Business Model In E Retail In India

Published Date: 02 Nov 2017

RESEARCH PROPOSAL

Innovation in Business Model in e-retail in India

Aditya Jajodia – 2011HR005

Table of Content

ABSTRACT

Indian market has been dominated by the unorganised players for centuries now but organised retail has been the hot news in India for the past decade among the policy makers as well as big business houses for different reasons. Business houses lobbied for higher FDI in different formats of organised retail to ensure funds from foreign players whereas policy makers were concerned whether the mom ‘n pop kirana stored would be able to sustain the competition that will follow. But off late, the consumers in the metros and tier-1 cities, have preferred the all-under-one-roof retail format due to better accessibility and lower buying time, which is reflected in popularity of retail chains such as Big Bazar (Future Group), Reliance Fresh (Reliance Industries), Metro Cash & Carry, More (ABG), etc.

Following the changing consumer buying pattern and increased internet penetration, entrepreneurs seized the opportunity to offer retail products online and further changed the rules of the game. Now, almost everything - – from computers to cook-ware and from books to flowers - can be brought online, with multiple payment options, even in interest-free EMIs for large ticket items, and it gets delivered at your doorstep in a couple of days.

The industry is still in its nascent stage and it would be too early to say whether it would be able to stand the tide of time. Still, I found it relevant to study in greater detail the business models that these firms have been following, what are the innovative practices that are devised to suit the dynamic Indian market and what are the implications of the same in delivering growth for the firm and value for customers.

Introduction

The Indian consumer has traditionally been believed to be very conservative in spending their Rupees and ensuring value-for-money as far as possible.

Winning in India’s retail sector: Factors of Success – PwC

India goes digital – Avendus

http://www.internetretailer.com/2013/01/11/indias-online-retail-market-could-double-size

AT Kearney’s Annual Global Retail Development Index (GRDI) 2008 puts India as the fifth largest retail destination in the world. The Indian retail sector is pegged to be worth $350b in 2011 with a growth rate of 15-20% per annum1. Although organised retail consists of a mere 8% of the pie, the potential for growth is immense. The increasing population of the youth (20-30 years of age) and the increasing popularity of Internet among them have led the experts to bet their money on e-commerce in the near future. We had about 55 million PCs in India in 2011 and 15 million PC broadband Internet connections reaching to about 80 million internet users which are just 7% of the population (17% of urban population). This is significantly lower than the global benchmark of 31%. This number is expected to reach 376 million by 2015. India has 62.7 million Facebook users in 2011 which is 68% of online population, clearly reflecting the popularity of social media and consequently the expected change in day-t-day habits like buying. Time spent online per user is currently 0.55 hours per day and will grow by 27% per user by 20152, which will be super ceded by 220 million3 internet users with the smartphones. The numbers are astounding and have naturally caught attention of entrepreneurs and venture capitalists to invest heavily in the sector.

In addition, the total spend on digital consumer market (B2C) has been only rising in the recent years. The consumer facing models can be classified into Information, Community, E-Commerce , Consumer Services and Entertainment.

Consumer facing Models (market size in Rs. Cr., 2010)

Category

Information

Community

E-Commerce

Consumer Services

Entertainment

Components

Search (450)

Portals (500)

Classifieds (1000)

Comparison Sites

Social Networks (80)

Travel (19600)

E-retail (2100)

Financial Services (2000)

Healthcare

Government

Education

Gaming (660)

Music (420)

Videos (800)

Source of Revenue

Consumer spends & Advertising

Advertising

Consumer Spends

Consumer Spends

Consumer spends & Advertising

Therefore, it would be very interesting to study what the e-tailers are up to in the country from a business model perspective and how is it adding value to the consumers and in return contributing to the growth of the firms and the sector. (Note: All the industry data points used in this study are for 2011)

E-Commerce

Given the pace at which companies are growing and getting funded in this space, this decade could well belong to the e-commerce industry in India. In the last few years, the industry has come of age and today e-commerce represents the bulk of economic activity in the digital consumer market. By definition, digital consumer market includes businesses that involve a transaction with a consumer and a one-time physical delivery of a product or a service.

E-commerce companies are growing on the back of a promise to address what Indian consumers desire the most - convenience, value for the money and availability (of desired products and services).

Broadly, e-commerce can be segmented into 2 key sub-segments: Online Travel and E-tailing.

