WHAT IS SOP IN RETAIL ?

Standard Operating Procedures are documents explaining the steps to be followed in various operating areas within an organisation such as Operations, Environment, Service, Inventory management, Visual Merchandising, etc. This is done in order to maintain discipline uniformity and quality standards within the organisation.
Most effective SOP gives specific directions to users on how to work more efficiently in their area of responsibility. It is very important for an organisation to train its users on the SOPs of respective area of work in order to maintain uniformity at work place. Areas usually covered in an SOP are explained below :
1. Operations
2. Environment
3. Customer Service
4. Sales
5. Vendor Management
6. Staff Management

OPERATIONS

The SOP should cover critical areas of retail operations such as stock audits, cycle counts, cash management, handling returns from customers, damage and expiry control, inventory gate pass procedures, security measures, staff registers, log books, etc. This is very vast area and the SOP document should cover all the activity areas so that respective people have the needed guidelines to be followed in performing their day to day activities. The SOP should be updated on regular basis based on industry best practices.

ENVIRONMENT

This should all the activities related to store up keep such as house keeping, maintenance, dusting, visual merchandise of window displays and shop floor. It should have guidelines of how to put the signage and display units within the shop floor to project a unhindered customer movement within the shop floor. This also covers the up keep activities need at warehouse and back warehouse at stores to ensure merchandises are not damaged due to mishandling. The goal is to maintain a healthy working environment for employees and a pleasant shopping environment for the customers.

CUSTOMER SERVICE

This is a very important area and it has to be covered in depth the way a customer has to be handled in the supply chain. Supply chain here meaning sales, returns, post sale servicing, reverse logistics, explaining product usage and Customer Service Desk. This includes the loyalty program terms and conditions. All points of customer contact should be explained in depth with plan of action as this involves brand image and customer satisfaction. This area needs regular updates based on changes brought about in company policies and processes.

SALES

This area covers the various procedures at Point Of Service (POS) such as sales, returns, float cash management, daily sales reports, credit notes, cash back, corporate sales and other services offered by retailer.

VENDOR MANAGEMENT

This covers the processes involved in vendor relationship management and third party logistics such as how to list a new vendor, multi tier purchasing model, payments terms negotiation and other policies related to vendor management.

STAFF MANAGEMENT

This includes processes related to direct payroll staffs, outsourced and brand staff, such as HR Policies, grooming standards, induction procedures, training, appraisal and sales incentives. This area is more intermingled with the Human Resource Department than operations.

RETAIL GLOSSARY

This is a glossary on retail terms that are used in Retail IT and Operations. The list will be updated on periodic basis :

