CATEGORY MANAGEMENT

Team Ab Ki Baar

Alok Ranjan

Manish Kumar

Mohammad Arshad

Methodology
Our A-B-C approach revolves around the concept of Responsiveness and Innovation for improving
customer experience based on our understanding of Customers Need and Amazons insistence on
highest service standards by simplifying engagement processes.

Objective

B
Identify opportunities for value added
services
Define Evaluation Criteria
Develop a model for prioritization
Identify consumer needs for this service

Design
Consumer Interaction mechanism for
this service
Retailer selection criteria & process
Service quality check

Key
Deliverables Approach

Identify similar services offered by others

Secondary Research to identify
Parameters & prioritization model

Primary Research to assign weightage

to parameters & rating services
Mapping of services & categories
Prioritize services/categories
List of consumer benefits from service

Brainstorming on first principle basis

as a consumer ; Re-iterating design
for consumer convenience
Game theory to design incentive
Consumer interaction process
End to End service offering
Retailers selection criteria & Incentive

C
Create
Value for consumer, retailer & Amazon
Incentive for retailer
Financial model
Implementation plan for next 24 month
Identify
Resource Requirements & constraints
Business risks & Roadblock
Intensive secondary research to
determine values for financial analysis
Brainstorming to identify resource
requirement and business risk

Financial Model

Expansion Plan

Strive to be the Worlds Most

Customer Centric Company!!

Assess Phase (Service Category Prioritization)

Parameters based on which services are prioritized

Services
Local tie-ups for Demo at nearest retail outlets

Relative Benefits
Indicates the hygiene factor associated with the service
Benefits indicate alignment of categorys accessibility need as per customer.

Collaborate with local stores so that consumers can try out the
product before buying it online

Free trial at home

Relative Penalty

A trial product is sent with the delivery guy to ensure

customers use/ wear the product before buying it

Indicates the necessity factor associated with the service

Customer sees this service as a hindrance in purchasing product

Carry to service centre policy

Relative Cost

Consumer needs to deposit his product for inspection

and collect the serviced product

Estimates the relative cost of implementing each service based on Consulting

fee, Delivery person training, Cost associated with samples and testers.

Installation

Relative Difficulty in implementation

Product would be installed at home during or post delivery by an expert

Indicates the relative degree of technical, operational, contractual,

manpower or logistics related issues associated with each service

Ranking of service done Using

+ )%
% + %

Prioritization Matrix
Prioritization
Matrix

High Involvement Products

High involvement products usually have high price tag and
a high degree of risk associated
Consumers engage in extended problem solving, where th
ey spend a lot of time comparing different aspects such
as features of the products,
prices, and warranties.

Painting supplies & Wall Treatment

Laptops & Tablets, Watches & Accessories
Heavy & Bulky electronics Appliances
Furniture & Kitchen Appliances
Beauty Products
Clothes/Outerwear.

Obtained
By

Importance - Implementability
Matrix

Assess Phase
Service Prioritization
Matrix
Relative weight

12

Relative
Benefit

Relative
Penalty

Interior designing/ consulting

pre- purchase
Customized Size
measurement
Free trial at home

17

local tie-ups for Demo at

nearest retail outlets

13

0.26

0.27

0.5

Column5

Column6

Value
Relative
% difficulty %/(Cost %+
Total Difficulty
% Difficulty
Difficulty in
of
of
of
implementati
implement
implementation
implementati
on
ation
on)

Relative
Cost

Total
Cost

%
cost

7%

1.5

8%

3.5

8%

0.43

19

8%

1.25

7%

7%

0.56

22

9%

1.25

7%

3.5

8%

0.60

19

8%

0.5

3%

2.5

6%

0.91

Customization of style
Installation

8
9

4
9

20
27

8%
11%

7
8

1.75
2

10%
11%

6
8

3
4

7%
9%

0.49
0.55

Sim card purchase facility at

time of delivery
training of equipment
operations

2%

0.25

1%

1.5

3%

0.42

20

8%

1.5

8%

3.5

8%

0.50

AMC/ Scheduled service

20

8%

1.5

8%

4.5

10%

0.44

Carry to service center policy

17

7%

1.75

10%

3.5

8%

0.39

Expert's advice for questions

Live chat with trained
customer care
Free subscription of samples
& testers
Take back for
replacement(after specified
period)
Trial version of paid
apps/games

11

4%

5%

5%

0.44

19

8%

1.25

7%

7%

0.56

4%

0.75

4%

1.5

3%

0.48

17

7%

1.5

8%

9%

0.40

2%

0.5

3%

2%

0.40

SERVICES

Total Valu
Value e %

0.25

Importance - Implementability
Matrix

Brainstorming Phase- Customer Need

Purchase: social conformity
Consumers are affected by
physical surroundings
Post- Purchase: "Cognitive dissonance
Consumers unsure about their
purchases or having difficulty deciding
between two alternatives.

