Ptak Prize India Qualifier 2014 - Analysis of E-Commerce Supply Chain Challenges and Logistics Bottlenecks. Industry analysis using Porter's 5 forces model, strategic road map for E-commerce firms in India and the future of omni-channel retail. Case Questions: The logistics issues were there for decades and it impacts the same way all the sectors which heavily rely on distribution (Example: FMCG). So keeping these logistics issues as constraints to live with, (a) Analyze and present what Specifics to Ecommerce Industry makes Logistics as a 'Critical Bottleneck' (b) Analyze and present the key things that make 'Last Mile Network Planning and Scheduling' a nightmare for the planners. 2. Using Porter's 5 Forces, analyze the current E-Tailing (Retail E-Commerce) Industry and tell us, Will you start your Own E-Commerce business in 2015? Support either of your answers with facts and your inferences. 3. Review the below statements carefully: i. "Equity Funds are not free money - Investors will push you hard for profitability soon; as you are aware, none of the Indian E-Com players are profitable". ii. "E-Commerce customers are well tamed with multiple value propositions (Easy Returns, Discounts, Cash on delivery (COD), free replacement etc.) from E-Commerce companies. You restrict any one of it, it will lead to dissatisfaction" Now assuming you are the 'Head-Strategy' for an E-Commerce organization- set the strategy for 2015 to 2019. 4. Article clearly says "OMNI Channel (Click and Brick) is the future". Now, traditional offline giants like TATA, Reliance etc., will setup their own online vertical and E-Commerce big players will also come up with physical stores. Analyze both these scenarios in detail and present who is going to be the winner - Is it Offline player who adopted the Online as an extended channel or the Online player who adopted the Offline as an extended channel?

2. E-Commerce & Logistics
Submission By:
Indian Institute of Management, Shillong
Romulans
Chaitanya Beera
Nishesh Bhasin
Rakind Gupta
Shreyas Pai

3. Executive Summary
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
1 2 3 4 5 6,7,8,9,10 11,12
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1. Amazon begins
offering US
Amazon Prime
(two-day delivery
2. Amazon
starts Fresh
pilot in Seattle
3. Launch of
same-day
service Shutl
in the UK
4. Amazon
introduces
branded
parcel boxes
5. Amazon
launches
AmazonSupply
6. Amazon rolls out
Fresh
7. Google pilots
Shopping Express
8. Alibaba launches
China Smart
Logistics Network
(CSN)
9. eBay acquires
Shutl
10. Amazon begins
Sunday delivery in
the US
11. Amazon begins
Sunday delivery in
UK
12. Alibaba signs
logistics/delivery
cooperative deal
with China Post
Rapidly Evolving E-Logistics Scenario – No longer a support function
Other Characteristics
Last Mile Delivery
Home
Delivery
Parcel
Lockers
Post Office
Re-routing
Drop at
neighbour
Cross
Border
Offline vs. Online
Amazon recently opened a
brick & mortar store in USA
Most top retailers have e-commerce
presence
Omni-Channel Retail
e-Commerce Strategy
Streamline logistics and
end-to-end visibility
Interactive consumer
feedback system
Recyclable packaging to
reduce costs in returns
GST ready logistics
vendors and supply chain
Streamline COD – courier
to deposit in bank account
Multi-channel visibility -
apps, social media

4. Characteristics of e-Commerce that put spotlight on Logistics
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The Business Model Logistics is the only physical link between the e-retailer and the consumer
Consumer
Virtual Connection
Physical Connection
44%
44% of shoppers abandoned
carts due to unsatisfactory
estimated delivery times – A
study conducted by UPS and
ComScore in 2014
• Logistics is the critical link between consumer and an
e-retailer.
• It has the power of either delighting the consumer or
forcing him to change the consumer altogether

5. Logistics – The Critical Bottleneck in e-Commerce
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Lack of logistics infrastructure and
the systems, processes and
technology required to grow the
burgeoning e-retail business
Cash on delivery (COD) mode of
payment is regarded as a
drawback
High rate of return is another big
problem in this regard
High competition leading to price
war is also a hurdle.
Rather than the traditional end-to-end
distribution model, a new
ecommerce-led “line-haul +
regional distribution centre + last
mile delivery” model is booming
As e-commerce continues to grow,
most shippers, particularly multi-channel
shippers, are still only just
beginning to work out what this
will entail for their distribution
network infrastructures

