Though extrinsically different, fundamentally brick & mortar retail and online retail have many things in common. Starting from distribution concepts such as supply chain and network distribution to inventory management and efficient warehousing capabilities; both channels of retail delivery feature these important value chain components. In India, unorganized retail scores over organized retail in terms of volume and value of purchase. On the other hand, the adoption of ecommerce in India is darn slow because of many tangible and intangible reasons. Proponents of online retail in India, including me, feel that standardization of brick and mortar industry would abet the growth of online retail in India.
With the standardization and consolidation of retail industry, the supply chain infrastructure would be streamlined. Barring a few big etailers, most of the other online retailers use drop shipping as one of the most common fulfillment strategies. As a result late delivery, out of stock situations, sour online customer experiences are largely prevalent. I strongly feel that once standardization of retail industry takes place, we would witness three significant changes – more effective ways of managing inventory, efficient techniques of replenishing inventory and use of optimized network distribution to reduce logistics costs. These in turn would alleviate the uncertainties related to online retail.
E-tailing in India can be a success if the eTailers change their business models and understand the “Determinants of Shopper Behavior in E-tailing”- E-tailers should create economic value for the Indian customers rather than a curiosity value. Since shopping is still a ‘touch-feel-try experience’, standardization across manufacturers and fulfillment partners would make customers confident about purchasing products online. The consumer purchasing the product has a fair idea about the offering - she can actually visualize that her blackberry is more or less as the same size as her iPod or credit card. In the United States, one prefers to purchase electronic items from the “World Wide Web” because customers know exactly (quality, size, volume) what would be delivered at their doorsteps.
Standardization of Retail in India would entail predictability of fulfillment as far as online retail is concerned. Shrinking gross margin and EBIT have made the national retailers realize the importance of technology automation across the value chain. All the players in the entire value chain - in the process of cutting costs – have adopted sophisticated technology integration in order to effectively manage the flow of merchandise and goods. This technology sophistication would in turn help the online retailers; as most of the fulfillment partners, vendors and suppliers are common for both delivery channels – online and offline.
More often than not we have seen ineffective inventory management, because of over-forecasting, leads to excess inventory conditions. In order to make way for fresh season merchandise, retailers need additional delivery and sales channel to free up the excess inventory. In his blog, Darpan Munjal aptly pointed out that “Web is a great channel for the clearance strategy, and retailers will be able to offer deep discounts online to clear up the inventory before they get ready for the next buying season”. As standardization of Retail happens in India, this would become a regular feature with the online channel becoming an important delivery channel for all brick and mortar retailers.
With the standardization and consolidation of retail industry, the supply chain infrastructure would be streamlined. Barring a few big etailers, most of the other online retailers use drop shipping as one of the most common fulfillment strategies. As a result late delivery, out of stock situations, sour online customer experiences are largely prevalent. I strongly feel that once standardization of retail industry takes place, we would witness three significant changes – more effective ways of managing inventory, efficient techniques of replenishing inventory and use of optimized network distribution to reduce logistics costs. These in turn would alleviate the uncertainties related to online retail.
E-tailing in India can be a success if the eTailers change their business models and understand the “Determinants of Shopper Behavior in E-tailing”- E-tailers should create economic value for the Indian customers rather than a curiosity value. Since shopping is still a ‘touch-feel-try experience’, standardization across manufacturers and fulfillment partners would make customers confident about purchasing products online. The consumer purchasing the product has a fair idea about the offering - she can actually visualize that her blackberry is more or less as the same size as her iPod or credit card. In the United States, one prefers to purchase electronic items from the “World Wide Web” because customers know exactly (quality, size, volume) what would be delivered at their doorsteps.
Standardization of Retail in India would entail predictability of fulfillment as far as online retail is concerned. Shrinking gross margin and EBIT have made the national retailers realize the importance of technology automation across the value chain. All the players in the entire value chain - in the process of cutting costs – have adopted sophisticated technology integration in order to effectively manage the flow of merchandise and goods. This technology sophistication would in turn help the online retailers; as most of the fulfillment partners, vendors and suppliers are common for both delivery channels – online and offline.
More often than not we have seen ineffective inventory management, because of over-forecasting, leads to excess inventory conditions. In order to make way for fresh season merchandise, retailers need additional delivery and sales channel to free up the excess inventory. In his blog, Darpan Munjal aptly pointed out that “Web is a great channel for the clearance strategy, and retailers will be able to offer deep discounts online to clear up the inventory before they get ready for the next buying season”. As standardization of Retail happens in India, this would become a regular feature with the online channel becoming an important delivery channel for all brick and mortar retailers.
