MCOM PAR T 1 ROLL NO 58 SEMESTER PAR T 1 CHAPTER 1 INTRODUCTION A virtual organization can be defined as ‘a group of individuals or organizations with specialized core competencies,who work spontaneously together with the help of ICTto develop and deliver a product or service in the market to gain competitive edge’. Virtual org anizatio ns do not rep resent a firm’s attribute but can be considered as a dif fer ent organizational form. Unfor tunat ely , it is quite hard to find a preci se and fixed definition of fundamental notio ns such as virtual organization or virtual company. The term virtual organization ensued from the phrase virtual reality!, "hose purpose is to loo# li#e reality by using electronic sounds and images. The term virtual organization implies the novel and innovative relationships bet"een organization s and individuals. Te chnology and globalisation both support this particular type of or ganization. Virtual can be defined as $not physically existing as such but made by soft"are to appear to do so$,in other "ords unreal but loo#ing real!. This definition precisely outlines the leading principle of this unconventiona l organization, "hich holds the f orm of a real %conventional& corporation from the outside but does not actually exist physically and implicates an entirely digita l proce ss rely ing on inde pend ents "eb ass ociates. Thus, virtu al orga nizat ions are ce ntr ed on technology and position physical presence in the ba c# gr ou nd. Vi rt ual org anizatio ns pos sess limite d phy sical res our ces as val ue is added thr oug h %mo bil e& #no"ledge rather than %i mmovable& equipment. Virtual organizations necessitate associations, federations, relations, agreements and alliance relationships as they essentially are partnership "ebs of disseminated organizational entities or self'governing corporations. 1.2 SEGMENTAT ION OF VIRTUAL COMPANIES Today e'commerce is a by"ord in (ndian society and it has become an integral part of ourdaily life. There are "ebsites providing any number of goods and services. Then there are those, "hich provide a specific product along "ith its allied services. 1
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Strategic Management a case study on virtual organisation
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7/25/2019 Strategic Management a case study on virtual organisation
A virtual organization can be defined as ‘a group of individuals or organizations
with specialized core competencies,who work spontaneously together with the help of ICT
to develop and deliver a product or service in the market to gain competitive edge’ . Virtual
organizations do not represent a firm’s attribute but can be considered as a different
organizational form.
Unfortunately, it is quite hard to find a precise and fixed definition of fundamental notions
such as virtual organization or virtual company. The term virtual organization ensued from
the phrase virtual reality!, "hose purpose is to loo# li#e reality by using electronic sounds
and images. The term virtual organization implies the novel and innovative relationships
bet"een organizations and individuals. Technology and globalisation both support this
particular type of organization.
Virtual can be defined as $not physically existing as such but made by soft"are to appear to
do so$,in other "ords unreal but loo#ing real!. This definition precisely outlines the leading
principle of this unconventional organization, "hich holds the form of a real %conventional&
corporation from the outside but does not actually exist physically and implicates an entirelydigital process relying on independents "eb associates. Thus, virtual organizations are
centred on technology and position physical presence in the bac#ground. Virtual
organizations possess limited physical resources as value is added through %mobile&
#no"ledge rather than %immovable& equipment.
Virtual organizations necessitate associations, federations, relations, agreements and alliance
relationships as they essentially are partnership "ebs of disseminated organizational entities
or self'governing corporations.
1.2 SEGMENTATION OF VIRTUAL COMPANIES
Today e'commerce is a by"ord in (ndian society and it has become an integral part of our
daily life. There are "ebsites providing any number of goods and services. Then there are
those, "hich provide a specific product along "ith its allied services.
1
7/25/2019 Strategic Management a case study on virtual organisation
1. Si"#l! Product E-Co!rc! )ome (ndian portals+"ebsites deal in a specialized field, for
example
Autoo$il!% 6xamples are http++""".indiacar.com+ and http++""".automartindia.com+.
:n these sites "e can buy and sell four'"heelers and t"o'"heelers, ne" as "ell as used
Vehicles, online. )ome of the services they provide are / 2ar research and revie"s / :nlineevaluation / Technical specifications / Vehicle (nsurance / Vehicle ;inance / <ealer =ocator /
5egional Transport :ffice regulations / 6xpert spea# / 7essage board9and more.
Stoc&% '"d %('r!% '"d !-co!rc!
(n (ndia today, "e can even deal in stoc#s and shares through e'commerce. )ome of the sites
are http++""".equitymaster.com* http++""".>paisa.com. )ome of the services offered to
registered members are / :nline buying+dealing of stoc#s and shares* / 7ar#et analysis andresearch / 2ompany information / 2omparison of companies / 5esearch on 6quity and
7utual ;unds / Trac#ing 7ar#et Trends / 0otline for advice on 5is# 7anagement / ?@'0our
(n a consumer'to'consumer %2?2& model, the ecommerce "ebsite serves to facilitate the
transaction bet"een t"o consumers. Auction sites such as e1ay or :=H%specifically "hen
items are sold by individuals, rather than businesses listing products for auction '' a semantic
distinction "hich nonetheless fundamentally changes the relationship bet"een the seller and
buyer& are the classic examples of 2?2 ecommerce sites.
Co$i"i"# Mod!l%
Amazon.com '' arguably the most successful ecommerce business of all time '' uses all four
of these models in a combination "here theyIre independent of one another to varying
degrees. Amazon <irect sells products that they "arehouse and ship %1?2&, Amazon
7ar#etplace allo"s individuals or businesses to sell directly to consumers %2?2, dependingon "ho’s selling&, Amazon’s 7echanical Tur# program can connect consumers directly "ith
freelancers to do "or# %"hich, again, can be 2?1 or 1?1 or 2?2 depending on "ho’s buying
and "ho’s selling&, and Amazon )upply sells 1?1.
1.3 CORPORATE STRATEGIES
:rganization frame strategies in all the functional areas.the functional areas include the
follo"ing
1.HUMAN RESOURCES
The survival and success of a firm depends upon quality of its people.therefore ,a firm must
frame personnel or employees related policies in order to motivate employees "hich in turn
"ould lead to its success.
