Professional Documents
Culture Documents
Project Report
on
A project Submitted to
University of Mumbai for partial completion of the degree of
B.M.S
Under the Faculty of Commerce
Submitted by
MITTAL NAIKNAWARE
BMS – Marketing
April 2019
ACKNOWLEDGEMENT
As I submit my project on “Business Plan for Online Retail for New Entrant”
With great pleasure, I express my gratitude to our director Dr. Swati Pitale and
project guide Asst.Prof Pooja Tripathi without their help this would not have been
completed & for providing me with the wonderful opportunity to expand my horizon
of knowledge in this interesting field.
I acknowledge my indebtedness to various inputs and study materials provided for the
contents of the project.
I would like to thank each and every person who directly or indirectly helped me in
the completion of the project. It is my proud privilege to express my deep sense of
appreciation and gratitude to my parents and friends for their support and co-
ordination in the course of the project either directly or indirectly involved in time
with their valuable feedback.
Place: Mumbai
EXECUTIVE SUMMARY
The purpose of this study was to understand the overall business model of Online
retail and prepare a business plan for online retail. Online retail is the one the fastest
growing industry in India and expected to employee lakhs of job in India. Online
retail has become so competitive that its hard to operate and even the discount offered
by the online retailers have created a huge loss for them. Hence, it is very hard to start
an online retail and operate in a country like India where still most of the population
stay in the rural sector. Even though India’s retail market is expected to increase by 60
per cent to reach US$ 1.1 trillion by 2020, on the back of factors like rising incomes
and lifestyle changes by middle class and increased digital connectivity. While the
overall retail market is expected to grow at 12 per cent per annum, modern trade
would expand twice as fast at 20 per cent per annum and traditional trade at 10
percent.
The project talks about the current scenario of the online retail industry and the
history of online retail in India. Entering the online market is a low-risk way of testing
a brand’s strength, obtaining shopper behaviour data to better understand consumer
preferences, and building relationships with customers before setting up stores. It is
also a low-cost way to test the technological, financial and logistical infrastructure of
a country through the reliability of online payments, shipping and delivery. Combined
with social media, this is a low-cost opportunity to begin a dialogue with consumers
even before you set up shop. The project also talks about the evolution of online retail
in India and future of online retail in India, VR and AR are still seen as intimidating
and gimmicky. But a ton of advances in both technologies in the last 2-3 years, and
mainstream companies like Facebook (with Oculus and a massive reduction in price)
and Apple (with AR Kit) are getting these technologies out to the masses. The day is
not far away when the size of a VR device will be small enough to fit within the
contact lens in your eyes (provided heating issues can be solved) and you will be able
to merge the real and virtual worlds. It also covers the aspect such as a success factor
of online retail along with talking about top 20 global online retailers. Lastly, it ends
with competitive analysis by looking at PESTEL and SWOT of top online retailers.
The project also included the difference between online retail and offline retail. It also
covers the aspects such as factor considered by the buyer from purchasing from online
and offline. Chapter three was a review of related literature, where literature was not
just Indian literature but also involve global literature. Starting an online business
gives you the benefit of having access to millions of customers, but you also have a
lot more competition. No matter what you're trying to sell, you can bet that hundreds
more online retailers have a similar idea. Project mention about the steps involved in
starting a online retail. Project also talks about different challenges online retailers
face while starting an online retail. Project talks about the difference parameter to
consider while starting an online retail.
Lastly project talk about the planning for staring an online retail. The chapter was
divided into 5 important parts consider while starting the online retail. Such as
financial planning, marketing planning, operational planning, IT planning and HR
planning for starting an online retail business. Where suppliers meant a whole lot
when e-commerce was not around. Now – even more so. When it comes to e-
commerce, suppliers can provide you with the right merchandise but they can also
take the stocks burden off your shoulders. Amazon, for example, relies heavily on its
marketplace partners to increase listed products number, without buying stocks for
those products. The reality of selling online, however, is that the best stores take time,
effort, and plenty of technical preparation to set up.
Table of Contents
1 Introduction to Retail 1
2
1.1 Introduction
3
1.2 Evolution of Retail
2.1 Introduction 6
Annexures
List of Figure
List of Table
Bibliography 74
Business Plan for Online Retail for New Entrant Mittal Naiknaware
Chapter – 1
Introduction to Retail
1.1 Introduction
The Indian retail industry has emerged as one of the most dynamic and fast-paced
industries due to the entry of several new players. It accounts for over 10 per cent of
the country’s Gross Domestic Product (GDP) and around 8 per cent of the
employment. India is the world’s fifth-largest global destination in the retail space.
Indian Retail Industry has immense potential as India has the second largest
population with affluent middle class, rapid urbanisation and solid growth of internet.
India’s retail market is expected to increase by 60 per cent to reach US$ 1.1 trillion by
2020, on the back of factors like rising incomes and lifestyle changes by middle class
and increased digital connectivity. While the overall retail market is expected to grow
at 12 per cent per annum, modern trade would expand twice as fast at 20 per cent per
annum and traditional trade at 10 percent. Indian retail market is divided into
“Organised Retail Market” which is valued at $60 billion which is only 9 per cent of
the total sector and “Unorganised Retail Market constitutes the rest 91 per cent of the
sector. India’s Business to Business (B2B) e-commerce market is expected to reach
US$ 700 billion by 2020.Online retail is expected to be at par with the physical stores
in the next five years and has grown 23 per cent to $17.8 billion in 2017.
India is expected to become the world’s fastest growing e-commerce market, driven
by robust investment in the sector and rapid increase in the number of internet users.
Various agencies have high expectations about growth of Indian e-commerce markets.
Indian e-commerce sales are expected to reach US$ 120 billion! by 2020 from US$ 30
billion in FY2016.Further, India's e-commerce market is expected to reach US$ 220
billion in terms of gross merchandise value (GMV) and 530 million shoppers by
2025, led by faster speeds on reliable telecom networks, faster adoption of online
services and better variety as well as convenience.
India’s direct selling industry is expected to reach Rs 159.3 billion (US$ 2.5 billion)
by 2021, if provided with a conducive environment through reforms and regulation.
Indian exports of locally made retail and lifestyle products grew at a CAGR of 10 per
cent from 2013 to 2016. The size of modern retail in India is expected to double to Rs
171,800 crore (US$ 25.7 billion) from Rs 87,100 crore (US$ 13 billion) in three years
driven by omni-channel retail.
Retailing in India is one of the pillars of its economy and accounts for about 10
percent of its GDP. The Indian retail market is estimated to be US$ 600 billion and
one of the top five retail markets in the world by economic value. India is one of the
fastest growing retail markets in the world, with 1.2 billion people.
As of 2003, India's retailing industry was essentially owner manned small shops. In
2010, larger format convenience stores and supermarkets accounted for about 4
percent of the industry, and these were present only in large urban centres. India's
retail and logistics industry employs about 40 million Indians (3.3% of Indian
population).
Until 2011, Indian central government denied foreign direct investment (FDI) in
multi-brand retail, forbidding foreign groups from any ownership in supermarkets,
convenience stores or any retail outlets. Even single-brand retail was limited to 51%
ownership and a bureaucratic process.
In November 2011, India's central government announced retail reforms for both
multi-brand stores and single-brand stores. These market reforms paved the way for
retail innovation and competition with multi-brand retailers such as Walmart,
Carrefour and Tesco, as well single brand majors such as IKEA, Nike, and Apple. The
announcement sparked intense activism, both in opposition and in support of the
reforms. In December 2011, under pressure from the opposition, Indian government
placed the retail reforms on hold till it reaches a consensus.
In January 2012, India approved reforms for single-brand stores welcoming anyone in
the world to innovate in Indian retail market with 100% ownership but imposed the
requirement that the single brand retailer source 30 percent of its goods from India.
Indian government continues the hold on retail reforms for multi-brand stores.
In June 2012, IKEA announced it had applied for permission to invest $1.9 billion in
India and set up 25 retail stores. An analyst from Fitch Group stated that the 30
percent requirement was likely to significantly delay if not prevent most single brand
majors from Europe, USA and Japan from opening stores and creating associated jobs
in India.
On 7 December 2012, the Federal Government of India allowed 51% FDI in multi-
brand retail in India. The government managed to get the approval of multi-brand
retail in the parliament despite heavy uproar from the opposition. Some states will
allow foreign supermarkets like Walmart, Tesco and Carrefour to open while other
states will not.
