As the festival season approaches every year, e-commerce marketplaces in India have taken to offering hundreds of tantalising items at steep discounts to lure shoppers to their websites.
The practice has become the online equivalent of the Black Friday in the US, which marks the beginning of the sale season when shoppers madly dash to stores such as Walmart and Target.
Online sales in India are yet to reach the scale of Black Friday or of China, but they have become a critical activity for these enterprises every year. E-commerce players such as Flipkart, Amazon India, Paytm and Shopclues says they shipped 10-15.5 million units this season, in some cases almost double last year’s tally.
Sales will likely ascend as more shoppers go online — from 50 million now to 200 million by 2020. Soaring sales have been possible thanks to a frenzy by customers for ‘best deals’. Even flat screen TVs are sold out in minutes.
But how do these companies prepare for the big day or rather big days (sales run into at least five days and return in short bursts)? They not only have to keep up with the multi-fold traffic jump to their website but also with a sharp spike in demand.
So there is never a case of ‘too much preparation’. Companies like Flipkart learnt some tough lessons from the 2014 sale, when it faced technical glitches and called off the sale was in less than 24 hours.
“It’s an Olympic kind of moment,” says Smrithi Ravichandran, director, category design organization, Flipkart. Kishore Thota, director, consumer marketing, Amazon India, says scale is the biggest difference in a sale. “You have to prepare for new peaks.”
Indeed, companies approach sales as political parties would a mega rally, but on a more sophisticated and grander scale. Everything from logistics to sales force to customer support to technology has to be ramped up and work in sync to ensure a glitch-free sale.
Ten months to sale
Planning now starts about 10 months in advance. Flipkart, for example, looked into the previous sales to understand what went wrong and right. Did sellers have enough inventory? It also studied buying patterns.
In June, Flipkart set up a core team of 30 drawn from logistics, engineering, Myntra (its fashion arm), customer care etc to brainstorm on the upcoming sale.
The team reported to CEO Binny Bansal every week. Each department—logistics, seller management, marketing, systems, product, supply chain— prepared a ‘playbook’, a detailed document on what needs to be done, to anticipate events and how to handle crisis.
Amazon India focussed on creating scale to manage the traffic. In the run-up to the sale, it added a 175,000 new products every day.
It then increased the number of warehouses and expanded its ‘I have space’ network, tie-ups with kirana stores, gas stations etc where products are dropped to help buyers pick them up themselves if they so opt, to help in last-mile connectivity.
Amazon increased its pickup points almost 18 times to 12,500. Some companies scouted for shopping trends. Shopclues sent teams to China, Hong Kong and Singapore trade shows to spot trends. “This was to get an idea of what to push in the season,” says Sanjay Sethi, CEO, Shopclues.
Checking out sellers…
Sellers are a critical part of the sales and companies send teams to engage with them. Another team tests the systems in office.
The aim is to provide on-ground and online support to sellers. Amazon held meetings at 41 locations in 24 cities while Shopclues focused on sellers in tier 2 and 3 towns like Nagpur, and Coimbatore, which account for 70 per cent of orders.
Flipkart held special events with sellers in hotels across the country. In mid-September, it invited top sellers in Maharashtra to Ramada Hotel in Powai, Mumbai to prepare for the sale.
A key reason for the 2014 damp squib was because not every stakeholder in the sales process was on board—logistics failed to react to an order overload while sellers were not equipped to service orders.
“They told us about inventory planning, what to stock, what might sell,” says an online seller of jewellery who was invited to Powai.
Sandip Kohli, founder, basement bazaar, a seller of shoes and fashion products, says companies share analytics with sellers, discuss tentative costing and ask them to ramp up sourcing prior to sale.
Like many other sellers, Kohli had to reduce prices 12-20 per cent further. “It eats into the margins but higher volumes make up for any margin loss,” says Kohli.
Seller education helps to iron out supply-side issues. But all these efforts will count for little unless the app and the site is glitch free.
During a sales, traffic typically increases nearly 10 times to 8-10 million.
An e-commerce platform’s app and site must be equal to the rush. Flipkart’s playbook for engineers is a diary packed with tips on how to react to a situation — demand peaks, customer complaints, logistics problems, software and hardware glitches.
All of September, 150 engineers worked from 9 pm to 9 am to test the site.
Dummy orders were carried out to see how the system reacted. Amazon scaled up its hardware five times.
The company has the luxury of having infrastructure on cloud with outsourced partners, which means additional capacities can be added on the go.
Peaks were seen at mid-night and in early morning, just when people entered offices. And prior to the sale, during what the technology teams called `game days’ Amazon engineers carried out dummy transactions.
…The Big Day
When the big day arrives, the offices of these companies are turned into war rooms.
At Paytm, the conference room in its Noida head office had 30 engineers constantly monitor a live dashboard and their smartphones for specific updates.
“It’s a data room, where live transactions are projected into TV screens with key metrics,” says Saurabh Vashishtha, vice-president, Paytm. The rush begins in a matter of seconds and increases by the minute. If shoppers feel hurried or bombarded with options, the backend teams at online marketplaces have to be on their toes. And shoppers are not the only ones constantly staring at monitors. “Every single employee has worked 24-48 hours at a stretch during a sale,” says Ravichandran.
Companies do their bit to boost employee morale. Amazon employees get a regular supply of snack and beverages round the clock. Thankfully, shopper fatigue sets in as the day progresses as most buyers scramble to grab the best deals early.
The sale finally ends at midnight and it is back to business as usual. Wait! The next sale is round the corner.
Click Here for Original Source – Economic Times