The various personnel strategies are
• 5ecruitment and selection strategy
• Training strategy
• 8erformance appraisal strategy
• 8romotion strategy
• Transfer strategy
• 2ompensation strategy
•
2.MAR5ETING STRATEGIES
•
7
7/25/2019 Strategic Management a case study on virtual organisation
• 7ar#eting is the important aspect of an organization.the success of the organization
is largely attributed to the performance of the mar#eting.therefore there must be
suitable mar#eting strategies in respect of the follo"ing
•
8roduct strategy• 8ricing strategy
• <istribution strategy
•
8romotion strategy• 7ar#eting research strategy
•
3.FINANCIAL STRATEGIES
•
• ;inancial management deals "ith planning,raising,utilizing and controlling of firms
financial resources to achieve organizational goals
• <epreciation strategy
• <ividend strategy
• 2redit strategy
• 5etained earnings strategy
•
4.OPERATIONAL STRATEGIES
•
•
The production department aims at improving quality,increasing quantity andreducing cost of production.to achieve production obDectives there is a needto frame
production strategies
• 8roduction capacity
• )ize and location of plants
• Technology
• Juality of product
• 5esearch and development
• modernisation
8
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• (ndia is the second largest cellular mar#et in the "orld after 2hina, "ith a massive
subscriber base of -KL.-F million, as of 7arch ?FE. 7aDority of smartphone usersare still on ?4 net"or#. 1udget @4 smartphones coupled "ith affordable plans, can
very "ell drive @4 gro"th in (ndia. The most obvious mobile commerce trend is
further development. Mearly m'commerce sales are forecasted to increase fourfold
billion in the next fe" years. 1usinesses are beginning to realize that m'commerce is
#ey to enhance their brand, boost sales, and #eep up "ith competitors.(ndia’s retail
mar#et is expected to cross .E trillion U)< by ?F?F from the current mar#et size of
>FF billion U)<. 7odern retail "ith a penetration of only >N is expected to gro"
about six times from the current ?L billion U)< to ??F billion U)<, across all
categories and segments.(ndia is set to "itness proliferation of the fourth'generation
"ireless data services, or @4 services shortly "ith slashed data plans. 1eing the
second largest mobile mar#et in the "orld, (ndia needs to ta#e its place in the
forefront of providing innovative services and applications to its citizens. 5ecent
e7ar#eter study, by the year ?FL more than ?>N of all online retail transactions "ill
happen in the mobile paradigm. Ad"ee# explains that statistic "ith information that
-'E@ year olds are very li#ely to use their mobile devices as a shopping tool. Their
process is to visit their favorite retail stores not to shop but to vie" a product and
compare prices, and then to compare prices at various online locations using their
phones. They then buy the product using their mobile device. The future loo#s very
bright for mobile commerce, although businesses are still experimenting "ith ho" to
use the mobile commerce concept to their best advantage
• 1.6 FLIP5ART-THE AMA7ON OF INDIA
• :nline shopping has to do "ith the Gestern nations for quite some time and (ndians
are very restrained to online shopping. The quality of goods, credibility of shopper,
payment options, delivery time etc are the most important things that stand in the
minds of people "anting to do any online shopping. Gith users of internet increasing
multiple folds every year, people "ant to do miracles by sitting before their laptops or
home 82. Though Amazon is one of the earlier players in the industry, it is
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• (n ?FFL, ;lip#art started "ith selling boo#s. The first boo# sold at flip#art.com "as
-John oods! "eaving #icrosoft to Change the orld Today$ (n ?FF, they added to
their catalogue, media %including music, movies and games& and mobile phones and
accessories
• The cash'on'delivery model adopted by ;lip#art has proven to be of great significance
since the credit card and net ban#ing penetration is very lo" in (ndia.
• (nitially word of mouth marketing "as used to popularize their company
• (n ?F, product launches included cameras, computers, pens B office supplies,
computer accessories, home and #itchen appliances, personal care, health care,
gaming consoles, audio players and televisions. ;lip#art is currently the only
authorized online reseller of i8ods in (ndia.
• (n :ctober and Covember ?F, ;lip#art acquired the "ebsites 7imeEKF.com and
2ha#pa#.com =ater, in ;ebruary ?F?, the company revealed its ne" ;lyte <igital
7usic )tore. ;lyte, a legal music do"nload service in the vein of iTunes and
Amazon.com, "ill offer <57'free 78E do"nloads. ;lyte offers bro"se by languageoptions "here users can do"nload international as "ell as regional songs. ;lip#art has
listed the music based on its genre on the ne" music store and has given a lot of
variety. Users can shop for trac#s from various albums starting at K on the store. A
purchased song can only be do"nloaded maximum @ times on an internet enabled
device. ;lyte garners KFFO do"nloads in > months
• (n ?F?, product launches includes health B beauty products, =ife style products
"hich includes "atches, belts, bags B luggage.
• As far as future is concerned, ;lip#art "ill be loo#ing at bigger investments in our
supply chain and technology. (n terms of sales they "ere earlier loo#ing at a figure of
Pbn by ?F>. 1ut this can be achieved in the next one to t"o years. ;lip#art "ill also
be loo#ing at entering ne" categories. Additionally, ;lip#art )elf'<elivery, "hich
currently operates in ?L cities, "ill be further scaled up.
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updates, ne"s, photos and videos. ;lip#art acquiredthe rights to 2ha#pa#Is digital catalogue "hich
includes @F,FFF filmographies, F,FFF movies andclose to >F,FFF ratings. ;lip#art has categorically saidthat it "ill not be involved "ith the original site and"ill not use the brand name.
•
2<
L!t%$u0.co
• =etsbuy.com is (ndiaIs second largest e'retailer in
electronics. ;lip#art has bought the company for an
estimated U)P ?> million.=etsbuy.com had beenclosed do"n and all the traffic of =etsbuy is divertedto ;lip#art.
