E-Tailing

2012 is Interesting
Now is a very interesting and challenging time to compete in ecommerce. In an economy,
Where consumers are in the drivers seat Seamless, vibrant shopping experiences across channels are a must-have.

Retailers are revamping their approach for managing and expanding their customer experience
Adopting new technologies and trends, while enhancing older investments Evaluating the cross-channel efforts (such as online, in-store, mobile and social initiatives)

1 Consumer
Constantly connectedwith their iPhone at the airport to their desktop in the office
Trips to the mall are becoming less efficient than surfing the web.

Customers are seeking a new type of value.

They are more discriminating about when, and how much, they buy; reacting more to coupons and promotions, particularly free shipping; and seeking out comparable pricing on services.

Consumers are more tech-savvy, seek more value and seek it through more channels than ever before.

More Tech Savvy

Treating shopping like a game they want to win
Interest in engaging with different technologies sees greater adoption of tools among consumers Chat becoming a preferred way to communicate with retailers

More Value
Consumer expectations increase with cross-platform access as shoppers expect the ability to interact with a brand wherever and whenever they want
At the same time, it is important for companies to present a consistent brand experience across channels, while optimizing each channels unique capabilities Product differentiation is critical where retailers must have unique, new, exclusive and/or discounted product Service can be a necessary differentiator

What is the Customer doing on his Smartphone?

The Foundation
Competing in an omni-channel environment often requires investment in organizational and technological infrastructure
Scaling the Technology Content Management Integration Issues

Branding
Look at Amazon

Product Assortment
There are multiple ways that assortments can be extended.
Introduce new product lines built off current success Based on profitability, evaluating performance at the item level.

Merchandising
SEM
Exemplary Customer Service Analytics evaluation of what works Site enhancement that improves customer navigation Making it easier to find Pricing or Promotional strategy

Personalization
Every person is an individual, and as such we try to understand that customer, including use of their spend pattern and social graph to incorporate that experience into the site
For example, we might look at someone who liked us on Facebook and provide a much different perspective Ultimately we take advantage of trigger-based communication (abandoned cart; automated recommendations) to drive conversion, which is a very targeted approach to selling

Others
Social
Mobile Analytics and Testing

What should be the KPIs

In India

http://www.technopak.com/about%20te chnopak/Retail%20Ecommerce%20The%20Channel%20Fo rward.pdf

Four Models that work in India

Standard - This is the basic model wherein products are listed on the web portal, and customers browse and buy the products e.g. www.flipkart.com Deal based - These sites focus on providing lucrative deals across product and service categories e.g. www.snapdeal.com Club based These sites position themselves as private shopping clubs and are open to members only Eg. www.fashionandyou.com Marketplaces - These sites essentially bring together buyers and sellers and serve as a platform for their interaction e.g. www.ebay.in

Where is the Money?

While more than $350 million have been invested in Indian ecommerce over the past three years, a majority of the capital has gone into only one kind of e-commerce business model, i.e., inventory-led e-commerce models
In retail industry
low gross margins for categories such as mobile or electronics; moderate gross margins for categories such as home appliances and health & beauty high gross margins for clothing, shoes, accessories, watches, jewellery, etc. In all, retail is a 30 per cent gross margin business

Where is the Money..

A retailer has to recover money for
Marketing IT Operations (warehousing, sourcing, retail ops, etc.) Lease/rental and G&A.

If a retailer is highly efficient, in net-net he can achieve 7 per cent operating margin. For a 7 per cent operating margin, a retailer has to show that his inventory turnover is 10x or 12x and has no unsold inventory. The operating margins will be in negative territory if the retailer has more than 6 per cent unsold inventory.

Where is the Money..

Retail
Earns 30 per cent in gross margin Spends
12 per cent on marketing, 6 per cent on lease/rental, 1 per cent on technology, 3 per cent on operations

1 per cent on G&A

to make 7 per cent operating margin. And if there is a high level of unsold inventory, the 7 per cent operating margin can be operating loss (assuming a minimum of 7 per cent unsold inventory)

Is this Sustainable?
Clever Working Capital Management
SOR Model Back-to-Back

12-15 per cent unsold inventory On an average spending 25% of gross revenues on marketing Own branded delivery Free shipping is taking a toll of around 6% of gross revenues

Is this Sustainable?

Which way to go?

Tier II and Tier III Cities
Multiple Payment options Integration with Offline shops Easy Returns Retain Customers