Advanced Financial

Management

E-commerce inventory management

Presented By: Group 7

Name Enrollment No.

ARAVIND RAJARAMAN 21BSP0250
NADIMPALLI VIDYA NEELIMA 21BSP0434
PRATHEEK I 21BSP0489
SWETARANI NANDA 21BSP0649
JYOTIRANJAN PANI 21BSP3166
 TABLE OF CONTENTS
Sl. No Content Page No
1 Table of contents i
2 Synopsis ii
3 Definition of E-commerce inventory 1
management
4 Question 1 1
5 Question 2 3
6 Inventory management at Flipkart 5
7 Conclusion 6

i
 Synopsis
Ecommerce inventory management is simply the act of tracking the location,
amount, pricing, and mix of inventory available from your business. The
ecommerce aspect considers the necessities of an online retailer that may
need to track inventory for multiple online sales channels. It offers visibility
into inventory counts and locations from when it enters the warehouse until it
reaches the customer. Users can better view products that are overstocked,
understocked, out of stock.
Understanding how to manage inventory is crucial for any business. It prevents
waste, saves costs, and saves time. Keeping on top of supply creates more
customer focus as it gives people the products they want.

ii
 E-commerce inventory management
Definition: Ecommerce inventory management is an organized approach to sourcing,
storing, tracking, and shipping an ecommerce business’s inventory. Strong inventory
management processes and strategies can be a source of leverage for ecommerce
companies looking to increase efficiency and reduce operational costs.

The inventory management for E-commerce Business is important because the inventory
management process is efficient, cost effective, and accurate. It allows them to plan and
determine how much inventory stock they should have on hand at any given time.

1. What are the processes adopted by e-commerce players in India at the

time of ordering, storing, tracking and delivery of merchandise to its
customers?

A. Order placement: Order details (including items, item quantities, shipping details,
and delivery addresses) are typically sent to an order management system when a
business receives a customer order. If the company has multiple fulfilment centres or
warehouse locations, the OMS will automatically choose the best warehouse
location based on the delivery address and item availability. This helps to cut down
on delivery times and costs. To ensure faster delivery, one order with multiple items
may be fulfilled from multiple warehouse locations. For example, if one fulfilment
centre does not stock or does not have an item in stock, the customer may receive
two shipments from two different fulfilment centres to avoid having to wait for the
item to be restocked.

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B. Picking inventory: The process of gathering a specific number of items from
inventory in order to fulfil customer orders. Order picking must be a meticulous
process because it has a direct impact on the overall order processing workflow's
productivity: the faster orders are accurately picked, the faster they can be packed
and shipped. Organizations use a variety of picking strategies to efficiently fill orders,
including but not limited to:
 Piece picking is when each picker gathers the products needed for one order
at a time.
 Picking by zone, in which each picker is responsible for picking items within a
specific warehouse zone. At the end of the process, all the items are
gathered.
 Order pickers work in batches to collect products for multiple orders at the
same time.
Picking can be done manually by using picking slips and spreadsheets, or
automatically using barcodes and scanners, or even picking robots or machines.
C. Sorting: This is when the items are separated into groups based on their destination.
For example, if zone or batch picking strategies are employed, each item must be
sorted into its proper order before being packed and shipped. Sorting is an important
step toward accuracy and customer satisfaction because it gives employees the
opportunity to double-check that all ordered items are present and in good condition
before shipping.

D. Packing: The process of packing items safely and securely into appropriate shipping
boxes. Weighing the packages and labelling them with the recipients' addresses and
any necessary delivery instructions are also part of the packing process. It's critical to
prioritise dimensions and weights that can be easily handled and are cost-effective,
whether items are packed in custom packaging or plain corrugated shipping boxes.

E. Shipping: The process of delivering orders to their desired location. Orders can be
shipped directly to the customer, or they can be consolidated with orders going to
nearby locations to save money and reduce the number of shipments. Multiple
orders are usually shipped with the same carrier and then forwarded to specific
locations as needed when orders are consolidated. It's critical to use a dependable
tracking system when shipping so that the website and the customers can keep track
of orders.

Following up with customers to ensure satisfaction or answer any questions about

the product purchased is common practise for businesses. Customers are more likely
to be satisfied if the order processing steps are carried out effectively — that is, if all
items are delivered accurately, on time, and safely.

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2. Challenges faced by the e-commerce players in effectively and profitably
managing its merchandise in India.

