BUSINESS MODEL
Online Distribution v/s Offline Distribution
The Indian Landscape-2014 v/s 2020
Submitted to: Sutikshan Naithani
Submitted on: 6th December 2014
By
Lokesh Chandak
Institute of Management Technology
Ghaziabad
India is in the verge of internet boom. The Internet in India took more than a
decade to move from 10 million to 100 million users and 3 years from 100 million
to 200 million whereas it took only a year to move from 200 to 300 million users.
The government’s ‘Digital India’ programme to connect all villages with broadband
in the next 3.5 year i.e., by the end of 2018 will provide a huge boost to internet
user’s base in India. The online market share in India is about 0.5% compared to
global average of 4%. Thus there is a tremendous scope for further increase.
According to the study by KPMG and Internet & Mobile Association of India, ecommerce will contribute 4 percent to India's gross domestic product by 2020.
The major reason for such staggering growth in the online business are
1.
2.
3.
4.
Tremendous growth of online users.
Lower prices compared to offline purchase.
Better online shopping experience.
Efficient operations lead to saving of time and money of both buyer and
seller.
Limitations/Challenges
1. Since the product couldn’t be physically inspected before ordering and
receiving, HCL have to make its returns and redress processes transparent
and reliable.
2. Lack of proper infrastructure which is expected to develop tremendously in
coming years.
3. Unreliability of 3rd party carriers may hamper the brand.
4. Absence of physical communication with its customer.
Impact of online distribution models on offline distribution:
It can be absolutely predicted that the online distribution system will be much
more convenient, easier, better than the offline distribution. Online distribution
will lead to removal of middle men (Re-Distributors) thereby increasing
profitability for HCL as well as retailers. The retailers and consumers can
directly purchase from distributors. HCL should implement a system in which
the retailers have to register with the distributor online and then HCL can
categorize or rate the retailer as per their credibility and volume of sales.
Payment period should be as per the rating of the retailer. The retailers will
directly make orders online. This will bring in much more transparency. The
system of eliminating the redistributors and connecting with the retailers directly
online can be implemented gradually to all across the country. B2C can also be
implemented after developing proper infrastructure and gaining experience in
B2B model. Connecting directly with the small as well as large retailers will
result in smoother operations. It will also be a win-win situation for both the
parties as described above. The increasing penetration of internet and rising
number of users will make it possible.
Considerable competition is present in the e-commerce market like
alibaba.com, amazon.com and flipkart.com. However, in the coming years, the
demand is expected to increase tremendously thereby creating space for new
players to enter the segment and prosper. This is the right time to enter the ecommerce market and take the advantage of being among the early movers. Also
HCL will be able to have some time to develop its management as per online
business requirement if it enters the online segment today and hence it will be
automatically a major player in future.