Archive for February 10th, 2007

Digital Lifestyle store India – Fight between Videocon Next and Tata Croma

With Videocon joining the retail bandwagon its interesting to see they have decided to come in the high end electronic segment which surely aligns with their group strategy. Though different from Others like bharati airtel, ITC,reliance which are trying to ride high on Agri Business. Tata on other hand have also ventured in digital lifestyle store format. Interesting to know TATA does not have their own manufacturing line in this space to fill the shelve but will be dependent on other providers.

If we look at the segment these 2 players which to build up. It has got a good margin call and people are not comfortable even abroad with idea to pickup television from the woolsworth or coles next door this means Vishal Megamart and other big retail players would not pose a really big threat to the format. The problem this section will face is from existing single brand revolving flagship stores. Example Sony World, LG,HCL digital lifestyle store etc. Though for videocon investing in brand “NEXT” will pay off as end of the day its in line with retail strategy being followed by other consumer electronics providers.

Though for TATA its a different ball game altogether. They have to work two ways. First create efficent supply chain and invest in shelf space. They will be competing with players at two different spectrum first with supply chain organizations like redington whose pie they will be eating into.Though they have tied up with Woolsworth for this end of spectrum. It will help in reducing the overall margin hence offering as player on price cant be expected. Secondly offcourse the small time next door retailers who have been converting from just another consumer electronic retailer to a branded life style digital store with all branding sponsored by big brands like samsung,sony etc.

E-Commerce India – 10 Questions to ask your E-commerce vendor

So you have decided to take the e-commerce plunge and have decided to go with an small IT Companies which claims to have done shopping cart websites and can do the job in less than INR 1,00,000. WAIT!!!!! before you take the plunge its important to understand difference between an experience provider and another run of mill IT outfit run by students who have just graduated. I decided to create a small questionaire which can help you in evaluating best suitable vendor for your organization in layman words

Q1) What site architecture will be implemented ?

Answer you are looking for is any specific implementation model followed by the vendor. Like Interface components ,ability to plug and play features with ease in terms of long term maintainance. Think of the e-commerce site as an operating system. More the usage of computer higher will be load. So if you dont have good processor(architecture) for your site you are bound to face trouble.

Q2) How many number of  transactions  can site support ?

You are trying to dig vendor more for answers on ability to handle customers per minute/per hour. Imagine you decided to spend 10 lakhs per month on advertising budget which helps you draw 10 lakh customers. If your site only has potential to handle 25% of the load whats the point spending so much money in bringing in customer.Use terminalogies like Co-current transactions, capbility of architecture implemented, is the site database dependent for transaction or application is live in itself to manage transactions before putting load on database.

Q3) Experience with E-Payments System?

This is very important for an e-commerce vendor. If the e-commerce vendor cannot advice on the best suitable e-payment system for your platform and does not have integration experience, This should be enough hint for you to start looking for another vendor. As by integration it doesnt mean just integrating code. But advicing you on Average ticket size based on previous e-payments system. Possible number of chargebacks expected what kind of percentage should be negotiated with banks. Should mobile payments be encouraged. etc etc

Q4) Managing supply chain is it just simple as shipping to customer ?

Supply chain begins with Inventory management. Using web as a channel of sales is ability to reduce inventory and manage stock just to predicted requirement. What strategy does the vendor help you in devising to push sales of items available largely in stock and charge premium for items in demand but low in stock.  Does the e-commerce vendor allow you to manage stock in batches

Q5) Help Desk assistance ?

What kind of support services are provided by vendor. Is someone always looking after your IT infrastructure to see business runs smooth. Is their a self service portal provided by vendor to manage your requests. What kind of Quality SLA’s is vendor ready to include to help you give maximum benefit.

Q6) What kind of IT infrastructure vendor expect you  to setup to manage operations?

Q7) Whats ongoing maintainance cost ?

Q8) What kind of research and development does vendor carry out in field of e-retailing ?

You are trying to understand ability of vendor to keep innovating to help you keep you as leader in your segment. Look at  e-commerce and e-retailing research which can benefit your business in long term.

Q9) What kind of customers have they managed?

Please not this is an very important question as its non technical in nature. Most of the e-commerce consultants are techies instead of business consultants in india. So the outlook of their company is similar, request information on what kind of customers do they have and what kind of implementation they carried out. request information in terms of revenue and customer base achieved from the site. Try to mould more questions from the questions related to your site like number of transactions the system can manage, have they done advertising campaign or how many new features have they added in last 12 months etc.

Q10)  What percentage of their customers have been successful with ventures?

Ans concentrate on the customers ones being unsucessful. The reason you are trying to find out of vendor was cause of project failure.

Once you are sucessfully able to get answers to the above 10 questions asked you will realize the true potential of your e-commerce vendor. This all has been based on my experience setting up Cyberica E-Retailing Solutions practice.

We meet so many customers and their outlook on selection of vendor is more on technology showcase instead of business problem. Hence we came up with a questionaire which help customer evaluate vendors on basis of technical understanding as well as business operational knowledge. As its important for customers to understand when they dont have technical knowledge to manage the channel then why evaluate a vendor only on technical capabilities. Vendors ability to talk to customer in business language is very important.

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February 2007
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