WEEK 5|Case study 1 - Fabmart (E-Commerce): Flashcards
Introduction to E-Commerce, Fabmart case introduction, explanation of data set & questions to be answered, revenue pareto, volume pareto, scatter plot of sales and revenue, revenue trend
How is E-Commerce market different from Retail market?
E-Commerce market knows the customer well and has better chance of customizing products to the user than the retail markets which has limitations regarding data about the customer. Even the E-Commerce website may be customised for each and every customer.
E-Commerce business could be one to few products like speciality stores or many products like a super market
What might be the market share of E-Commerce in India?
Around 10%.
What are some of the challenges for E-Commerce Companies?
Supply Chain Management is the biggest problem faced by E-Commerce Companies. They will have to avoid “stock-out” situations in order to prevent customer loss. Also, there cannot be huge inventories which increase operational cost.
What is a platform company?
A platform Company is a marketplace for sellers of different categories of products all in one place. e.g. FMCG, Mobile Phones, Lifestyle products.
Major percentage of sales will be on SOR (Sale or Return ) basis. Around 50% will be on the SOR basis.. rest will be purchased with working capital.
What is a niche company?
Niche Companies typically sell one or few categories of specific products.
What are some of the challenges of a platform company?
Each category of the product might require different strategy for speed, quality, inventory management, storage etc. To manage many product categories becomes more and more complex when the number of products increase.
The number of SKUs are typically very large that maintaining inventories on a daily basis is extremely hard. So, E-Commerce platforms use pareto principle and identify the 20% of products which give 80% of revenue and ensure that inventory is properly managed for these SKUs and that there is no stock-outs.
How does the distribution network of an E-Commerce company work?
There is a parent Distribution Center (DC) which is a hub to receive / store products from sellers and there will be Child/ Forward Distribution Centers which receive its inventory from parent DC’s. Each pin code will be assigned a primary DC which is the closest in terms of distance / cost and parent DC will be assigned for delivery if in case the primary DC for some reason could not serve that pin code. Each day, stock will be shifted from parent DCs to child DCs and product stocks which are below a particular threshold gets replenished.
This network of parent and child DCs is called 2 tier network.
What are SKUs , BU’s and MOQs?
SKU - Stock Keeping Unit - how you uniquely classify the product you sell. E.g: XL size, Green Colour, Collared, half-sleeved, T Shirt. Note that XXL size could take a different SKU number and full-sleeved T shirt could also take a different SKU number.
BU - Business Unit - E.g.: Mobiles, LifeStyle, FMCG etc
MOQ- Minimum Order Quantity - the minimum amount of quantity which needs to be ordered in order to minimize the total cost. Usually, set by the sellers. e.g.: in case of FMCG- 1 box of 100 pieces could be MOQ, for mobile phones , 1 could be MOQ.
Normally, there will be one order per week to the seller to cover the sales for upcoming week
What are the typical number of SKUs in a successful platform company life flipkart?
Around 10 Lakh SKUs.
Some products are stored in inventory even though there sales is less to give the customer a feel of variety.
How much data will be generated by platform companies like flipkart? How are they analysing this data?
Around 5 paentabytes per day. They use python and databases. Companies typically will store the latest data typically data of last 3 to 6 months and either archive or purge the unnecessary past data to a data warehouse.
The challenge is to analyse such huge data which keeps accumulating every second.
E-commerce company management typically use dashboards for the summarized version of analysis. Dashboards are to set the physical layout of the information and the data in the dashboards keeps changing without changing the structure of the dashboard.
What is pareto principle?
Pareto principle states that 80% of the results/output will come from 20% of the efforts. Also called the 80:20 rule. E.g.: 80% of the world wealth is held by 20% of the people of the world. 2) 80% of revenue comes from sales of 20% of the products.
What are some of the formulas in excel that we could use for analysing the data?
- Vlookup (lookup_value, table_array,col_index,range_lookup)
- Pivot tables
- Charts (for summarizing results) - scatter plot, bar chart, stacked bar chart
- =TEXT(“A2”,dddd) ==> displays day of the week.
- = AVERAGEIF(“condition”,”Action”)
How is inventory measured?
Inventory is measured in days
Inventory = Average sales of the product / opening stock
Closing Stock = Opening Stock + Inward Stock - Sales
Average Inventory Days = Average Open Stock / Average Sales
