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DIVERSIFICATION Redirected To Dotcom A mail order company looks to the Net for a future. By Ranju Sarkar
Otto Burlingtons Mail Order (India) is acutely aware of that, which is why the 12-year-old outfit (it tied up with Otto Versand of Germany in 1994) is now talking of reinventing itself as a fulfilment services company. The idea? Leverage its experience of handling 1.3 million customers, 3,000 different products, and 1,000 vendors to create a new business. Says Andre Kapur, Vice-Chairman of the company: ''A lot of internet-based retailers in India are facing problems in fulfilment services, and that's a huge opportunity for us.'' In its new avatar, the Noida (near Delhi)-based company will offer a suite of services including direct marketing, product assortment, logistics, distribution, purchasing, and internet marketing. Besides, it will handle customer service aspects like call centres and claim management. The fee structure for such services will likely be a mix of a flat and transaction-based fee. About a dozen enquiries had already been received in response to the company's advertisements in early February, although at the time BT went to press no deal had been finalised. But Kapur is optimistic. An IDC report projects e-commerce to touch $6.2 billion by 2006 (currently, it's about a quarter billion). Numbers, especially the dotcom variety, can go horribly wrong, but there's little doubt that the business is growing. A few companies are already into parts of e-tail backend. Jaldi.com, for instance, manages logistics, customer relationship, and payment collection for portals such as Rediff and MantraOnline. Says Kumud Goel, CEO, Jaldi.com: ''As e-commerce grows, which it will, companies operating in small verticals will need to outsource the backend to be able to grow.'' Goel estimates that there's a 40 per cent cost savings potential between customer acquisition and delivery and service. For Otto Burlingtons, there's a lot at stake. The mail order business, despite its huge customer base, seems to be making no progress. Last year, its revenues were a bare Rs 21 crore-assuming an average price of Rs 400 per item and an average shipment of 2,000 per day (the company refused to divulge any figures)-and it had virtually no profits to talk about. Kapur lays the blame for it on a few mistakes of the past. For instance, encouraged by the frenetic growth of the early 90s, it tried to transplant some of its collaborator's techniques like rewarding customer referrals with free gifts. Referrals poured in, but a lot of those customers proved to be non-existent. However, the company had gone ahead and sent free gifts to the referees, incurring expenditure but no income. Says Kapur: ''The whole exercise was money down the drain.'' Armed with a new business plan, Kapur is hoping that what he picks up from the mail box tomorrow is not referrals, but customer cheques. |
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On the
cramped mezzanine floor of a three-storeyed building, six operators and a
warehouse manager are busy packing an array of goods pulled out of large
storage bins, and swiftly bar-coding them before shipping them out in
cardboard boxes. On a typical day, nearly 2,000 such containers will go
out to consumers spread across India. That's probably enough to keep six
workers busy in a day's shift, but hardly anything for a company that
pioneered mail order business in India and now has the world's market
leader for a partner.