India's e-commerce market was worth about $3.9 billion in 2009, it went up to $12.6
billion in 2013. In 2013, the e-retail segment was worth US$2.3 billion. About 70% of
India's e-commerce market is travel related. According to Google India, there were 35
million online shoppers in India in 2014 Q1 and was expected to cross 100 million
marks by end of year 2016. CAGR vis-à-vis a global growth rate of 8–10%.
Electronics and Apparel are the biggest categories in terms of sales.
According to a study conducted by the Internet and Mobile Association of India, the
e-commerce sector is estimated to reach Rs. 211,005 crores by December 2016. The
study also stated that online travel accounts for 61% of the e-commerce market.
Chapter – 2
Introduction to Online Retail
2.1 Introduction
Indian retail is one of the fastest growing markets in the world. The sector is
experiencing exponential growth, with retail development taking place not just in
major cities and metros, but also in Tier-II and Tier-III cities. The retail market in
India is expected to reach US$ 866 billion by 2015 from the current US$ 516 billion.
The organised retail segment in India is expected to account for 20 percent of the
overall retail market by 2020. Net retail sales in India are also quite significant among
emerging and developed nations.
With retail growth expected to continue at the slow pace of 1.5% – 3% over the next 3
– 5 years in Europe, many retailers are looking to emerging markets to fuel growth.
There are several ways to enter a new market, such as acquiring a local player,
opening own stores when regulation allows, setting up a joint venture or franchise
partnership, or selling wholesale to local retailers on a concession basis. But, what
about selling directly via the online channel? This is a low cost, low-risk alternative to
establishing a physical presence in new markets, including emerging markets.
Entering the online market is a low-risk way of testing a brand’s strength, obtaining
shopper behaviour data to better understand consumer preferences, and building
relationships with customers before setting up stores. It is also a low-cost way to test
the technological, financial and logistical infrastructure of a country through the
reliability of online payments, shipping and delivery. Combined with social media,
this is a low-cost opportunity to begin a dialogue with consumers even before you set
up shop.
To put this into perspective, American luxury retailer Neiman Marcus recently
acquired partial ownership in a Chinese fashion website to test China’s market, learn
about Chinese consumers’ likes and dislikes, and capitalise on the country’s
increasing demand for luxury goods. Neiman Marcus got all the information it needed
without entering into expensive real estate contracts or trying to navigate the
complexity of tier 2 and tier 3 cities. On a smaller scale, many UK retailers already
ship products to other markets in which they don’t have a physical presence. Next, for
instance, ships to 61 countries worldwide, but has stores/ concessions in only 40
countries. On the other hand, Debenhams [IRDX RDEB] has a presence in 24
countries, but now ships to 67 countries.
Whether you are entering via the e-commerce route or complementing your existing
local footprint with an online offer, how do you know which emerging markets are
ripe for e-commerce? A.T. Kearney conducted an annual study, the GRDI – Global
Retail Development Index. This study identifies the top 30 emerging markets that are
prime for retail entry. Out of these 30 emerging markets, they have then ranked the
countries based on their attractiveness for online retailing in our 2012 E-commerce
Index. They looked at metrics such as internet penetration, value and growth of online
sales, as well as evaluated typical e-commerce challenges, such as technology,
payment and logistics infrastructure, and internet security and digital commercial
laws.
Let’s take a look at the top 5 in detail and find out why they are the top
performers.
1. China –
With a $23bn online market and 78% CAGR growth rate since 2006, it is hardly
surprising that China made it to the top of the list. Its online retail market is expected
to explode, reaching $81bn over the next five years as the country’s infrastructure
improves and online purchasing behaviours evolve. China has 513 million internet
users, the largest online population in the world, and 164 million online shoppers who
are drawn in by lower online prices, promotions, and free shipping, and who value
peer reviews. Consumer electronics and apparel are the two most popular categories
among China’s online shoppers, followed by beauty products. Infrastructure
challenges continue to stall China’s e-commerce potential.
2. Brazil –
With 80 million internet users who spend $10.6bn online per year, and are expected to
spend $18.7bn by 2017, Brazil is coming in a close second. Brazil’s strong and
growing middle-class shop online to get better deals. Brazilian shoppers are price
conscious, demand free shipping and interest-free payment terms. They also frequent
group-buying sites such as Groupon. In 2011, 10 million Brazilians made more than
20 million transactions on group buying sites. Appliances and consumer electronics
are the most common products sold online. Online apparel sales remain marginal, as
fashion-savvy Brazilians still value the social experience of in-store shopping. Local
Brazilian retailers already have an online foothold, with B2W (owned by Lojas
Americana’s department stores) possessing 20% of the online retail market. Some UK
retailers, such as Marks & Spencer, Debenhams and House of Fraser, are trying to get
a piece of the Brazilian market without opening stores, by offering to ship to Brazil,
capitalising mainly on tourists who have come across their brands in the UK or other
markets. Although Brazil’s e-commerce market is thriving, the country has particular
issues with logistics and online payment security. To combat these, the Brazilian
government has invested in air and shipping ports and is strengthening its digital
commerce laws.
3. Russia –
Russia has the largest online population in Europe (60 million users) and 15 million
online shoppers. Russians also browse the web regularly from their mobile phones –
there are 1.8 mobile phones per person in the country. These market dynamics
translate into a $9bn online retail market, with growth projected to reach more than
$16bn by 2016. Russians primarily buy with cash; this is because only one in five
households has a credit card. The country’s poor financial and logistics infrastructure
and consumers’ lack of confidence in delivery concentrates e-commerce sales in
Moscow and St. Petersburg, where 70% of e-commerce sales are delivered, and a
further 20% are in second-tier cities. Both domestic and foreign retailers are investing
in e-commerce operations to position for future growth. Leading Russian grocer, X5
Retail Group, recently launched an e-commerce site, while French retailer Auchan
plans to establish collection points for online orders. Next, who already has 22 shops
in Russia, has an e-commerce site in the local language, and guarantees free delivery
in 6 – 8 days via FedEx. Monsoon has 21 stores/concessions and Accessorize, 86
stores/concessions in Russia and an e-commerce website in the local language and
local currency.
4. Chile –
5. Mexico –
Mexico is Latin America’s second-largest online retail market (after Brazil) with
$1.2bn in sales per year and the fastest-growing internet penetration rate in the world.
As more Mexicans obtain internet access, online sales are projected to nearly triple to
$4.4bn by 2016. Despite its potential, a poor technological infrastructure hinders
Mexico. The internet penetration rate is 31%, with users primarily connecting at slow
speeds to avoid paying for faster but higher-priced broadband connections. Still,
Mexico offers some of the unique e-commerce innovations, such as the BanWire
system, which allows customers to purchase a product online, print a voucher and
pays for the product in person at a nearby convenience store. International retailers are
seeking to capitalise on Mexico’s potential. Wal-Mart’s Superama chain allows
customers to order products online and either pick them up (no charge) in the store
two hours later or pay for home delivery within the hour.
India first came into interaction with the online E-Commerce via the IRCTC. The
government of India experimented this online strategy to make it convenient for its
public to book the train tickets. Hence, the government came forward with the IRCTC
Online Passenger Reservation System, which for the first time encountered the online
ticket booking from anywhere at any time. This was a boon to the common man as
now they don’t have to wait for long in line, no issues for wastage of time during
unavailability of the trains, no burden on the ticket bookers and many more. The
advancements in the technology as the years passed on have been also seen in the
IRCTC Online system as now one can book tickets (tatkal, normal, etc.) on one go,
easy payments can check the status of the ticket and availability of the train as well.
This is a big achievement in the history of India in the field of online E-Commerce.
After the unpredicted success of the IRCTC, the online ticket booking system was
followed by the airlines (like Air Deccan, Indian Airlines, SpiceJet, etc.). Airline
agency encouraged, web booking to save the commission given to agents and thus in
a way made a major population of the country to try E-Commerce for the first time.
Today, the booking system is not just limited to the transportation rather hotel
bookings, bus booking etc. are being done using the websites like MakeMyTrip and
Yatra.
The acceptance of the e-commerce on a large scale by the Indian people influenced
other business players also to try this technique for their E-businesses and gain high
profits. Though online shopping has been present since 2000 it gained popularity only
with a deep discount model of Flipkart. In a way, it re-launched online shopping in
India. Soon other portals like Amazon, Flipkart, Jabong, etc. started hunting India for
their businesses.
