Problem Statement: Part - I

Background - Business Understanding

Welcome to the Capstone Project on E-Commerce.. Hope you enjoyed exploring and learning about the e-commerce industry in the previous modules. Over the course of time, e-commerce has emerged as a leading industry and has become an integral part of almost everything we do ranging from buying/selling products to doing online transactions.

As this e-commerce business has dominated the world drastically, it is important to understand and adapt to these technological advancements. Lets hear out from Amit about the relevance of e-commerce and how it works.

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Now that you have a good understanding of the e-commerce domain and the key drivers such as price optimization and market mix modelling that play an important role in an e-commerce business, it's time to put that into action and work on a capstone project based on an industry-relevant problem faced by an e-commerce firm named 'ElecKart'.

Now lets watch the following video as Amit provides an overview of the business problem on which you need to work in this Capstone Project.

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As you saw in the video above, ElecKart is a leading e-commerce chain based in Ontario, Canada, specialising in electronic products. It sells all major electronic items such as TVs, cameras, OLED screens, and microwaves. The company follows the marketplace model and acts as a platform where buyers and sellers can interact with each other. Sellers can put various products on the website, and buyers purchase these products from them. The company serves as a technology provider for a free but regulated marketplace and deals with all the top-end and low-end brands to cater to different types of customers.

The company has a huge network across the country and has partnered with multiple courier companies to deliver their products to customers in every possible corner of the country. It sells these products only via the website and occasionally offers big-ticket promotions (similar to the Big Billion Day) in order to ensure that the top-end customers are delighted. The company has established several quality checks to ensure the timely delivery of the products and notify the end customers of each intermediate step till the final product is delivered to their doorstep. Detailed feedback is also requested on the products and services in order to further improve customer experience.

The following major entities are involved in the end-to-end operations for any ElecKart business chain:

Category managers: They curate the assortment of products on the website. They add information related to the products on the website and define the sections on how the products are grouped for a better user experience. For example, there will be one category manager for the Electronics category and another for Fashion, and so on. They display products in an appealing manner on the website and decide the product range with proper price planning to suit the target customers needs.

Onboard Team: They look out for merchants with whom the company can do business and get them on board. They validate their authenticity, do all the paperwork, and handle the agreements.

Sellers: Sellers supply the goods and products that are to be sold on the e-commerce platform. Note that marketplace models do not own the goods themselves. These types of models are engaged in selling goods produced by suppliers.

Warehouse: Generally, companies maintain their own warehouse, but they can also depend on the sellers for it. The sellers stock their products in the warehouse in advance, for which companies charge them some amount. When an order is placed for a product, the product is directly shipped from the warehouse of the company. This helps the company better regulate the quality checks.

Logistic partners: They play an important role in the delivery and return of goods. They are also responsible for collecting the payment from customers for COD orders.

Online e-commerce platform: This plays an important role in facilitating the sale and purchase of goods and services offered by the sellers to the customers.

Customers: Customers visit the website, examine the goods stocked on the shelves and make the final purchase according to their needs.

Customer care team: This team helps the customers and merchants with their product or delivery issues.

The brand has shown commendable growth in just a few years of its operation. However, over the last one year, ElecKart has faced a revenue dip even after spending a significant amount of money on marketing and promotions. There was a high customer churn ratio because the company was failing to understand customer demographics and cater to the needs of their customers. There was no mobile app for a satisfactory shopping experience and the website had a confusing interface with incomplete product details making it difficult for the customers to easily locate what they are looking for. The budgets planned were not as impactful as expected, and the CFO was quite unhappy with the turnover rates. Now, the CFO wants a root cause analysis done to understand what went wrong in the process and why they were unable to hit the desired profit levels. The company would like to optimise its operations in order to ensure better cost efficiencies and not lose the existing customer base due to lack of planning and operational flaws.

Now, suppose you are working at an e-commerce service consultant firm, and you are tasked with understanding the problem and making recommendations about how ElecKarts end-to-end operations can be optimised. You are required to spend a couple of weeks collecting facts and data about ElecKarts operations and investigate this incident to find the possible root causes for the underlying issue.

Lets dive into the root cause analysis using the 5 Whys or the issue tree framework based on ElecKarts business model and the issue tree provided below.

Revenue Problem

Create the above issue tree chart on Coggle and fill the empty boxes with a question mark based on your understanding and the hints provided before and after these blanks. You need to determine the root cause of the problem by understanding the 'Why' of each of these sub-root causes in the given tree and submit your solution as a pdf file downloaded from Coggle.

Problem with acquiring new customers coggle made for free at coggle.it Inability to beat huge competition in the market Insufficient budget for hiring a technical team to develop an app ? Improper product assortment Poor shopping experience Revenue Problem Confusing and non-interactive website Unplanned budgets Ineffective market penetration Lack of Market Mix Model Non-optimal allocation of marketing budget across different marketing levers