Crazy times call for crazy organizations’- thus spoke Management Guru Tom Peters some 25 years ago. Given the current age of fast pace business models emerging every day, one has to often go really crazy looking at every aspect of business- be it dreaming and envisioning a new product or service; creating or re-creating an organization structure; segmenting the present and potential customers and converting their latent desires into crying needs- the heightened degree of madness is so visible around us that no one and least of all any BPM professional can ignore the same.

Disruptive Business Models

Disruptive business models are those that compel a major shift in the consumer behaviour. Given this definition, eruption of e-Commerce in the Indian retail space has possibly been the biggest disruption story of the last few years which is still unfolding.

…eruption of e-Commerce in the Indian retail space has possibly been the biggest disruption story of the last few years which is still unfolding.

We now have a spectrum of Indian Davids and Western Goliaths spanning all areas of our lives - how we pay our bills (PayTm, Mobikwik, Naspers backed PayU), how we travel (MakeMyTrip, Naspers backed ibibo), how we commute (Ola, Uber), and how we shop (Flipkart, Snapdeal, PayTm, Amazon, Alibaba through Snapdeal and PayTm) without counting the huge number of well-funded hyper-local businesses that have mushroomed recently, simply because they are too nascent.

Given that it was the e-retail businesses, and specifically Flipkart, who really kick-started this consumer revolution with the online Rail Ticket booking via IRCTC the only notable success until then, it is no wonder today that e-commerce is almost synonymously (though quite erroneously) linked to e-retail.

Some of the numbers indeed seem staggering – a cumulative Gross Merchandise Value (GMV) of US$ 14 Billion for the top three e-retailers as compared to $ 12.5 Billion for the top 10 offline retailer just a decade into mainstream e-retail in India, a projected GMV of USD 120+ Billion by 2020 making India the fastest growing e-retail market in the world.

Process Excellence – The Biggest Challenge

Disruption, by its very nature, implies innovation and a conscious big leap to a newer eco-system. It often drives as well as is driven by new technology. That being the case, could innovation at the business process level remain untouched? The obvious answer is a big NO.

The promise to the consumer is almost always steep or at least tantalizingly different for him to change an old habit. Living up to such a promise every time and keeping it up or even bettering than the competition on a sustainable basis would be impossible without solid and well governed processes backing the same.

While shopping online has caught the fancy of a typical educated urban consumer not only in the Metros but also in most tier 2 and several tier 3 cities, the real moment of truth lies in timely physical delivery of the chosen product within the promised manner and of course the deadline. This remains the single biggest challenge for the providers of various online marketplaces. Many of them have responded to the challenge by promoting or acquiring their own logistics firms- at least in the major geographies of their delivery operations.

In these times, it is a sane organization that combines disruptive technology with process excellence i.e., the right kind of crazy that will ensure the benefits of technology are reaped by everyone, for generations to come.

Innovating while chasing the right business metrics creates a virtuous cycle but innovating to chase the wrong metrics leads to fundamentally unsound business processes. It can be argued that many of the practices being followed by Indian start-ups across industries fall in the second category. Specifically in e-retail, three business practices are essentially shortcuts for acquiring new customers. These are: deep discounting, cash on delivery (COD), and a no questions asked return policy (NQA).

1. Extreme discounts have been the order of e-retail for so long that consumers now only equate discounting as a benefit for online shopping, ignoring increased selection and convenience;
2. COD eats heavily into already wafer-thin margins (cash management costs, longer cash cycles);
3. NQA leads to indiscriminate ordering and significant additional costa on handling/ returns.

Another key challenge is to reconcile the collections made by the delivery team. Any process weakness here and you are doomed to fail. Here the advent of disruptive practices in the payment systems space, most notably by the digital wallets like Paytm has the potential of revolutionizing the market at a pace far greater than the credit and debit cards mechanism that was witnessed some 15 years ago.

Likewise, Robotics in warehouses has been another recent phenomenon which is already making its impact felt in select parts of the country. LensKart- the premier Online retailer of eyewear has not only robotized its Lens cutting and fitting processes but also invested heavily in scaling up its delivery abilities through a good mix of insourcing with the default mode i.e., outsourcing.

Process Excellence – The Differentiator for Sustainable Success

It may not be over emphasising a proposition that the Indian e-Commerce ecosystem has a serious risk of losing focus on process excellence. Once critical mass is achieved and basic product market fit is demonstrated, it is imperative for organizations to focus on establishing robust and scalable processes in their next stage of growth. In fact, disruptive business processes or lack of those have been the distinguishing factors between a successful or not so impactful business venture in the e-Commerce space.

Process excellence and automation are not only critical for the customer delivery promise, these are fundamental to earn profits and ultimately create a sustainable business that stands the test of time. Who can forget the infamous Billion Dollar Sale launched by Flipkart last year where they hugely underprovided for the tech infrastructure leading to massive congestion and ultimate failure of the big bang initiative? On the other hand, Amazon has caught up rapidly in the Indian market through the sheer strength of more robust processes connecting the customer at every level of his engagement journey.

Process excellence and automation are not only critical for the customer delivery
promise, these are fundamental to earn profits and ultimately create
a sustainable business that stands the test of time.

In summary, while e-Commerce in general and online retailing in particular have already made a huge impact in India and accelerated a major shift in the customer habits, it is still very nascent in terms of process maturity.

There is indeed a real danger of the business leaders losing focus on the fundamentals of Process Excellence in the backdrop of excessive media coverage on the quotient and of course massive funding for customer acquisition. A more balanced investment approach, with adequate focus on technology and process structure, backed by robust governance mechanism, thus remains the need of the hour.

These are surprisingly sane and old-fashioned management guidelines, considered crazy by people looking to ‘disrupt’ everything under the sun. In these times, it is a sane organization that combines disruptive technology with process excellence i.e. the right kind of crazy that will ensure the benefits of technology are reaped by everyone, for generations to come.

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