Online shopping in its early stage was a simple medium for shopping with fewer
options. The users can just place an order and pay cash on delivery. But, in last few
years this field has been renovated to a high extent and hence fascinated many
customers. Today, the online shopping has become a trend in India and the reason
behind the adoption of this technique lies in the attractive online websites, user
friendly interface, bulky online stores with new fashion, easy payment methods (i.e.
secure pay online via gateways like PayPal or cash-on-delivery), no bound-on
quantity & quality, one can choose the items based on size, colour, price, etc.
Despite being a developing country, India has shown a commendable increase in the
e-commerce industry in the last couple of years, thereby hitting the market with a
boom. Though the Indian online market is far behind the US and the UK, it has been
growing at a fast pace.Further, the addition of discounts, coupons, offers, referral
systems, 30days return guarantee, 1-7 days delivery time, etc. to the online shopping
and the E-Market have added new flavours to the industry.
While a lot of online retail started with the easier categories such as electronics, books
and the likes, the first wave of lifestyle products started becoming big with the likes of
apparel, accessories, jewellery etc. being sold online. Some of the big names
including Myntra, Jabong, Yebhi, etc. started becoming big around this time. Today, a
lot of the growth of the e-commerce marketplaces is contributed to fashion, lifestyle,
furniture etc. Products, while of course, the standardised products still continue their
big share of the revenue.
A lot of private online-only or online-first brands came into existence around this
time. Warby Parker, Bonobos, Dollar Shave Club etc. in the USA, and closer home in
India, Urban Ladder, Bluestone, Zivame, Zovi, Yepme etc. all started selling around
this time creating a distinct brand recall. While marketplaces still control the bulk of
transactions online, some of these vertical brands have established a clear viable
business for themselves. For e.g., Dollar Shave Club’s sale for a billion dollars has
been one of the first success stories for the online-first vertical brand's space. Today
many vertical brands use the power of the digital horizontals to reach out to a wider
customer base.
Google used to control pretty much all of the companies’ marketing budgets till 2012.
Once Facebook started monetising their newsfeed, they also became a big force to
reckon with. While Google has won back much of the share thanks to many
categories including furniture now becoming search focused, a 360-degree strategy
involving social, retargeting, mass media etc. is the preferred strategy now for most
brands. If you see the horizontals such as Flipkart, Amazon or the verticals such as
Urban Ladder, Myntra, etc. – most of them are multiple mediums including localised
ones (such as radio, outdoor) as well as digital and national ones.
Around April 2014 is when Flipkart officially launched their same-day delivery.
Though they were always known for their fast delivery for most products, configuring
an entire supply chain to deliver the same day would have been quite an effort.
Amazon launched Prime delivery in India sometime around 2016, but today, the norm
has become same day or next day delivery without any extra charge. Supply chains
have been configured end-to-end to be able to deliver these promises consistently at
high volumes.
2015 was the year that companies started building dedicated mobile shopping
experiences for customers. While some of them went overboard in giving discounts
specifically to drive mobile installs and stopping desktop sites, there were enough
start-ups who were building integrated kickass experiences. We launched the Urban
Ladder mobile app in 2015 early but had a bunch of other speciality apps such
as Living Spaces, Urban Storage as early as 2014. Today, more than 35 percent of our
revenues come from our catalogue app (and another ~12 percent from mobile web)
without offering any specific incentive for customers, and users are buying large
products such as sofas, dining tables, and beds on our mobile app! This percentage
number is higher for some other companies dealing with smaller ticket size/ smaller
sized products.
Recommended and related products have been showcased on websites forever. These
products are usually based on your browsing behaviour and the products that you
typically add to cart. As all online companies get more user data, we are able to
personalise your experience far beyond just the products you see. We are able to
utilise data in the background and build more intelligence around the kind of products
you like based on other patterns (demographic, geographic, inflow channel, time-
based etc.) and showcase products to even the first-time customers. An increasing
amount of data, raw processing power, infinite storage and ability to test the outcomes
of any permutations thrown to the user has become a self-fulfilling prophecy to get
the system to become more intelligent.
Offline companies opening their website has been a thing forever. But now, we are
seeing online companies go headlong into opening offline retail stores. The difference
however between the two approaches is evident in the usage of data, online
intelligence and ground-up thinking that some of us are able to do to open our retail
stores. For example, our revenue per sq. feet in our physical store that we launched in
July has hit 5x of typical other furniture stores because of our intelligent use of
technology to aid selling and better store staff training with data. Lenskart is seeing
great traction for their offline stores and has surpassed most other offline-first
eyewear retailers. If some of the concepts that Amazon has shown in the USA are to
go by, the future of offline retail is actually going to be defined by online companies.
While some of these are in the nascence, Amazon’s drone video from a couple of
years back seems to have funnelled a lot of promise in getting your next mobile phone
order from the air. Regulatory changes look imminent to clear the air for this next
wave. Alibaba’s smart warehouse system powered by robots has also been in the news
for a while. The overall movement away from humans and into systems and robots is
debated with a lot of passion obviously. Retail and logistics have traditionally been
people-heavy industries and innovations like these on the backend show a lot of
promise and are outstanding for fast customer deliveries.
Today, VR and AR are still seen as intimidating and gimmicky. But a ton of advances
in both technologies in the last 2-3 years, and mainstream companies like Facebook
(with Oculus and a massive reduction in price) and Apple (with AR Kit) are getting
these technologies out to the masses. The day is not far away when the size of a VR
device will be small enough to fit within the contact lens in your eyes (provided
heating issues can be solved) and you will be able to merge the real and virtual
worlds. You will be able to browse infinite digitally created shops worldwide sitting
in your home and be able to buy any product with hand gestures and voice control. It
may sound right out of a Tom Cruise movie today, but rest assured, as the devices
become more mature, and user experiences become well thought-out, these
experiences will become a reality to change the face of retail.
The Indian B2C/C2C e-commerce sector has grown rapidly in the last 5 years to reach
USD11Bn in 2013 (Fig 2). This segment is expected to grow to USD 60Bn by 2017,
making India the fastest growing e-commerce market in the APAC region. The major
factors driving this growth are decreasing the cost of devices (PC & mobile),
increasing internet penetration, more payment options backed and lastly changing
consumer preferences.
10.9 198
8.9
7.5 140
121
5.7
81
4.0 70
Fig 2.2: B2C/C2C E-Commerce Sales in India Fig 2.3: Internet Users in India
(USD Billon) (Million)
India has the third largest internet user base in the world behind China and US and is
expected to overtake the US in the next 2-3 years. While it took a decade for the
number of internet users in India to move from 10 million to 100 million, the
subsequent leap to 200 million happened in a mere three years (Fig 3). This
accelerated pace of growth is expected to continue and to be bolstered by the number
of users accessing the internet from their mobile devices, estimated at 110 million
users as of October 2013 and growing rapidly. This rapid spread of mobile internet,
especially of smartphones could unlock a significant market beyond the Tier 1 cities
for the online retail segment.
5% 2 % Travel
6%
Online
Retailing
16 %
Financial
Services 20
71 %
Classifieds
2
Other Services 2013 2018 F
Fig 2.4 Key Segments 2013 Fig 2.5: Online Retail Market in India (USD Billion)
Currently, travel has more than a 70 percent share of the B2C e-commerce market
(Fig 4), which is likely to come down with online retail gaining prominence (Fig 5).
Industry experts believe that this ‘second-coming’ of the online retail sector in India is
here to stay. This confidence comes from the much better eco-system that prevails in
terms of consumer acceptance and the infrastructure to deliver. And there is the
successful example of the air and train travel segment where the online booking has
permeated across socio-economic strata. Experts also point out that with the huge
mobile subscriber base and fast increasing base of mobile internet users, the Indian
online retail market could potentially take a non-linear growth in the years to come
(Fig 6).
10.2
9.2
8.3
7.3
6.2
5.9
5.3
4.9 4.8
4.3 4.9
3.8 3.8
3.3 3.4 4.2
3.3 3.4
2.9
2.8 2.5 2.2
2.1 1.8
1.6 1.8 1.6
1.3 1.4 2.1
0.9 1.0 0.9
0.8 1.1 1.1 1.7 0.3
0.5 1.0 1.4
0.0 0.0 0.1 0.1 0.1 0.1 0.2
2006 2007 2008 2009 2010 2011 2012 2013
This sentiment is shared by PE/VC community which has backed the India online
retail market, by investing nearly USD 2 Billion in various online businesses by the
first half of 2014. In the recent past, significant additional investments have been
shared publicly, the USD 1 Billion funding raised by Flipkart, Amazon’s planned
USD 2 Billion investment and the proposed USD 650 Million funding to be raised by
Snapdeal.