SL NO	KEY WORD	EXPLANATION
1	Area	It represents each geographic area that belongs to a chain within the organizational hierarchy. It could be states or countries based on the geographical. Each area can belong to only one chain.
2	ARS	Auto Replenishment System is the functionality in RMS which calculates the ROQ based on the replenishment settings done by the PM in RMS
3	ASPD	Average Sales Per Day is the average of the quantity sold in a day during the stipulated time period. It is calculated as (qty_sold / number of days)
4	ATS	Available To Sell means a product is in good condition meeting all the necessary standards for sale of it to a consumer
5	Average Cost	This is the moving weighted average of unit cost captured at SKU location level. Used in margin calculations and General Ledger for stock ledger maintenance. It is calculated as ((SOH x average cost) + (Incoming qty x unit cost))/(SOH + incoming qty)
6	Average Holding Inventory	It is the average stock value held for particular times. It is used for inventory turnover and return on investment calculation. It is calculated in general as (opening Book qty + closing Book quantity)/2 or as (opening Book qty + closing Book quantity) / (number of months+1) based on the application of the formula
7	Banner	Channels are further divided into banners for better understanding of the different categories in the respective business channel
8	Barcode	Barcode is a scanner readable code in the form of a pattern of lines with varying width that is printed on a product. This displays the UPC of the product at the POS upon scanning to register the sales against the respective product
9	BI	Business Intelligence is an approach to analyse data to extract facts and relations that can be presented to the executives of an organisation to make more informed business decisions and define best practices in different areas of operations
10	Book Stock	This is the stock on hand held in the system at a given point in time. Book stock is use in inventory analysis and variance calculations
11	Branch / Store	A Location where products are sold i.e. a place where sales and returns take place for the product sold or service rendered. In general branches/stores are treated as profit centre in a retail organisation
12	Case Pack Size	It is the quantity of a single SKU that can be accommodated in one case that is supplied by the supplier. Purchase Orders are by default placed in case pack size. This is also known as supplier pack size
13	Cash Float	A float is a small amount given by the head cashier to a cashier while allocating the POS Till during the opening of the shift. This is given in multiples of smaller currency in order to return change to customers at the time purchase. The amount it returned to the head cashier during end of shift
14	Chain	It is the first level of the organization hierarchy below company in Oracle Retail. Can be used to group by store formats, concepts, geographical groups, etc. Operating currency code can be defined for the Chain.
15	Channel	This defines the different types of business models the retailer is involved in such as Catalogues store, Brick and Mortar, Ecommerce, etc. Profit centres or stores can have designated channels incorporated in the ERP for reporting purpose and drafting business plans
16	Class	Class is the second lower level in the merchandise hierarchy. This is the further subdivision of department to identify further levels of classification in a product line. Vat setting is also done at this level
17	Company	This is the highest of merchandise and organizational hierarchy in Oracle Retail. This is the level at which financial accounting is summarised in Oracle Financial system
18	CRM	Customer Relationship Management deals with the policies defined by an organisation to communicate with its existing customers and future potential customers. It covers areas of ERP, Customer Service Desk, POS, loyalty programme, marketing, data integration, customer data analysis, analytics and digitalisation
19	Customer Conversion Rate	It is the percentage of customers who have actually bought a retailer’s product or service when compared to the total footfall/Walk-in for the stipulated time period. It is calculated as (Number of Bills/Footfall) x 100
20	Customer Return /       Sales Return	This is the process wherein a customer returns the purchased product to the retailer due to dissatisfaction, damages or product quality. The product is accepted by the branch if it falls under the Returns Policy of Nakumatt Holdings and a Credit Note is given as a token of acceptance which can be used by the customer to purchase another product of their choice at Nakumatt branches
21	Cycle Count	These are short span perpetual inventory checks done at store and warehouse locations for high value shrinkage SKUs, in order to identify the root cause for loss of inventory. Cycle counts are also done at warehouse on regular basis to do health check for internal storage locations to avoid hurdles caused while picking due to incorrect inventory
22	Data Cleansing	Data cleansing is an activity done at short term intervals by technical support team to comb the data in the database by validating table relations and accuracy of the data present
23	Department	Department is also called as Category is a key level in the merchandise hierarchy where a cluster of Classes with similar product line is listed under one group for higher level reporting and classification. Budgeting, markups, intake margins, tax settings and purchase type of a category is defined at this level
