Fabmart's e - Tailing Model

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Case Details:

Case Code : ITSY024
Case Length : 14 Pages
Period : 1999-2002
Pub Date : 2002
Teaching Note : Available
Organization : Febmart
Industry : Electronic Retailing
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"The net offers Indian business a great opportunity to reach the customer directly without layers and other media in between. The net will bring the customer inside boardrooms for the first time, creating turmoil in organisations. But those who leverage on the opportunity will make it big."

- K. Vaitheeswaran, VP (marketing), Fabmart.com.

Introduction

In 2000, PC Quest, a leading IT magazine, chose Fabmart for its Editors' Choice Award¹ as the 'best-focused e-commerce shop', on the basis of a survey of 66 e-commerce sites. In the same year, the readers of Chip magazine² chose Fabmart as the 'Most popular online shopping site.' Fabmart was one of the first online stores in India. Launched as a music store, it gradually expanded to include a wide range of products. It gained a reputation for the huge number of brands it showcased and for its unique promotional campaigns. When it began in 1999, Fabmart tried to do everything right to develop its online shopping site. "It chose the right categories, set up a foolproof fulfilment mechanism and kept its costs down," said V.Ravi, Executive Director, India Research³.

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All its initiatives paid off, with Fabmart's customer database increasing to 1, 60,000 shoppers worldwide by early 2002. By early 2003, Fabmart widened its field of operations, concentrating on three main areas. Its first area of focus was electronic retailing; the site had a variety of stores in different categories. Secondly, it focused on web services by offering corporates services like payment gateways⁴ and web-based Business Process Outsourcing (BPO) solutions. Thirdly, it concentrated on its physical chain of grocery supermarkets in Bangalore and planned to expand it to different cities with a mixture of physical retailing formats.

Fabmart's e-tailing model had its share of bottlenecks too. It took a long time to download items from the site. The entire process of making an order seemed cumbersome and complicated. There were also complaints that the site did not contain some famous books and CDs. Occasionally customers complained that goods were not delivered on time and that there was no feedback on the status of the order made. Nevertheless, Fabmart put up a tough fight to its competitors like indiatimes.com, sifymall.com and rediff.com. It strove hard to remain loyal to its customers and emerged as a strong and credible brand.

Balancing Brick and Mortar, and Click and Portal

In September 1999, a team of six experienced professionals from planetasia.com⁵ and Wipro Computers and Systems Integration⁶, launched Fabmart.com.

According to K. Vaitheeswaran, VP (marketing), Fabmart.com, the vision of Fabmart was to leverage the advantages of the internet as a medium for shopping and to offer shoppers an experience which was as good as or better than what they got in physical shops.

He added, "We wanted a name with four characteristics: it should convey precisely what we stand for, it should be very crisp and short with just one syllable, the company name and URL⁷ should be the same, and there should be no possibility of a spelling error while typing in the URL." On the basis of these conditions a few names were short listed and the name Fabmart ("Fab" as in "Fabulous")⁸ was found suitable.

Excerpts >>

1] The most coveted and longest-running Information technology products award in India. The award is based on an all-India survey conducted by Indian Market Research Bureau.

2] Launched in Germany in the early 1980s, by 2002 Chip was published in 14 countries in Europe and Asia in several languages, with a combined monthly readership of 2.8 million.

3] Radhika Dhawan, "Growing Demand", BusinessWorld, 28 January 2002.

4] It facilitates e-commerce payments by authenticating the parties involved, and routing payment-related data between the parties and concerned banks/financial institutions in a highly secure environment, and providing general support to them.

5] A solutions and services company, headquartered at Bangalore, which develops internet technologies.

6] Wipro was ranked as the 7th best software services company in the world. It generally undertakes information technology consulting, product design and business process outsourcing services.

7] Uniform Resource Locator - the global address of documents and other resources on the world wide web.

8] www.indiainfoline.com

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