Sunday, May 10, 2015

E commerce companies boom in india

E Commerce Boom in India

The e-commerce sector is gaining
pace in India with early movers expanding their portfolio and striving towards more customer centricity.Private investors have instilled faith one-commerce and poured $2.3 billion providing them the financial
firepower to give brick and mortar
stores a run for their money. Challenges Faced by E-commerce Players in India Recruitment: E-commerce is becoming a haven for job seekers with1 lakh temporary positions beingadded in the quarter ending December2014. Demand for temporary workersshoots up during festive seasons because of increase in customer orders. E-commerce players like Amazon, Flipkart, Snapdeal and
CaratLane are pioneers in hiring
temporary employees who are mostly
involved in delivery, warehouse, online
marketing and customer services.
Staffing companies expect that the
hiring of temporary workers will grow
at a steady 60% for the next three years. Tapping a huge customer base of Indian consumers who use internet primarily for other purposes like booking tickets, downloading video content etc.
Increase in salaries: The salaries of
delivery boys at the entry level has increased by 100% while that of the
remaining temporary workforce catering to the e-commerce has gone up by 60%. Attrition: According to Randstad, a staffing company, there is a very high attrition of as high as 100% in delivery. Existing infrastructure and supply chain constraints Customer payment defaults or absence of customer during delivery :
India does not have standardized street address systems and roadconditions are rough. Most of the
times, a street, building name and
series of landmarks are needed to
locate a house and customers are
required to be at home to receive a
package.
Threat from Competitors
To counter the threat from online book
stores like Amazon and Flipkart,
traditional brick and mortar stores
like Marks & Spencer are beefing up
their presence on the digital platform
and changing distribution
channels. But, this approach did not
come without problems for them. Many
of their shop assistants were
irked as they were the ones who put in
all the hard work of advertising a
product to a customer, and then
the customer goes away and
eventually makes the final purchase
on the website which in turn leads to
them missing out on their targets and
subsequent commissions.
To counter this threat, M&S ensured
that all the teams could together claim
credit for an online sale. This initiative
came from the HR department as it
served as a strategic business partner
aligning the employee behaviors to the
organizational goals. M&S is also
focusing on consistent customer
experience through an in-house store.
Strategic HR Initiatives
HR can play role of a business partner
to mitigate the risks cited above. HR
should sit with the leadership
team comprising of line managers to
clearly define products, services and
model of delivery of the business.
Specific roles and responsibilities
should be defined to drive business
results which require unique skills and
knowledge of the e-commerce
business in its entirety. HR managers
have to build organizational capability
to embrace and capitalize on new
business opportunities. For example,
to overcome recruitment challenges,
they can partner with various staffing
companies like Manpower,
TeamLease, Randstad, Kelly Services,
Global InnovSource etc. to source
contractual manpower during festive
seasons or otherwise. These staffing
companies are efficient and well
equipped to fulfill staffing
requirements. Other initiatives that can
be taken by HR are:
1. To tap the huge customer base, HR
managers should look for tie-ups with
government-owned
portals which can provide access to a
database of over 21 million
consumers. The IRCTC portal is one
of the largest e-commerce sites in the
entire Asia-Pacific region and
partnership with them will help
to sell their products through IRCTC
portal.
2. E-commerce companies should look
to fill up back end positions with
temporary workers (less skilled,
workers from small towns or women
looking to re-enter the workforce)
which will require less
training and are easily available in
market (low uniqueness and low
strategic value in the Lepak and
Snell model—Quadrant 3). It will help
in reducing costs and reaching
sustainable profit levels faster.
It also creates huge employment
opportunities for the temporary
workers leading to increase in
brand equity.
3. To combat attrition, one option for
e-commerce companies is to give the
potential hires a realistic
preview of the new job. Second, since
the delivery boys are sent to new
localities every day, their
burnout rates are very high. But, if
they are sent to same areas their
efficiency will surely rise and
hence end attrition.
4. E-commerce players should come
up with a mechanism where customer
alerts are sent by text
several hours before a scheduled
delivery. Flipkart has a lab dedicated
to improve the final stage of
deliveries from local warehouses to
customers. These initiatives can be
driven by HR professionals acting as business partners.
5. HR should vouch for investments in
improving current infrastructure like
servers, IT platforms etc. to cater to growing bandwidth of e- commerce sites. It will require huge investments initially but it will increase customer satisfaction in the long run E Commerce Boom in India
The e-commerce sector is gaining
pace in India with early movers
expanding their portfolio and striving
towards more customer centricity.
