Supply Chain & Logistics Mix: E-Commerce & E-Marketing Strategies play a vital role in modern business success. Effective supply chain management ensures smooth operations, while strategic e-marketing enhances customer engagement and sales. This page explores how these elements integrate to optimize business performance and drive growth.
Supply Chain Management
- Supply Chain Management (SCM) is the process of managing the flow of goods, services, information, and finances from raw material sourcing to the final delivery of products to customers.
- It involves coordinating various activities such as procurement, production, logistics, and distribution to improve efficiency, reduce costs, and enhance customer satisfaction.
Components of Supply Chain Management:
Planning
- Involves demand forecasting, inventory management, and production scheduling.
- Helps align supply with customer demand to avoid overproduction or shortages.
- Tools: ERP (Enterprise Resource Planning), demand forecasting software.
- Example: Walmart uses advanced data analytics to forecast demand and optimize inventory levels.
Sourcing (Procurement & Supplier Management)
- Involves selecting suppliers for raw materials and negotiating contracts.
- Focuses on cost-effectiveness, quality, and supplier relationships.
- Example: Amul Procures milk from over 3.6 million dairy farmers across India. Uses a cooperative model for direct sourcing, ensuring fair pricing.
Manufacturing (Production)
- Converting raw materials into finished products.
- Includes assembly, quality control, and packaging.
- Focuses on efficiency, minimizing waste, and maintaining high quality.
- Example: Toyota uses Just-in-Time (JIT) manufacturing to reduce inventory costs and increase efficiency.
Logistics (Transportation & Warehousing)
- Involves transportation, warehousing, and distribution.
- Uses supply chain networks and third-party logistics providers (3PL).
- Example: Flipkart (Walmart-owned) has a strong warehousing and delivery network in India.
- Uses AI and automation in fulfillment centers.
Delivery (Distribution & Retailing)
- Ensures products reach customers efficiently.
- Involves last-mile delivery networks.
- Example: Zomato & Swiggy uses real-time tracking and logistics for food delivery. Ensures fast delivery with AI-driven route optimization.
Returns (Reverse Logistics)
- Handles returned or defective products.
- Focuses on recycling, refurbishing, or disposal.
- Example: Amazon India has an efficient return and refund policy for customers. Uses logistics partners for product pickups.
Information & Technology (IT Integration)
- Uses AI, blockchain, IoT, and ERP systems for supply chain efficiency.
- Example: TCS (Tata Consultancy Services) develops AI-driven supply chain management software for businesses.
- Example: Lenskart uses AI to track inventory and optimize logistics.
Logistic Mix
The logistics mix refers to the combination of activities involved in planning, executing, and controlling a company’s physical flow of goods and services from the point of origin to the destination.
- It is a subset of supply chain management, contributing to the creation of time and place utility.
- Ensuring the right product, in the right quantity, at the right time enhances the overall efficiency and effectiveness of the supply chain.
The essential elements include:
- Order Processing : Receive, confirm, and prepare customer orders and prepare them for shipping.
- Inventory/stock management : maintaining optimal stock levels, tracking product movement, and preventing stockouts or overstock situations.
- Warehousing : Storing goods in a proper manner so that they can be accessed easily and quickly when required.
- Material Handling during loading, unloading, stacking, and organizing inventory.
- Packaging : to ensure their protection during transportation, convey necessary information, and influence consumer perception.
- Transportation and distribution to the point of consumption.
- Information Handling- supporting functions such as real-time tracking, inventory management, and communication.
E-Commerce
- Term E-Commerce is an abbreviated term for ‘electronic commerce’, which refers to the process of undertaking business transactions over the Internet.
- Generic e-commerce portals – any product, ranging from furniture to flowers. E.g.- FlipCart, Amazon
- Specific e-commerce web portal – only specific category products. E.g- Big Basket.
- It is an internet-based business ecosystem that comprises an e-commerce web portal, e-commerce software, an e-commerce app allowing various buyers and sellers to undertake business transactions comfortably and securely.
- M-Commerce and Multi-channel Commerce –The purpose is to interact in multiple ways with the buyers. It consists of an App, web portal, email, social media, etc.
- Use of Emerging Technologies in e-Commerce –
- Use of AI/ML in sorting of products and services for personalized experience to customers.
