Vs

Presented by: Group 9 Sumeet Mittal (171) K. Naresh Kumar (172) Ashish Sharma (173) Gourav Kumar Bhut (174) Anurag Nair (175) Shashank Sharma (176)

 American international e-commerce company with headquarters in Seattle, Washington. Founded by Jeff Bezos in 1994. Started as an online bookstore, but soon diversified,selling DVDs, CDs, video and MP3 downloads, software, video games, electronics, apparel, furniture, food, toys, and jewellery. The company also produces consumer electronics notably the Amazon Kindle e-book reader and the Kindle Fire tablet.

 Deploys a threefold strategy of limitless inventory, customer convenience and low price. Amazon derives about 40% of its sales from affiliate marketing called "Amazon Associates" and third-party sellers. Associates receive a commission for referring customers to Amazon by placing links on their websites to Amazon. Worldwide, Amazon has over 900,000 members in its affiliate programs.

Amazon Operating Models

Amazon sells its own inventories and manages customer relation and supply chain on its own through Amazon.com. Amazon also act as third person and allow other companies to place their products at Amazon.com for sale. However, Amazon only manages front end customer relations while logistic issues are controlled by sellers. Amazon has also introduced its e-commerce solutions and design web sites and offer hosting services to its customers.

Operational Strategy
Large Inventory
provides an opportunity to offer huge collection of books, music or other products without keeping them physically on shelf. In 1999 Amazon consistently added new product line or capabilities after every six weeks to increase its sale revenue. Currently, its product range can be divided into 34 broad categories.

Integrated Business Operations

 Amazon.com server uses the supply chain optimization software to predict demand and also optimize its supply chain. Firstly, customers credit card is processed to finalize their orders. Amazon warehouse is also informed about customer order to find out stock information. In case of shortage appropriate suppliers are selected. This information is transferred to publishers, music companies & OEMs for further process & on receiving the order it is packed & delivered to the customer.

 Low Cost Strategies

A large part of Amazons cost is fixed in nature. high activity leads to low fixed cost per unit. Thus, Amazon can offer low prices to customers.

Customer Fulfilment Network (CFN) Strategy

designed to increase margins by sourcing directly from producers, rather than from wholesalers. also reduce costs per sale by cross-docking orders at the warehouse closest to the customer through state-of-theart demand forecasting and optimization solutions.

Quick Shipment
Amazon provides hassle-free, same or next day fulfillment on most items. enhances customer satisfaction and loyalty

Marketplace Model of Amazon India

e-commerce market in India expected to grow to $200 billion by 2020 FDI not currently allowed in this sector Forced Amazon to follow a marketplace model in India

 Indian e-commerce company founded in 2007, by Sachin and Binny Bansal. Like Amazon, initially Flipkart focussed on books and soon expanded to other products like electronics, stationery supplies and life style products. Flipkart's offering of products on Cash on Delivery besides other online payment options is considered to be one of the main reasons behind its success. Recently Flipkart has launched its own product range under the name DigiFlip.

Operational Model of Flipkart

Logistics
Flipkart ships more than 30000 items a day cost of the delivery is born by the company, making it operationally & financially complex Flipkart uses its in-house logistics (FKL) as well as third party logistics (3PL) services More than 90% COD orders & destinations with more than 100 orders use FKL, rest use 3PL In case of FKL, the shipment is first transported to Mother hub & then to delivery hub and than last mile delivery is done using suitable mode of transport company has tie-ups with 15 courier companies

 Procurement: Procurement of items is done through either:

Inventory: These items are pre-ordered based on previous sales data. 75% items are inventoried due to discounts available. Just in-time: Items procured just-in-time are used to serve immediate outstanding orders.

Sourcing is done at regional as well as central level.

Warehouse Management System

 Inward Processing
Physical in warding: physical delivery of goods from suppliers to the warehouse is taken Quality Check + Scan: goods received go through an initial quality check & scanned to make an electronic entry to record the input of goods Pre-packing: initial packing of products is done

Storage Management
Put-list generation: a system generated list of shelves corresponding to the products is made Order pending check: checks for pending orders Physical placement on shelves: Based on Put-list, products are placed on the respective shelves

 Outward Processing
Pick-list generation: Based on the orders to be delivered for the day, a Pick-list is generated by the IT system Pick-up from shelves: The products from the Pick-list are picked up from the shelves as per the IT system Final packaging: Picked up products are packed according to category & then in Flipkart-branded boxes. Placement in respective delivery hubs' bags: Packed products are placed in a specific bag which is dedicated for that destination area delivery hub.

Order Fulfillment

 As soon as the order is placed, there is an inventory check at the local warehouse. If the item is not found than other warehouses are checked. The product is then packaged and delivered. If the item is not found in the inventory it is forwarded to the Regional Procurement Team (RPT) for JIT procurement from local vendors. If yet not possible, the order goes to the central procurement team (CPT) for the last option of procurement. As and when the item is found, it is packaged and shipped to the customer via either courier, Indian post or its own internal logistics arm depending upon the area.

Inventory Management
The inventory stocks are replenished whenever it goes below Reorder point. Holts forecasting method is used for demand forecasting. FIFO method is employed for inventory management For determining what items to store & what items to procure from vendors, Flipkart uses Long Tail Concept.

Supplier Management
Flipkart works with over 500 suppliers including several international suppliers like Ingram Books. Its steady rate of growth has allows it to get the best credit lines. Flipkart follows a grading system of its suppliers based on their fill-rate performance. Suppliers are grouped into A, B and C grades based on their past performance. Other parameters considered for selecting a supplier are Quality-check contract & Percentages of return accepted by the supplier.

Recommendations
Manual labour at warehouses can be reduced by using RFID-technology. Warehouse layout needs to be looked into so that increased SKU complexity can be handled better. Include seasonality in the forecasting process to meet customer expectations better during highrush seasons & manage inventory costs better during lean periods. Periodic review of categories should be undertaken and non-performing or highly volatile categories should be dropped.

 Incentivize customers for using pre-payment methods over COD payment. Revisit 30-day no-questions-asked replacement guarantee across product categories. Reducing inventory cost by usage of cross docking. Introduce pin-code based delivery-time schedules. Currently it follows same delivery SLAs pan-India. In-house Payment Gateway system could be looked into in the near future, though it adds additional operational complexity as it requires compliance with PCI DSS standard.

Amazon vs Flipkart
Amazon Working model Flipkart Market place in India & eMarket place tailing for rest of the world. As they did not wanted to take much risk in India. Also waiting for the FDI decision to be cleared.

Revenue model

$39mn in FY12 (in loss). $32mn in FY12 (in loss) They themselves have Funded through venture huge cash deposits. Annual capitals. Raised $381mn. turnover $61.09bn . Operating Income- $679mn E-commerce, Amazon associates (third party service), subscriptions. Same.

Services