•
2<
M0"tr'.co
• Acquired 7yntra.com in an estimated ₹ ?F billion
%?,FFF crore, about U)PE million& deal
2<
Adi9uit0 • ;lip#art acquires a 1angalore'based global mobilenet"or# AdiJuity for an undisclosed amount
2<
A,,it!r't! • ;lip#art acquires a mobile mar#eting start'up
Appiterate as to strengthen its mobile platform
•
3. Acc#i*s n! cco*-#is/*ents
• ;lip#art is among the top EF (ndian Geb sites and has been credited "ith being (ndiaIs
largest online boo#seller "ith over million titles on offer. ;lip#art bro#e even in
7arch ?FF and claims to have had at least FFN gro"th every quarter since its
founding. As of today, ;lip#art employs over @>FF people. ;lip#art is the third largest
real'time, through ;aceboo# and T"itter. 0onesty is the best policy for this e'
commerce trailblazer.
• ;lip#art is rapidly expanding its net"or# of "arehouses, distribution centers,
procurement operations and ?@+L customer support teams. The company has its o"n
delivery net"or# in EL cities and is set to expand this in the current financial year.
Gith a team of around @,-FF members, the company operates from offices and
"arehouses in seven (ndian cities.
5. O-e'tion# st'te,(
• ;lip#art began operations on the consignment model ' goods "ere procured from
suppliers on demand, based on the orders received through the "ebsite. 0o"ever,
eventually, the boo#s'to'electronics e'shop adopted the "arehouse model. The
company has its o"n "arehouses, and maintains its o"n inventory. )ales proDection
determines the inventory, and the available inventory accounts for the sales made* itIs
a self'feeding cycle of sorts. Cearly KF to LF per cent of deliveries ta#e place through
their o"n net"or# as this model provides for better control over the entire logistics
management piece.
• :n the operational front, issues faced by the company pertain to delay in deliveries, or
faulty products. As a customer'centric, none of these issues can remain unresolved for
long. They faced significant challenges in reverse logistics. (tIs a big tas# to trac#
unsuccessful orders, "hich are quite costly to manage. 0ence, ;lip#art stresses on
customer service ' it aligns "ith the firmIs philosophy of ma#ing better our service
promiseI. Their bigger obDective is to redefine the "ay (ndia shops.
•
;lip#art "ill continue to expand its categories in order to meet the gro"ing consumer interest in the e'commerce mar#et. They have recently added computer peripherals,
#itchen appliances, televisions and home theatre systems and selected stationery items
to their product range. They "ill continue to add more products + selection to their
existing categories as "ell.
6. 0'n!in,
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• ;lip#art "ent for a maDor brand ma#eover, ma#ing it loo# more Iup mar#etI. There
have been large ne"spaper ads, TV2s and a lot of "eb ads. 1ut unli#e other
ecommerce companies the inorganic mar#eting #ic#ed in only "hen the product "as
strong. ;lip#art already had a proven model execution "ith boo#s and extending to
other verticals did not need infrastructural changes. ;lip#artIs real achievement has
been in solving the pain points in (ndian ecommerce that most "ell funded players are
still complaining about.
• "No Kidding, No Worries"
• Co Oidding, Co Gorries, the recent advertising and branding campaign of ;lip#art is
a unique example of $Trap Them Moung$. An in'depth analysis of recent
advertisement campaign of ;lip#art strongly conveys (ndian youthIs sentiments andtheir desire. The story board of adverts, features #ids in adult situations, li#e a beauty
parlor, a cafe, and an office. The 0inglish language B the happening places is the
heart of Co Oidding, Co Gorries advertisement series. The creative director succeeds
to #eep O::=C6)) of 1rand ;lip#art.
flipkart attacks the online fears
• ;lip#art carefully chooses their "ay for"ard. ;or no", ;lip#art seems to be playing
their cards right. ;lip#art.com has aired three TV2s. 6ach of the ads attac#s a distinct
fear in the consumerIs mind to"ards online shopping, and ho" ;lip#art solves that
problem.
• ;ear of "rong product ' EF day replacement guarantee
•
;ear of giving credit card details online ' 2ash on <elivery feature
• ;ear of not getting the original product ' :riginal products "ith original "arrantee
• The creatives using #ids to brea# through the clutter, and the consumer "orry and the
solution offered by ;lip#art is clearly communicated. The brand I;lip#art.comI at the
end is also very clear to be missed, "hich gives the branded brea#through.
3< d'0 R!,l'c!!"t #u'r'"t!!
7/25/2019 Strategic Management a case study on virtual organisation
• Ge <: C:T sell old boo#s or used boo#s. All the boo#s listed at ;lip#art.com are
ne" boo#s.
• The boo#s listed at ;lip#art.com are C:T available for free do"nload in eboo# or
8<; format.
• The magic of this text is that if searched for $Sboo# name free e1oo#$or $Sboo#
name pdf do"nload$ you "ould al"ays get ;lip#art among the top results. These are
very popular search queries and ;lip#art had nothing to do "ith it but still they cashed
in. This "as also the time "hen ;lip#art had Ad'sense embedded. 8eople "ould come
to the site, see nothing li#e a $8<; do"nload$ button, and then see an ad for 8<;
do"nload and clic#. This meant more revenue for ;lip#art. 4iven that the margin on
boo#s are very small after the discount, ;lip#art "as probably earning more by saying"hat they did not do than by doing "hat they actually "ere suppose to do.
• 2) P(*ents
• Co credit card+net ban#ing, fear to transact online, repeat transaction failures, no
access to "eb ' these are the common problems "ith online payments. Ghat ;lip#art
is doing to overcome theseQ
• ;lip#art had at least @ different 8ayment 4ate"ays integrated. They introduced 2ash'
on'<elivery. Then they are also doing order on phone. 8ayment via <<+2heque is
also accepted.