6. Logistics – The Critical Bottleneck in e-Commerce
E-commerce logistics models
have led to a wave of new
demand for four distinct
types of logistics
Mega e-fulfilment centres
where the merchandise is
stocked and picked at item
level
Parcel hubs/sortation centres
which sort orders by zip or
post code
Parcel delivery centres which
handle the ‘last mile’ delivery
to the customer
Seamlessly integrated
technology where shopping
carts connect via API, web
xml or some other
connection to a
transportation management
system
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Challenges related to delivery timelines, cash management and returns management
The central area, relying on rivers, lakes and railways, does not have many advantages for export-oriented
economic conditions, and has a low level of technology, equipment and logistics standardization, affecting the
logistics efficiency

7. Last Mile Delivery
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Significance Last mile delivery accounts fro 30% of all e-logistics cost – The biggest chunk of cost
The Problem A constant tussle between service levels and uncertainty
Service Levels Profitability
Factors affecting last mile
delivery
Quick Delivery Time
Visibility such as Tracking
Free Delivery
Customisations such as re-routing
Free Returns
Expansion in Tier II cities
Unavailability of the recipient
Merchandising till the last stage
Last Mile Delivery is a nightmare for planners due to the fact that it is very difficult to strike a perfect balance
between the service levels and the profitability of the entire supply chain

8. E-Commerce – Porter’s 5 Forces Analysis
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Bargaining
Power of
Suppliers
Industry
Rivalry
Threat of
Substitutes
Bargaining
Power of
Buyers
Threat of
New Entrants
High:
- Brick & Mortar moving to Click
& Mortar
- No requirement of a
- Less complex/absent legal
framework
- Higher outreach
Moderate:
- Brick & Mortar don’t have the
same outreach
- Higher cost of substitutes
- Touch-and-feel vs. Free Return
Policy
- Convenience – at the store
vs.at the door
High:
- Demand driven model
- Giving best deals to garner
higher customer turnover
- Multiple options to choose from
Low:
- Serves as a platform for
suppliers
- Helps the supplier reach
more customers, thus
lowers bargaining power
High:
- Intense competition
- Discount offers
- Speed and convenience
of delivery, try-n-buy,
return policy

9. Will We Start Our Own E-Commerce Business?
A space that is fast becoming cluttered – existence of ventures that address the masses as well as those
that look at the niches
Capital Intensive – No investment in showrooms, but high warehousing, transportation, and logistics
cost
Low Profits – Very small margins, high competition, high expense
IT Competence – E-Commerce is more than just a website
Vendor Selection and Management – sourcing material in time, from the correct vendor is a hassle
Dependence on others to deliver on your promise
9
NO!

10. Our E-Commerce Strategy
• Customer Feedback is crucial – walk the extra mile
• Tightening logistics and enhancing terms with logistical partners, while developing our own
independent capabilities
• Improving quality control measures in sourcing and packaging, to deliver on customer
expectation, while developing reverse-logistics
• Direct deposition of COD collections into bank account by courier service, thus reducing the
cash collection cycle, and adhering better to the Government and VAT guidelines
• Planning cheaper transportation means keeping in mind the much-awaited application of GST
in India
• Streamlined and consistent multi-channel visibility – presence on multiple channels,
communicating the same message – social media, apps, duty free areas, multiple countries
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11. Online Players Going Offline vs Offline Players Going Online
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Why?
Online Players Going Offline Offline Players Going Online
• The key reasons for online players to
open physical stores are multisensory
consumer experiences, better logistics
and consumer service offerings and
strong, lasting brand relationships
• Even if consumers prefer buying online,
nothing beats the experience of feeling a
product, holding it and seeing it
• These stores also serve as logistics
centres for home delivery – Overall
reducing cost in the supply chain
• Prominent examples – Amazon in NYC,
Birchbox, Frank & Oak
• The key reasons for a physical store to
open e-commerce websites are –
Changing consumer behaviour,
opportunity to engage with larger
segment of the target market
• Showrooming – The phenomenon which
describes the tendency of a consumer to
browse for products in physical stores
but buy online due to the price
differential. Physical stores do not want
to loose out on the business
Who will win
in the long
run?
In the long run both the physical and online retailers will have Omni channel strategy. We
believe that online retailers will have an edge over Brick-and-Mortar retailers, because of –
high consumer penetration, attractive marketing strategies, and brand agnostic consumers

13. Hope You Found This Interesting
Thank You For Your Attention
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