The table on the right lists out the Top 20 online retailers globally (Fig 7).
Interestingly 14 of them are brick and mortar retailers. And each of them has shared
their intent to invest in the online channel.
Amazon 85 100%
Apple 18 43%
Walmart 9.2 2%
Dell 7 100%
Tesco 5 4%
Sears 3.8 9%
CostCo 2.6 2%
Ultimately, and as demonstrated with the above markets, success in online retail often
requires patience, persistence, and an ability to adapt to local markets. Notably, and
for the interests of this piece, we believe that there are four main success factors for
entering new markets either online or as part of a multichannel strategy. These consist
of:
The convenience of ordering products at the click of a button and having them
delivered to your home is the main benefit of online shopping. Thus, managing the
customer experience from online browsing and product purchase to delivery and
return is critical. In markets where logistics are a challenge, constant communications
with customers about shipping timelines can help manage expectations and build
trust.
Chapter – 3
Difference between Online Retail
and Offline Retail
Online Retail:
Every make and model are at your fingertips without having to drive miles to find it.
Don't see your television at this store, surf to another. The only drawback is you can't
test the product beforehand unless you find it at a retail store near you, but you can
read product reviews, user opinions, and manufacturer specs with minimal exertion.
Most reputable sites make aware the availability of each item.
Offline Retail:
Limited to only products it sells at the local level, but you can test your new television
in-person before buying it. Depending on store size, selection may be limited, but
availability is almost always certain.
ADVANTAGE:
Online retail
Online Retail:
Generally, online sellers feature lower prices because they don't have the overhead of
renting a pad in a strip mall, high electric bills, and a staff of salespeople. There are
even Web sites that offer 'percent off' discounts if you enter a code after meeting a
minimum purchase requirement, which could save even more money. Though, pay
attention whether or not your television is brand new or refurbished.
Offline Retail:
In order to compete with online purchasing, retail outlets are slashing prices all
around. Paired with a coupon or special 'in store' discount, prices might get as low as
some online sellers. In addition, many retail outlets resell returned items for even
lower prices.
ADVANTAGE:
Online retail
Online Retail:
Depending on where you live and what store you buy though, you might not have to
pay a sales tax. Shipping is a different story. Some stores don't charge shipping or you
can get coupons for free shipping while others do charge, which might drive the final
cost of the television up several hundred dollars.
Offline Retail:
You will pay your local sales tax at a retail outlet, and there won't be any shipping
charges. However, most stores will charge a fee to deliver your new television (if you
choose) or offer free delivery. If they charge for delivery, try to get the fee waived.
ADVANTAGE:
Online Retail:
This is a sticky point with online purchasing. While most excel in servicing the
customer, there's also a negative stigma associated with online sellers. Please read
user opinions before buying and make a gut call. At times, consumers are charged
restocking fees, have to pay for shipping if sending the item to be fixed under
warranty, or buy the item with a 'no return' clause in the sale.
Though, with some warranties, the consumer will get a replacement model
temporarily or permanently depending on the issue. Customer service is sometimes
hard to contact, and there's usually no storefront to voice a grievance in person.
Offline Retail:
With a receipt, modern retail outlets are easy to deal with when returning, exchanging,
and using the warranty. Customer service is usually driven to retain your business by
any means necessary, even if it means taking one on the chin every now and then. To
be on the safe side, read their return/exchange policy before buying.
ADVANTAGE:
Offline retail
3.5 Security
Online Retail:
While some people think buying stuff online means your credit information is there
for the grabbing, that just isn't true anymore.
Most online retailers use some sort of 128-bit encryption and are as secure as banking
sites. Sure, there's a risk, but no more than buying in a store. Read user opinions,
check their security license, and you'll be fine.
Offline Retail: What's written for online security goes for retail security. For the most
part, your information will remain private, but there's always the rare case of identity
theft at some level.
ADVANTAGE:
Chapter – 4
Review of Related Literature
Barnes (2013) questions the reasoning why online shopping has become so popular.
Many authors (Chaing and Dholakia, 2003, Monsuwé et al., 2004 and Poulter, 2013)
believe one of the key reasons is convenience. Shopping online offers pronounced
convenience (Chaing and Dholakia, 2003). A key reason some consumers favour
online shopping is also due to price comparisons (Monsuwé et al., 2004; Palmer,
2013). 85% of consumers compare price information online (Chaing & Dholakia,
2003), although it is not evident whether these consumers continue and purchase the
products online or on the high street. Another apparent reason the internet is
preferable is avoiding long queues (Poulter, 2013), yet it could be argued, the time
spent checking out, paying and waiting for deliveries is more time consuming and
more inconvenient than queuing. Moreover, Fitterman (2013) believes, purchasing a
product in-store is instantly gratifying, there is no need to wait. Nevertheless,
consumers can shop online anywhere, anytime including when exercising, cooking or
cleaning (Chaing & Dholakia, 2003), and they get another boost when the parcel
arrives (Eckler, 2013). With busy lifestyle consumers can still get their retail therapy
without leaving their desk, slightly in contrast, it was also found one third of
consumers shop in bed, with 46% of people asked to make purchases between 7 pm
and 1 am (Poulter, 2013), but also consumers are keen to take advantage of the ability
to shop 24 hours, seven days a week.
On the other hand, more than half (55%) of respondents studied by Rackspace (2013)
admitted to receiving online dissatisfaction and annoyance when purchasing online.
44% of those dissatisfied abandoned their shopping, this could be viewed as a positive
statistic for the high street if consumers shop with them instead.
The top annoyances were named as complicated check out procedures (Rackspace,
2013). Check out must be simple, if there are too many forms, consumers tend to
abandon their shopping and go elsewhere (Adeshara, 2013). High shipping costs are
also frustrating if the delivery cost equates to more than the savings they have
received consumers are likely to leave their often-impulse purchases. However,
shipping costs can often be eliminated using voucher code websites (Palmer, 2013).
In traditional shopping, features of the atmosphere are a key factor influencing the
consumer’s perception. These features also affect whether the consumer is finding the
shopping experience pleasurable or not, as stated by Sherman et al. (1997). On the
contrary, the environment in online shopping includes a much narrower range of
experiences and certain technological abilities are needed to function in such a setting.
All the senses cannot be used to perceive online shopping experiences. Therefore,
Lunt (2000) expressed that the key explanation for consumers not shopping online is
because of the limited experience factors involved (Dennis et al., 2007). However,
Childers et al. (2001) claimed that online shopping does have several merits and
interactions which can bring about interesting experiences (Demangeot & Broderick,
2006). Even though online shopping has many benefits, there are still consumers who
have reasons to avoid it. Lee and Turban (2001) pointed out that navigating websites
can prove to be tricky for consumers who are not familiar with shopping this way and
they do not trust the internet as a safe source for transactions (Monsuwé et al., 2004).
Such users frequently complain about factors such as refunds, return policies, billing
problems, exchange policies and faulty products. Dellaert and Kahn (1999) observed
that if consumers face problems while shopping online, they only wait eight seconds
to receive any response from the company’s system before giving up the purchase.
Still, in contrast to the traditional shopping, brick and mortar retail environment,
marketers of online shopping sites generally put forward more detailed product
information. This does give them an edge as these days consumers want to know
everything about a product before spending money on it (Chen & Chang, 2003).
E-consumers are more willing to take risks compared to offline shoppers. Several
authors have talked about the risks faced by online retailers: Rowley (1998)
mentioned the uncertainty surrounding online transactions, Forcht and Wex (1996)
pointed out that organizations have to guard themselves when it comes to data
authenticity and reliability, and Richards (1997) stated that there is an insufficient
legal material for online retailing which could prove risky if something goes wrong
during the online purchase (Whysall, 2000).
The authors have also discussed a way to measure the e-shopper’s trust towards e-
retail businesses by exploring: the security level for credit cards, private details of a
shopper, and the safety and trustworthiness of the website (Merrilees & Fry, 2003).
These risks, especially security-related, do cause online businesses to lose potential
customers. Additionally, in order to perform e-consumer must have stable internet
access and they must be comfortable with using the internet. This may be an issue for
the older generation who are not as confident in their technical abilities (Kim & Park,
2005). However, it should be noted that these possible risks can be avoided or
lessened through acquiring the necessary experiences and obtaining certain skills and
knowledge on computers, the web, and shopping online (Li & Zhang, 2002).