24	District	Groups Stores within a Region (generally geographically) Each District can belong to only one Region
25	Division	It is the highest level in merchandise hierarchy below Company. A cluster of groups with similar product line is listed under one division for higher level reporting and classification
26	DSR	Daily Sales Report is generated as part of EOD activity at stores. It is generated in order to reconcile tenders and cash collected during the day and compared it against the system generated report. Short in cash collected or card swipes are identified.
27	End User	End users are people to use the application to execute their day to day activities. Any technical change or process change brought in will impact the end user, hence proper user training is needed before deploying any  change
28	EOD	End of Day is the process which involves closure of POS tills and generation of sales report along with sales log file for the day from back office system. This marks the end of all the transaction at store for the day. Post this activity completion, any new transaction can be done in the next business date only
29	ERP	Enterprise Resource Planning is a suite of integrated applications that we use to collect, store, manage and interpret data from our day to day business activities, including: Product planning, costing, Pricing, stock ledger maintenance, supply chain management, Marketing, sales, etc.
30	GMROI	Gross Margin Return on Investment ratio helps retailer to know what level of returns can be obtained upon the investment made for a stipulated time period. In simple terms it helps us understand the performance of a category/ item with respect to gross sales margins. This is calculated as (Gross Margin value / Average Inventory Cost)  where Gross Margin value is (Gross Sales - COGS)/Gross Sales
31	GMROS	Gross Margin Return on Selling Area ratio explains the gross margin made by the product upon the selling area allocated for the product. This is used by retailers to find the gross margin per square feet in the selling area and take decision on expansion of selling area or reduce the selling area or discontinue the product all together. This is calculated as (gross margin value/selling area in sq ft)
32	GRN	Goods Received Note is the document created when a Purchase Order is received at the branch or warehouse
33	Gross Sale	This is sum of the total amount paid by a customer to a retailer for the service enjoyed or a product purchased. This is used for reconciliation of tenders in Daily Sales Report during End Of Day Process
34	Group	This is the second highest level in merchandise hierarchy below division. A cluster of department with similar product line is listed under one group for higher level reporting and classification
35	Help Desk	A system (application, people and process) put in to place to provide support and resolve issues and concerns raised by IT and Business users within an organisation. This acts both as a bridge and a repository for communications between Business, IT Department and support team
36	Inner Pack Size	It is the break pack size of a supplier case i.e. how many quantities of an SKU are present within the break pack of a supplier case
37	Intercompany Transfer	It is the transfer of goods between two different transfer entities. Such transfers are treated as Sale of Goods from one transfer entity to another in financials, hence the name Inter-company
38	Inventory Turnover	It represents the number of times a retailer rotates his inventory during the considered time period. This is used to know how efficiently inventory is handled within the organisation. It is calculated as (COGS/Average Inventory Held)x100
39	IPO	Import Purchase Orders is the document released to a supplier from another country for supply of goods for a requested quantity within the stipulated time period
40	KPI	Key Performance Indicators are metrics used by a retail organisation to evaluate the performance in respective area of interest. KPI differ from organisation to organisation. A few examples are Sales metrics, Customer loyalty metrics, Vendor Performance Metrics, Inventory Metrics
41	KRA	Key Responsibility Areas are general outputs or responsibilities that are given to a particular team or role. The performance of the team member or head is measured based on the fulfillment of his KRAs
42	LPO	Local Purchase Order is the document released to a supplier for supply of goods for a requested quantity within the stipulated time period
43	Master Data Management	It is the approach taken by the retailer to manage the masters related to SKUs, Barcodes, Suppliers, taxations, locations, SKU – supplier and SKU – Location mapping, etc. As a best practice retailers form a Central Data Management team to centrally control all data related to master data changes to ensure better control and reduce human error
44	Maximum Book Quantity	This is the maximum stock expected to be maintained an SKU at a location at any given point in time to meet the projected demand. This is used as a check for over ordering; thereby ensuring LPO is not be raised for quantity beyond this point. In general referred to as MBQ along on with minimum book quantity
45	Minimum Book Quantity	This is the minimum stock expected to be maintained for a SKU at a location at any given point in time to meet the projected demand. This is usually set as the reorder point for the SKU and when the stock levels hit this point, new LPO is raised to meet the maximum book quantity. In general referred to as MBQ along on with maximum book quantity