- Use of Augmented reality (AR) and virtual reality (VR) in Man-Machine-Interface.
- Use of Blockchain technology in record maintaining.
Types of E-Commerce:
- B2B (Business-to-Business): Companies involved in the supply chain, like manufacturers selling to wholesalers, and wholesalers to retailers, all use a common portal to conduct business.
- B2C (Business-to-Consumer): Businesses sell products directly to consumers, e.g., Amazon, Flipkart.
- C2C (Consumer-to-Consumer): Consumers sell to each other on platforms like Quikr, OLX.
- C2B (Consumer-to-Business): Consumers promote products via their social media (e.g., blogs) and link back to the company’s e-commerce site, earning rewards, e.g., affiliate marketing.
- B2G (Business-to-Government): Businesses provide products or services to the government, e.g., Government e-Marketplace (GEM).
- C2A (Consumer-to-Administration): Consumers interact with government agencies for payments or information, e.g., paying utility bills or taxes online.
- P2P (Peer-to-Peer): Individuals transact directly with each other without intermediaries, e.g., cryptocurrency, ridesharing.
- D2C (Direct-to-Consumer): Brands sell directly to consumers online, bypassing intermediaries, e.g.Mamaearth,BoAt,Pepperfry.
Difference between Inventory and Marketplace Model
| Aspect | Inventory Model | Marketplace Model |
| Inventory Ownership | Platform owns and manages inventory. | Platform connects buyers with third-party sellers. |
| Product Selection | Platform decides on the product selection. | Diverse product selection from various sellers. |
| Logistics & Fulfillment | Platform manages the entire supply chain. | Sellers handle their own logistics, fulfillment. |
| Pricing Control | Platform has direct control over product pricing. | Sellers have control over the pricing of their products. |
| Customer Relationships | Platform manages customer service and support. | Customer relationships may be shared between platform and sellers. |
| Brand Identity | Platform’s brand is prominent. | Individual sellers have their own brand identity. |
| Risk & Investment | Higher risk, significant investment in inventory. | Lower risk, investment in platform development. |
| Scalability | Scaling may be challenging due to physical constraints. | Scalability is often more straightforward by onboarding more sellers. |
| FDI in INDIA | FDI is not allowed. | 100 % FDI under automatic route allowed. |
Advantages of E-Commerce:
- Speed up the shopping process: E-commerce platforms allow customers to browse, compare and buy products faster, eliminating the need to visit a physical store.
- Personalized shopping experience: Through data analytics, e-commerce platforms can provide personalized product recommendations based on customer preferences, thereby increasing satisfaction.
- Reduced operational costs: E-commerce businesses can reduce overhead costs through functions such as outsourcing, allowing them to operate in multiple locations without a physical store.
- Customer retargeting: E-commerce platforms can easily retarget customers who have shown interest in products, using coupons, email marketing and personalized ads, thereby increasing the likelihood of conversion.
- Encourage accidental purchases: The convenient and simplified purchase process in e-commerce often promotes accidental purchases, thereby increasing sales.
- Access to reviews before buying: Customers can read product reviews and ratings from other buyers, helping them make informed purchase decisions.
- Detailed product information: E-commerce platforms provide product descriptions, specifications, and images, making it easier for customers to understand the product before buying.
- Making high-quality service affordable: E-commerce businesses can provide high-quality customer service with lower operating costs due to automation and digital tools.
- Fast and affordable marketing: Digital marketing strategies, such as social media campaigns and search engine optimization (SEO), help e-commerce businesses reach a wider audience quickly and at a lower cost.
- Flexibility of 24/7 service: E-commerce platforms are always available, allowing customers to shop at any time, increasing convenience and sales opportunities.
Disadvantages of E-Commerce:
- Lack of personal touch: E-commerce lacks the personal interaction and customer service that physical stores can provide, which can impact customer satisfaction.
- Uncertainty about quality: Customers cannot be sure about the quality of the product without physically inspecting it, leading to potential dissatisfaction.
- Delayed delivery: E-commerce often involves shipping, which can delay product delivery, especially to remote areas or during peak shopping seasons.
- Trust issues with high-value items: Customers may hesitate to buy high-value items like gold or furniture online, as there are doubts about their authenticity, quality and after-sales service.
- Site crashes: Technical issues, such as website crashes or slow loading times, can disrupt the shopping experience and lead to lost sales.