Price Sensitive

Convenience
Shopper

Wants to touch/feel

Consumer

Need

Seeks Variety

Wants
information
Needs Suggestion

Trial

@ Store

O F F L I N E

O N L I N E

Pre-Purchase: cognitive miser

Consumers depend on the
advice of the sales person

Brainstorming Phase - Customer Need ( Continued)

Increased
Traffic

Financial
Stability

Positive Incremental
Revenue

Effective Utilization of
Resource ( Lean time)

Product Specific Retailer

Selection Process

Characteristics

Square foot

Medium size outlet(~9001000 feet)

Type of outlet

Multiple brand outlet

Catchment Area

Near to busy market area

with maximum footfalls and
near to residential hub

Variety

High Variety

Assortment

Medium to high Assortment

Image

Market perception

Net Sales value

High

System Requirement

Real time inventory

information

Retailer data obtained from Junglee

Retailers segregated based on pin code
Select retailer based on parameters
Contact Retailers

RETAILER to
PRODUCT MAPPING

Particulars

RETAILER
ASSORTMENT

Retailer Selection Criteria

Contract between Retailer & Amazon

Onboarding of retailers similar to
existing seller onboarding
Product catalogue mapping

Retailer Needs

Sorting of retailers based on rating and distance

between retailer and shipping address
(Display 5 Retailers)

Brainstorm Resource Requirement, Roles & Responsibilities

Roles and Responsibilities

Resource Requirement
For Amazon

Resourcing Requirement
Types of Service

Capital
Investment

Infrastructure

Software

Purpose

If not available

Internet
Connection

SMS delivery
If not available prior

Talent

Employee

Retailer Amazon

To connect Retailer
with Amazon

Computer and
other peripherals

Regular mapping of
products
and consumer visit
Maintenance and
handling of Retailer
Account
On-boarding of
retailers on Amazon
platform
Retailer training

For Consumer

For Retailer

1
Bring big retailer
on-board

Y
Y

Comply with
norms & policies

Maintain Account
of retailer

Ensure Availability

Provide training
to retailer

Give Unbiased
Advice

Y
Y

Infrastructure
Support

1
Give feedback for
service Improvement

Brain storming- Design Purchase Process

PLAY

New Purchase Process

Existing Purchase Process

Brain storming- Choose Retailer Page

Trial @ Store

Brain storming- Trial List Page

Trial @ Store
Approx. distance & Time for travel along with route
Time for display by retailers

Brain storming- Retailer Amazon Interface

Visit to Store

Retailer asks for Info

Retailer matches info with

internal system

Retailer feeds the code into the

system

Consumer tells Unique code

(SMS) to retailer

Retailer displays product

Amazon credits retailer with a fixed

amount

Retailer enters Unique code

provided by the consumer

Brain storming-Trial Zone

Contains list of all products tried by the Consumer

Create Phase Operational & Quality check

Operational Checks

COMMENTS

Flexibility to change retailer

Slot once booked cannot be withdrawn.

Expiry of unique code

Unique code to remain valid for 3 working days

Non- Receipt of unique code

Message resending option available

Service on deal products (Happy hours, Due to limited time and product availability constraints
deal of the day, lightning deal)
Not applicable
Time slot getting over

Performance Measurement Parameters

Click Rate
Trial @ Store

Click Depth
% conversion

Retailer

Feedback/Rating

Retailers have limited capacity Manpower, store size

COMMENTS

Service Quality Checks

Does not find the product

Consumer to tell the unique code only post Regular Feedback from consumers
display of products
Compensation to retailers for service
Share the data whether a particular
product is available
Introducing rating into algorithm for
shortlisting top 5 retailers

ill treatment by retailer

Time window- Reducing customer Experience

Annual retailer training program

Time window specified by retailer as per their convenience.
Scaling up to ensure round day visiting hours

Create Phase Value Creation

Value for Retailer

Value for Consumer

Low price advantage with Sensory Experience
Group purchase experience @ low cost

Free Advertisement
Intangible benefits
Incremental Revenue during lean time- Compensation & new
consumer
Opportunity to be big partner with Amazon

Value for Amazon

Increased Consumer experience and trust

Growth driver for HIC products
First mover advantage Consumer base
Average ROI 38
Low Product Returns

Constraint

Mechanism to Address

Convincing Retailers to come on-board

Make Retailers aware of the benefits like increased revenue, free advertising

To Provide coverage to maximum number of consumers

Based on demographic profile, select the retailer such that at least one retailer is available within 4km reach

Maximum time slot after office hours

Have variety of retailers based on size and location to ensure sufficient number of retailers after office hours

Designing effective compensation

Compensation is based such that both retailer and Amazon will be benefited by this service

Proper feedback from customers

Customers to be encouraged to provide feedback after every trial through website and e-mail

Training and support to retailers

Amazon will help the retailers either through video conferencing or through common retailer meet to make them
aware about the program

Business Risks
Customer dissatisfaction due to retailers behavior

Feedback mechanism to address this issue. Retailers will be given further training to understand the model

Cannibalization due to customer retention by retailer

The trial @ store facility along with reasonable price to drive the customer toward Amazon in the longer run.