46	Net Sale	This is the sales made by a retailer excluding the VAT amount. Scan margin is calculated from Net Sales and not from Gross sales. It is calculated as Gross Sale/(1+(VAT/100))
47	Non-Trading Item	These are inventory SKUs for which stock in maintained but are not sellable at POS. These include stationary, packing material, carry bags, etc. that are bought for internal use and packaging purpose. There is no direct revenue generated from these SKUs
48	Pallet Size	It is the quantity of SKUs that can be stacked in a pallet. This is calculated by as (TI X HI) where in TI is the number of cases that make up one tier of a pallet and HI is the number of tiers that make up one pallet vertically
49	Perpetual Inventory	This is a method of tracking sales and purchases of an SKU in the system in near real time. This is achieved by implementation of a robust inventory management ERP
50	Petty Cash	An easily accessible amount of cash given on regular intervals to the profit centres in a retail organisation for purchase of low value non trading items and to accommodate small expenses related to repair and maintenance. A report on usage of the fund it given by the profit centre to the head office based on which funds are reimbursed.
51	Pickup Lead Time	Time taken for transfer of goods from the supplier’s dispatch location to the retailer’s warehouse or store. This is added to the supplier lead time to arrive at the total time taken for supply of goods from the date of order approval
52	PM	Procurement manager or head who handles the buying and allocation of goods for his/her respective category
53	POQ	Prescaled Order Quantity is the final order quantity that is requested from the supplier based on the supplier pack size. This is the nearest rounding off of the ROQ based on supplier pack size and rounding off threshold set in the system
54	POS	Point of Sales is a till at the branch where payment transactions related to sale or return of Goods. It is the place when the customer pays the retailer for the product or service offered
55	Rate of Sale	This is the rate at which sale has increased or decreased in the current period compared to a similar period in the past. It is calculated as {(Current Period sale – Past Period sale)/Past Period Sale}x100
56	Region	Groups Districts within an Area, such as North, South, etc. Each Region can belong to only one Area
57	ReIM	Retail Invoice Matching is the ERP module that facilitates users to reconcile vendor invoices with GRN and raise Credit Note Request, Debit Memos, Credit Memos and release advisory to OFIN-AP for vendor payments
58	RFM	Recency Frequency Monetory Value' is a term used to measure the customer value in retail. It is commonly used in database marketing and direct marketing and has received particular attention in retail and professional services industries Recency : How recently the customer has purchased from the retailer Frequency : How often does the customer buy Monetory Value : How much does the customer spend on an average per purchase
59	RMS	Retail Merchandising System is the ERP module that facilitates users to manage the master data and inventory at Nakumatt
60	ROI	It is the percentage to measure the performance of gains obtained from the total investment made in a product or total capital invested in a business. It will give clarity on how soon we can recover our investment cost or what percentage of profit we can expect from our investment. It is calculated as (Net Profit/Total Investment) x 100
61	ROQ	Recommended Order Quantity is the requirement for goods placed by the branch or warehouse to the procurement team. This can be system generated through ARS based on SOH and MBQ set or manually calculated
62	RPM	Retail Price Management is an ERP module used to manage pricing for products sold by a retailer. Promotions, clearance and regular price changes at product level are done through this module. This publishes the information of price changes made to POS through interface and batch programs
63	RTV	Return to Vendor is the document created to assist to return of goods back to supplier due to various reasons such as damaged, non-selling, etc. A credit note is given by the supplier as a receipt of acceptance of the document
64	SBU	Strategic Business Unit is a group of profit centres management discretely due to their distinct catchment attributes though they are all held by a single retail organisation. Each unit will have a discrete marketing plan, business plan, competitive analysis done to improve efficiency and sales
65	Scan Margin	It is the margin made by a retailer by selling a product or service to a customer. This is arrived from Net Sale i.e. Sales value after Tax inorder to eliminate the VAT or other tax factor which are to be paid to the government. It is calculated as {(Net Sale – COGS)/ Net Sale}x100 or as {{Gross Sale – (COGS x (1+vat/100))}/Gross Sale}x100
66	Selling Unit Retail	It is the price at which a retailer sells a product or service to a customer
67	SIM	Store Inventory Management is the ERP module that facilitates users to manage store inventory and reordering
68	SKU	Stock Keeping Unit is the level of the SKU at which stock in maintained in the system. SKU is also called as Item in retail
69	SME	Subject Matter Expert is a person who has high level of expertise in his domain who can guide and bring in change based on best practices. They are consulted for all changes and development in their respective domain, both operational and technical