These low price online retail shops are causing a great consumer surplus (Dobbs et al.,
2013). Haubl and Trifts (2000) also mentioned that when shopping online, consumers
can compare prices and look at alternative options. Websites such as flipkart.com aid
in making this comparison with just a few clicks. Furthermore, on online shopping
websites, consumers have access to other customers’ reviews which can guide their
purchasing decision (Chen & Chang, 2003).
Overall, convenience is a major factor which motivates consumers to opt for online
shopping (Ozen & Engizek, 2014). Most of the present literature research regarding
convenience has focused on the brick-and-mortar traditional retail environment. There
has been a comparatively less exploration into the convenience of online shopping.
Online retailing provides benefits in terms of place and time (Gehrt et al., 2012);
shoppers can be saved from spending time going to crowded malls. According to Li
(1999), e-consumers are more acquainted with convenience rather than experience.
For them, convenience is the most significant aspect when making purchases as they
have limited time and are not as bothered by the idea of purchasing goods without
physically touching them (Li & Zhang, 2002).
Chapter – 5
Steps Involved in Starting Online
Retail Business
Starting an online business gives you the benefit of having access to millions of
customers, but you also have a lot more competition. No matter what you're trying to
sell, you can bet that hundreds more online retailers have a similar idea. What
differentiates your product from other similar products? To help your product stand
apart from the rest, you'll need to find a niche.
Let’s say you make jewellery but so do a few million other people. What makes yours
different? If one-of-a-kind jewellery (or another product) is your gig, make sure it's
truly original.
Offer expertise in an area. Even if the product itself isn't very unique, your expertise
might be a strong selling point. If you're selling a line of skincare products, for
example, it helps if you have a degree in a field related to skin health.
Check into the competition. Figure out what isn't already being offered and find a way
to fill the hole with your product.
Your business needs to be registered according to your state's laws. Choose an official
business name and fill out the appropriate paperwork to make your business official.
Before you register your business, it can help to have a business plan laid out.
Consider your production costs, shipping costs, taxes, and web hosting fees.
Know the business regulations in your state and be sure to comply when you get
things up and running.
Like the name of any other business, go for something short and catchy that will be
easy for people to remember. Visit the website of a domain registration company and
test out some of the names you're interested in to determine whether they're available.
Once you land on a good name, go ahead and register it.
There are free hosting services to be found, but if you're serious about running an
online business long term, consider paying for one that offers all the services you
need. You'll be less likely to run into problems when your business starts to take off.
Choose a hosting service that allows for growth.
Some hosting services are highly structured, allowing you to choose from among
different templates to create a website quite easily. Others allow you to do your own
programming, giving you greater flexibility.
Elegant or funky, classical or hipster, your online store should reflect what you’re
selling. No matter what your style is, it's important to give off a professional air. Since
you won't be able to earn people's trust in a person, your website will have to do the
selling for you. Your site should be engaging, and most importantly, easy for
customers to use when they're ready to make a purchase.
Make sure your site design matches your product. For example, if you make
traditionally styled diamond jewellery, having a website that looks like shredded
cardboard with edgy fonts and images taped to the cardboard would tend to drive
away your potential customers.
You don’t have to design the website yourself—there are professional designers
who are more than up to the task, plus e-commerce websites will offer dozens of
appropriate templates for you. If you know in advance what you want, you’ll
make selecting a designer or a template that much easier.
When designing your site, you need to remember to focus on what is important.
Your ultimate goal is to make your site simple and easy to use.
Your customers should have to make no more than 2 clicks in order to land on
the page where they can make a purchase.
The top of every page should have a link to your shopping cart if it’s an e-
commerce store
Buttons should be large and clear to read and input boxes should be large and
easy to enter your information
Less is more. Don’t be wordy when you don’t need to on payment pages
Make sure your logo at the top of the page always links to the homepage
If you have dark backgrounds use light text and vice versa
You'll need this so your customers can view your products, enter their information
and make a secure purchase. The software safely stores customer information. Don't
skimp in this area, since the e-commerce software you choose will make a big
difference in how easy it is for customers to feel secure buying something from your
store.
You can also use an all-inclusive e-commerce web service. Sites such as Shopify offer
competitive packages, with free templates, custom packages, credit card processing,
and more. E-commerce web services make it easy to sell your products on the web,
without a lot of overhead. There are no custom interfaces or templates to work with;
you simply create an online store within the framework of the service.
Focus on your key areas of expertise and display them professionally. Much like you
would do when having potential employers contact references, put your best foot
forward for potential clients. Include descriptions, where appropriate or necessary.
Don't use jargon. If you are offering technical expertise, include descriptions that
appeal to your client base, not your peers. For example, if you are showing that you
can code with PHP and AJAX, don't say "in this case, if the input field is empty, the
function clears the content of the txtHint placeholder and exits the function." The
person who needs you to work on their site will just scratch their head and say "huh?"
Say, instead, "Start entering text into this field, and it will auto-complete."
5.3.2 Be social:
Whatever your business, whatever your venue, keeping your name in the air is key to
internet success. Have a business account on Facebook, Twitter, and LinkedIn. If your
business is graphically oriented, have accounts on Flickr and Tumblr as well.
Whenever there is news of any kind of new contract, a new page, a new entry, a new
photo—cross-post it to all your social media sites. Also, make sure those sites link
back to your main website, and that your website has links to all of them.
There are many companies and webmasters who use affiliate programs to boost their
online sales, and most of these affiliate programs are free to join. When you sign up
for an affiliate program, an affiliate link with a unique affiliate ID will be assigned to
you. The affiliate link is used for marketing the products of your merchant. When a
visitor buys an item through your affiliate link, you earn affiliate commission.
For example, if you are an affiliate marketer for Musician's Friend, an online musical
instrument retailer, you can advertise their products on your site. If a person visits
your site and clicks on the link that takes them to the Musician's Friend website, and
they purchase an instrument within a certain amount of time (24 hours or more,
typically), you get a commission on the sale.
Chapter – 6
Marketing Aspect of Online Retail
How it works
Imagine you sell handbags. It’s coming up to the holiday season, so you write a blog
post titled ‘The perfect outfit for the office Christmas party’.
In the article, you list a dress, jacket, shoes and, crucially, one of your own handbags.
You include good photos of all the products you mention and ensure you link to the
product page where readers can buy your handbag.
So how does this attract traffic? This is your ideal scenario: a fashion-conscious
woman is looking for inspiration on what to wear to her office party. She turns to
Google and searches for ‘Christmas party outfit’ - and up pops your article.
She clicks on the article and likes what she sees, so she clicks through to your
handbag product page and then starts browsing your shop. Bingo!
A content strategy
Having a strategy for your content is essential. It should be something you set aside
time for each week.
The most important aspect of your strategy is understanding your target audience.
What are their interests? How old are they? What content will be useful to them?
Once you know who you’re targeting, the next step is to plan your posts. Coming up
with valuable and relevant content can be hard. Keep a list of potential headlines that
you add to whenever you have an idea.
As well as a list of content ideas, add important dates to your calendar with reminders
to publish relevant articles. So, a month before Valentine’s Day you might post an
article like ’10 fool-proof Valentine’s gifts for the woman in your life’.
You should also think about how the content will be structured. Types of posts that
work well are:
Lists: Quick reads that can be packed with products. e.g. ’10 great handbags to go
with that little black dress’
Informative/ ‘how to’ posts: Articles with tips or advice. e.g. ‘What to wear for that
all-important job interview’
Topical/relevant: Making your post topical is a great way to get people reading it. e.g.
‘The best and worst handbags at the Oscars’
Amusing posts: Difficult to achieve but very likely to be shared on social media if
they hit the mark. e.g. ‘5 hilarious things we’ve woken up within our handbags’
Once you’ve got your strategy sorted and you’re regularly producing content, the next
thing to do is measure how well it’s working.
Each month you should look at what articles generated the most traffic to your site,
and which of those led to the most sales.
Cost
No financial cost here - the main cost to content marketing is that it takes a lot of
time. To build an effective library of content, you'll need to put a lot of effort into
both strategy and production.
Email marketing is the most powerful tool in your marketing arsenal. If you’re not
using it effectively, you’re missing out on sales.
If you have a visitor on your website and they don’t buy from you, the next best thing
is to capture their email address.
One of the best ways to do that is to use a box with a sign-up form, ideally offering
something in exchange for the visitor's email address. e.g. ‘Sign up and get 10% off
your next order’
Another good technique is to incorporate a sign-up field at the end of your blog posts.
The idea is that, if they enjoyed reading one of your posts, they’ll likely enjoy the
other content you might send them.
You should also offer customers the chance to join your mailing list as part of
the checkout process.
