Project Report on eSparSha

[A Supply Chain management Perspective]

Submitted to Prof. Jishnu Hazra

14th August 2013

Submitted by:
Group 6- Sec 2

Group Members:
Naman Kumar 1211039
Kanad Shaurya 1211105
Manish Pathak 1211113
Manoj Tripathi 1211114
Gaurav Singh 1211185
Vivek
1211315

Executive Summary

The following report is an analysis of supply chain of eSparSha, which is a start-up in the
field of Customized Merchandise Printing in India. Their clientele includes college students
(300 colleges across India), Corporations, Bands and Fan Clubs. The company gives its
customers

the

option

of

designing

their

merchandise

on

their

online

portal

(http://esparsha.com) as well as using their services to get their in-house designs printed. The
company focuses on quality of service as its differentiator against other payers in a low Entry
Barrier market. The company operates on thin margins and relies on word-of-mouth
promotions rather than official promotion channels. Round neck T shirts, collared T shirts
and sweat shirts accounted for the majority of the INR 1.7 crore of sales in 2012-13 for the
company. About half of the sales occur in South India and sizeable portions in North and East
India also.
The company started off with manufacturing and printing outsourced to firms in Chennai, but
quality concerns and strategic shifts moved their sourcing to Tirupur. Currently the company
is headquartered in Hyderabad with a zonal office in New Delhi too. eSparSha is diversifying
into tie-ups with brick and mortar stores, as well as printing customized pen drives, mugs and
wine glasses. B2B segments are what they are specifically trying to target due to ease of
business formalities and relatively stable order patterns. Apart from this, they are looking to
brand their Hyderabad divisions and are venturing into Event, Fan and Brand merchandising.
eSparSha works on a Make-to-Order operation strategy with an ideal order to delivery time of
10 days. The process begins with a customer ordering merchandise printing online or on
phone. The company procures finished cloth merchandise from its hub in Tirupur, Tamil
Nadu. Printing is also mostly done in Tirupur, though the company has procured two printing
machines of its own in the Hyderabad office as a pilot. The process focuses on customer
satisfaction and keeps them in the loop through a feedback process on the initial prints, so
that any required changes can be made. Delivery is done using four modes of logistics- Indian
Railways, Bus Transport, Courier companies like DTDC and FedEx and Airline logistics in
rare and contingent cases. All of these have their upsides and downsides, an analysis of which
has been presented in the report.
The report also contains an analysis of the challenges being faced by the company in various
parts of the supply chain- in logistics, uncertainty, quality standardization, pricing and
pilferage. Sources of inefficiency have also been studied, ranging from ill-effects of
1

centralized printing, absence of inventory modelling and pilferage monitoring and printing
losses.
After a thorough analysis of all challenges and ways to overcome them, we suggest the
company three wide recommendations. Firstly, we suggest them to decentralize
manufacturing and printing functions to three facilities in India (Surat, Ludhiana, Tirupur)
from one now in Tirupur. Next, we suggest them to diversify more into B2B space which will
help them mitigate many issues with the current supply chain. Thirdly, our advice is to go for
differential branding and pricing for different quality merchandise, and inventory stocking of
standard colours and sizes.
Overall, we have written the report such that it gives the reader a good understanding of the
supply chain of a typical fast growing company in the customized merchandising market in
India and the bottlenecks which stand in the way of rapid scale up.

Contents
1.

Introduction ................................................................................................................................... 4

2.

Business Model .............................................................................................................................. 4

3.

Financial Highlights ...................................................................................................................... 5

3.1

Revenue by Product categories ............................................................................................ 5

4.

Organization Hierarchy: .............................................................................................................. 6

5.

Diversification Strategy: ............................................................................................................... 7

6.

Supply chain network: .................................................................................................................. 8

7.

6.1

Early stages: .......................................................................................................................... 8

6.2

Evolution so far in the supply chain network: ................................................................... 9

Challenges and Inefficiency........................................................................................................ 11

7.1

7.1.1

Less organized market: .............................................................................................. 11

7.1.2

Logistics: ...................................................................................................................... 11

7.1.3

Uncertainty in demand: .............................................................................................. 12

7.2
8.