Private investors have instilled faith on
e-commerce and poured $2.3
billion providing them the financial
firepower to give brick and mortar
stores a run for their money.
Challenges Faced by E-commerce
Players in India
Recruitment: E-commerce is
becoming a haven for job seekers with
1 lakh temporary positions being
added in the quarter ending December
2014. Demand for temporary workers
shoots up during festive seasons
because of increase in customer
orders. E-commerce players like
Amazon, Flipkart, Snapdeal and
CaratLane are pioneers in hiring
temporary employees who are mostly
involved in delivery, warehouse, online
marketing and customer services.
Staffing companies expect that the
hiring of temporary workers will grow
at a steady 60% for the next three
years.
Tapping a huge customer base of
Indian consumers who use internet
primarily for other purposes like
booking tickets, downloading video
content etc.
Increase in salaries: The salaries of
delivery boys at the entry level has
increased by 100% while that of the
remaining temporary workforce
catering to the e-commerce has gone
up by 60%.
Attrition: According to Randstad, a
staffing company, there is a very high
attrition of as high as 100% in delivery.
Existing infrastructure and supply
chain constraints
Customer payment defaults or
absence of customer during delivery :
India does not have standardized
street address systems and road
conditions are rough. Most of the
times, a street, building name and
series of landmarks are needed to
locate a house and customers are
required to be at home to receive a
package.
Threat from Competitors
To counter the threat from online book
stores like Amazon and Flipkart,
traditional brick and mortar stores
like Marks & Spencer are beefing up
their presence on the digital platform
and changing distribution
channels. But, this approach did not
come without problems for them. Many
of their shop assistants were
irked as they were the ones who put in
all the hard work of advertising a
product to a customer, and then
the customer goes away and
eventually makes the final purchase
on the website which in turn leads to
them missing out on their targets and
subsequent commissions.
To counter this threat, M&S ensured
that all the teams could together claim
credit for an online sale. This initiative
came from the HR department as it
served as a strategic business partner
aligning the employee behaviors to the
organizational goals. M&S is also
focusing on consistent customer
experience through an in-house store.
Strategic HR Initiatives
HR can play role of a business partner
to mitigate the risks cited above. HR
should sit with the leadership
team comprising of line managers to
clearly define products, services and
model of delivery of the business.
Specific roles and responsibilities
should be defined to drive business
results which require unique skills and
knowledge of the e-commerce
business in its entirety. HR managers
have to build organizational capability
to embrace and capitalize on new
business opportunities. For example,
to overcome recruitment challenges,
they can partner with various staffing
companies like Manpower,
TeamLease, Randstad, Kelly Services,
Global InnovSource etc. to source
contractual manpower during festive
seasons or otherwise. These staffing
companies are efficient and well
equipped to fulfill staffing
requirements. Other initiatives that can
be taken by HR are:
1. To tap the huge customer base, HR
managers should look for tie-ups with
government-owned
portals which can provide access to a
database of over 21 million
consumers. The IRCTC portal is one
of the largest e-commerce sites in the
entire Asia-Pacific region and
partnership with them will help
to sell their products through IRCTC
portal.
2. E-commerce companies should look
to fill up back end positions with
temporary workers (less skilled,
workers from small towns or women
looking to re-enter the workforce)
which will require less
training and are easily available in
market (low uniqueness and low
strategic value in the Lepak and
Snell model—Quadrant 3). It will help
in reducing costs and reaching
sustainable profit levels faster.
It also creates huge employment
opportunities for the temporary
workers leading to increase in
brand equity.
3. To combat attrition, one option for
e-commerce companies is to give the
potential hires a realistic
preview of the new job. Second, since
the delivery boys are sent to new
localities every day, their
burnout rates are very high. But, if
they are sent to same areas their
efficiency will surely rise and
hence end attrition.
4. E-commerce players should come
up with a mechanism where customer
alerts are sent by text
several hours before a scheduled
delivery. Flipkart has a lab dedicated
to improve the final stage of
deliveries from local warehouses to
customers. These initiatives can be
driven by HR professionals
acting as business partners.
5. HR should vouch for investments in
improving current infrastructure like
servers, IT platforms etc. to
cater to growing bandwidth of e-
commerce sites. It will require huge
investments initially but it will
increase customer satisfaction in the
long run amounting to huge profits
eventually.