Once you’ve built your list, it’s time to start using it.
Just like your content marketing strategy, it’s important to have a plan for email
marketing. In fact, it should simply be an extension of your content strategy.
Create a list of ideas for marketing emails and update it frequently. You should be
aiming for one email a week, so you’ll need plenty of ideas! Here are a few:
MailChimp offers a free service to send 12,000 emails to up to 2,000 subscribers, with
monthly fees of $10-$150 for more than 2,000 subscribers and/or unlimited emails.
If you do it right, social media can have a big impact on your sales figures. The aim of
the game is getting your customers to be your brand advocates - promoting your
company for you.
Where to start
The first thing to do is think about which platforms you’re going to use. Typically, the
visual ones, like Instagram and Pinterest, work best for online shops. But Twitter and
Facebook are also very important. A Shoppable Instagram, as in the Skinny-dip
example above, can be a great way of generating revenue for visual industries, such as
fashion or homeware.
It can sometimes be useful to focus on one platform, particularly if you are limited to
the amount of time you can spend.
Just like your mailing list, your social media strategy will be closely tied to your
content marketing strategy.
Our advice would be to split your posts so that only 20% is promotional. The rest is
interesting content that appeals to your audience. Followers won't appreciate a
constant stream of promotional messages only. They want to be informed and
entertained, rather than just sold to.
As well as posting out content to your followers, it’s important to get involved with
conversations.
A good way to do this is to see what’s trending and comment on it - particularly if it’s
something that your target audience might be interested in. It will sometimes seem
off-topic to talk about current events, but it all helps give your brand personality.
A great way to engage people is to give something away. Typically, in exchange for
them posting, sharing or ‘liking’ something.
This might be simply sending a personal message when they buy something, or an
exclusive discount code, or a competition.
Going back to our handbag company, an idea might be to get people to post photos of
themselves wearing your bags, tagging your company in the post. The great thing
about this is that their network of followers will all see these posts, creating a viral
effect that spreads the message of your brand.
Cost
Whether you do this yourself will depend a little on your budget. If instead, you
decide to outsource your social media marketing to an agency, you'd be expected to
pay £1300-£2600/month for Twitter and £1600-£3200/month for Facebook.
6.4 PR
Getting good PR is all about having a story. Magazines, newspapers and blogs are
always looking for article ideas, so the key is to make your story relevant to their
audience.
The first thing you need to do is make a list of publications that your target market is
likely to read. Find out contact details including a contact name for each one.
Once you have your list, you then need to segment it into different focuses. A national
newspaper will have a very different focus to a blog, so your pitch to them will need
to be different.
Still using the handbag company example, if you were pitching to a blogger that
focused on sustainable fashion, you might centre your story around your locally-
sourced materials and the process for developing the bags.
If you were pitching to a more style-focused blogger, your story might rather revolve
around a unique design element or a tie-in to a new trend.
Journalists are busy people, they receive a constant stream of promotional messages
from brands trying to get featured. Make sure your pitch is clear, concise, and it has
something to stand out from the crowd.
Include a phone number in your email so they can easily call you for more
information.
This is only applicable to certain businesses, but if you can, it’s worth giving your
product away to the journalist you're pitching to.
Firstly, they’re getting a nice freebie, so they’ll immediately be in a good mood. And
secondly, they're able to get a much better sense of the product.
This works particularly well in the fashion industry. Many style bloggers will 'review'
(read: wear and photograph) your product, but they'll expect to keep it as a gift in
return.
Cost
Like content marketing, there's no cost here other than the time it takes you to do
it. For small businesses and start-ups, it's often something you'll do yourself -
particularly as founding your business will likely be a key element of your story.
However, if you're short on time or not versed in writing press releases, it is advisable
to outsource your PR to a specialized agency - you will be charged a minimum of
£500/month upwards.
Paid advertising is not always the first option for new businesses as it requires cash
(rather than good old-fashioned hard work). But, if you have the funds, it can be a
great way to generate sales.
How it works
If someone clicks on your ad, they get taken to your website and you get charged a
fee.
The great thing about PPC is that once it’s all set up correctly, and you’re generating a
return on your investment, you can simply ramp up your ad spend to increase your
revenue.
If you plan on running your own campaigns it would be advisable to spend plenty of
time researching best practice and familiarizing yourself with the keyword bidding
process. It’s very easy to lose money if you don’t know what you’re doing.
The alternative is to hire an agency to run your campaigns for you. They’ll have the
expertise and experience to make it a success.
Cost
Google AdWords lets you choose how much you think your advert is worth, 10p for
example, and you only ever pay that when someone clicks on it. As a guiding figure,
AdWords campaigns normally start at around £400/month if you're looking for
effective results.
Affiliate marketing is when you let other people market your products in return for a
percentage of sales that you generate as a result of their efforts.
How it works
Affiliate marketing relies on being able to track the source of a particular sale. You
typically provide a unique URL that affiliate marketers can use to advertise your
products.
A blogger, for example, would then post this URL on their website with an
accompanying article about your company.
When a customer clicks on that URL, they’ll be taken to your website and, if they
make a purchase, the affiliate tracking software will attribute that sale to the blogger.
Affiliate networks
Some example networks include Rakuten LinkShare, Commission Junction and Share
Sale.
If you want to take this route, you’ll need to invest in affiliate tracking software, such
as Lead Dyno, Wigify or Refersion.
Cost
The affiliate will take a percentage as a commission. This can vary greatly, with some
taking 6% and others up to 50%, largely depending on the type of product you are
marketing. If you use an affiliate network, they will also take a fee in return for you
accessing their contacts.
Chapter – 7
Financial Aspect of Online Retail
Periodic balance sheets and income statements–also known as profit and loss
statements--provide the data source for nearly all financial ratios. By collecting
information on a monthly, quarterly and annual basis, Online Retailers can use the
financial data underlying every ratio to make decisions both long-term and short-
term–known as trend analysis–which helps seasonal businesses, such as one
specializing in winter sports gear, to make better financial decisions for the months
ahead.
Key financial ratios for Online Retailers focus on aspects of income, liquidity and
profitability. From an income standpoint, retail managers turn to the gross margin as
an indication of the sales dollars remaining after subtracting the costs of purchasing
merchandise. It provides managers with an indication of their ability to convert
existing inventory into future cash. To figure gross margin, the gross profit from the
income statement is divided by the business’ net sales, also found on the income
statement; the higher the number, the better.
Understanding cash flow is crucial to retail managers, and the current ratio--which
divides current assets by current liabilities--gives business owners key information
regarding their ability to pay short-term debts. The quick ratio, which adds cash and
accounts receivables from a balance sheet and divides that figure by current liabilities,
provides an even better picture of a business solvency as it uses only the most liquid
of assets of the business. Another key liquidity ratio where higher is better is the
inventory turnover ratio. By taking the cost of goods sold and dividing it by average
inventory, managers get a snapshot of how quickly inventory is sold at current sales
levels, and they can look for trends both good and bad when comparing this ratio over
different time periods. Lastly, one other liquidity data point of note for Online
Retailers is the average collection period which tells managers how quickly they’re
able to collect outstanding debts. To calculate it, managers take their average accounts
receivable times the number of days in the period they’re observing, i.e., over a
month, a quarter, a year, etc., and divide that number by the total amount of net credit
sales over the same time period.
Generating income and having cash on hand isn’t the only objectives for smart
business owners, so they use profitability ratios to track the growth of the business’s
net worth. ROA, or return on assets–calculated by dividing profit before taxes by net
assets--allows retail managers to identify how productively and effectively they’re
using the business’ assets to grow, and it enables them to make necessary decisions
about under-performing assets.
Identifying key financial ratios, however, is just the starting point. Once calculated,
smart retail managers compare these ratios to industry standards as benchmarks to
gauge their own performance over time. Through comparison and trend analysis,
managers can further identify key areas of weaknesses that may need immediate
attention. Most importantly, however, these same comparisons can also help business
owners identify key competitive strengths that may be overlooked.
Chapter – 8
Operation Aspect of Online Retail
Suppliers meant a whole lot when e-commerce was not around. Now – even more so.
When it comes to e-commerce, suppliers can provide you with the right merchandise
but they can also take the stocks burden off your shoulders. Amazon, for example,
relies heavily on its marketplace partners to increase listed products number, without
buying stocks for those products.
