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    Contrary to the fears that e-commerce portals will bring a downfall of the physical retail format, the latter has bounced back with the might of the e-commerce channel. A booming consumer market in countries like India and China, entry of foreign retail players, domestic giants diversifying into retail and mushrooming local stores – all indicate towards the high growth potential of the retail sector. But at the micro level, it is essential for budding entrepreneurs and business enterprises not to get swayed away by the favorable macro conditions and do their groundwork properly before entering into retail business. This article will highlight six important areas which every retail entrepreneur should revisit.

    Business Model Feasibility

    The business model is basically how a company plans to create and deliver value, generate revenue and earn profits. For example, a retail departmental store aims to earn revenue by selling groceries and household supplies (value), procured through wholesalers (partners), to the local customers (target segment, CRM) while retaining a margin on the goods so that profit can be earned after deducting COGS and operating costs from the revenue generated. For a business model to work, it is very important to assess if it can be executed as intended or not. For example, if there are competitors already present in a given locality, the idea of a new departmental store in that location may never take off unless it has a business model better than that of its competitors. In case of retail departmental stores, a better business model may include exclusive wholesale partners, trained staff, advanced servicescape, varied payment options etc. Undertaking a feasibility study of the business model will help an entrepreneur not only in its evaluation but also in its improvement towards making it more competitive and more profitable.

    Undertaking a feasibility study of the business model will help an entrepreneur not only in its evaluation but also in its improvement towards making it more competitive and more profitable.

    Product Category

    Retail products and services can be classified into certain broad categories like books and stationery, apparel, electrical and electronic goods and services, financial services (like insurance, stock broking), sports equipment, groceries and home supplies, medical stores, footwear, furniture etc. Before choosing the category of products/services for a retail venture, there are certainly important considerations involved.

    • Value of the product – How are the targeted customers going to benefit by using the product? The products/services offered to the customers must fulfill their specific needs or solve their specific problems.
    • Size of the market demand for the product – The market share a retail enterprise expects to capture must substantiate its revenue targets.
    • The frequency of consumption/need – How frequently a product/service is consumed directly affects how frequently that product will be purchased.
    • Competition and channels – Customers have different shopping destinations/preferences for different product categories. For example, customers in a given location may have a preference for one or two medical stores over the others for their needs of medical supplies or the customers nowadays have a preference for online shopping channels for the purchase of electronic products of complementary nature like power banks, Bluetooth speakers etc. Thus, the scope of competition in retail is not just limited to business entities in the local market but also extends to different channels of distribution and delivery which need to be considered in choosing the product categories.

    Pricing and Margins

    Pricing is a very important element of the marketing mix. Pricing strategies are decided after taking into consideration various factors like costing, brand USPs, business environment and the marketing objectives and strategies of the business enterprise. For example, when Reliance Jio was launched, its services were offered free of cost to its subscribers across the country for more than 6 months. It helped Reliance Jio penetrate the booming telecom market in India and the company captured a market share of 6.4% in a very short of span of time (1). Some of the important pricing strategies are listed here.

    • Premium Pricing – Companies can charge higher/premium prices when their products/services have strong brand USPs and exclusivity and there’re no immediate competitive threats or the entry to the market is restricted.
    • Penetration Pricing – This pricing strategy is used by companies to enter new markets or capture larger market share by setting the prices of their products lower than that of the competitors and thereby attempts to lure customers.
    • Economy Pricing – This is a low-cost-no-fancy marketing approach where the primary focus of the companies is to provide the core product/service to the customers. The primary objective here is not to make the product cheaper but to make it accessible to the economically sensitive segment.

    Other popular pricing strategies include price skimming, bundle pricing, promotional pricing, psychological pricing, geographical pricing, value pricing, product line pricing, optional product pricing and captive product pricing.

