Friday, April 23, 2010

Expansion into a full ecommerce store

Continuing Vishal's memoirs:

As we have been discussing, we started out as a lead generator for selling cars and bikes. Customers started using our service and we started car rentals as well. Then customers started asking us for car accessories! This led us to look at expanding our store to other product domains.

To understand that expansion, let's take a step back and understand how ecommerce is different from normal retail shops.

The physical shops that you visit actually store merchandise (whether it is computers, CDs or books) that you can buy instantly from them at each location. The demand is local as well. Compare that to an ecommerce store – where we have a huge list of products that you can buy – BUT we do not have physical inventory repeated each location (in theory, we can satisfy country wide demand from one location and not have to replicate inventory at each location).

It is very hard to forecast across lakhs of products when and how much inventory to order. In addition, order allocation across multiple locations is another big challenge. Initially, we started working with suppliers to reactively order the item after customer order is placed to reduce inventory risk. Across time, we had enough buying history to predictively order several products and we continue to fulfill merchandise across our many locations.

These are some of the challenges of running an ecommerce store, and you can now imagine how many complicated it can get, and why technology is important to remain on top of things.”

This is the behind-the-scenes picture, let's see how Infibeam started building out that picture.

First we needed the list of 'things' that we can sell, the “catalog”. The bigger the list, the bigger the “selection” for the customer.

So, in early 2008, we acquired a small outfit in Delhi that created digital catalog for retailers. Subsequently, we expanded fulfilment operations in North India.

We soon added more categories such as mobile store, health equipment, and cameras.

In May 2008, we launched our books store with more than 3 million books in our catalog. We continued adding selection across retail categories like mobile phones, apparel, home appliances and many more. By the end of 2008, we were selling products across all retail categories and business was growing. We had the entire roster of products that we could possibly sell.

Going back to our history of how we started selling cars and then customers started asking for car accessories, we were mentally in the space around products, and we came across the customized products space. For example, people want to buy mugs or keychains, wouldn't it be more appealing if it can be customized? That is when we decided this is an exciting market and we should be part it. We then acquired an ecommerce company in gifting and customized goods – in Bangalore. It was started by two IITians - Manish Agarwal and Kartik Jain, a fantastic team. Soon, we expanded our presence in Bangalore and started fulfilment operations in South India.”

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