A decent store with its own warehouse operations has thousands of products at any
time on its inventory, employs at least a couple of dozens of people to store products,
pick and pack, and prepare for delivery. That’s why so many large companies choose
to outsource their fulfilment operations to “third-party logistics” suppliers such as
Anchor 3PL or the ever-growing Fulfilment by Amazon so they can focus on what
they do best (usually purchase the best assortment of merchandise, service customers
and marketing).
Key Take Away: A much larger post regarding 3PL/YPL (third party logistics) will
soon be available on Netonomy.NET but until then, let’s have a look at things to
consider when developing your own warehouse operations:
technology is the key – all 3PL service providers use technology (warehouse
management systems) to know at all times where the products are, what’s the
most efficient way to pick those products, who should be the person in charge for
each package and others
think about the season – some seasons (such as the Holidays) are more
operationally intensive than others. Be ready to employ temporary workforce to
fulfil your orders
everything needs to be tracked and monitored – security and accountability are the
keys to handling large numbers of orders and workforce
Just as mentioned above your merchandise may be displayed and marketed online but
it has to be packed and reach its destination in the real world. That’s why you need a
good warehouse management and that’s why you need a great shipping service.
Shipping is usually an outsourced service. The best thing to do, unless you’re
swimming in cash and you want to start competing for the likes of FedEx and DHL,
employs one of the shipping providers and negotiate your way to a marketable
shipping cost. Such a cost is likely to be, in the future, one you will be paying yourself
– so pay attention.
Once you’ve contracted these shipping providers integrate their system with yours so
you can streamline packaging and delivery. Once in a while customers do not like
what they’ve bought. You will need to handle the returns and reimburse customers for
their purchase. Here you can team up with the shipping provider but your store has to
handle all the communication.
hire a shipping provider – It’s probably not worth it to have a shipping service of
your own
pay attention to systems integrations when it comes to online store – warehouse –
shipping flow
handle your returns as gracefully as possible – it may mean the difference between
an unsatisfied customer and a lifetime brand ambassador
Before even considering selling – you need to think about how you are going to treat
your customer and keep him coming back. That’s where CRM comes in. While the
term is usually used to describe a type of software, it is actually the term describing
the whole policy on how you are going to handle interactions between you and your
customer.
CRM needs to be “customer-centric”. Big words – but what do they mean? It just
means that everything you do needs to be done “for the customer, by the retailer”.
You need to understand the customer purchase patterns so you can recommend the
most suited products. You need to record purchases, interests, preferred channels and
basically all there is to it when it comes to understanding your customer.
Then act on that – after you’ve analysed data make sure customer care, warehouse
operations, shipping providers and even your purchase operations – all know who the
customer is and what it wants.
CRM is not just software – it’s a company policy on how to treat clients
Profiling is a must – understand as much as possible about your customer so you
can serve better
“Customer-centric” is not a buzz-word – it’s common sense
Here’s one you surely expected, maybe not so down the list: your online store
catalogue. Of course – this one is important. Without one we would be back to mail
orders and inventing the wheel. However, as you’ve probably seen so far – it is just a
small part of the whole e-commerce store business.
When it comes to it some things you really should be taking into account:
make sure you don’t over-design your store – your products are the most
important items. Make them shine.
analyse and predict: predictive analytics is the practice of analysing users
behaviour and predicting what would they rather buy at any given time. Read
more about it here.
search, search and let’s not forget search: most of your customers will be using a
search engine to navigate to your store (1). Make sure your store is optimized.
Once there, when in doubt, they will want to search for products (2) – make sure
your site search works. Finally – when their order was shipped they will want to
search for its location (3). Show them.
One includes the other. But for the sake of the argument let’s just assume that maybe
loyalty programs online are so important that they should be a separate item for
marketing. Because they are.
Loyalty is really hard to acquire these days. Especially when it comes to e-commerce.
Most users will be searching for the lowest price and buy from whomever the seller is.
But you can fight the trend with loyalty programs such as:
rewarding purchases – reward your users with points they can spend on your store.
It’s really effective in keeping your customers tied to your brand, as well as
making them feel great about it
social shopping – make your customer feel like a king when he can give out
discounts and freebies to its peers and friends
reward social media – most online users have some kind of influence in their
micro-community of friends. Encourage them to take part in your story, share
your products and reward them with freebies, discounts and … well …sometimes
“Thank you” is enough
Chapter – 9
The reality of selling online, however, is that the best stores take time, effort, and
plenty of technical preparation to set up. In fact, if you rush too much, you’re likely to
miss one of the six most crucial technical aspects that go into any e-commerce
website. The results could either hurt you immediately or catch up with you in a few
months, right when you can least afford it.
Today, we’re going to cover the six most important technical factors e-commerce
newbies should cover before they add even a single product to their new store. From
site software to security to payment gateways, here they are — plus how you can
decide which provider or software is the best fit for you and your own unique
situation.
What would an online store be without the software to power it? A catalogue, that’s
what.
If you’re brand new to e-commerce, here’s a quick primer on what you’ll be choosing
between. There are two basic types of online stores:
Hosted — essentially store software run on a server provided and maintained by the
same company, with one monthly payment; and
Self-hosted — you pick and pay for the server, and download, install and maintain the
e-commerce software yourself.
There are advantages to each. Hosted sites are often preferred by new store owners
due to ease of setup, but they lack the same kind of control over add-ons, bandwidth,
etc. that self-hosted sites do.
Choosing between hosted/self-hosted e-commerce and picking the platform that’s best
on top of that is a weighty decision, and it takes time. We have some suggestions
about the most important features of a CMS, but don’t be afraid to ask friends or
fellow business owners for their opinions as well.
Of course, any e-commerce site is nothing without a server to power it. And unless
you have a server farm in your basement with daily backups, quality redundancy
control, and 24/7 maintenance, your best route to get the space and support your store
needs is through a quality host.
(If you do have a server farm in your basement, well, kudos. Clearly, you don’t need
our advice for this part.)
There are quite a lot of things that make up a quality host, and finding one — even if
it’s not for yourself — can take a ton of time and energy. Here are a few of the most
important things to look for:
Features — Nearly any host can promise 99% uptime and daily backups. But beyond
that, you probably have a wish list of “must-haves” or “nice-to-haves,” like one-click
software installs, 24/7 tech support, specific hosting environments (Linux/Windows),
and so on.
Reviews — Hosting reviews are fairly easy to find, so if you find a few hosts that
sound promising, have a look at what others say about them. It also doesn’t hurt to ask
people you know for their unbiased opinions or recommendations, either.
Price — You don’t want to get caught in the “race to the bottom” for the cheapest
hosting possible, but you don’t want to spend more than you have to, either. Look for
reasonably priced plans that correspond to features given or monthly plans that scale
up or down without contracts.
Ability to grow — What works for your store now might not work in six months.
Look for a host that gives you room to grow and expand without emptying your
pockets or breaking contracts. You should be able to add more RAM, get more
bandwidth, add storage, etc. without being punished — or your store is disabled.
Going the hosted route? You don’t need to find a server. However, it’s worth looking
into any upgrades that your provider might offer, such as increased bandwidth for
busier stores or larger packages for more products. Remember to take these costs into
consideration before making a final decision on your CMS or plan!
Quite a lot of sensitive information flows into and out of e-commerce sites. Credit
card numbers, billing addresses, and other personal details need to be kept secure —
otherwise, you might gain a bad reputation.
Many e-commerce platforms now come bundled with security essentials, but you’ll
still want to double-check that you have these technical aspects before you sell a
single product:
An SSL certificate, which secures credit card and other sensitive transactions
Secure password requirements and storage, meaning you don’t allow “1234” as a
valid account password, nor do you store it in plain-text
You should also keep an eye out for critical updates to your e-commerce software,
which is usually made available in the event of bugs or newly discovered
vulnerabilities. Patching these quickly can prevent your site — and your customers —
from being exposed to a potential threat.
Accidents happen. Even the best hosts and most well-meaning store owners delete
files they needed or wipe out customer records with accidental button clicks. Ideally,
you should set up routine, automatic backups for your online store before you sell a
single product. This will allow you to swiftly recover from even the largest
catastrophe (no matter whose fault it is). And if the backups are set up from the very
start, you won’t even have to think about it — they’ll always be there, just in case.
“But I’ll be careful,” you might say, or “I don’t want to waste the space.” Consider
this: would you rather spend a few dollars a month to have peace of mind, or possibly
spend a hundred hours setting your store up from scratch again… and losing sales in
the process? It should be an easy decision.
Once your customers place an order with you, how are you going to get your products
to them? And how do you plan on sending them tracking information, or even
printing out the appropriate labels to place on their boxes?