    To read more on pricing, click here – 6 Ways To Price Your Product 

    SOPs and Operational Efficiency

    In order to ensure that goods are available on time (inventory process) and are effectively put on display (merchandising process), customer service goes unhindered (staff management and training) and other essential business processes are effectively carried out, it is very necessary for a retail enterprise to ensure that the operational activities (which makes up a business process) are laid out in a well-defined format. The answer lies in developing Standard Operating Procedures (SOPs). Having a written, systematic and step-by-step procedural roadmap of the operational activities can help a retail enterprise in several ways –

    • Employees can better understand what procedures they are required to follow in executing their functional duties and what output they are expected to deliver.
    • Maintain consistency and uniformity in operations and operational outputs
    • Monitor and control the performance of the retail enterprise at the operational level and thereby improve the operational efficiency

    To read more about SOPs in retail, click here – 05 Reasons Why You Must Develop SOPs For Retail Stores

    Brand USPs

    Barring monopolistic situations, retail is a fiercely competitive space. From needle-makers to airliners, no business entity is spared from the intense competition at the retail level. This is especially true when the products/services/values being offered by different companies in the same market are homogenous. This is where USP (Unique Selling Proposition) comes into the picture. We can take the example of the telecom industry in India. All the service providers provide similar services except maybe for some amount of geographical variations in the network reception and internet connectivity and this exception itself strongly guides the customers in choosing one service provider over another. The rest of the credit could be attributed to perceptive positioning and advertising. But when Jio was launched and offered the same services as that of its competitors with a strong USP that its services will be provided free of cost to its subscribers, a brand like Reliance was able to quickly secure a considerable share of the market. However, it may not always be possible for a company to create any real difference with which it could establish a distinct identity or position itself uniquely in a market. That’s when companies try to make use of perceptive positioning to draw the customers closer to a brand. Whether real or perceptive, brand USPs are crucial for a business enterprise venturing into the retail space to position itself as unique or distinct from its competitors.

    This is especially true when the products/services/values being offered by different companies in the same market are homogenous. This is where USP (Unique Selling Proposition) comes into the picture

    Showroom Layout

    The layout of a showroom or a store refers to its basic architectural map comprising of floors, entrances, exits, parking, payment counters, aisles, lobby, display, demo counters, trial rooms, washrooms etc. Showroom layout is designed keeping in mind factors like display of merchandise, movement of people and inventory, design details, the category of products, services, safety and security etc. But a showroom is much more than the architect’s map. Customers’ first impressions about a business are built here and it deserves the best shot. Certain highlighters worth considering in showroom design and layout are listed here (2).

    • It’s good to have store windows.
    • Make sure there’s something eye-catching when customers enter the showroom.
    • Keep the basic directional signs simple and movement easier.
    • Don’t bring the aisles to abrupt ends.
    • There’s no necessity to keep the aisles straight; they can be curved too.
    • Don’t let the display stacks touch the ceiling.

    Retail is not an easy nut to crack especially when an entrepreneur aspires to rise above the average retail player in the targeted market which remains the goal of every retail enterprise. An ambitious business model might fall flat if it is not thoroughly examined and brainstormed with critical and alternative vision and viewpoints. Choosing a product category where the competition is already intense might limit market share. Pricing products too high might dampen revenue projections or be pricing them too low might result in slow growth. Thus, it becomes imperative for retail entrepreneurs to reassess their business ideas and empower it with the right strategies.

    To read more article related to this topics click here: How can an Indian SME Attract Investment? | YRCHow Can an SME Raise Funds from Public? | YRC05 Reasons why Developing the Right Culture in the Organization is Inevitable for Growth | YRCHow SOPs will Benefit Wholesale Brand Venturing into Retail | YRC.

    YRC is an “Expert Service Division” of Mind-A-Mend Consultancy Pvt. Ltd..

    Author Bio

    Rupal Agarwal

    Chief Strategy Officer
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      PROCESS AUTOMATION

      The idea of having Ecommerce Consultants on-board from the beginning itself points towards reducing the involvement of the promoters in daily operations. Ecommerce Businesses willing to be a brand reaping profits & sustaining the competition must ensure that most of their processes should be automated. The more the manual intervention, the more would be the errors.

