Posted in Marketing & Strategy Articles, Total Reads: 3032
, Published on 19 August 2012
Heard words like Add to Cart, Checkout, Tracking? I am sure the answer is a big Yes! Thanks to a world full of Amazon, eBay and our very own Flipkart these words are not strange for the tech savvy generation that inhabits the urban and suburban cities. A website s competence and business it generates is judged by smooth operations and the ability of creating the virtual shipping a mirror of true shopping.
But have we ever thought about the Physical aspect of this Virtual world of shopping, we the customers are reluctant to buy from a website whose deliveries are not in time or checkout procedures are complex or for that matter the page takes too long to load. These reasons apart from the fact of the actual product quality and type being offered affects consumers buy behaviour considerably. These may become the main contributor for a Buy or no Buy decision at the end of the day.
Customers mostly get aware of these background elements only when there are rifts opening up in the Virtual Dream world. For some of the sites whose credibility we vouch for has a team of people and various processes that work overtime for you to see a smooth delivery of products. Drawing an analogy from the movie “Inception”The virtual world on the website is projections of a marketers mind based on his understanding of his Customers.
Aspects of Shopping Online
Now you may want to define what are the elements that a Marketer needs to focus most on to create the Virtual dream. This list is quite generic for you if you have ever been shopping online but still defining this list is essential:-
1) Quality of the product
2) Speed of delivery
3) Prompt Communication and being informed
5) A Wow! (Flipkart Bookmarks, key chains etc.)
For all these parameters and metrics from the mind of a consumer a company needs to build robust, stable background processes these processes is what can be called "The elements of new World supply Chain". The new world Supply chain is neither reactive nor is it proactive. Confused! This system is a mix of reactive and proactive. The question that should now haunt you - Is why best of both the worlds? Let’s answer them one by one.
Push Vs Pull breaking point
Consider a firm which waits for the Confirmed online orders to come in and then start MRP or the final production or Assembly. Which elements is this company compromising with? This kind of an approach adds to the delay between time of order and the final delivery to the end user. At best this Company can reduce some production time but not without having another threat lurching closer i.e Quality issues.
The solution here is to the following to reduce the final Delay:-
1. Design - While designing products make sure that every product is composed of majority of generic parts which can be used across 3-4 product lines. Also design for quick final assembly
2. Production - Clearly as can be seen there are 3 broad categories of components that need to be manufactured by the firm
a) Generic parts - To be manufactured in Bulk by the manufacturer according to the sales forecast of all the products that require that particular Component
b) Specific parts - To be manufactured in smaller batch quantities by the manufacturer according to the sales forecast of the specific product
c) Wow Products - Today as we speak many E-commerce invest in freebees that the end user gets as a gift for shopping with them. The quality and Cost are the two main features that a manufacturer should be interested in. Production can be done In-House or can be out sourced. Production quantity should be based on Overall Sales forecast plus a safety stock.
This part has 3 main Components -
1) Managing Virtual Space - A smooth Check out is this an Assumed feature or a desirable feature? None of the above! This is now part of the Hygiene factors. You cannot afford to have a slow check out process and expect the consumers not to fly. Another important part of this management is to manage the communication to the Customer. This encompassesinteractions at all touch points between the company and the Customer.
2) Managing Final Assembly – We need to focus on designing the final assembly in such a way that the process be simple and quick to perform. Also, by using parts that can be assembled together in a simple way our skill set requirement at this point in the production process will be b very low. This will translate to a final assemble step which will cost us lesser than what we are currently paying for.
3) Managing Delivery
Delivery and communication go hand in hand. But before trying to understand what are the supply chain models being followed by the websites we need to understand that most of these Websites don’t manufacture all the products they put up for Sale on their website. More often than not a manufacturer makes the product and these websites offer a place for them to sell their products online. This is very similar to how a Retail chain like Big Bazaar or Shoppers Stop function.
There are two prominent practices that are being used by these websites to manage their supply Chain these are as follows:-
1) Supply chain management by the Website company
This practice involves two stages of handling material.
Stage 1: Here the website keeps a minimum stock with itself in a company warehouse and place orders with the manufacturer as an when reorder point is reached. This process is represented below :-
Stage 2 : This stage involves shipping of orders to the customers as an when the customer places an order for a particular product.
This system has its own pros and cons. The website company has to additionally invest in a warehouse facility. Also, they stock products which may not even be sold. Thereby, increasing the cost for the company.
2) Distributed Supply chain management by both the company and manufacturer
This method is an integration of both the stages of the previous model. This integration has to be fuelled by strategic tie-ups with Logistic players to maintain cohesion in the system. A website enters a strategic contract with a logistic player for shipping all orders. Then the manufacturer who wishes to put up his products on the website are also (by a clause in the agreement) made to open an account with the same logistic player.
The manufacturer is directly responsible for shipping products to the customer directly. Website saves on cost and other resources for the Supply chain part. Added to this the logistic part which has been outsourced is now being handled by an expert of the area. The website can concentrate on focussing on its core business functions.
As a final remark we can say that the online trade is not just a simple cheese cake walk as it seems but an amalgamation and fine tuning of various business processes to create a holistic package for the customer and in doing so maintaining high levels of efficiency and effectiveness is what a successful Company in the e-space must focus on. Efficiency and effectiveness will help us control two variables that impact the online trade i.e. – Cost and time. So the mantra is “ Kifaaytiaurjaldi- Cost effective and Time saving”. And all this will not pay without communication at all points with the customer. Keep him informed.