• ? basic things that they are currently doing that ta#e little technical effort but quite
some product management I"illI
• a. Auto redirection to ban#ing site Unli#e most other ecommerce sites, ;lip#art never
lands you on 22avenue page, you are auto redirected to the ban#s page "here the info
is required to be filled. ;lip#art by'passes unnecessary page by passing the required
parameters directly to 22avenue and not through a user interface.
• b. 1an#s )tatus ;lip#art maintains its o"n real time status if the ban#Is net ban#ing is
"or#ing or not. )o there are no surprises after you have chosen the ban# and then go
to the net ban#ing page.
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• (n the "orld of e2ommerce, the players #eep a standard list of products and then go
out procuring it only "hen there is an order placed. There is no inventory on
their end and there is no live status of inventory from their supplier. 5emember The
Alchemist, $Cever 8romise something that you donIt have$.
• After placing an order, they "ould #eep loo#ing for the product at multiple places.
After a "ee# you might get a call saying that either the product is not available and
"e "ill do a IfavorI by refunding your money or if the product is there, it is not the
color+size that you as#ed for.
•
;lip#art "as no different in ?FF, many customers used to get similar calls after daysof ordering. 1ut for the last year at least ;lip#art maintains its o"n inventory %or at
least it seems so&. They are selling "hat they have. ;rom pure hearsay, ;lip#art is
ta#ing up a big "arehouse in 1angalore and is in tal#s for one in C25 as "ell. :ne of
the fe" companies that is using the funding to build a business and not spend it li#e a
;724 company on ads
• 4) e#i&e'(
• ;lip#art is exploiting the delivery problem as a cashable need gap and building its
o"n delivery bac#end. ;lip#art is seen delivering through their o"n delivery boys in
1angalore and at times "ithin ?hrs from order.
• ;lip#art has started putting fliers in ne"spapers in 1angalore "ith a product listing,
call'to'order phone number and a promise of delivering Itomorro"I. This means more
discoverability, no payment problem and no delivery delay.
• ;lip#art is loo#ing to build its o"n courier company. The recent P?F7n funding from
Tiger 4lobal "as only part of a larger sum they are #no"n to be raising. ;lip#art is
loo#ing to raise PFF7n at a valuation of P?FF7n.
=. M'r&!ti"#
• (t is very difficult to sell a product "hich has been offered intentionally high to amiddle customer in (ndia. 1ut then the customer is getting that offer at the comfort of
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• 8rice is optimized best "hen the overall cost to the company per product is optimized.
)o that means here the contributing factors have to be loo#ed at and the costing there
has to be optimized.
• )o loo#ing at the maDor cost factors that affect the 6'2ommerce that are ta#en care of
;lip#art
• . )upply 2hain %procurement and shipping&
• ;lip #artIs core competency lies in their )upply chain and logistics "hich has been
perfectly monitored and managed by professionals. This involves a deep
understanding of "here the suppliers are and "here the end consumers are so that
"hen a customer orders a product, it can reach him by the shortest route in theshortest time and minimum manpo"er time being spent.
• This also means that customer demand is anticipated and pre'emptive steps are ta#en
so that products are ready to be shipped from the point closest to the consumer before
he even places the order.
• This helps in reducing the overall cost of moving the product to consumerIs place. The
overall cost of ;lip#art has been reduced to great extent, all than#s to 1lue <art, the
logistics partner of ;lip#art. (t is so because the transportation cost has been
reduced and therefore ;lip#art is able to earn a reasonable margin on the sale of
product, belongs to the actual producer
• ?. 7anpo"er and time spent on each order
• Ge must understand that all operations have to be made sustainable and more
importantly scalable for ultimate long term gro"th. )o all process from "hat route a
person ta#es to pic# up material to ho" much time it ta#es to pac# a product have to
be loo#ed at and it is "hen a company "or#s to"ard optimizing all these processes
that a company really starts to ta#e the lead.
1<. Co,!titio"
• 2ompetition is increasing day by day and by the end of ?F>, there "ill be hugenumber of players in 6'commerce in (ndia. Gith the rise in (nternet users, the
7/25/2019 Strategic Management a case study on virtual organisation
numbers of e'commerce companies are also increasing. )o ;lip#art "ill definitely
face tough fights in future and they should be ready for it. )napdeal is currently the
biggest competitor of ;lip#art. :ther close competitor includes 4roupon, best deals
etc.
• 11) Tc%#in, co*-etition
• Great website:
• ;lip#artIs "ebsite is great, easy to use, easy to bro"se through the products, add
products to "ishlist or to a cart, get product revie"s and opinions, pre'order products,
ma#e payments using different methods, in short hassle' free and convenient.
• Great Delivery system
• Ghen user places an order, the postal address has been trac#ed. And the order goes to
nearest "arehouse. And it is being pac#ed, pic#ed up and delivered by local courier
company. The advantage of cash on delivery is no fraudulent activities or anything.
Ghen the item is delivered ma#es sure the item is there and then pays. And also user
can trac# the routine of item through email. And the company informs about the status
of item.
• Great books and hot deals
• ;lip#art offers excellent collection of boo#s, <V<Is, movies, electronics items, home
appliances, and life style and health care products. ;lip#art promo coupons and
discount coupons are also available. :ne another feature of ;lip#art is best deals and
offers. Ghen you place an order greater than EFF (C5, youIll get free shipping.
• Exellent o!!niation s#ste!
• ;lip#art is reno"ned by their relationship "ith the customer. (f you are facing any
difficulties getting the product you can contact them via telephone %li#e everyone
?@+L&, email or through "ebsite.
•
(ndia is a hard place for delivering any item but ;lip#art is managing to deliver theitem in ?'E business days. (f the order you placed is not available donIt "orry. The
7/25/2019 Strategic Management a case study on virtual organisation
can be used as a payment mode for all forthcoming purchases on the portal.
6xpectedly, this amount "ill be deducted from the balance in your accountIs "allet.