      In Ecommerce business, you get only 1 chance to impress the customer & if you mess up there, you lose the customer for long.

      Process automation in respect to all the activities pertaining to customers from order receiving to order fulfilment is a must for a seamless experience for the customers.

      Task Management is another grey area where most deadlines fail as 90% of the tasks are assigned manually & are forgotten, unheard, misunderstood or mistaken.

      YRC Team of Ecommerce Management Consultants helps to make maximum of the processes system-driven to ensure minimalistic manual intervention.

      VIDEOGRAPHY & PHOTOGRAPHY

      No matter how good your product is, the customer would know only if it looks good.

      Photography includes the following steps:

      • Cataloguing your products
      • Cataloguing your images
      • Backup your images (A few cloud storage solutions include Dropbox, Google Drive, Bitcasa, Apple’s Cloud Storage etc.)
      • Choose the right camera & lens (You may also outsource the photography to a third party agency)

      DIGITAL MARKETING

      Digital Marketing includes SEO & SMM. SEO i.e. Search Engine Optimization includes activities like back-linking, meta tags, blog-writing etc. to ensure your website ranks on the 1st page on Google Search.

      Next comes SMM i.e. “Social Media Marketing” which as the name suggests including promoting your products on all the social media sites, email marketing, influencer marketing & several other BTL activities.

      These activities are going to be recurring & would decide the traffic on the website, the conversions, whether the right target market is tapped, the likes, the views, the orders, the reviews & much more. YRCs Ecommerce Consultants create a budget for digital marketing right from pre-launch to launch & for each month thereafter.

      Building digital marketing strategies in coordination with the agency, selecting them to signing them off would be the role of YRC.

      This ensures seamless coordination, detailed interactions & desired execution as it is always advisable to work with a single agency than multiple of them.

      IT INTEGRATION

      Selection of the right software for smooth functioning of back-end operations right from production to webstore display would be suggested and integrated by YRC Team.

      YRC’s Team defines SOPs of Product Movement, maps it with the locations & people. They then create a blueprint of all the features required in the software & help in shortlisting & selection.

      IT Integration involves connecting your offline inventories with real-time online webstore so when a sale occurs, inventories get deducted real time across offline as well as online platforms.

      This helps in accurate inventory management, maintaining the MOQs, re-order levels & achieving the optimum inventory levels.

      Some popular software include unicommerce, viniculum for your front-end website management & Genisys for your entire back-end Purchase, Production, Accounting, Invoicing etc. management.

      WAREHOUSE & LOGISTICS PLANNING

      • How many cities or countries you wish to sell in?
      • Where should your Warehouse be located?
      • Should you have one warehouse in each country or city?
      • Should you be having your own delivery team in your base city?
      • Would the 3rd party vendors be reliable? What happens when they lose or misplace your product during delivery?
      • How should I manage the logistics if my goods are coming from different countries?
      • How should the goods be stored and barcoded?
      • How much space do I require for warehouse?
      • I am sure several such questions must be haunting you while you think of starting your own fashion ecommerce brand.

       

      At YRC, our warehousing and logistics experts can help you devise a strategy for all of the above mentioned queries and much more.

      We design the layout of the Warehouse considering the inward, goods processing, software entry, barcoding, outward, goods return, scrap storage, goods stacking & much more.

      Logistics route plan is devised considering the manufacturer to your warehouse and from there to last mile delivery locations.

      UI & UX DESIGNING

      This Step involves 03 distinct parts:

      Part 1: Choosing the right Platform:

      From several platforms available in the market right from Shopify to magento, woocommerce, prestoshop, wordpress etc. you must choose the one that fits best for your business

      Part 2: UX Designing:

      “UX” denotes User Experience, which if put in simple language is building the functional requirements of the website.

