They must be burning cash. Running big discounts. Razor thin margins. Profits? Ha ha ha. This is what typically comes to mind when someone talks to us about e-commerce. We think e-commerce needs to go beyond lean thinking, make significant investments to improve quality of service and that it has become a game of scale. Last week, Kanav Sharma, the founder of e-commerce startup Shawpers wrote to us with an interesting theory.
“If we imagine online retail is a big mall, the mall is lying empty with a lot of shops right now,”he says. Shawpers sells items that fall into the home & living category. Existing online stores are “pampering” customers with blind discounts, hardly any of which are genuine and sustainable, he contends.
So how does Shawpers sustain? By saving everywhere they can.
“We are a no-frills attached e-store. Which means, we are taking the “avoidable” services and offers out of the shelf, only to pass on the discount to the customers,” he said. Here’s how they are doing it.
Chuck the Graveyard Shift
Only 0.5% of the customer care calls are received between 12 midnight and 6 AM and ~2% of calls received between 9 PM – 6 AM. Though, the cost of maintaining the customer care team for these times is high, the benefits are low. The queries can be taken and resolved over an e-mail.
Stop Saying Mine is Shorter than Yours, Delivery time, We Mean
Kanav believes that there is no point shaving a couple of hours from delivery time when it could cost way too much.
E-commerce companies today have entered into this rat race of ensuring fastest delivery. The fact that the order has been placed online, indicates that there is no “emergency” as such for the order to be delivered within the next 2-3 hours. In the race to deliver the products fastest, the supply chain cost optimization is always overlooked. Our idea lies in going for a quick, but not the quickest delivery. We will promise a feasible timeline of 3-5 days for most of the products but not overlook the cost optimization of the supply chain.
Say No to Fancy High Street Office
This is something most startups do.
As an online company, when everything can be managed remotely, we just need solid servers, good internet connections and great employees. When all these things can be managed remotely, why spend on flamboyant offices in cyber city, Gurgaon or South Mumbai. One reason for companies taking such offices is to make their presence felt. We, however, will be making our presence felt the most in the space that matters the most-The Cyber Space.
Let the Bots Do The Work
We make sure that we do not employ a lot of people during the growth phase, only to fire them later or to have high costs later on down the line. We have a belief in firm automation of technology and processes from Day 1.
Just in Time
The company has adopted the just in time model to cut costs of holding inventory. It also helps them maintain better cash flow. “Though it is a difficult process to manage, having the required experience of people from manufacturing industry (where JIT model is inevitable), we have been able to get things in place, for now,” he said.
Shawpers isn’t that massive yet. It delivers about 10 orders a day and has to face stiff competition from players like Amazon and Flipkart. But hey, full points for trying!
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