HR Investment Strategies
HC Bridge Framework - Strategy
Analysis Lens
1. Strategic Assumptions
In 2005, there were 167 million
domestic internet connections
worldwide. For 2015, the forecast is
estimated at 2.7 billion. India had 150
million registered internet users as of
December 2012 and out of these, only
2-3 million were e-commerce
customers. This shows that e-
commerce definitely has a bright future
globally and more so in an emerging
economy like India with a growing
middle-class population.
2. Strategic Resources
E-commerce companies like Amazon
are giving more autonomy to their
blue-collar workforce including
delivery boys and truck drivers which
in turn increases their efficiency and
speed of operations (Quadrant 4
of the Lepak and Snell employment
model). However, this advantage of
cost reduction by hiring temporary
workers comes with challenges of
managing and motivating them. To
overcome this, most e-commerce
companies have their delivery staff on
the payroll of a third-party company
which is responsible for hiring, paying
and laying off the employees. For
example, eKart does 85% of Flipkart
deliveries. The role of the ecommerce
companies is only to train the
workforce (performance variation is
higher in modified Lepak and Snell
employment model) and monitor
service standards, not to micro-
manage the other aspects of
recruitment and retrenchment. This in
turn also frees the e-commerce
companies from the complications of
strikes and political interferences.
3. Competitive Positioning
Fulfilment by Amazon (FBA) is a new
service launched by Amazon in India
where a client can store products in
Amazon fulfilment centers and after
this stage, the entire responsibility of
picking, packaging, delivering and the
associated customer service support
and returns for these products is
managed by Amazon. This can help
businesses scale better and reach out
to newer customers.
4. Business Processes
A flat organization structure and a
young, highly qualified talent pool that
e-commerce players boast of is
giving the traditional retailers a
nightmare.
HR as Change Agent
E-commerce companies are also very
conscious about delivery staff who are
the face of the company to the
customers. Hence, companies insist
on them being well groomed and polite
in their conversations. E-commerce
companies request their partners to
get a background check on their
delivery staff by the police as they do
not want the brand reputation to be hit
by having someone with a criminal
background to have access to a
customer house or walk away with the
day collections.
E-commerce companies can increase
their popularity by launching contests
on Facebook and having a blog
section on their homepage to gain
consumer insightsto improve services.
The infographics on the homepage
should be executed strategically with
involvement of both the marketing and
HR departments (use of data analytics
and HR metrics is useful). Investment
in technology such as using bar-
coding to prevent pilferage is also
becoming increasingly important.
Organizational Development
Interventions by the HR Department
1. Health and Safety
E-tailers justify the health hazards
posed by the weight of baggage that
the delivery staff carry (employees
make anywhere between 20 and 30
deliveries a day and often their bags
are heavy sometimes weighing up to
30 kg) by saying that once the volume
of transactions increases, they can
invest more in heavy vehicles like
trucks to fulfil deliveries. But, e-
commerce players must consider this
issue more seriously and invest in
logistics to counter the threat of
attrition.
2. Manpower Planning and Talent
Development
Lowering attrition of the blue-collar
workforce and preventing fraud is high
on the agenda of e-commerce
companies. Companies are trying to
make the job more lucrative by
investing in training of employees. A
mix of classroom and on-field training
is popular among major players. This
makes the employees stakeholders in
the growth of the company.
Recommendations
Amazon reports that 63% of its
workforce worldwide is male. It is also
assumed that a high percentage of
their black employees work in their
warehouses. Moreover, according to
PayScale, Amazon median
employee retention rate is only one
year. E-tailers should focus more on
diversity initiatives and can
introduce scholarships for minorities
and women from leading colleges
worldwide.
India being an infant in the e-
commerce sector has problems with
logistics, payment gateways, and
intense competition among major
players for too few customers. On the
logistics front, due to problems of last-
mile delivery and unreliable third party
couriers, different carriers have to be
used to deliver consignments to
different regions of the country. Hence,
e-commerce players should focus on
building their own fleet of delivery
vehicles.
Another issue that e-tailers need to
tackle is the cash on delivery (COD)
option, in which the consumer pays the
company once the product is received.
This is a hard problem to get around,
because of low credit card penetration
in India as customers still do not trust
the authenticity of payment gateways.