70	SOD	Start of Day involves the process of download of master data and price change data into store Back Office and Point of Sale. This also involves the process of float cash distribution and opening of POS tills for business transactions
71	SOH	This stands for Stock On Hand. In retail operations this refers to the physical stock for an SKU at a particular location. In RMS this also refers to the book quantity for an SKU at the respective location
72	SOP	Standard Operating Procedures are documents explaining the steps to be followed in various operating areas within an organisation such as Operations, Environment, Service, Inventory management, Visual Merchandising, etc. This is done in order to maintain discipline uniformity and quality standards within the organisation
73	SPF	Sales Per Square Foot/ Sales Per Footage is a retail calculation made to calculate the sales made per square feet sales area. This will give us the efficiency of the store sales team. It is calculated as (Total Sale)/(Total Sales Area (sq ft))
74	Stock Audit	These are periodic perpetual inventory checks done at a branch or warehouse location to reconcile the physical inventory with book stock and arrive at the shrinkage/variance. The variance is taken against the sales for the time period to arrive at the variance percentage. This will give a good picture on loss in margin to the retailer due to variance/shrinkage. It is calculated as (Variance Cost Value/Total Sales for the period)*100
75	Stock Holding Days	Based on the current SOH and the ASPD, a merchandiser can determine the number of days it would take for the existing inventory to be exhausted. This is used as an input parameter to arrive at the recommended order quantity in manual calculations and also in pricing strategy to liquidate non selling SKUs through discounts
76	Store Order Multiple	It defines the multiples of quantity that the store can request from the warehouses. It can be set as Each, Inner or Cases, so the store’s ROQ and transfer requests are placed as per inner size and case size defined
77	Subclass	Subclass is the lowest level of merchandise hierarchy. This is the further subdivision of class. Subclass is not unique and can repeat i.e. same subclass featuring in different class unlike other levels which are unique. Retailers can use Subclass to define brands
78	Supplier Lead Time	Time taken from the date an order is released to the supplier to the date when the supplier readies the stock for dispatch. This is added to the pickup lead time to arrive at the total time taken for supply of goods from the date of order approval
79	Tare weight	Tare weight or Tare in the weight of the empty container that holds the products. By subtracting the tare weight from the gross weight, we can obtain the net weight of the goods carried in the container
80	Transfer Entity	Transfer entity is a group of locations that share legal requirements around product management. An inter-company transfer occurs when product is transferred between locations with different transfer entities. Inter company is handled as sale of goods from one entity to another in financials
81	Transfer Zone	Clusters of profit centres or stores defined in the system to allow transfer of goods. Goods can be transferred only in between stores falling under the same transfer zone
82	UDA	User Defined Attributes are characteristics that can defined for an SKU to identify or group them for reporting purpose such as Brands, Product type, etc. Other user attributes that can be defined in RMS as ‘free from text’ UDA used for defining legacy item code against oracle code for reference purpose and ‘Date’ UDA used for defining expiry date or manufacturing, etc.,
83	Unit Cost	This is the cost price at which a product is purchased by the retailer from a supplier. This is always excluding the vat rate. This can also be expressed as the net selling retail (net sale) the supplier charges for sale of goods to the retailer
84	UPC	Unique Product Code is the unique number given to a product, usually by the manufacturer which is embedded into a Barcode or a QR code on the product for scanning purpose
85	UTS	Unavailable To Sell means a product is not in a good condition or does not meet the necessary standards for sale to a consumer. Such products are returned back to the supplier or written off from the book quantity and scrapped
86	Variance / Shrinkage	These are quantities identified as Loss in book quantity while doing a cycle count or a stock audit. It is a direct loss to the organisation. It is calculated as (Physical Count – Book Stock)
87	VAT	Value Added Tax is the charge levied on a product or service based on the selling retail. This is paid to the government at regular time intervals by the retailer. Selling price - (selling price/(1+(vat/100)))
88	Warehouse	A location where products are stored and distributed centrally for a particular catchment area serviced by the warehouse. In general warehouses are treated as cost centre in a retail organisation
89	WMS	Warehouse Management System is the ERP module that facilitates users to manage Warehouse inventory, perform complicated warehouse tasks with ease and receiving/shipping of goods based on requests created in RMS and SIM
90	Omni Channel	Omni Channel is a means of providing the customer with a seamless shopping experience whether they shop online or through mobile app or telephone or brick and mortar. Omni channel presence is a big advantage to a retailer because it increase market reach and sustaining customer base by giving them convenient modes of shopping