Challenges:........................................................................................................................... 11

Sources of Inefficiency ........................................................................................................ 13

Recommendations: ...................................................................................................................... 14
8.1

Decentralization of functions: ............................................................................................ 14

8.2

More diversification into B2B:........................................................................................... 15

8.3

Inventory of standard colours and sizes: .......................................................................... 15

8.4

Pricing strategy based on order fulfilment time: ............................................................. 15

1. Introduction

eSparSha, a customised merchandise company came into inception in the year 2010. The
business idea was simple providing customised design to the customers giving a more
personal feel to them. The company was co-founded by three graduates from NIT, Allahabad
namely Karthik Venkat, Bala Satish & Nalin Goel and it was based out of Hyderabad. Doing
a comprehensive market study they found out that the industry was mostly unorganised but
had a huge market potential. With the other big players as Myntra.com had already pulled out
of the market because of the smaller scale of operations. This came as a boost for them.
Although, the market had very low barriers of entry so chances of other competitors propping
up was always there. Initially the company started off with customised printing solutions for t
shirts which still make the biggest share of their revenue. Their only source of promotions
was word of mouth, social media and personal contacts. Initially they had to struggle with
orders as it took time to establish their brand identity. The core competency of the company
was its designs that were strictly kept in-house other than that the whole supply chain was
outsourced. Sourcing of the fabric &printing of designs were outsourced. Later on over the
years the company is a well-known brand for customised apparel and has close to 300
colleges as clients at local and national levels. It has also evolved its offerings to other
merchandises as mugs, pen drives etc. The company was also successful in roping in some
big names as Euphoria, IIT Mumbai mood indigo as their official brand partner.
2. Business Model
eSparShas business model works mostly works on the make to order model. The whole
process is covered under 4 verticals. The customer places orders through calling to the head
office or using the website. The website also offers a range of design solutions to choose
from. The customer can also send their own designs for printing. Next up is manufacturing or
fabric procurement where the demand of merchandise is given to the vendor. A quality check
supervisor takes care of this vertical. After the merchandise is sourced its up for printing
where the prototype is made ready and shown to the customer online. Only after the approval
nod given by the customer the printing operation gets ahead. After the printing gets over the
product is ready for delivery. Delivery is done using 2 party logistics and it also involves inhouse logistics. On time delivery is important to maintain quality of service although the
companys delivery systems are inefficient. A normal delivery takes 4-5 days. Pilferage and
4

late delivery are some concerns the company needs to deal with. Delivering the product the
company also stresses on getting feedback from the customers that helps it working on its
efficiencies & satisfying customer needs further.

3. Financial Highlights
3.1 Revenue by Product categories

Round neck T-shirts contribute the maximum amount to the companys revenue with a
total value of 1.12 crore (INR). Collared T shirts & Sweat shirts are number two & three
on the list in terms of the revenue percentage with a value of 29 & 26 lakhs INR
approximately. With the company diversifying into Bags & Mugs as the new products
into the market, the revenue share is picking up slowly.
Customer Category Wise Revenue

Zone wise Revenue

4. Organization Hierarchy:
Even though eSparSha is a relatively new company into the fourth year of its existence, it has
a well-defined Functional structure to handle organizational operation. At the helm are the
three founders: G Bala Satish, Karthik Venkat, Nalin Goel. While Mr. Satish is the head of
Sales function, Mr. Karthik is head of Operations. Both of them are based out of the
Hyderabad office. Mr. Nalin heads the Finance and Marketing functions.
The Companys Delhi office is headed by VP, Business Development who also works as an
Operations Head. At the time of writing the report, they are soon recruiting two sales
managers in the office.
As for the Hyderabad Office, there is a full Sales team of 6 Sales managers and 4 office
support staff. All of them work under the Mr. Satish, Head of Sales. The Sales team in
Hyderabad is divided into Corporate Sales, Institutional Sales and Retail Sales Divisions. The
Corporate Sales is managed by a Middle level manageer who has two telecallers and two
sales executives working under him. Th Institutional Sales and Retail sales divisions have