;lip#art allo"s you to ma#e a partial payment using your Gallet and pay the
remaining amount using other payment modes li#e credit card, debit card, and net'
ban#ing. ;lip#art does point out that cash'on'delivery payment mode cannot be
combined "ith a Gallet payment. This is ;lip#artIs "ay of bypassing payment
gate"ay problems and also facilitates frequent shoppers
• 12) P'os n! Cons o. Cs/ on e#i&e'( *o!e#
• 6'commerce "or#s on the principle of negative "or#ing capital. (n other "ords the
vendor does not use his capital in procuring the goods rather uses your payments
made in advance to procure the goods and deliver it. =et me ta#e an example, Dustimagine you bought an i8ad on line, and you paid for it using your credit card. Co"
the money from the credit card is debited immediately "hile the delivery of the i8ad
ta#es about a "ee# or > days. Co" most firms can procure faster and deliver but
they ta#e that extra fe" days as they retain the payment and can put it to other use or
simply generate interest for those fe" days. This model "as pioneered by <ell "hen
they sold their laptops extensively through <ell <irect and it had "or#ed very "ell for
them earlier.
• Co" this model is under threat as consumers in (ndia "or# on the cash on delivery
model. Co" in the global scenario 2ash on delivery accounts for almost >N of
transactions according to a Cielson report. 1ut in (ndia it is almost -FN.
• Apart from loc#ing up "or#ing capital, cash on delivery also adds to the complexity
of the supply chain. 8lus there is an added threat as collection is done by the delivery
agents and often there is an element of hazard "hile using external collection agents.
*espite these challenges +Cash on *elivery+ has led to the oom in the e-
commerce in India and does not look like the model is going away soon$ o what
can e-retailers do to sustain themselves in this environment.
• . 0ave cash on delivery %2:<& only for select categories. :ften using 2:< for all
categories may not ma#e logistical sense. )ome of the categories li#e boo#s etc may
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%and since corporations buy coupons in bul#, a part of "or#ing capital management
can also be ta#en off in the process&.
• Touc( ,oi"t% 6commerce is shifting from the bro"ser to applications that sit on
devices. ;lip#art can regain its first mover advantage by introducing i:) and Android
apps that ma#e shopping much easier than on native bro"sers.
• 5ing fencing customers and pampering those "ho return for more is crucial in the
build'out phase. ;or years, ;lip#art has focused on internal effectiveness and not so
much on the customer and it is about time to change that. There is also an important
mindset change that needs to happen at this phase ' increasing value for not only
buyers but also sellers "ho "ould benefit the most in having access to the ;lip#art
platform. The outcome of such thin#ing "ill play an important part in the late'secondand third stage of this transformation
• Pu## A( no',nic ,'ot/ n! $ui#!in, t/e ecos(ste*
• 6xploit adDacencies 0aving built a solid foundation "here the customer has been
placed at the focus of future planning %in addition to internal effectiveness, "hich
;lip#art has al"ays excelled in&, opportunities in adDacencies need to exploited.
2ategory expansion, "hich ;lip#art has been at, is one "ay to provide buyers "ith all
their needs on a single platform and leverage scale. There are adDacent categories
ho"ever that have already matured into full'fledged businesses "ith similar ' not
exact ' contours. Ta#e travel for example. The basic fabric of the business is similar
' acquire inventories from suppliers, build a technology platform for delivery, squeeze
out a bit of margin and deliver the product by careful customer segmentation minus
the added headache of physical deliveries. )tanding "here "e are, categories such as
these are too difficult to build grounds up for ;lip#art. 0ence an acquisition is the best
route to increase momentum on the ecommerce fly"heel ;lip#art has already built
and set in motion.
• 1uild the ecosystem Ghen a business model has successful equivalents in developed
mar#ets, the role of a local strategist becomes easy ' import ideas. 0o" successful
"ill a ;lip#art handheld device or ;lip#art Geb )ervices becomeQ Ghat is interesting
ho"ever is building a supply ecosystem "here original creators are encouraged to participate on the platform "ithout losing value to intermediaries. Authors are a very
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• =everaging scale becomes easier for a platform company. 2ontinuing "ith the earlier
example, investments in building incremental ecosystems can present
disproportionate re"ards to business outcomes for ;lip#art. The same %or very closely
related& content for education could be as applicable in )outhern Africa as is it is
(ndia, opening up immediately vast business potential. The true unloc#ing of scale can
easily happen in a "orld "here ;lip#art is a platform rather than an ecommerce
service.
A large'scale program that ta#es a product or service company and transforms it into a
platform play is not simple. ;or some it could be a lifeIs dream. 1ut it certainly is a
dream "orth living. ;or a company li#e ;lip#art that has already transformed the
ecommerce mar#et in (ndia, this could be the second calling for a chance of inclusion
in historyIs "all of fame.
• Conc#usion
• ;lip#art is a story that comes from smart "or# and an Iit is possibleI attitude. There is
a need to for a couple of more stories li#e these and there "ould be no cribbing about
(ndian 6'2ommerce not "or#ing.
• Their aim is to ma#e ;lip#art synonymous "ith the shopping experience in (ndia.
• 6'commerce in (ndia has a huge potential going for"ard and this is Dust the start. They
have a lot of "or# ahead of us if they are to fully realize this potential ' they feel it
"ill be some time before they actually loo# overseas
• The U)8 of ;lip#art is to provide the consumers "ith the best online shopping
experience. The company aims to provide its customers "ith good value and "ants to be regarded as one of the most friendly service providers in the domain.
• (t is also loo#ing to become the biggest e'commerce organization of (ndia "hile
retaining its focus on serving the customers to the best of their abilities. (t "ill also
loo# to innovate in this domain and try to expand its offerings so that customers have
more to choose from.
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earlier literature and provides ne" insight for conducting ne" enquiry. (n this chapter,
an attempt has been made to revie" the literature relating to the gro"th of retail cafe
business in (ndia and ho" our sample subDect virtual organization has fared since
inception.
•
2.2 Lit!r'tur! R!)i!/!d
• ( have revie"ed the academic literature to gain insight into 6'2ommerce in (ndia!.
