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CASE STUDY

Luring you to
I
T is better known as India’s first pri- Shopping@satyamonline.com has
vate Internet Service Provider as something for everyone – music, books,
well as the second Indian company computers – it’s all there. At present, the
to be listed on the Nasdaq. A sub- site has over 18 major categories to
sidiary of Satyam Computer Services choose from, with some categories hav-
Ltd, Satyam Infoway has been at the ing several sub-classifications, and more
forefront of the e-biz wave. But, there shops likely to come on board in the near
has been little talk about its shopping future. The channel has gone in for tie-
channel – shopping@satyamonline.com. ups with individual merchants for sourc-
A close examination, however, reveals ing the products on offer, while the logis-
that this absence of hype is deliberate, tics angle is being taken care of by DHL
part of a strategy to walk the talk rather (Air Freight Ltd), and the credit verifica-
than spew bombast and later fail to tion is through Citibank. Using DHL’s
deliver. reach, shopping@satyamonline is able to
In an arena that still has only a few guarantee deliveries to over 280 loca-
players, shopping@satyamonline.com tions across the country.
offers a comprehensive range of prod-
ucts, and the company says its objective A typical transaction
is to be “a definitive provider of e-com- So, how does a transaction at shop-
merce services.” ping@satyamonline.com work? Nothing
click-and-buy Sankar Radhakrishnan

very complicated actually, but for ease of registered at Satyam, all she has to do is
understanding it can be divided into the click on a separate icon, enter her login
following stages: name and password and all the neces-
1. Rita Kumar is looking for a gift for sary details are automatically filled in.
her husband. She browses through the All this information on the order is
various categories and decides that some processed by Satyam’s server, which
biker-wear from Royal Enfield is just sends a request to Citibank to check that
what her husband would like. She clicks sufficient credit is available to cover the
on it to add it to her shopping cart. She value of the purchase. The bank then
continues to browse, and picks up some blocks this amount, but does not charge
books and music too. All these are added Rita’s account. So, the payment is not yet
to her shopping cart and it’s now check- made. As soon as Satyam is informed
out time. that Rita can pay for her purchases, it
2. As soon as she clicks on the check- starts processing the order. This credit-
out icon, a form appears, where she has verification process happens in a matter
to fill in details about herself such as her of minutes.
postal address, e-mail address and so on, 3. Satyam sends the details of the order
give the address to which the package to the different merchants who typically
has to be delivered and, of course, her will have the order ready in four-seven
credit card details. If Rita is already days. Parallel advice is sent to DHL
giving details of the consignment and
While Satyam’s where it is to be picked up from, and
online bazaar who the consignee is. When the order is
ready, the merchant informs his local
offers almost DHL contact who then arranges for the
all that virtual package to be picked up. Though DHL
delivers most products bought at
shoppers have Satyam, some purchases, especially per-
come to expect, ishables are delivered by local couriers.
This, however, is likely to change very
its absence of soon, according to K.R.
an alternative Chandrashekaran, Vice-President-
Retail, Satyam Infoway Ltd.
payment option 4. Once DHL has picked up the parcel,
to those without an airway bill is prepared and the pack-
age can be tracked on DHL’s trace and
plastic money track system. At this juncture, DHL
might prove a sends a confirmation to Satyam about
the product’s shipment.
drawback. 5. As per the current delivery system,
DHL will call Rita to arrange a suitable
delivery time. In case such an arrange-
ment cannot be worked out, DHL will Satyam, which then e-mails the cus-
attempt delivery during normal business tomer about the delivery failure and the
hours. In the event that the delivery can- reasons for it.
not be carried out, DHL will make a sec- Another problem that can arise is dam-
ond try, and if the delivery still cannot be age to the product. Whenever possible,
made, DHL’s agent will leave a DHL card the courier tries to get the recipient to
and contact number at the customer’s confirm that there is nothing wrong with
premises requesting them to contact the goods. But in the event of any com-
DHL. Once the delivery has been carried plaint, shopping@satyamonline has a ‘no
out, the courier informs Satyam. questions asked’ replacement policy.
6. On confirmation of delivery, Satyam
sends a requisition for settlement to Revenues
Citibank, which then pays out the money The Web site has two revenue streams:
to Satyam and charges the customer’s 1. Listing fees: These are paid by the
account. Only then does Satyam pay the shops or brands that are showcased on
merchant. the mall. This is usually an annual fee,
the value of which depends on the size of
Troubleshooting the store, the design and the extent of
Things usually work out all right. But showcasing.
what happens when something goes 2. Commission on sales: Typically, this
wrong? Suppose the merchant does not is a percentage of the sales that happen
have the goods Rita ordered? This situa- online. It is akin to the retail margin
tion typically arises in the case of books earned by brick-and-mortar showrooms,
and music, when the item ordered is not department stores and supermarkets.
in stock. Satyam then keeps the cus- The exact percentage is generally deter-
tomer posted about the likely delay and mined by the category.
also offers the customer the option of
cancelling the order. Why?
Similarly, if all attempts at delivery fail For the merchant, the Web site offers a
and the customer also fails to get in new channel and greater access and
touch with DHL, the courier informs thus a chance to boost revenue. This is

50 ✦ Praxis ✦ Business Line ✦ July 2000


cards. Though the number of credit card
holders is growing, it is still a major
Delivery is a
drawback, especially when Satyam’s danger area,
main competitor Rediff.com offers cus-
tomers the option of paying by cheque
especially since
and demand draft, and even by VPP in logistics in the
the case of books and music. This imme-
diately makes Rediff appeal to a much
country are
larger audience. not yet of
Another issue, and one that is common
to all players in this market, is sales tax.
international
Working out how products bought online standards.
should be taxed is a major headache for
all e-tailers. Right now, Satyam has
However, this is
worked out an uniform rate of 10 per a problem that
cent CST into its prices, but the issue will
have to be clarified soon. The absence of
is common to
uniform rules could be another hitch. all e-tailers.
The recently introduced IT bill may
redress this though.
Delivery is another danger zone, espe-
cially since logistics in the country are
especially true of smaller organisations not yet of international standards. The
that cannot afford the marketing costs of problem of delivery, however, is common
reaching out to a larger market. Satyam to most e-tailers.
gives such organisations the reach they For all its advantages, though, shop-
need with its background, infrastructure ping@satyamonline.com is a little
and back-end systems. unfriendly to the first-time user. For
For the customer, Satyam is able to someone who has never shopped online
offer a discount because of some savings before, it can be slightly daunting. There
in overheads, and the customer thus gets is assistance available at the help-desk,
the goods at a slightly lower price. There but the help icon is rather small and does
is also the advantage of being able to not immediately catch the eye. Rediff, on
buy goods that may not be available the other hand, has a very clearly
through regular channels. An example is marked ‘how to order’ link on its shop-
being able to buy Hindustan Lever’s ping page.
leather bags, which are normally not
available through regular channels The future
except on certain occasions. These prod- With online shopping growing by the
ucts are available at shopping@satya- day, shopping@satyamonline.com seems
monline right through the year. well set to be right there on top. It has an
The Web site also offers the customer early-mover advantage as well as some
better security of payment through its solid backing. Given this, and the chan-
tie-up with Citibank, also ensuring secu- nel’s commitment to providing excep-
rity of personal customer details by tional customer service, the Web site
restricting access to its database. appears set to be a winner. ■

Issues
Some issues still remain to be
addressed. One is the extent of penetra-
tion of credit cards in the country. It is
clear that only a small section of the
country’s population possesses credit

Praxis ✦ Business Line ✦ July 2000 ✦ 51