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Hypercity Argos to begin catalogue retailing in India August 28, 2007

Posted by Ramnath Rangaswamy in Business, Emerging Markets, India, Indian Economy, Logistics, Retailing, Supply Chain.
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untitled9.jpg Hypercity’s catalogue retailing is a very good business idea.

The Tier-2 and Tier-3 cities are growing. The consumers in the Tier-2 and Tier-3 cities demand the same products as the consumers in the metros.Catalogue retailing meets this demand in the most effective way.

The retail space requirements for catalogue retailing is minimal. Rent of the retail space and cost of running a store, are the biggest chunk of the costs, in running a retail business. Catalogue retailing minimizes the requirement for prime retail space.

Catalogue retailing has a fast startup. This is because stores do not have to be opened. Hypercity, if required, can have a pan -India presence in weeks.

The Indian logistics industry is matured enough to meet the logistics demands of Hypercity..

The logistics
Hypercity could choose to outsource the logistics to 3rd party or choose to do it in house. The trade-off is costs versus control on service quality. When volumes are low, 3rd party is a cheaper option. As volumes pick-up it becomes cheaper to do the logistics in-house. In terms of service it is better to have the delivery in-house. After all the only Hypercity employee that the consumer can potentially interact with , is the delivery person. To ensure that this sole interaction between Hypercity and the consumer, is pleasant and leads to repeat sales, it is better to have more control over the delivery person and hence have the delivery person as a Hypercity employee.

The supply chain
In terms of the supply chain network, initially Hypercity could service demand from a single DC { Distribution Centre]. As Hypercity expands coverage, it could open a DC in each region – North, South, East West. When demand trends stabilize more DC could be opened in the larger demand centers. What could also be done is to have a tiered-distribution; low cost, high volume items can be stocked at local DCs, while high cost items [ watches, jewellery, electronics] could be stored at regional or national DCs.

The reverse-logistics
Hypercity will also have to setup a process for the reverse logistics. This is to take care of returns. The key here is to be prompt and empower the person on the ground to take a decision. Most retailers – brick and mortar, web and catalogue- do not pay sufficient attention to this. This can lead to customer dissatisfaction and loss of business.

It will be interesting to see how Hypercity’s catalogue business pans out!.

For the complete story click here; Hypercity Argos unveils catalogue retailing plans

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