two personnel each. Retail sales has one person to look after online sales and another for
sales in conventional merchandise stores in Hyderabad.
Overall, eSparSha has a dynamic, cross functional and evolving organizational structure.
5. Diversification Strategy:
eSparSha has a well-defined diversification strategy, aimed at expanding both, their offerings
and the kinds of clients they serve. The strategies are as follows:
o Retail business-tie up: eSparSha has tied up with around 10 brick and mortar stores in
Hyderabad, to sell their merchandise. The model basically is that the Company is going
to produce indigenous designs which are witty, humorous, quirky etc. They will then
get them printed on merchandise themselves and put them up for retail in the
aforementioned stores.
o Customized merchandizing- pen drives, mugs, wine glasses: The Company has
realised the value of merchandising non-fabric articles like pen drives, mugs, key
chains, wine glasses etc. There is high margin in these products and sourcing is
relatively less complicated. Scale is the only requisite here to meet fixed costs within a
reasonable time frame. eSparSha is starting with designing and printing of the above
merchandise from New Delhi where the market has a large identified potential.
o Business to business offerings- Separate branding: Now that the Company is aiming
to focus more on B2B offerings like One Institute One Design, it is looking to create a
new brand for its B2B functions so that it can have better and unambiguous visibility in
the B2B space, separate from its mostly UG College offerings. The supply chain is
expected to be relatively simpler and steadier with this brand, with predictable and
steady order patterns. The most important benefit of this is expected to be ease of
business, with relatively simpler generation of Sales Tax documentation which is
proving to be the largest bottleneck in the largely B2C transactions currently.
o Different Branding for Hyderabad divisions: The Company has planned to brand its
three Hyderabad divisions separately:
o Corporate Sales- Dealing with merchandising solutions for Corporations
o Institutional Sales- Dealing with merchandising solutions for large institutions
from the central headquarters to other parts of the country

o Retail Sales- Dealing with sales over the online portal as well as sales in brick
and mortar stores in Hyderabad
o Future product strategy: eSparSha is planning to launch itself into the following
categories of fabric and non-fabric merchandise in the coming years:
o Event merchandizing- Through the portal http://store.eSparSha.com
o Fan merchandizing- Through the portal http://meramerchandise.com
o Brand merchandizing- Through the portal http://geeksheet.com
6. Supply chain network:
Studies suggest that network design determine almost 80% of the total supply chain cost.
This makes it very critical for companies to have a robust and efficient network design.
eSparSha being still in entrepreneurial stage of its life cycle has already seen so many ups and
downs in its two years of operation.
6.1 Early stages:
Initially, eSparShas supply chain network consisted of specialized outsourced printing and
manufacturing facilities from Chennai as well as in-house design facility. The inbound
logistics was taken care of by the manufacturer whereas eSparSha was only responsible for
the outbound logistics. The modes used for transportation were, railways, roadways, airways
and courier. Selection of the mode of transportation was driven by the time they had in hand
and connectivity of the city where merchandise were to be delivered to. When they had very
less time for order fulfilment, they go with airline delivery. The consignment is parcelled to
the nearest airport through air cargo and then bus delivery system is used for last miles.
Airline delivery is the costliest mode among the four whereas train parcel is the cheapest.
When they have sufficient time for order fulfilment, they go with rail parcel but when there is
no direct connectivity between the starting point and destination, rail parcel is not possible. In
that case they go with courier system. They have tie-up with two major courier service
providers, Fedex and DTDC for that. Since apart from design everything was outsourced,
they were not bothered about inventory holding. In other words, initially their model was
make-to-order wherein orders received from clients were directly transferred to the
manufacturer. The diagram below shows their supply chain network pictorially:

6.2 Evolution so far in the supply chain network:

In their initial network they faced predominantly two challenges, namely, high cost of
sourcing and quality. To reduce the cost of T-shirt sourcing, they shifted their upstream
activities to Tirupur from Chennai. Tirupur, being the textile hub of India, offered demand
aggregation and hence economies of scale and skilled labourers. As far as quality was
concerned they took two measures, firstly, they deputed two supervisors at the
manufacturers place for quality checks during manufacturing and printing. Instances of order
returns were also increasing due to quality of printing. So secondly they took a measure
where in a snapshot of the prototype with a high definition camera was taken and mailed to
the customer for the go ahead before actual printing. This helped them reduce the order
returns. The pictorial diagram shown below shows the new network with the changes that
they have incorporated.