      UX Designing includes designing the features required in the website, customer journey map, website features, the browsing features, navigation features, ecommerce order management process flow, checkout cart features, catalogue management, ecommerce payment system, cross selling features & much more.

      “As per statistics, 68% of the customers abandon the carts before payment”

      An interesting UX ensures the customer sticks on to the website for a longer time.

      Part 3: UI Designing:

      UI stands for User Interface, which means designing the look and feel of the website. UI includes using the right colours, elements and the entire aesthetics of the website.

      A good User Interface ensures the user completes the task that he has come for. It navigates the user through the journey of the brand in the simplest but most effective way.

      The UX designer maps out the bare bones of the user journey; the UI designer then fills it in with visual and interactive elements.

      If User experience is the bare bone, user interface wraps it up with an attractive cape.

      At YRC, our team if experts can help you develop the entire User Journey to ensure it is engaging!

      SAMPLING & PRODUCTION

      This step follows the “Designing” Phase, whether you have an in-house design team, freelance designers or an outsourced design company. It is one of the most exciting phases, as here you see your designs turning into products & your ideas turning into reality.

      In most start-up cases, production is outsourced i.e. brands tie-up with the established manufacturers/ job-workers to get their products manufactured.

      Sampling involves multiple 04 Stages, Fit-Sample, Prototype Sample, Pre-Production Sample & the Production Sample.

      Prototype Sample is the first sample provided to the buyer. It can be in any fabric/ colour. This sample is just to understand whether the product design looks equally great in reality.

      Fit Sample, as the name suggests is prepared to check the fit of the garment i.e. the various sizes, length, width etc.

      Pre-production is made by the actual production line. Here the stitching quality and other aspects related to manufacturing are checked. This is the last stage where rejection can be accepted.

      Production Sample is made before the production which is the replica of what is going to be finally produced.

      Once you are through with all this, you are good to go ahead & get your goods manufactured.

      PRODUCT DESIGNING / SOURCING

      Product Designing or Sourcing is the heart of the Ecommerce Fashion Brand.

      Product Designing / Sourcing can be done in several ways, as follows:

      • In-house Design Team
      • Freelance Designers
      • Outsourced Design Team
      • Ready Product Sourcing (From Manufacturer or Wholesaler)

      At YRC, we evaluate your business strategy & business model to arrive at the decision, which of the above ways would be best-fit for your business. In certain cases, product sourcing may be a combination of the above.

      These are the people who are going to build your brand! Whether they are the designers or merchandiser, your brand look is going to be in their hands.

      If you are designing each garment from the scratch, the sourcing would play crucial role in developing design identity of your brand.

      Sourcing includes fabric, trims, lining & all the raw material required to build the garment.

      BRANDING

      Branding is the “Look of the Brand”, right from logo to tagline, the colours used, the brand story, the brand communications on social media, the packaging & all the other aspects which speak directly or indirectly to the customers. Branding constitutes the look & feel of the brand & hence must be thoughtfully planned to match with the product that we are selling.

      Branding must appeal to our target audience. Example : A golden colour logo depicting finesse, art, richness, premium, however beautiful it may be individually cannot go with a brand selling affordable kids wear products. So, your logo must be in-line with your brand positioning, whether you are an expensive brand or a luxury brand or a value for money brand, it must be depicted from your “Branding”.

      It is an integral part to attract the target audience.

      ORGANOGRAMS & SOP’s

      Organogram is the “HR Blueprint” of the business which is created at the onset, to map out the team required across each function at various stages of the business. At the launch, only key people need to be got on board to ensure the project gets started & at this stage, all of them need to multi-task. Similarly, certain financial as well as operational goals are set for addition of the further team. Example, for the operations team, we hire 1 operations manager during the pre-launch phase & we add 1 more only when the business kicks-off & we reach a volume of selling more than 1000 pcs/ month or a turnover of more than 0.1 million USD.

