Operations in E-commerce Environment

E-commerce is one of the fastest growing markets globally and nationally. Indian e-commerce market was approximately worth $2.5 billion back in 2009 and it went up to $14 billion in 2014. Business Travel (airline tickets, railway tickets, hotel bookings) is a major part in Indian e-commerce market, holding 75% of the market whereas online retailing (e-tailing) contributes only 12.5%. In Indian Retail Market, online contribution is only 0.47% whereas the global Industry average is 4%, which shows that there is huge potential in this market. Online shoppers in India are growing at a rate of 30% every year as compared to the global growth rate which is 8-10%.

With such a high growth rate and the kind of massive potential there is, a number of new e-commerce stores are entering into the market and expanding quite rapidly. With increasing competition most of the e-commerce stores are using discounted prices and attractive coupons as a tool to attract customers which thereby creates a price war and hence shrinks the margins for business. In a situation of reduced margins where the objective is to provide high level of Customer satisfaction through improved services and to run a sustainable business, proper Operations Management plays a vital role in the success of the business.

Different tasks for Operations Management in e-commerce are

• Product / Service Quality
• Forecasting demand
• Inventory Management
• Scheduling Management
• Purchasing Management
• Supply-Chain Management
• Human Resource Management
• Reengineering and Consulting

With increasing competition, businesses now are looking to provide high level of customer service as a way to retain customers and propel growth. In order to achieve this, businesses are developing their own logistic services for the delivery of goods which makes Supply chain Management a much more integral to their business process. Flipkart, Yebhi and many other businesses uses their own courier services to deliver goods.

E-commerce businesses are handled in different kind of models like Business to customer (B2C), Customer to customer (C2C) and many more. In B2C model, inventory is managed by the company and products are delivered directly from Company’s warehouse to the end customer, this type of model ensures product quality and quick delivery thus resulting in good customer service but on the downside the business takes a risk in Inventory Management and forecasting demand. Flipkart before 2012 used to operate in B2C model, but now it is operating in different mixed business models. Operations in B2C models are more complex thus resulting in low profits but in this model business looks at futuristic growth by achieving high levels of Customer service.

In Customer to Customer model e.g. eBay, business provides a  platform for buyers and seller to meet and make transactions. Anyone can list their products on this kind e-commerce store and can sell their products. Business doesn’t maintain any inventory; it is maintained by the sellers who ship the product directly to the end customers. Here shipment, delivery time and product quality are  at stake but still customer service can be managed with strong rules to sellers. eBay uses ‘Buyer Protection’ where in buyer satisfaction is taken as high priority to make payment to seller for the good supplied by him, thus ensuring buyer satisfaction. 

REFERENCES:

1. http://www.hindustantimes.com/
2. http://www.retailopia.com/2012/11/indian-E-commerce-current-trends.html

This article is written by Pramod Kumar M. Pramod is a PGDM student of 2013-15 batch of IIM Raipur. He worked at Tech Mahindra for 31 months as Associate Software Engineer before joining IIM Raipur. He can be reached at pgp13100.pramod@iimraipur.ac.in