Looking at the criticality of printing, eSparSha has set up an in-house printing facility on a
pilot basis at Hyderabad office. Based on the experience with printing they are planning to
take a call on making it an in-house activity completely. Printing is currently being done at
Tirupur and Hyderabad in parallel. As mentioned earlier, quality of the products and services
is the key differentiator for them and printing is the most critical activity which determines
quality. By having an in-house printing facility they aim to have better control and
monitoring over the quality of printing.
Key difference in the new model is with inventory holding. Since, they have their own
printing facility, they are required to keep inventory with them. Earlier there was no
requirement for demand forecasting, inventory management and reordering policy because
everything was outsourced to the upstream players. Even now, there is no robust inventory
management mechanism in place. In-house printing facility is also facing major challenges
because of skilled manpower. Printing wastages are about 3%, which is high as per the
industry standards.
Pilferage and other wastages are also a big cause of concern for them currently. These
wastages generally happen during storage and transfer. There is no monitoring measure in
place as of now. As per the head of operations, it is not cost effective for them to have a
damage and pilferage monitoring system at this stage.

10

7. Challenges and Inefficiency

7.1 Challenges:
7.1.1 Less organized market:
The market the company operates in is unorganized, as anyone willing to coordinate
with merchandize manufacturers and printers can enter. The Entry barriers to the
market are low and consequently make it mildly unattractive to mid-sized players like
eSparSha. The main threat that eSparSha faces from these smaller players is that the
main customer segment, College Student, is price and service sensitive. So should
eSparSha be a little less price competitive, or require the Customer to fulfill some
intricate formalities like Sales Tax Documentation, they are likely to shift to some
other merchandizer.

7.1.2 Logistics:
The most number of problems the company faces is in Logistics. Each logistics
medium has its own set of issues.
o

Railways: This is the cheapest (about INR 500 per 100 kg) (and hence most used)
mode of transport for the company and consequently has its downsides. The Railways
system, though cheap, provides very little control to the company over when the
parcels will actually leave the source station. After the parcels are booked, the
Railways workers may load them in as many as two or three shifts, which makes it
difficult to coordinate delivery between two points. Also, inadequate Sales Tax
Documentation poses some problems when the customers, i.e. majorly college
students, collect the parcels from the destination station. With increased strictness
from the Sales Tax Department, there is frequent checking of parcels and with
inadequate documentation, there are consequences to the tune of the company paying
fines or the officials demanding bribes in the form of merchandize, which adds to
pilferage costs. The biggest issue, probably, with Railways delivery is that for
destinations which do not have a direct Rail Link from the source (Hyderabad), there
is no support from the Railways Department to change the parcels from one line to the
other while in transit. So only to those places deliveries can be sent which fall on a
direct rail link from Hyderabad.

Courier: FedEx, DTDC are the companies that eSparSha has tied up with for
logistics. While they do provide last mile delivery, they do not possess adequate
11

knowledge of formalities and documentation required for sales-related merchandize

transferred over various state borders. In case they get stuck at some stage, the
representative of the courier company does not take responsibility to take the
consignment further and the risk/fine has to be borne by eSparSha. Yet all said and
done, this is the best mode of transport, considering cost and reliability.
o

Bus delivery: This is used by the company in case there is no other option for last
mile delivery. The company has to pay the bus conductor/ representative some
amount apart from the freight carriage charge so that safe delivery is ensured till the
destination. Even after that the bus does not deliver the goods to the customers
doorstep. eSparSha has to coordinate with the customer and have it lifted off once the
bus reaches the destination.

Airline delivery: This is similar to sending any other freight by domestic airlines. The
weight charges are too prohibitively high for the company to use this solution on a
regular basis. The company hence uses this mode only when there are contingencies
or deliveries are urgent. The mode is not really scalable as of now.

7.1.3 Uncertainty in demand:

There are three ways in which in which uncertainty affects the companys business:
o

The spread of orders over the year: The major clientele of the company is college
students. They majorly order for their college festivals which are neither spread
evenly throughout the year, nor are fixed from one college to other. Only after
sizeable experience with a customer can their yearly ordering cycles be predicted and
this is difficult for a relatively new merchandizer.

