Wednesday, April 6, 2016

Growth Agenda for Ecommerce Companies: Insights from a top MBA College in Greater Noida

A top MBA College in Greater Noida, Ishan Institute of Management & Technology has seen the ecommerce industry jet setting from the stage of infancy to take off in the recent years. This is reflected in the numbers that the top MBA College in Greater Noida has to show in terms of campus placements, summer internships, workshops and seminars. To penetrate through this hullabaloo around the new found money milking proposition the academicians of the faculty of business administration that offers MBA courses have engaged in intellectual surgery. In this piece we focus on building an agenda for growth of ecommerce companies. Looking into the new financial year we take a look at the challenges that ecommerce companies in India are likely to face and the best possible solutions to those challenges.

Pilot Study before Entering a New Ecommerce Business
Before entering a new ecommerce business it is highly advisable to conduct a pilot project study with an eye on the following particulars. The pilot project study should focus on the factors of market size, ecommerce readiness, scope of growth, CRG issues and the format of competition. These factors have been listed here based on the findings of academicians of the top MBA College in Greater Noida in their research papers. The academicians of the graduate business school have observed that market size in ecommerce is critical to entering a new venture. The total market valuation, average gross merchandise value and average gross sales achieved by existing businesses are some important metrics. Ecommerce readiness index as such is a highly technical concept depending on many factors such as modes of payment along with their individual transaction costs, risk factors associated with payment modes, technological drivers of business, backend investments required in fixed asset creation, rent or lease for inventory management and streamlining the supply chain. The scope of growth shall necessarily vary from city to city and hence must be studied while focusing on local parameters like demographic profile of internet users, type of value components that customers of the area prefer, customer valued experience, internet penetration, internet surfing and downloading speeds in the local area, etc. CRG issues in the context of ecommerce include taxation policies, caps on foreign investments in online retail, caps on sourcing from vendors, digital ombudsmen, solutions providers, etc. Competition has got to be studies for both the offline and online segments. Competitors may be classified as click and mortar, brick and mortar and online.

Adapt the Technological Drivers of Business Continuously
The ecommerce vertical is a highly technology driven field and thus business enterprises and executives need to study the technological drivers on a day to day basis, watch for new trends that might be shaping and most importantly question the user friendliness of the technology being put to use upfront.  The choice of technology should be assessed against the parameters of time, scale and space. While metropolitan cities in India offer scope for the use of mobile apps development and mobile app based sales, it needs to be seen if the surfing and download speeds in the remote areas of India support the same. Web based sales and business development may offer better routes for interface with the customers in these areas. Again, website development needs to cater to responsive design to offer customers the delight of mobile shopping experience.

Valued Customer Experience around Delivery, Payments and Transactions
More than the product or the service it is the perception of the product or service that the customer develops at different stages of the purchase cycle that matters. Steve Jobs getting the LISA to say “hello” not because it must but because it can is just a very abridged version of the statement. To this extent it has been felt by researching academicians at Ishan Institute, one of the top PGDM colleges in Delhi NCR that the convergence of online and offline routes of business is critical to the success of ecommerce ventures. As the customer moves from research, purchase and fulfillment stages it is important that the business enterprises adapt its value proposition in accordance with the expectations of the customers. Multiple technological routes like tablets, PCs, smart phones, mobile apps need to be offered to facilitate easy transition from one stage to another. Again it must be remarked that while small cities in India are the next frontier of growth in ecommerce and thus exude confidence, there are challenges in the form of operations and delivery in the absence of an integrated end to end logistics infrastructure on the ground. Again the most desired form of online purchase for Indians is cash on delivery (CoD). The CoD mode of transaction increases transaction costs by adding labour costs of SDPs, travel costs, risks of cancellation of orders and reverse logistics, financial costs and shoe leather costs of cash handling.

Costs of Customer Acquisition
The percentage of online purchases resulting out of website visits in the context of an emerging economy like India is a meagre 2%. While the data is discouraging from the perspective of online sales and business development, it must be said that the data also reveals an important insight. The remaining 98% of the website traffic necessarily use the web interface for executing an online research and understanding the brand positioning of the company. They are also likely to switch from one brand to another brand very easily with almost zero lock-in costs and switching costs. Thus ecommerce companies need to reinvent their brand proposition and the value offering of their products and services constantly.

At Ishan Institute of Management & Technology, one of the top MBA and PGDM colleges in Delhi NCR we are in the process of conducting a massive research onslaught dedicated specifically to ecommerce to enable and empower aspiring managers and alumni of MBA courses tap into opportunities in ecommerce.