I. Infrastructural Problems:
E-commerce relies heavily on the Internet. Unfortunately, internet penetration in India is
dismally low, with only 0.5 percent of the population having access to the internet,
compared to 50% in Singapore. Similarly, PC penetration in India is as low as 3.5 per
thousand people, compared to 6 per thousand in China and 500 per thousand in the
United States. The Internet can still be accessed using PCs and telephone connections. E-
commerce is still out of reach for the average person, with only 2.1 percent of the
population owning a phone. E-commerce has a difficult time reaching a population of
1,000 million people dispersed among 37 million households in 6, 04,374 villages and
5,000 towns and cities. E-commerce is still out of reach for the average person, with only
2.1 percent of the population owning a phone. E-commerce has a difficult time reaching a
population of 1,000 million people dispersed among 37 million households in 6, 04,374
villages and 5,000 towns and cities. Furthermore, both PCs and internet connectivity are
relatively expensive in India.
II. Absence of Cyber Laws:
Another significant difficulty in the e-commerce business is the lack of cyber regulations
to control online transactions. The World Trade Organization (WTO) is anticipated to pass
cyber legislation soon. The Information Technology (IT) Bill, which was passed by the
Indian Parliament on May 17, 2000, aims to address the developing sectors of e-
commerce through legislation.
The bill also aims to make e-commerce easier by addressing the legal difficulties that the
new technology has produced. As it stands now, the Bill only addresses commercial and
criminal law. It does not, however, address issues such as individual property rights,
content control, or specialised data protection regulations.

III. Privacy and Security Concern:

Today, privacy and security are two of the most vulnerable aspects of e-commerce. So
far, neither the Website nor outside watchdogs have provided any protection against the
dangers posed by the exploitation of one's privacy.

IV. Payment and Tax Related Issues:

Payment and tax issues are another issue that e-traders are constantly confronted with.
The electronic payment is made with a credit card or plastic money, which has not yet
gained popularity in India for two reasons. To begin with, India has a relatively low credit
card penetration rate.
Second, with the growing possibility of credit card theft perpetrated by hackers, Indian
customers are wary about paying by credit card. Credit cards have not grown in India, as

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 they have elsewhere, owing to authentication and recognition issues with electronic
signatures.
Similarly, in this seamless global e-commerce, tax administration is a challenging issue.
Because determining tax incidence in the case of e-commerce transactions is challenging,
there is plenty of room for tax evasion. What is the best way to get rid of this? Some
propose a 100% tax vacation for e-commerce in the country until 2010.

Others argue that e-commerce should be tax-free for it to thrive in the country. In the
United States, it has already been decided that nothing sold on the internet in digital
form will be taxed. Should India not, at least for the time being, follow the lead of the
United States? We'll have to think about it.

V. Digital Illiteracy:
Digital illiteracy is currently one of the most serious issues confronting India's e-
commerce industry. On the other hand, India is devoid of software engineers due to the
ongoing exodus of talented computer programmers to other countries. The Indian IT
industry has been seriously harmed as a result of this. Clearly, the solution to this
challenge resides in reducing computer brain drain and increasing computer usage in the
country.
The Indian consumer is also defined by his distinct mentality. In most cases, an Indian
consumer will not go large distances to obtain a product of his choosing when a nearby
store can give him with anything he desires.
As a result, the consumer does not explore the Internet, despite the fact that he or she is
aware of the associated connectivity and other issues. Furthermore, establishing
confidence through electronic media takes time, particularly when the seller is located in
a remote location.

VI. Virus Problem:

The computer virus that started in Manila confirms that computer viruses are a severe
obstacle in the execution of e-transactions. On May 5, 2000, a computer virus known as "I
Love You" was discovered in Manila, Philippines, and spread throughout the world,
infecting millions of computer files and causing a massive loss of $7 billion to
governments and businesses. The perpetrators of the 'virus' must face severe penalties,
or else such attacks in the future will be devastating to India's still-developing e-
commerce sector.

VII. English Specific:

Finally, all the software now in use in the country is English-only. However, for e-
commerce to reach small businesses, it must be provided in the owners' native languages
(regional), allowing them to adapt e-commerce processes to their operations. The sooner
it is completed, the easier it will be for small businesses to adapt to e-commerce.

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3. Inventory management at Flipkart

Flipkart is an electronic commerce company and among India's largest online retailers.

Flipkart uses a Continuous review model. The inventory stocks shed when the inventory
levels reach Reorder point (ROP). The company employs first in first out (FIFO) method
for its inventory management. Under the FIFO method, shipment request is sent to a
warehouse where the oldest inventory items are shipped first. This model makes sense
for electronics since technology becomes obsolete very quickly.

Flipkart employs a model of continuous review. When inventory levels approach the
Reorder mark, inventory supplies are shed (ROP). For inventory management, the
organisation uses the first in, first out (FIFO) system. Shipment requests are forwarded to
a warehouse where the oldest inventory items are sent first using the FIFO process This
model makes sense for electronics since technology becomes obsolete very quickly.

Flipkart uses sales to predict the levels of inventory. The warehouses are divided into
multiple parts such as inventory, packaging, shipping etc. Stocks are replenished every
24-48 hours and in the back end the company records details of all the transactions. The
company has partnered with postal companies for order tracking and reconciliation, Thus
the customer is updated about the state of his order via email, website or text messages.
If the product needs to be returned, it is done effectively and efficiently due to the
company’s partnership with the courier companies. In the case of electronics, warranty
and after sales service is solely the manufacturer's responsibility but Flipkart facilitates
interaction between supplier and customer.

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Conclusion
Poor inventory planning undermines the success of any eCommerce business. Efficient
inventory management is key to sustained profitability and adequate supply of inventory
ensures order fulfilment levels are always maintained.

Retailers can keep track of all the details that tend to slide between the cracks with
ecommerce inventory management software, and achieve greater short- and long-term
success.

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