Order designs: Merchandize printing business has to deal with the challenge of
intricate and sometimes difficult to print designs, which is part of the business of
developing printing screens. However when there is customization to the level of
getting each end customers name and other detail (e.g. jersey number) printed, the
complexity goes up with every level of customization. What adds to the issue is that
the customer does not understand that a name and a unique number are two different
levels of customization and costs have increased accordingly. They just think in terms
of customized and non-customized and this lack of customer awareness adds to the
woes of the company. They simply cannot charge differentially for each level of
customization, given the level of cut-throat price competition in the business.

12

Order to delivery Lead Times: The ideal time between customers ordering and
delivery being completed is about 10 days. However, some customers order as late as
5 days from order to delivery and this increases cost to eSparSha, given that both the
manufacturer and the printer will have to work with extra capacity to fulfil the order.

Pricing cannot account for uncertainty: There are three main kinds of uncertainties
enumerated above. Out of them, high level of customization and short lead times are
two things that tend to really increase costs to produce printed merchandize for
eSparSha. However the customers do not really understand the intricacies involved in
the business. They not only expect deliveries to happen on time, but also expect
eSparSha to not factor in late ordering and multiple customization levels while
quoting prices, both of which are significant add-ons to cost of printing. In case
eSparSha tries to pass the cost on to the customer, they might lose out because of stiff
price sensitivity in the market.

Quality price mismatch within same institute: This is a unique problem for the
company. Lets say there are two clubs in a campus- A and B. Both order customized
merchandize from eSparSha. The order from A is costs the club INR 200 per unit
while the order from B costs B INR 250 per unit. So B has a higher quality product.
Now they generally sell these products to students at one rate, lets say INR 350. Bs
product is superior to A. The students think that it is the merchant- eSparSha who is
responsible for the quality difference. This constitutes a reputational issue for the
company.

7.2 Sources of Inefficiency

o

Centralized printing facility: The Company has two printing machines in the
Hyderabad centre, as a pilot. Apart from that all printing as of now occurs in Tirupur.
This means that finished merchandize (fabrics in this case) have to be transported to
areas spread all over India (as we can see from the company business geographic
spread, it is serving customers all across India) from one hub, Tirupur. This
significantly adds to cost of the product and reduces margins by at least INR 10-15 for
every unit.

Absence of robust inventory and reordering model: eSparSha has to deal with
orders of Lead Time as short as 4-5 days. They are, yet, still operating on a largely
Made-to-order model. This is good for a large number of orders, and to deal with
orders that have a short lead time they have started stocking unprinted merchandize.
13

However, there is no definite inventory model or ordering pattern they are following
that can mitigate this issue of irregular order patterns. They stock about 1500 units for
a week and reorder at the end of the week. This is based mostly on intuition and lacks
a sound inventory and reordering model. It will be helpful if there is such a model in
place, considering the uncertainty and logistics costs involved.
o Pilferage monitoring: As pointed out earlier in the report, the company is dealing with
pilferage issues at various points in the supply chain. However the leadership is not in
favour of appointing supervisors to monitor transfer of merchandize in the supply
chain, mainly because the cost of appointing personnel specifically for this purpose will
exceed the costs imposed due to pilferage. However, this has to be taken care of once
the company scales up its operations in the next 2-3 years.
o 3% printing losses on own machine: Typically 3 in 100 shirts are rendered virtually
useless due to printing errors on the companys own machines. The company is
operating on tight gross margins and this kind of wastage can be eliminated only with
the help of higher quality printing machines which will need significant investment. Till
then, this kind of loss has to be incurred as it is systemic and difficult to maneuver
around due to technological constraints.

