A Study of Operating Practices and Supply Chains in the e-Commerce Online Retail Businesses in India

Abstract

Beginning with the Fabmart.com founded by K Vaitheeswaran in 1999 the Indian online stores industry has taken baby steps to enter the country’s business map. The Five layer Business Model, as has been proposed by the authors after their study of the industry, has been adopted by all the players , to a smaller or larger extent. The USP of the online industry is the low cost mantra facilitated by prepaid sales, online ordering and delivery at customer doorstep. The authors have proposed KPI’s for all the layers of the business model. We have studied the Indian e-commerce industry structure and practices and found that apart from the lack of investment capital (Indian banks do not, as a rule , lend to newly forming online companies, the industry has to rely mainly on venture capitalists), the supply chain management, the reverse logistics, the infra issues relating to prepaid sales vis-à-vis COD (Cash-On-Delivery) are all to be matured for the sustainability of online enterprises. We have studied two examples, one of a fashion online shop which has some unique features and another of an online venture selling a bouquet of products. Both these companies are at the two extremes of the Indian online industry spectrum – the latter is the largest in terms of size and oldest in terms of its antiquity (Flipkart was started in 2007 ) , and the former is a recently started niche retailer. While some of their problems are common, there are differences which can make them take different ways in the future to pursue their businesses. The authors have tried to study and bring out the salient features and have proposed some thoughts on the way forward for the e-commerce industry.

Keywords: E-Commerce, Investment, Business Model

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