BUSINESS INTEGRATION STRATEGY

Business Integration is a strategy of expanding a companies profile into manufacturing or retailing based on company's current portfolio. There are a few integration strategies which we will discuss in this topic as mentioned below :

1. Forward Vertical Integration
2. Backward Vertical Integration
3. Horizontal Integration

FORWARD VERTICAL INTEGRATION

This can be defined as a business strategy that involves forward integration where in the company expands into direct distribution and sales of its products. An equipment manufacturer wants to retail their products through their branded stores instead of giving them to a third party retailer is a good example for forward integration.
A manufacturer would take this strategy for the below benefits :
- Have complete control on inventory movement from manufacturing to retailing
- Increase profit margins
- Pass on the benefits of portion of the retailer margin to end customers by retailing goods on competitive price
- Remove middle men to improve supply chain efficiency
- To gain better control on market and product segment
- To improve customer experience
- To better understand and fulfil customer needs

This is very effective in retail when manufacturer wants to open Category Killer stores.
Please refer to blog on Types of stores to understand category killers

BACKWARD VERTICAL INTEGRATION

This can be defined as a business strategy that involves backward integration where in the an organisation expands into manufacturing of its goods. A retailer wants to manufacture their products is a good example for backward vertical integration.
A retailer would take this strategy for the below benefits :
- Cut on additional margin cost levied by the manufacturer
- Improve the quality of the products
- Improve control on supply chain and timely supply of goods
- Become more competitive in the respective product segment
- Gain better control at times of higher demand for products in market
- Ensure hindrance free supply at times of shortage of component parts or raw material

HORIZONTAL INTEGRATION

This can be defined as a business strategy that involves expansion of business by acquiring other players in the same or similar field or discipline. A company acquires huge stakes in a competitor's company or takes over the competitor's company for the below benefits is known as horizontal integration :
- Increase the market share
- Enter new market
- Create a monopoly
- Gain better control over the product segment
But this strategy is quite risky for both the organisation and the consumers. A successfully monopoly could lead to disaster because of increase in product pricing and lack of competitors to stimulate innovation in the product line. If the take over transition has frictions leading to loss of talents and resources, this can cause huge damage and financial loss to the parent organisation.

E-COMMERCE KILLING BRICK AND MORTAR RETAILING !! IS IT REALLY HAPPENING !

Many have argued and even a few are convinced that Online shopping revolution will kill E-Commerce but it has so far not happened. Yes people are vastly shifting from Brick and Mortar to Online to buy products but how many people are satisfied with their online shopping experience is a big question mark.
The answer lies in the reality we see around us, if customers shopping online are satisfied with the experience then why do we still have a huge crowd walking into shopping malls and department stores ! E-commerce will increase the customer's spending because of products made easily available but it will not kill BNM (brick and mortar) due to the follow reasons :

1. WE ARE SOCIAL BEINGS
2. DELIVERY COMPLICATION
3. SECURITY
4. EXCHANGES
5. SUSTAINABILITY
6. COMPETITIVE RIVALRY
7. SUPPLIER BARGAINING POWER

1. WE ARE SOCIAL BEINGS

We human like to socialise, meet people and have a new experience. All that we own and the importance they carry depends on the experience that we have got out of them. With that being said, how much do we enjoy shopping online in front of a computer. To be frank we don't enjoy or get an experience of shopping from it. We just buy online because we get better discounts or choices. In India we have got into the new practise of physically checking out an electronic product like TV or a mobile in a shop and then compare the prices online. Later we end up buying online since we get a better deal. But online retailers cannot sustain forever through discounts which we will discuss under sustainability. The top selling products of online retailers in India is electronics, in particular mobiles. This means we are still attached to buying our daily needs form Brick and Mortar stores. And people still prefer to buy product such as clothing, health and beauty, furniture and grocery from brick and mortar stores.