For most store owners, the easiest answer to all of these questions is “with shipping
software.” From simple web interfaces provided by your local carrier to more robust,
multi-carrier software suites, shipping platforms can provide:
Import of tracking information for your orders and automated customer emails
They can also save an immense amount of time since you won’t need to enter tracking
information by hand or generate labels one-by-one via a clunky website.
You’ll probably want to select shipping software after you choose your site software
because compatibility can vary by CMS. However, most store platforms will be able
to interface with your country’s major carriers of choice — like the USPS and UPS in
the United States — so that’s a good starting point, and often the most affordable to
boot.
Finally, with all of these other technical aspects sorted out, your store should be
taking shape. But it won’t be functional until you’re able to accept payments from
customers!
A payment gateway is the piece of software you need to accept credit card payments
from customers online. There are dozens, if not hundreds, of gateways compatible
with each platform out there, and the gateways available also vary by region and
currencies accepted.
Not certain how to choose the right payment gateway for your store? Here’s a guide
to doing just that. What it all boils down to is this:
If you need a merchant account to use the gateway you select, apply for one right
away to reduce the waiting period
Whether you go with integrated or hosted should depend on customer preference and
how much time you have available
Nearly all gateways have fees, but keep in mind that up-front costs could negate
higher monthly ones, long-term
If you’re planning to offer bookings or subscriptions, keep an eye out for gateways
that offer automatic billing — not all support this feature
To recap, before you start selling online, you’ll need to spend some time setting up
these six technical aspects:
By getting these out of the way up front, you’ll be better prepared to create a solid,
sustainable store that runs well and can scale easily. You’ll also be able to withstand
almost anything that is thrown your way, be it loads of traffic, data loss, or even a sly
hacking attempt or two.
Chapter – 10
HR Aspect of Online Retail
Retail is notorious for having a high rate of employee turnover. This means
employees routinely come and go, which poses several challenges. Training and
developing are difficult, time-consuming and constant if you constantly have to
recruit and hire new people. It's also more difficult to build customer loyalty if
customers keep seeing a new face every time they enter your store. You can address
these problems by recruiting the right people and building a rapport with your
employees. When you interview people, make sure you ask specific questions that
relate to the type of work your employees do. Informal social outings and fun games
at work can help build rapport.
10.2 Diversity
10.3 Misconceptions
Online Retailers often experience seasonal demand fluctuations. The holiday buying
season, from "Black Friday" through Christmas, is well-known as the busiest
shopping season of the year. Online Retailers often try to add temporary staff during
these times. They often wind up with fewer skilled and trained workers who might not
have the tools to best serve your customers. These workers can also alienate regular
staff that must pick up the slack. Develop a plan to assimilate temporary workers
during these seasonal periods. A store meeting at the start of the busy season is a good
way to help temporary workers learn the system and get to know the regular staff.
You need employees who radiate and help mobilize your vision for the company.
Every company has its own respective vision of how they want to the company to
grow, and you’ll need a team who understands the vision in order to make it a reality.
E-commerce businesses often have comprehensive processes that require people who
share the same goals and objectives in order to reach the company’s goal. If every
employee’s objective is to help the company grow, then everyone will be willing to
contribute the best of their abilities to achieve the shared vision.
E-commerce businesses often have comprehensive processes that sift out people who
share the same goals and objectives in order to reach the company’s goal. If every
employee’s objective is to help the company grow, then everyone will be willing to
contribute to achieving a shared vision.
Accountable
In addition to understanding the company’s vision and mission, it’s important for their
own personal and professional goals to align with that of the company’s. Good
employees don’t just work to get paid, they take pride in the “ownership” of their
work.
Whether good or bad, your employees must proudly represent your business and not
hesitate to give the best service possible. If they make mistakes, then they should also
be able to own up to it, take accountability and responsibility for their actions.
The best employees are those who think like stakeholders because they are.In a sense,
they are
Delivers quality
A good employee delivers quality work. E-commerce businesses are made in the
details; happy customers are those who feel you’ve gone the extra step.
Two important factors affecting the quality of work our focus and dedication. If your
employee consistently delivers high-quality work, it shows they aren’t easily
distracted, can pay attention to the details, and are dedicated to their work. It’s
important to have an employee who doesn’t get easily distracted with work especially
since e-commerce businesses always require detail-oriented people who can dedicate
their time
Eager to learn
Since the e-commerce landscape is constantly changing, try to hire team members
who can learn and adapt to it. The best employees are detail-oriented, willing to
devote time to learning and mastering efficient processes, and continually
improving/adding to their skills. Your best team members will have the flexibility to
improve with every step and learn quickly from previous mistakes.
Innovative
E-commerce, when it first surfaced, was an innovative idea that changed the
landscape of sales. Online businesses have so much room for creativity and
innovation that your ideal team member will know how to leverage this.
Certain processes and workflow often take an innovative mind to mix and match
methods to come up with the most efficient ways to do things without sacrificing
quality. Look for the employees who can spot opportunities and new ways to do
things better.
Observant
Hire team members who are updated on (or at least willing to learn) the latest tools
and online business trends. They should be quick to spot and utilize the latest tactics
and tools that will help them do their jobs better.
Enthusiastic
Ferocity and the ability to incorporate enthusiasm into their work is another great sign
of an excellent e-commerce employee. You want an employee who is fierce and
pumped to work for the business success, and the results will show from their
performance. Look for someone who is not only enthusiastic about their work but also
able to take actionable insights into sustainable processes for the success of the
business.
Able to Execute
Execution is crucial; even with all the planning in the world, execution is needed to
make things happen. Look for someone who is able to execute ideas with finesse for
your team.
Finding someone who can not only visualize and put together a plan but can also lead
others to smooth execution would make an ideal employee for e-commerce
businesses.
Sometimes, it’s easy to get team members who are overly eager but lack a plan for
execution. These employees need guidance and direction, which could take time. It is
therefore extremely important to have an employee knows their own strengths and
weaknesses and is willing to learn how to work with them to get a job done.
Meticulous
It’s important to have an employee who has a good head on his or her shoulders.
Dealing with a fast-growing online business requires accuracy because if a mistake is
made online, it could reach the ends of the Internet (and your potential clients). Your
employees need to be meticulous about their work, know what they are doing, have
proper training, and be able to execute meticulously yet efficiently.
Capable of scaling
In larger businesses, teams begin to break up into departments so that everyone has a
clear, exclusive, and defined role to take care of. However, for small or growing
businesses, you need team members who know how to scale. This includes being able
to handle growing responsibilities, knowing how to delegate and learn about tasks
outside their department as needed, and juggle between work without losing sight of
the big picture.
Your team members need good time management skills and an efficient work ethic in
order to handle the fast-paced processes in retail business. This is even more true with
online stores because products are dispensed and processed quickly.
Patient
Aside from the ability to handle the pressure, you need an e-commerce employee who
has the ability to take a hit and can manage conflict with high levels of
professionalism, especially when dealing with customer complaints.
Such situations may be tough for some to manage, so it is important for an employee
to be level-headed and have the ability to take on criticisms as a challenge to improve.
It is crucial that your employees know how to take “no” for an answer and be able to
work with irate customers.
Communicative
employees will be able to handle concerns, complaints, and inquiries to turn them into
business opportunities with finesse.
Passionate
Employees tend to do better work for causes that they believe in. You can’t sell wine
if you don’t like it, and similarly, it’s hard to get others excited about a business that
you’re only so-so about.
Chapter – 11
Conclusion
Conclusion
As mention in the project, Indian retail is one of the fastest growing markets in the
world. The sector is experiencing exponential growth, with retail development taking
place not just in major cities and metros, but also in Tier-II and Tier-III cities. The
retail market in India is expected to reach US$ 866 billion by 2015 from the current
US$ 516 billion. The organised retail segment in India is expected to account for 20
percent of the overall retail market by 2020. Net retail sales in India are also quite
significant among emerging and developed nations.
As entering into the online market is a low-risk way of testing a brand’s strength,
obtaining shopper behaviour data to better understand consumer preferences, and
building relationships with customers before setting up stores. It is also a low-cost
way to test the technological, financial and logistical infrastructure of a country
through the reliability of online payments, shipping and delivery. Combined with
social media, this is a low-cost opportunity to begin a dialogue with consumers even
before you set up shop.
As project is based on Business plan for Online retail, project cover all aspect of
starting the online retail. As every aspect is important for starting the online business,
it is very important to understand each aspect in great detail. Starting from financial
planning to HR planning each aspect has their own importance.
Annexure
List of Figure
List of Table
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