- Cybercrime and data privacy concerns: E-commerce platforms are vulnerable to hacking, data breaches and other cyber threats, posing risks to both businesses and customers.
Challenges to E-Commerce in India
- Lack of digital infrastructure: Inadequate digital infrastructure in many parts of India limits the reach and efficiency of e-commerce platforms.
- Low internet penetration in many areas: Limited internet penetration in rural and remote areas hampers the growth of e-commerce.
- Policy uncertainty: The absence of a specific and comprehensive e-commerce policy creates uncertainty for businesses operating in the sector.
- Taxation issues: Inconsistent taxation laws and issues such as Base Erosion and Profit Shifting (BEPS) pose challenges for e-commerce companies in India.
- Lack of digital literacy: Many potential customers lack the digital literacy needed to effectively navigate and use e-commerce platforms.
- Cybersecurity concerns: E-commerce platforms face significant cybersecurity risks, including credit/debit card data breaches and ransomware attacks.
- Language barriers: Limited availability of services in local languages restricts access for non-English speaking customers.
- Limited coverage in remote areas: E-commerce companies often face logistical challenges in delivering products to remote and rural areas.
- Quality variations: There may be significant differences between the product shown online and the product delivered, leading to customer dissatisfaction.
Recent Developments:
- Consumer Protection (E-Commerce) Rules 2020: These rules were introduced to ensure fair practices, transparency and protection of consumer rights in the e-commerce sector. They aim to protect consumers from unfair trade practices, misleading advertisements and ensure authenticity of products being sold online.
E-Marketing
E-Marketing uses the internet and digital tools to promote products or services to a target audience.
Examples:
- SEO (Search Engine Optimization): Enhancing website visibility on search engines like Google.
- Social Media Marketing (SMM): Promoting products on platforms like Facebook, Instagram, and Twitter.
- Email Marketing: Sending promotional emails to subscribers.
- Content Marketing: Creating blogs, videos, or infographics to engage customers.
- PPC (Pay-Per-Click) Advertising: Running paid ads on Google or social media.
- Affiliate Marketing: Partnering with affiliates who earn commissions by promoting your products.
- Influencer Marketing: Collaborating with social media influencers to reach their followers.
- Mobile Marketing: Targeting customers via mobile apps or SMS.
- Video Marketing: Using YouTube or social media to share promotional videos.
- Online PR: Managing your brand’s online reputation through press releases and social media.
Benefits of E-Marketing:
- Wider Reach: Reaching audiences across the world.
- Cost-Effective : Lower costs than traditional marketing.
- Measurable Results: The effectiveness of campaigns can be measured through tools such as Google Analytics.
- Personalization: Customizing the content as per each customer.
- 24/7 Availability: Customizing the content as per each customer.
- Flexibility and Agility : quick adjustments to campaigns in response to market changes.
- Detailed Targeting: Marketers can target specific demographics, interests, and behaviors, improving the effectiveness of campaigns.
Limitations of E-Marketing:
- High Competition : The online marketplace is highly competitive, making it difficult for brands to stand out.Competitors can easily copy marketing strategies, forcing businesses to constantly innovate.
- Security & Privacy Issues : Customers are concerned about data breaches and misuse of personal information.
- Dependence on Technology : Requires stable internet access and digital devices, limiting accessibility for some users. Technical issues like website crashes, slow loading times, or platform outages can impact sales.
- Trust Issues : Online fraud, phishing scams, and misleading ads make some consumers hesitant to engage with e-marketing.Lack of face-to-face interaction can make it harder to build customer trust.
- High Advertising Costs : Paid advertising (Google Ads, Facebook Ads, etc.) can be expensive, especially in competitive industries. Continuous investment is required to maintain visibility and engagement.
- Ad Fatigue & Consumer Resistance : Overexposure to digital ads can lead to ad fatigue, reducing engagement.
- Many users install ad blockers, further limiting the reach of online marketing efforts.
- Negative Publicity Spreads Fast : Negative reviews, customer complaints, or social media backlash can go viral quickly.A single mistake in an ad campaign can lead to significant brand damage.
Supply Chain & Logistics Mix / Supply Chain & Logistics Mix/ Supply Chain & Logistics Mix/ Supply Chain & Logistics Mix /Supply Chain & Logistics Mix