2. DELIVERY COMPLICATION

This is one key factor that causes a lot of discomfort to buy from online. We end up giving our office address to receive products from online retailers because we cannot make ourself available at the house awaiting a delivery. At the same time, we don't have the privilege of replacing a product then and there when received damaged and incorrect. And when the product is found faulty after a few days of use, we again need to wait for the pick up of the product and the replacement. Reverse logistics is a very expensive process for an online retailer and it directly takes a toll on their margin, so on a long run this will be discouraged by online retailers causing a lot of discomfort to the customers. Also for a country as big as India, online retailers will end up investing heavily on their Hubs and distribution centres increasing their logistics expenses.

3. SECURITY

Though this area has had a drastic improvement over the recent past, it is still open to hacks and insecurity. Online purchases of larger amounts are still not preferred by consumers and are also not encouraged by banks in India causing a huge hurdle.

4. EXCHANGES

As discussed in delivery complications, exchanges are still a complicated process while shopping online for both the retailer and the customer. It causes a lot of inconvenience and involves a lot of time and money. Taking back a faulty product or a wrongly delivered product from customer's place is highly unprofitable for an online retailer leading to unsustainable business model with respect to reverse logistics.

5. SUSTAINABILITY

This is an area yet to be unearthed. Currently online retailers are attracting customers through elusive discounts and better choices. But how long will an online retailer be able to sustain the customer base through promotions is a big question because this involves high compromise on operating margins. So far none of the Indian online retailer has attained break even or even come closer to attaining the same. This means the current business strategy is unsustainable because investments will not pour in without returns to share holders. An unprofitable business model cannot be a sustainable business model.

6. COMPETITOR RIVALRY

Unlike Brick and Mortar stores where the rivalry is restricted to a catchment or area, the rivalry for

online is has a wider bandwidth due to all the competitors having complete and easy access to the entire market or country. This triggers red ocean business strategy to be adopted by rivals to kill one another for market share. Exactly what happened and is continuing to happen between Amazon and Flipkart in India. Such rivalry is usually fought through heavy discounts causing an unsustainable business model which will force small players to quit the business model and it can also lead to Monopoly is smaller markets which is unhealthy for the market and the consumers. This will make sustainability of the players in the market difficult in long term and could lead to customer dissatisfaction and breach of trust.

7. VENDOR BARGAINING POWER

Currently the online market is on a peak growth phase in India and entering maturity phase in a few

developed nations. This ensures that the vendor bargaining power is low and online retailers/ market place have an upper hand. This enables better fund flow and relaxed payment options for retailers thereby enabling higher discounts that are specifically given by online retailers on top of vendor discounts, there by reducing the price even when turnover is low. But when E-commerce market matures similar to Brick and Mortar market then the vendors will have better bargaining power or will come on par with that of online retailer's there by tightening the free flow of fund and stabilizing market price of their products there by reducing discounts. This may lead to exit of online retailers who rely on discounts for sales push.

CONCLUSION

Below is the statistics of E-Commerce contribution to retail industry in USA from 2011 to 2015 and it is no way closer to the current market fear that E-commerce will kill Brick and Mortar. The fact is that Brick and Mortar stores are closing down because of inept management of business operational, market saturation, fund crunch and ballooning costs that need to be cut to retain profitability. Brick and Mortar model of retail is very much a viable business which will be profitable when managed efficiently over the years to come, even with the launch of new technologies like augmented reality and virtual reality.

Source : www.internetretailer.com

Eventually Retail Industry will emerge to be OMNICHANNEL where free movement of customers is encouraged between multiple channels during their shopping phase before finalizing their purchase. Hence E-commerce will only help retailers to improve their turnover and maintain competitive edge but it will not kill Brick and Mortar business model of retail, Never, Ever - DOT.