)o, various articles, Dournals, boo#s, "ebsites etc. have been used to study the evolution,
conceptual frame"or#, definitions, #ey players, present trends %relating to internet
penetration, gro"th prospects, modes of payments preferred etc.&, future prospects and
barriers of 6'commerce. All the data included is secondary base and proper references have
been given "herever necessary.
• 6'2ommerce+e'business research articles done in (ndian context R')!" !t 'l.
compared (ndia and 2hina’s approaches in adoption of e'business. 1ased on the
literature survey and secondary data, the study analysed various factors influencing
the gro"th of e'businesses in the t"o countries. The factors examined include
government policy and focus, existing technology infrastructure regulatory
environment, experience and understanding of business operations, and culture,
among others. The study concludes that 2hina appears to be ahead of (ndia in theinfrastructure, but (ndia is ahead in e'readiness. ;urther, it states that both countries
are poised for rapidly increasing e'business, ho"ever, problems of poverty and
inequality bet"een urban and rural connectivity must be resolved to really ta#e
advantage of e'business in both the countries.
• M'l(otr' '"d Si"#( studied the determinants of (nternet ban#ing adoption by ban#s
in (ndia. 8anel data of -- ban#s in (ndia covering the financial years L - to
?FF@?FF> "as collected through 27(6 %2entre for 7onitoring (ndian 6conomy&database. =ogistic regression analysis "as used, the dependent variable is categorical
"ith a value of if a ban# adopted (nternet ban#ing during the study period and F
other"ise. (ndependent variables included in the study are firm size, firm age, ban#
deposits ratio, average "ages, expenses %fixed assets B premises&, 5:A %ratio of
average net profits to average assets&, mar#et share, average number of branches,
percentage of ban#s adopted (nternet ban#ing. The results of the study prove that
1an# type %8rivate&, firm size, ban# deposits ratio, firm age, mar#et share, averagenumber of branches, percentage of ban#s adopted (nternet ban#ing and expenses, are
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firms from - to E "as used to test the model. 8robit and 8oisson estimation
"as used to analyze the data and model.
• Apart from the studies mentioned above, there are quite handful of research
reports and survey based studies done by (nternet and 7obile Association of (ndia,
(751 (nternational, <ata monitor, and (nternet and :nline Association "hich
presents "ith quantitative figures, the status of e'commerce existing in the country.
•
2.3 CONCLUSION
)everal important phenomena are associated "ith e'commerce. 6'2ommerce has
unleashed yet another revolution, "hich is changing the "ay businesses buy and sell products
and services. Ce" methodologies have evolved. The role of geographic distances in forming
business relationships is reduced. 6'2ommerce is the future of shopping. Gith the
deployment of E4 and @4 "ireless communication technologies, the internet economy "illcontinue to gro" robustly. (n the next E to > years, (ndia "ill have EFF to @FF million internet
users "hich "ill equal, if not surpass, many of the developed countries. (nternet economy
"ill then become more meaningful in (ndia. Gith the rapid expansion of internet, 6'
commerce is set to play a very important role in the ?st century, the ne" opportunities that
"ill be thro"n open, "ill be accessible to both large corporations and small companies. The
role of government is to provide a legal frame"or# for 6'2ommerce so that "hile domestic
and international trade are allo"ed to expand their horizons, basic rights such as privacy,intellectual property, prevention of fraud, consumer protection etc. are all ta#en care of.•
•
•
•
•
•
•
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• D't' coll!ctio" is the process of gathering and measuring information.data is broadly
classified as primary data and secondary data.meaning
• 3.3.1M!'"i"# '"d %i#"i+ic'"c! o+ ,ri'r0 d't' Pri'r0 d't' consists of acollection of original + primary data directly collected by the researcher himself +
herself, from the source. (t can be accomplished through various methods, including
questionnaires and telephone intervie"s in mar#et research, or experiments and direct
observations. 8rimary research + data are used in academic research, mar#et research
and competitive intelligence. There are advantages and disadvantages to primary data.
• ADVANTAGES OF PRIMAR8 DATA
• 5esearcher can focus on both qualitative and quantitative issues.
• Addresses specific research issues as the researcher controls the search design to fit
their needs
• 4reater control over the relevance, focus, quality and collection method of data
• DISADVANTAGES OF PRIMAR8 DATA
• 8rimary data may be very expensive and time'consuming in preparing and carrying
out the research.
• =o" response rate has to be expected.
•
• 3.3.2. MEANING AND SIGNIFICANCE OF SECONDAR8 DATA
• S!co"d'r0 d't' involves the summary, collation and+or synthesis of existing research
rather than primary research. )ometimes secondary research is required in the
preliminary stages of research to determine "hat is #no"n already and "hat ne" data
are required, or to inform research design. At other times, it may be the only research
could face issues around brand ris#, insider threats and "ebsite uptime. (ssues around
employee'vendor nexus, bribery and corruption ma#e companies vulnerable to fines.
2yber security also raises some concerns around "ebsite exploitation by external
entities.
• / Co,li'"c! +r'!/or& e2ommerce companies have to comply "ith several la"s,
many of "hich are still evolving. 8otential issues around cyber la" compliance,
inefficient anti'corruption frame"or#, legal exposure in agreements or arrangements,indirect and direct tax compliance frame"or# and ;67A contraventions and
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regularisation could pose problems. Also, uncertainty around VAT implications in
different states due to peculiar business models could cause issues.
• ANAL8SIS
•
An analysis of the demographic profile of internet users further testifies thate2ommerce "ill rise rapidly in (ndia in coming years. Around L>N of (ndian internet users
are in the age group of > to E@ years. This category shops more than the remaining
population. 8eer pressure, rising aspirations "ith career gro"th, fashion and trends encourage
this segment to shop more than any other category and (ndia, therefore, clearly enDoys a
demographic dividend that favours the gro"th of e2ommerce. (n coming years, as internet
presence increases in rural areas, rural (ndia "ill yield more e2ommerce business.