Tracking retailers behavior

Feedback mechanism and the business given by retailer will help Amazon to understand the effort by retailer

Roadblocks
Cartelization by retailers to oppose this service

Take retailer into confidence Promote intangible benefits & goodwill

Create Phase
Decision Matrix
Assumptions
S-M-C-I game with assumed rationality
Opportunity cost of dedicated time slot
for retailer is near to zero
80% of consumer after visiting does not
purchase and rest purchase

Financial Model - Amazon

Requirements
A two hour window by retailer
Multi-brand retail outlet
Window priority: Covering
maximum shopping window
like after office hours

Compensation Model
For every Amazon consumer visit, Retailer will be paid 1.5% of Junglees buy box price
the in product
For successful purchase at amazon, Retailer will be further credited with 0.5% of buy bo
x price

% Compensation = 1.5% * 0.8+2%*0.2= 1.6%

U (R) =50000+ (%compensation)* (No. Of consumers visiting*margin on
product*Product price)
U (A) =100000+ (% conversion of consumers going to retailer)*(No. Of consumers
visiting*margin*Product price)
Sample Calculation : U(R) = 50000+ 1.2%*(5*240*1%*5000) =50000+960=50960
(if he cheats)
Amazon not Enter

Amazon Enter

Retailer Enter, cheat

50000,100000

50720, 106000

Retailer Enter, not cheat

50000, 100000

50960, 106000

Conclusion
Retailer
Amazon

Win-Win situation
Incremental revenue during lean time
Revenue Booster for HIP

Requirement:
Assumptions
Compensation to retailer is taken from the
Number of customer visit in a retailer
Incentive model designed
Service launched first in 5 cities then extended
Contribution ratio of the different categories
to 15 cities in a year and then finally to 20 cities
launched with these services
After 3 years effort is mainly in increasing
Effective margin with category mix in each year
penetration
Average product price in each year based on
Plan is to provide minimum one retail outlet
category mix and product mix within the category
within 9 Sqkm
Number of employees needed based on number
10% new customer conversion factor
of categories launched
Sample Calculations for year 2006- Amazon
Revenue Model

Cost Model

No. of Retail outlet covered (5 cities)

3000

No. of customers serviced per day

Total days service given by retailer (year)

263

Total Salary (No. x salary per

1210000
month)
Retailer account maintenance and
servicing
500000
Software installation and training 1500000

Price of product (average)

23000

Commission cost

111059640

Gross Margin (contribution ratio*margin*price)

345

112769640

Total Revenue (conversion factor 10%)

163323000

Total Cost
Incremental Profit

Capital Investment

8000000

ROI

5,05,53,360
6.31917

Conclusions: Despite conservative approach, this model indicates more than Rs 5 Cr. Profit and
an ROI of 600%

Create Phase
Financial Model- Retailer
Assumptions
Number of customer visit in a retailer
Service launched first in 5 cities then
extended to 15 cities in a year and then
finally to 20 cities
Only variable cost is considered in the model
Opportunity cost of the 2 hour time slot
provided is zero
10% new customer conversion factor

Revenue Model
No. of consumer serviced by retailer
(Daily)
Total days service will be provided
(Annually)
Number of consumers making
purchase after visiting outlets
Gross Margin
Commission
Total Revenue

Requirement:
Compensation to retailer is taken from the
Incentive model designed
Contribution ratio of the different categories
launched with these services
Effective margin with category mix in each year
Average product price in each year based on
category mix and product mix within the
category

Retailers are able to garner a minimum profit of Rs 35000

The importance is due to the profit generated during the time
of which opportunity cost is zero

The profit generated covers the inventory holding cost of the

product
Increase in the number of consumers:

Cost Model
6
263

Conclusions:
Financial Benefit

Maintenance of Account
Maintenance of Equipment and
peripheral services

--1800

Total Cost
Incremental Profit

1800
35219.88

It is beneficial for the retailers as their shop is getting recogni

zed without any advertisement and promotion. Moreover, th
e chance of cross-selling of other products may also increas
e

315.6
345
37019.88
37019.88

Intangible benefits:

Retail outlet is getting advertised and also a positive image

will be created due to association with Amazon

Create Phase Implementation Plan

Jul 17- Dec 17
Jan 17- Jun 17
Jul 16- Dec 16
Jan 16- Jun 16
Category: Kitchen
Appliances
City: 4
No. of Stores: 2500

Category: Beauty &

Personal Grooming
City: 6
No. of Stores: 3500

Category: Home
decorative & furniture
City: 2
No. of Stores: 3000

Category: Eye-wear
City: 3
No. of Stores: 4650

Industrial Products
Automobile Parts
Home Decorative
Furniture
Eye-wear

2020

2018
Modification to the Service
Home Decoration Furniture

Laptops & Tablets

Watches
Heavy-Bulky electronic
appliance

2019
2016

2017

Apparels
Automobile Parts

Beauty & Personal

grooming
Kitchen Appliances

Expensive Jewelry
Paintings Supplies & Wall
Treatment Clothes & Fashion
Accessories

Summary of Presentation

Process to arrive at Trial @ Store Service

Addressing need of Customer through this model

Selection criteria and selection process

Customer purchase process

Designing checks for the service

Performance measurement parameters

Value created for stakeholders

Financial viability of the model

Implementation plan