COD system creates a delay in
payment for the e-tailer and during
this time the company has to restock
the inventory before the cash from its
last sale has arrived. To counter this
problem, e-commerce companies can
have COD option only for low-priced
and low margin products. to huge profits
eventually. HR Investment Strategies
HC Bridge Framework - Strategy
Analysis Lens
1. Strategic Assumptions
In 2005, there were 167 million
domestic internet connections worldwide. For 2015, the forecast is estimated at 2.7 billion. India had 150
million registered internet users as of
December 2012 and out of these, only
2-3 million were e-commerce customers. This shows that e- commerce definitely has a bright future globally and more so in an emerging economy like India with a growing middle-class population.
2. Strategic Resources E-commerce companies like Amazon are giving more autonomy to their blue-collar workforce including
delivery boys and truck drivers which
in turn increases their efficiency and
speed of operations (Quadrant 4
of the Lepak and Snell employment
model). However, this advantage of
cost reduction by hiring temporary
workers comes with challenges of
managing and motivating them. To
overcome this, most e-commerce
companies have their delivery staff on
the payroll of a third-party company
which is responsible for hiring, paying
and laying off the employees. For
example, eKart does 85% of Flipkart
deliveries. The role of the ecommerce
companies is only to train the
workforce (performance variation is
higher in modified Lepak and Snell
employment model) and monitor
service standards, not to micro-
manage the other aspects of
recruitment and retrenchment. This in
turn also frees the e-commerce
companies from the complications of
strikes and political interferences.
3. Competitive Positioning
Fulfilment by Amazon (FBA) is a new
service launched by Amazon in India
where a client can store products in
Amazon fulfilment centers and after
this stage, the entire responsibility of
picking, packaging, delivering and the
associated customer service support
and returns for these products is
managed by Amazon. This can help
businesses scale better and reach out
to newer customers.
4. Business Processes
A flat organization structure and a
young, highly qualified talent pool that
e-commerce players boast of is
giving the traditional retailers a
nightmare.
HR as Change Agent
E-commerce companies are also very
conscious about delivery staff who are
the face of the company to the
customers. Hence, companies insist
on them being well groomed and polite
in their conversations. E-commerce
companies request their partners to
get a background check on their
delivery staff by the police as they do
not want the brand reputation to be hit
by having someone with a criminal
background to have access to a
customer house or walk away with the
day collections.
E-commerce companies can increase
their popularity by launching contests
on Facebook and having a blog
section on their homepage to gain
consumer insightsto improve services.
The infographics on the homepage
should be executed strategically with
involvement of both the marketing and
HR departments (use of data analytics
and HR metrics is useful). Investment
in technology such as using bar-
coding to prevent pilferage is also
becoming increasingly important.
Organizational Development
Interventions by the HR Department
1. Health and Safety
E-tailers justify the health hazards
posed by the weight of baggage that
the delivery staff carry (employees
make anywhere between 20 and 30
deliveries a day and often their bags
are heavy sometimes weighing up to
30 kg) by saying that once the volume
of transactions increases, they can
invest more in heavy vehicles like
trucks to fulfil deliveries. But, e-
commerce players must consider this
issue more seriously and invest in
logistics to counter the threat of
attrition.
2. Manpower Planning and Talent
Development
Lowering attrition of the blue-collar
workforce and preventing fraud is high
on the agenda of e-commerce
companies. Companies are trying to
make the job more lucrative by
investing in training of employees. A
mix of classroom and on-field training
is popular among major players. This
makes the employees stakeholders in
the growth of the company.
Recommendations
Amazon reports that 63% of its
workforce worldwide is male. It is also
assumed that a high percentage of
their black employees work in their
warehouses. Moreover, according to
PayScale, Amazon median
employee retention rate is only one
year. E-tailers should focus more on
diversity initiatives and can
introduce scholarships for minorities
and women from leading colleges
worldwide.
India being an infant in the e-
commerce sector has problems with
logistics, payment gateways, and
intense competition among major
players for too few customers. On the
logistics front, due to problems of last-
mile delivery and unreliable third party
couriers, different carriers have to be
used to deliver consignments to
different regions of the country. Hence,
e-commerce players should focus on
building their own fleet of delivery
vehicles.
Another issue that e-tailers need to
tackle is the cash on delivery (COD)
option, in which the consumer pays the
company once the product is received.
This is a hard problem to get around,
because of low credit card penetration
in India as customers still do not trust
the authenticity of payment gateways.
COD system creates a delay in
payment for the e-tailer and during
this time the company has to restock
the inventory before the cash from its
last sale has arrived. To counter this
problem, e-commerce companies can
have COD option only for low-priced
and low margin products.