• The last year has seen several developments that have given a fillip to the e2ommerce
industry Mo$il! to $! t(! o%t i"+lu!"ti'l '%,!ct o+ !Co!rc!
• Gith mobile apps being developed by most e2ommerce "ebsites, smartphones are
increasingly replacing 82s for online shopping. (n ?FE, only FN of the mobile users used
smartphones, and only >N of the e2ommerce transactions "ere made through a mobile
device. This figure has more than doubled, and more than EN of all e2ommerce transactions
today happen via mobileE . According to some industry players, over >FN of the orders are
being placed through mobile apps, "hich is not only leading to substantial customer
acquisition but also building customer loyalty for various brands. 0o"ever, most mobile
transactions so far are for entertainment, such as boo#ing movie tic#ets and music
do"nloads. This trend "ill change soon "ith more and more merchandise being ordered
online. Mor! $u%i"!%% coi"# +ro %'ll!r to/"%
• e2ommerce is increasingly attracting customers from Tier ? and E cities, "here
people have limited access to brands but have high aspirations. According to e2ommerce
companies, these cities have seen a EFN to >FN rise in transactions. E"('"c!d %(o,,i"# !B,!ri!"c!
• 1esides general online shopping, customers are also shopping online for "eddings
and festivals, than#s to "ider range of products being offered and aggressive advertisements.
The free and quic# shipment and "ider choice of products, along "ith the ease of shoppingonline as compared to in'store shopping, is also helping e2ommerce gather momentum.@
;urther, e2ommerce companies are doing rapid business due to sales. Ce" concepts such
sales on "ee#ends, holidays and festivals are attracting a lot of ne" customers and building
customer loyalty among existing customers. Television and social media, particularly
;aceboo#, are playing a proactive role in promoting eTailing through aggressive
advertisements. This has helped several e2ommerce companies build substantial brand
image. EBclu%i)! ,'rt"!r%(i,% /it( l!'di"# $r'"d%
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• :ver the year or so, there has been a trend of exclusive tie'ups bet"een eTailers and
established boutiques, designers, and high'end lifestyle and fashion brands. ;or instance, in
?F@, 3abong added international fashion brands such as <orothy 8er#ins, 5iver (sland, 1lue
saint and 7iss )elfridge, along "ith local fashion brands through 3abong 1outiques.
)imilarly, 7yntra benefited from exclusive tie'ups "ith brands such as 0arvard =ifestyle,
<esigual and G5:4C from Virat Oohli. EB,'"di"# t(! ,roduct $'%&!t
There is a recent trend of relatively ne"er products such as grocery, hygiene, and
healthcare products being purchased online. )imilarly, lingerie and (ndian De"ellery has also
been in great demand among customers outside (ndia. 6xport comprises >N of cross'border
e2ommerce, "ith the U), UO, Australia, 2anada and 4ermany being the maDor mar#ets.>•
6.2 SUGGESTIONS OF STUD8
(n ?F>, e2ommerce players see mobile commerce as the most preferred route "ith
mobile "allet as the preferred "ay of payment. Gith @4 services expected to be
launched in ?F>, internet penetration is li#ely to ta#e a significant leap, "hich is
li#ely to give another boost to mobile commerce. 2hanges in lifestyle and shopping
choices "ill see buyers preferring online and mobile channel over physical channel to
save time and see# "ider range and possibly comparative pricing. ;or mobile "allets,improvements on the payments front "ith multiple payment instruments and increase
in payment gate"ays aided by enhanced security "ith multiple authentication layers
"ill help the consumers "ith a seamless mobile experience. Ciche categories are also
expected to gather momentum including cars and real estate. 8remium and
international brands are li#ely to Doin eTail, purchases from Tier ? and E cities "ill
continue to rise and differentiated products such as exclusive brands by designers "ill
gro". 5iding high on the gro"th prospects e2ommerce companies "ill loo# at more
"ays to raise funds such as (8:s. )ome consolidation "ill also happen "ith the
leaders focusing on high gro"th and smaller players finding their o"n niche.
•
• Top F things the e2ommerce companies need to do to accelerate gro"th
1.cu%to!r !B,!ri!"c!
• As the customers progress from research to purchase to fulfilment stages, their
expectations change fast. e2ommerce companies need to understand these change drivers and
adapt their proposition accordingly. 6asy transitions bet"een ordering on tablets, mobile
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phones or 82s "ill have to be facilitated. 1esides, convenient multichannel returns and
delivery options need to be developed along "ith the provisions of touch and feel the product
before buying. They should also ensure sufficient after sales service and support. :nline
product revie"s and ratings, videos, more advanced sizing and fitting tools should be
provided.
2. T!c("olo#ic'l 'd)'"c!!"t%
• e2ommerce companies constantly have to upgrade their offerings "ith changing
technology. ;or instance, shopping through mobiles have truly arrived, they need to devise
easy to use mobile apps for their "ebsites. They need to ensure that their "ebsites have the
required speed to do fast business, especially during sale, deals and discounts. )olutions
enabling seamless integration of bac#'end and front'end infrastructure, customer experience
enhancement initiatives, integrated inventory management and analytics "ould be crucial for
the e2ommerce firms.•
3. Co")!r#!"c! o+ o"li"! '"d o++ li"! c('""!l%
• As the customers progress from research to purchase to fulfilment stages, their
expectations change fast. e2ommerce companies need to understand these change drivers and
adapt their proposition accordingly. 6asy transitions bet"een ordering on tablets, mobile
phones or 82s "ill have to be facilitated. 1esides, convenient multichannel returns and
delivery options need to be developed along "ith the provisions of touch and feel the product
before buying. They should also ensure sufficient after sales service and support. :nline product revie"s and ratings, videos, more advanced sizing and fitting tools should be
