Online Retail Partner Ecosystem

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The differentiator in an e-tailing business is often superior customer service. Many online retailers are relying less on captive inventory and services and depending more on
an ecosystem of suppliers and specialized partners. It is imperative to build a highly integrated operational model to retain the core values of the online shopping business.

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Online Retail Partner Ecosystem

  1. 1. e-commerceThe E-tailingPartner Ecosystem– Choreography at Its Best The differentiator in an e-tailing business is often superior customer service. Many online retailers are relying less product listing with information on captive inventory and services and depending more on on each product including images, an ecosystem of suppliers and specialised partners. It is description and specifications to the imperative to build a highly integrated operational model retailer. The available stock with the to retain the core values of the online shopping business. supplier is sent frequently, in cases daily, depending on the velocity of By Shijo Sunny Thomas the product at the retail site. The retailer publishes these products on An e-tailing business can have the online retail site and orders their site as available to the shoppers. multiple operational models. On the product. She receives an order An order placed by a shopper on the one end it could be a highly captive confirmation e-mail followed by the shopping site of the e-tailer is relayed model where all areas of the business shipment tracking details. Within two to the supplier, who commences such as maintaining inventory, order to five days she receives the product, the shipment of the product to the management, fulfillment and logistics but unfortunately the size is a customer. The supplier also provides is handled in house by the online problem, so she calls customer service the tracking information of the retail organisation. Another extent asking for a replacement which is shipment to the retailer who makes is when e-commerce players tie up promptly delivered in the next three it available to end customer. In retail with a marketplace of suppliers or days. Now imagine, if the only thing parlance, this kind of a model is manufacturers to offer their products that the retailer where she shopped, referred to as dropshipping. online on the ecommerce site. In had in its own stable, were the Depending on the level of addition to the product suppliers, product images, an attractive offer and integration and service level an online retailer could also rely a reputation for impeccable delivery agreement, a shopper might not even on specialised service partners for and customer service. be aware that the product has been e-mail marketing, shopping cart Online retailers attempt to exhibit delivered to her by entities which are management, logistics and even the concept of an ‘endless aisle’ by not part of the retail organisation. The customer service. These partnership- shifting the entire fulfillment aspect packaging and invoice will have the oriented models help online retailers towards the suppliers. This way, brand and signature of the retailer scale up rapidly by leveraging niche retailers can substantially increase and there will not be a mention of the expertise in multiple business areas. the availability of the merchandise, supplier. Obviously, it is evident that Cost factors also play a key role and it is not limited by the inventory the retailer has to go the extra mile to when retailers rely on product and carrying capacity of the online ensure service reliability and visibility service partners. retailer. To explain this aspect, in an at all points in the e-commerce For instance, a customer receives online market place, retailers have supply network. The retailers brand an e-mail for an attractive online established tie-ups with various image is constantly being tested by shopping offer on a pair of shoes. suppliers across multiple product the customer from order placement Quickly and deftly, she reaches categories. Suppliers provide detailed to delivery. Therefore, maintaining 102 . images retail . FEBRUARY 2013
  2. 2. e-commercehigh, reliable and consistent levels of shipment feeds containing tracking A new mode of operating thecustomer service is the key to success. information which resides in the dropship retail business is through the There is no standard mode of retailer’s order management system. use of supplier integration hubs. In itsoperation in this e-tailing value There are other feeds related to simplest explanation, an integrationchain. Some retailers will opt to price and quantity updates; payment hub is akin to multi-socket extensionhave the shipments delivered to reconciliations; returns and refunds board that we use at home. One endtheir distribution centre and then management among others. of the integration hub is the mainship it to the customer themselves. Traditionally many retailers have cable which connects to a retailer’sIn some cases, the retailer will have attempted and invested to define their enterprise applications. On the othertheir logistics partners pick up the own integration standards. These end are standard sockets to whichshipments from designated supplier are made available to suppliers who multiple suppliers can connect to. Thelocations and reorganise to be in turn make their own investments hub orchestrates the bi-directionaldelivered to customer addresses. The to subscribe to these integration flow of information and has builtmodel implemented by the retailer services made available to them by in adapters for major ERP vendorsultimately depends on the supply which can be used by the retailerschain complexity and competency. to connect to their ERP applications.Each operational model has a high On the other end, the hub exposesdegree of service level agreements all integration touch points whichinvolving shipping terms, order can be consumed by a supplier. Someaccuracy, packaging specifications, integration hubs also offer a full-product personalisation etc. fledged interface to the suppliers in Irrespective of the intricacies of such a manner that they do not needthe mode of e-tailing operations, an enterprise system at their end. Thisit is evident that retailers need to caters to the smaller suppliers whoweave together a layer of technology do not have the requisite technologyto induce control and visibility into infrastructure available immediately.their business. The focal point of These integration hubs also providetechnology in this business segment is The focal point of multiple integration methods to suitthe integration with the supplier base. technology in this the needs of the large supplier base.Unfortunately, despite dropshipping business segment The hubs also have built in reports,commanding a significant share of is the integration e-mail integration, workflows andthe etailing business, integration alerts to ensure effortless and reliablestandards are missing. This results with the supplier communications throughout thein retailers employing proprietary base. retailers define e-tailing supply chain.methods to integrate with their the structure and In a market such as India, wheresupplier network. The integration specifications. e-tailing is growing at such a rapidmethods are dictated often by the size pace, retailers can look at scalingand scale of the retailer operations. up through dynamic partnerships.Retailers define the structure and the retailers. This approach has turned Combined with an integratedspecifications related to the data out to be not only a costly proposition technology layer, the dropship modelthat is required from the suppliers. but also complex. Often retailers can prove to be a double edged sword.Retailers such as Amazon publish and suppliers end up duplicating Retailers can develop the capabilitydetailed specifications related to each information from the feeds so that they to offer constant availability of aarea of the integration touch points. can be consumed by their internal wide variety of merchandise and atThese can be accessed by the supplier systems. Smaller suppliers often only the same time have a firm grip onnetwork to build their side of the invest in ensuring that the retailer shipment delivery and customerintegration points. gets the information in the prescribed service. It is indeed the right time The integration points refer to all manner and not concentrate on to turn the tables on dropshiptouch points of interaction between integrating the information from the complexities and move on to drop-a retailer and a supplier. Product retailer into their internal enterprise dead efficiency.data feeds are used by suppliers to systems. This might seem a step upprovide detailed product information. from using paper, fax, phone or EDI, ABOUT THE AUTHORThis information finally resides in but when a retailer has thousands Shijo Sunny Thomas is thea retailer’s merchandising system. of dropship suppliers, a less than Industry Lead–Retail & CPG atAvailable stock positions are sent by optimal integration methods can prove Fujitsu Consulting India. He hassuppliers as daily feeds. Customer disastrous to the retail brand. Do worked extensively in advisoryorders are reverse feeds which are consider scenarios where one retail and operational roles withsent from a retailer’s systems to the order has to be split into multiple medium to large cross-channelsuppliers. Suppliers in turn send the supplier orders. retailers FEBRUARY 2013 . images retail . 103

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