8. Recommendations:
8.1 Decentralization of functions:
Although eSparShas customer is spread across all parts of the country ranging from Srinagar
in the far north to Itanagar in the north east and Calicut in the south but the sourcing is
currently being done from Tirupur. In the long run this will result in increased logistics cost
and delays. Hence, we recommend them to decentralize the sourcing hubs. They can have
three different sourcing hubs, namely, Tirupur for the southern zone, Surat for the western
zone and Ludhiana for the northern zone. They can also extend to Kolkata in the eastern zone
when demand in that reason increases to make it viable. Rationale behind having three
different sourcing hubs is to evenly distribute the demand in all the three regions. Ludhiana
and Surat are also known for their manufacturing superiority, hence choosing these cities will
be beneficial in the long run.
Like manufacturing, printing must also be decentralised and it should be located in the same
city as the manufacturing facility. Benefit of having both printing and manufacturing in the
same city will be three fold: first, coordination between printing and manufacturing will be
14

seamless, secondly, supervisors for quality checks can also supervise the manpower at the
printing facility and thirdly, there will not be scarcity of skilled labourers required for
printing.
Printing should be kept in-house as earlier because of the criticality of the activity. By
keeping it in-house, they will be able to have good monitoring and control over it.

8.2 More diversification into B2B:

As mentioned earlier, eSparSha is facing many challenges because of their B2C business.
Hence, to be sustainable they should look for more and more ways towards expanding into
B2B businesses.
They can partner with event management companies for their merchandising requirements.
Events can range from comedy shows to music concerts and sports extravaganzas. Currently
they are targeting student bodies of academic institutes, but they can also look towards get
into long-term contracts with administration of those institutes for merchandising. This will
help them build a brand image with the philosophy of one institute, one design. This will
also make the order size stable and reduce uncertainty. Launching more and more theme
based designs for their retail business will also help them grow in future.

8.3 Inventory of standard colours and sizes:

As for inventory management, they should look towards having a robust demand forecasting
and reordering methods. To begin with, they can have mechanism where they can have
finished goods inventories for basic colours (black, grey, blue and white) and sizes. By doing
this they will be able to fulfil shorter lead time orders more efficiently.

8.4 Pricing strategy based on order fulfilment time:

Pricing should not be uniform because it is costlier to serve the shorter lead time orders.
Hence, we recommend them to have a pricing strategy which is such that it takes care of the
inherent cot differences between different lead time orders in the long run.

15

Appendix:
Interview with Nalin Goel, Founder, Head Finance & Marketing
Question: Please tell us something about your business.
Answer: At eSparSha we print customized merchandize ranging from Apparels to pen drives
and mugs. Our customers can design on their own or use our services for it. We started off as
an apparel merchandising company in 2010. Initially we outsourced all manufacturing and
printing functions from Tamil Nadu. The main issue that came up then was that workers were
mostly illiterate with low knowledge of quality standards, which led to high printing and
manufacturing losses that were unsustainable. So currently we are sourcing our
manufacturing and printing functions out of Tirupur. Recently we have also acquired 2
printing machines of our own in Hyderabad. Our main USP is quality assurance and for that
we have assigned quality supervisors for both, manufacturing and sourcing facilities. Apart
from this, we do not give a go ahead for mass printing unless the customer is satisfied with
his first print. For this, we send him a picture of the first printed T shirt and only when he
gives a go ahead, do we print further.
Question: So who handles your logistics? Or do you do it on your own?
Answer: In our business, logistics forms a major part of overall costs to the company.
Currently we do not own trucks or other logistics equipment because first, we do not have
that kind of scale and second, we are primarily B2C right now and having own logistics will
create a lot of formalities in the system which we do not have the bandwidth to handle. So as
of now, we are using four types of logistics- Railways, Airways, Road (Bus) and Courier.
Railways are the cheapest of the modes but it has its own problems. Sometimes we will load
3 parcels and they will send them over 3 days. Plus there is no one on the other end who can
reliably check if the parcels reached safely. Needless to say, there is theft and pilferage too,
but neither we nor our customers do much about it as they are just students. Also the students
are not very active in procuring Sales Tax forms, so many times they are also stopped at the
stations by the Sales Tax department and they have to pay fines. Ultimately it affects the
image of my company. The second mode we frequently use is Courier. We have tied up with
DTDC and FedEx. They do provide good quality of delivery and deliver it to the customers
doorstep. But they also give us the headache of not knowing about inter-state transport forms
required. Like they will take it up to Delhi and after that they will say that they cannot take it
16

