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Retail & E-Commerce Operations: Dr. Rakesh Venkitasubramony IIM Lucknow (Oct 2020 - Jan 2021)

This document provides an overview of a course on Retail & E-Commerce Operations. It discusses the large scale of operations at major companies like Walmart, Amazon, and Uber. It also notes the challenges of demand forecasting and managing large amounts of stock keeping units and product data. The course will examine case studies of operational issues in retail and e-commerce companies. It will evaluate students based on exams, class participation, and a group project analyzing the operations of a selected retail company. The goal is to develop critical thinking on operational problems and solutions.

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98 views18 pages

Retail & E-Commerce Operations: Dr. Rakesh Venkitasubramony IIM Lucknow (Oct 2020 - Jan 2021)

This document provides an overview of a course on Retail & E-Commerce Operations. It discusses the large scale of operations at major companies like Walmart, Amazon, and Uber. It also notes the challenges of demand forecasting and managing large amounts of stock keeping units and product data. The course will examine case studies of operational issues in retail and e-commerce companies. It will evaluate students based on exams, class participation, and a group project analyzing the operations of a selected retail company. The goal is to develop critical thinking on operational problems and solutions.

Uploaded by

Ethan Hunt
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Retail & E-Commerce

Operations

Dr. Rakesh Venkitasubramony


IIM Lucknow (Oct 2020 – Jan 2021)
Session 1

Overview

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Reasoning behind the course

• Walmart in the US has more than 150 DCs, each more than a million sq. ft and ships
over 200 trailers daily.
• Big Bazaar has over 14 million sq.ft of brick n mortar stores across 321 cities in India
• Amazon lists approximately 3 billion SKUs across multiple marketplaces, around as
many packages shipped per year
• Apple has 20 million developers contributing apps.
• Uber does roughly 6 billion ride every year, over 36 million users, 2.5 million drivers.
• The biggest companies of the world are changing the contours of operations and supply
chain management.

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Small in scale, but truly remarkable customer insights

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Large scale, data rich, struggling for information

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And the result…

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A clearance sale…

• Is not a strategic advantage


• Is not a marketing innovation
• Is not a success of data analytics
• Is not a sign of operational excellence
• It just means that someone did not know what to buy, when to buy and how much to
buy
• No amount of EOQs, EPQs, MRPs, ERPs, Exponential smoothing etc. etc. will help
• Buy more across seasons, and hope that somehow the customer would pick it up!

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“Line up 10 new shoes and 10 buyers and ask them which
one will be the best seller next season, and you get 10
answers” – Jerome Fisher, founder, Nine West Shoes

“The single largest expense to any retail supply chain is not


tariffs nor returns, its markdowns” – Edward Hertzman, President,
The Sourcing Journal

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Turbulent environment

• Rapidly changing demographics, buying patterns


• ‘Fast’ fashion
• Excessive margin pressures on many retailers
• Increasing wages further squeezing margins
• Long lead time supply chains – trade war!

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Philosophical Insights

What are the ‘classic functions’ of retailing?


• Creating of assortments
• Break bulk
• Exchange of value
• Time and place convenience
• Transactional efficiency
• Information availability
• Reasonably fair price

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Philosophical Insights

Theories of institutional change


• The Wheel of retailing
• Entry as low cost low status, increasing progressively till a new competitor enters at the bottom
• Companies have tried to inhibit this movement (eg: McDonald’s) or defend using a combination of
store formats- Store Portfolio Management (eg: Dayton’s)
• The dialectic process
• General to specific and specific to general
• Life-cycle
• Natural selection

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Competitive Priority

At a point in time, retailers generally try and become one (or more!) of the following
• Cheap - est
• Everyone loves a good bargain, even the rich
• Extremely efficient procurement, supply chain, high turns, low rents
• Every Day Low Prices at Walmart, Costco
• Big – est
• Dominant assortments, category killers
• Hot – est
• Fast fashion, spot trends quickly
• Easy – est, Quick-est. Examples?
• Crude way of comparing strategies, but it helps as a starting point nonetheless.

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Operational Issues in Retail and E-Commerce
• Inventory – turns, record accuracy, shrink, obsolescence, markdown, returns, valuation
• Channels – online, offline, multi-channel, omni-channel
• Forecasting – challenging, quantitative and qualitative, data
• Assortment planning
• Buying
• Distribution to stores, last-mile delivery, fulfillment center operations
• Pricing, discounts
• In store operations and logistics, layout, shelf space allocation.
• Online display optimization, recommenders, personalization with data
• Incentives
• Platforms in general – problems like ride-sharing, surge pricing, onboarding

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Festival season sales – Good? Bad? Ugly?

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What we will aim to do
• Though largely an operations course, the problems are at the interfaces of Operations,
marketing and strategy
• Look at these problems through some stories
• You will be largely studying cases, critically examining them, discussing them
• Some theoretical discussions will happen.
• Trying to have industry leaders speak to you as well.
• The aim is to:
• Develop the ability to critically look at situations, data.
• Have insights on how some companies/executives approached operational problems
• Examine how some companies dealt with ambiguous operational environments
• Have an understanding of some mathematical models, not too many

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What not to expect
• The course is on Operations, marketing and strategy, but not operations, marketing, and
strategy.
• Less emphasis on complex mathematical models- optimizations, choice modelling,
game-theoretic modelling
• It is extremely challenging, and rather unwise, to separate operational decisions in retail
space
• Correct answers to cases – there aren’t any
• Data analytical techniques, coding - sorry

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Evaluation

Component Weightage
End Term 30%
Mid Term 20%
4-5 Quizzes (n-1) 20%
Class participation 5%
Group Project and Presentation 25%

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Group Project
• Groups of 6-7 students to be created
• Select a retail company (except Walmart, Amazon, Home Depot, JD,
Metro, Uber, Borders group etc.)
• You can either study how the company achieves operational excellence,
or analyse any particular decision/set of decisions.
• Source: Secondary data (analyst reports, annual reports etc.), interviews
with people etc.
• Get my approval by month-end. Meet me once in early December.
• Final presentation (15-20 mins), report

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