provided.•
4. D!li)!r0 !B,!ri!"c!
• Gith lac# of integrated end to end logistics platform, the e2ommerce industry is
facing issues related to procurement operations and transportation. :nline purchases from
Tier'? and Tier'E cities are expected to significantly increase, than#s to the emergence of lo"
cost smartphones, ho"ever, poor lastmile connectivity could act as a deterrent. Oeepingcontrol on logistics and on ground fleet management, especially courier companies, is
essential for gro"th.•
6. P'0!"t% '"d tr'"%'ctio"%
• (ndia continues to be a cash'based society due to limited ban#ing and credit card
penetration. This, combined "ith a lac# of consumer trust in online merchants, has forced
companies to offer 2o< services, "hich imposes significant financial cost for firms in the
form of labour, cash handling and higher returns of purchased items. <ata protection and the
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integrity of the system that handles the data and transactions are serious concerns. 2ompanies
should ta#e necessary action for management even if this imposes a cost on them.•
;. T'B '"d r!#ul'tor0 !")iro"!"t
• =a"s regulating e2ommerce in (ndia are still evolving and lac# clarity. ;avourable
regulatory environment "ould be #ey to"ards unleashing the potential of e2ommerce andhelp in efficiency in operations, creation of Dobs, gro"th of the industry, and investments in
bac#'end infrastructure. ;urthermore, the interpretation of intricate tax norms and complex
inter'state taxation rules ma#e e2ommerce operations difficult to manage and to stay
compliant to the la"s. Gith the "ide variety of audience the e2ommerce companies cater to,
compliance becomes a serious concern. 2ompanies "ill need to have strong anti'corruption
programs for sourcing and vendor management, as "ell as robust compliance frame"or#s. (t
is important for the e2ommerce companies to #eep a chec# at every stage and adhere to the
relevant la"s, so as to avoid fines.•
. O,!r'tio"'l +r'!/or&
• 1usiness models have been evolving rapidly in the e2ommerce sector largely due to
heightened competition and the inability of players to sustain high costs. 2ompanies in
e2ommerce "ill need to adapt and innovate constantly to sustain their businesses.
;urthermore, several of these companies entered into the e2ommerce industry as startups and
have gro"n to a huge size aided by the continuous gro"th in the mar#et but lac# "ell definedcapabilities and organisational structure. )ystem building, financial and talent management
become #ey.•
=. Cu%to!r 'cui%itio"
• The customer acquisition costs in (ndian e2ommerce have been climbing rapidly due
to intense competition bet"een multiple "ell'funded players. :nly ?N of "ebsite visits
currently result into transaction. Thus, there is a gap bet"een potential and actual buyers.
2oupled "ith high transaction costs, this area could pose serious problems. (n the U), L>N of consumers have stated that they "ill usually s"itch bet"een brands, and for the rest of the
"orld, this rate is KFN, according to 6commerce ;oundation.L This suggests companies
should constantly "or# on their brand positioning•
. Di#it'l i"+r'%tructur!
• <igital disruption has driven change in the e2ommerce industry "ith shoppers
embracing multiple touch points in their purchase Dourneys. 2ompanies should spend enough
resources on technology development as also advertising and branding, especially because
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the younger population is demanding. (n the Dourney to"ard digital business transformation,
embedding )7A2 technologies in the business becomes crucial.•
1<. Addr!%%'$l! 'r&!t%
To gro" their businesses, the (ndian e2ommerce sector needs to closely "atch the
gro"th of their mar#ets in the Tier ? and E cities. They need to improve their logistics andsupply chain management in these cities, do an effective demand management to #eep an eye
on "hat products are being sought in these cities. Gith e2ommerce largely being a borderless
activity companies need to #eep in mind that customers al"ays have the option to buy across
the border if they cannot fulfil customers’ expectations.•
•
6.3CONCLUSION TO STUD8
• (ndian e'commerce mar#et is distinct that it has a large illiterate population, ris#'
averse consumer behaviour and difficulty in tracing postal addresses that challenges delivery
system, especially in semi'urban and rural areas. Additionally, consumers here are found to
be "ary of the quality and after'sale. 1ut, this trend is fast transforming "ith increasing
penetration of mobile and internet in semi'urban and rural areas. (n order to realize the true
potential of the 6'commerce all the sta#eholders including 1an#s, Aggregators and online
merchants need to contribute in building a conducive environment. All e'commerce
companies, be it small or large understand the importance of going mobile and started
offering mobile commerce solutions to their customers. 7'commerce to contribute up to LFN
of online shopping in (ndia experts ILFN of e'commerce sales to soon come via smartphonesI
' The Times of (ndia. The intrusion of information communication technology in our lives has
changed our life completely. The "hole "orld is coming closer. The mobile commerce is the
future of globalization. The (ssues in mobile commerce are numerous. :nly a fe" are
discussed here. The complication arises due to mobile commerce need ne"er cyber la"s.
2orporate good governance is evolutionary in nature. 0ence, 7obile commerce is Dust
to"ards the stage of corporate good governance. The paradigm shift from management to
governance is ta#en ahead by the 7obile commerce.
2roadand and digital services will no longer e a lu3ury item - a scarce
commodity - to e rationed amongst the privileged few,+ %ores magazine
)everal important phenomena are associated "ith e'commerce. 6'2ommerce has
unleashed yet another revolution, "hich is changing the "ay businesses buy and sell products
and services. Ce" methodologies have evolved. The role of geographic distances in forming
business relationships is reduced. 6'2ommerce is the future of shopping. Gith the
deployment of E4 and @4 "ireless communication technologies, the internet economy "ill
7/25/2019 Strategic Management a case study on virtual organisation
5esearch.• K. <elotte’s Technology and telecom predictions ?F@,
http++brandalyzer."ordpress.com •
L. <ic#inger, A., )charl, A. and 7urphy, 3. %?FF>&. <iffusion and success factors of mobile mar#eting. 6lectronic 2ommerce 5esearch and Applications, @ %?&, >LE.
#s'online++?FLL.html• http++mediapanther.co.in+mar#eting+the'flip#art'success'story• http++thenext"eb.com+in+?F?+F-+E+digital'music'ta#es'indias'flip#art'flyte'soars' p