beyond that. So this is a problem with them. And sometimes they also mix up packages, like
once they interchanged parcels meant for NIT Kurukshetra and NIT Raipur. So these issues
are there. Then there is Bus Transport. We have to pay the bus person to deliver it till the bus
station at the destination. After that it is the customers responsibility to collect it from them.
We tell them bus number and all that, and they collect it. We pay the bus conductor to ensure
safe delivery. We also use Airlines to transport our goods in some cases. This proves
extremely costly. We have tied up with Spicejet and Indigo for this. By and large we use this
mode only when there is failure of some chosen transport mode at the last moment or there is
some very urgent delivery. Otherwise, it proves very costly.
Question: So what are your lead times like? What is the optimum order fulfilment period?
Answer: As our business is relationship based, we take care of even those orders which have
short lead times so as to maintain a long term relationship with the customers. Optimally, we
want orders to come in 15 days prior to the date of delivery, so that we can plan operations in
advance and costs are minimal. Generally it takes up to 2-4 days to get manufacturing done,
and 5-6 days for delivery. However we get orders even up to 5 days to delivery, which a great
challenge as it increases costs a lot. We cant pass it on to customer as then we may lose him
to other players. It dents our margins.
Question: eSparSha has been in existence for three years. What are the main challenges
you have faced till now?
Answer: Well as I said before, we have a lot of issues with logistics but we cant help it as of
now because steps to solve them will cost more than the penalties they cause as of now. Apart
from logistics, we have several other challenges. First the custom merchandising industry is
not a very organized market. Anyone who can work with a manufacturer and a printer can
enter the business. So we have to be very careful with our pricing. We cant turn orders down
because of demanding and short lead times or cost constraints. It is a relationship based
business and we have to constantly work hard to survive. Then there is uncertainty- the year
is event packed for colleges but the timing is scattered. We have bursts of orders rather than a
steady stream. Designs and colours are anyway a source of uncertainty in this business.
Students do not understand different levels of customization and expect us to adjust costs. We
cannot price our merchandise based on these uncertainty or lead times given to us as there is
a risk of the customer going to our competitors. They just want hassle free delivery of
17

merchandise and we have to give it to them at competitive cost. In colleges, there is another
problem. Two clubs may have bought different quality T shirts from us. So their final prices
to students should be different, but generally they are kept at the same level by the clubs. The
students then doubt the quality in the two orders supplied by eSparSha. This is a reputation
issue for us. So these are the main problems.
Question: Please elaborate a little on your organizational structure.
Answer: We have a well-defined structure. We are three founders: G Bala Satish, Karthik
Venkat, and I. Satish is the head of Sales, Karthik is head of Operations. Both of them are
based out of Hyderabad. I look after Finance and Marketing. Apart from us, we have
appointed a Vice President, Business Development who also works as an Operations Head in
the Delhi office. We are soon recruiting two sales managers in the Delhi office. As for the
Hyderabad Office, we have a Sales team of 6 Sales managers and 4 office support staff. All
of them work under Satish. Our Sales team (in Hyderabad) is divided into Corporate Sales,
Institutional Sales and Retail Sales Divisions. The Corporate Sales is managed by a Middle
level manager who has two telecallers and two sales executives working under him. Our
Institutional Sales and Retail sales divisions have two persons each. Retail sales has one
person to look after online sales and another for sales in brick and mortar stores in
Hyderabad. We are still evolving this structure to suit our needs.
Question: What is your future strategy, going forward? What are the changes you are
going to make in business model in general and supply chain in particular?
Answer: Going forward, we will have better promotion campaigns. Right now we have only
have campus contacts and word of mouth publicity. We need to market more aggressively.
Strategically, want to enter more into B2B space due to the ease of doing business.
Documentation is not an issue there. Then we want to brand our three functions at
Hyderabad. We are also looking into Event Merchandising, Fan Merchandising and Brand
Merchandising as avenues that have a lot of potential and are untapped as yet. Another area
with huge potential is Geek Merchandise- you can see our new portal in some time which
will be called Geeksheek.in. Apart from Apparels, we have ventured into customized pen
drives, mugs, wine glasses etc. These are higher margins businesses. Once the customer is
educated about these, they will be a significant part of the custom merchandising trade.

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