      SOPs are Standard Operating Procedures, a bible to run the entire organization right from Sales, Purchase, HR, Order receiving to Order fulfilment, Inventory Management, Accounts, Warehouse, Logistics, Supply Chain, Production & all the other relevant functions for the business. Business must be organized from its first day of operations; only then the tasks can be delegated.

      At YRC, we design the organization structure, the processes, and approximate time taken to execute each process, job profile of every member within the organization, their KRAs, KPIs & the Reporting Structure.

      CRITICAL PATHWAY

      Critical Pathway Analysis (CPA), is a project management technique which cannot be overlooked while launching an ecommerce fashion brand. Brand launch process is cumbersome with multiple inter-dependent & time-bound tasks involved, which need to be tracked to ensure the project remains on track.

      CPA outlines key tasks across the project, their turnaround time (TAT) & the dependencies of tasks upon each other. It identifies the sequence of tasks, their interdependent steps from inception to completion, their criticalities, and their dates of onset, target dates of completion along with the key responsible person for the respective activities. Critical Pathway helps in understanding the unimportant & not urgent tasks which may jeopardize the execution of the project because of an unexpected snag! It also maps out the potential bottlenecks which might be posed because of the dependencies of tasks upon each other & cases where the next task cannot be commenced before the completion of the previous one.

      CPA detects the minimum & the maximum time involvement of a particular individual or team to execute the task, thereby arriving at the overall deadlines associated with the project.

      At Your Retail Coach, we design the Critical Pathway & review it periodically to ensure the project is on track & the progress is measurable.

      BUSINESS STRATEGY & BUSINESS PLAN

      Business Strategy includes the vision, mission, goals, business model, business plan & strategy for all the functions within the organization.

      Business Strategy is a well-defined plan that outlines who, what, where, why, how & when for the company; for example, who would be the target market, how to attract the target audience, when to launch new products, where to operate from, how to handle competitors, what would be the USP, what would be long term goal of the organization & several other answers to the 5Ws of Strategy.

      Business Strategy aligns the organization towards a common goal. Business SWOT helps company to identify & overcome their weaknesses & focus to sharpen the strengths. Business strategy forecasts future risks and helps business in building skillsets to overcome the potential threats.

      YRC’s Business Plan focuses on creating a “Blueprint” of the business, thereby deriving the feasibility of the concept & gauge whether the opportunity is lucrative to invest time, energy & effort. Business Plan creates cash flow understanding i.e. building inflow & outflow cash projections from Week zero to week 60 i.e. 05 year projection. Business Plan calculates the capital investment, operating costs, one-time costs, recurring costs & all the other numbers relevant to obtain the breakeven sales, return on investment, return on capital, internal rate of return & several other ratios. Business Plan is also one of the important requirements if you are targeting the “Investor Route”. Fund raising becomes extremely transparent & channelized. With business plan panned out clearly, the business will know until what point must it be stretched & where to stop, which reduces the probability of unplanned investments.

      MARKET RESEARCH

      Starting the concept of Ecommerce Fashion brand with Market Research ensures we get detailed understanding of the industry & this research report also acts as a social confirmation for your concept. Market Research helps in understanding the target locations, their population, potential online buyers for your product, competitors for each category, and top selling products of the competitors, competitors’ price range, offers & their responses & much more. Market Research helps in thorough understanding of your brand position as compared to our competitors. It helps in identifying gaps in the market, in your category along with the scope of the said product in the desired market. This will help in validation of your concept & prevents you from making the same mistakes as your fellow brands, eventually saving your time, energy & efforts. This phase is also a make or a break phase, as the market research study may at-times come up with some eye-popping numbers & statistics which might compel you to re-think on your product or category that you are planning to sell or alter your entire concept itself!! Market Research Reports analyse the competitors’ webstore for their traffic, conversion & sales. This is extremely valuable information to derive our inventory budgets & projections, which takes us to our next phase.