The growth of the e-commerce market is driven by 2 key factors - total number of consumers transacting online (online shoppers) and revenue per online shopper per year. The number of consumers transacting online has been in excess of 70% of total internet users for countries like US, Japan and UK. The revenue per user in the US has been $1550 p.a., both of which are significantly higher than that of India.

Developing countries like India and China are expected to project a very different growth trajectory for e-commerce, as it has been for most other industries. The number of total internet users shopping online in India currently stands at approx. 11 million (14% of internet users) and is expected to reach 38 million by 2015 at a growth rate of 15%. The number of users transacting in e-commerce stands at 2-3 million but the growth in online transactions is expected to drive the overall growth of the e-commerce space in India, with revenue per online shopper also increasing at a similar pace.

Indian e-commerce industry

The e-commerce market in India is pegged at Rs. 28,500 Crore ($6.3 billion) for the year 2011 and is expected to grow to Rs. 107,800 Crore ($24 billion) by 2015, a 300% growth. Online travel constitutes a sizeable portion (87%) of this market today (37% for US, <20% for China and Japan). Industry experts expect the Indian market to also evolve towards higher contribution from e-tailing in coming years. By 2015, e-tailing is expected to catch-up with online travel with a contribution of $12 billion by each.

Taking a cue from the global trends and especially its Asian peers, the transacting user base in India is at a cusp of rapid growth in coming years. If the first phase was fuelled by the adoption of online travel, I believe the second phase of growth will be driven by e-tailing. When a Flipkart, Myntra or Yebhi advertisement is aired on national television, a middle class family is intrigued enough to explore the Internet medium and get their first Internet connection (especially since a majority of these families consist of the youth).

Investments

The availability of capital for a new industry is the second most important factor after the acceptance of products and services by the consumers. An industry cannot bloom without risk capital and PE or VC investors play the single most important role in providing the same. The interest and investment of VCs and PE investors has been on a surge in the digital consumer market since 2007 and the trend has been only getting more pronounced ever since.

There is another peculiar factor about the entrepreneurs in this sectors i.e.it is led by first generation entrepreneurs (in their 20s and 30s) and not large corporates and a number of rapidly growing companies stand testament to the impact these first generation entrepreneurs are having in the development of this new industry.

Critically, the angel and seed funding ecosystem has improved significantly in recent years, making much needed risk capital and mentoring more accessible to entrepreneurs. Some of the leading organizations providing angel/seed stage financing include Mumbai Angels Network, Indian Angels Network, Seedfund, Blume Ventures, etc.

Several VC firms have also started providing seed stage financing to try and "catch them early". Furthermore, successful business houses and high net-worth individuals (HNIs) are also carving out a portion of their capital to invest in early stage opportunities.

Payments

Payments in the e-commerce industry in India have been and will continue to be one of the defining factors in the growth of the industry. Payments are critical for both sellers and consumers. Sellers, for the cost associated with it, which eventually derives the final margin and for consumers, for the convenience and confidence associated with it. Results of IMRB’s I-Cube 2009 survey shows that 99% of the active Internet users who do not shop online, do not trust online transactions.

We can categorise the mode of payments as follows:

Online

Credit/Debit Card

Net Banking

Mobile Banking

Cash Cards

Offline

Cash on Delivery (COD)

Collection Agencies

Online Payments

On an average, Indian citizens have 0.2 payment cards per person whereas Chinese have 1.6 cards per person and citizens of the US possess 4-5 cards per person [1] . Overall, India has 18 million active credit cards with 8 million unique users, a penetration rate of just 0.7%. Although a consumer can transact online from a credit card as well a debit card but the number of credit cards is more crucial for the sector since a debit card is issued free with every bank account, is mostly used for ATM transactions and most users either do not know or do not care to use them for online transactions. On the other hand, a credit card is bought by a consumer by choice, the holders are more tech savvy and are likely to use them more often to make an online purchase. Data shows that the number of debit cards in use is more than 10 times the number of credit cards in use, but the total transactions through credit cards in the year 2010-11 accounted for Rs 75,500 Crore ($16.8 billion) while transactions through debit cards accounted for just Rs 38,700 Crore ($8.6 billion).

The online banking landscape is India is also not very encouraging, but improving nonetheless. 7% of all bank account holders in India use internet banking. This figure was only 1% in 2007. With the improving internet penetration, increasing number of youth in the labour market and efforts from leading banks to promote e-banking, this figure is expected to rise significantly in the near future.

Payment gateways

Online gateways are the interface between consumers and e-retail websites and has a direct cost associated with it charged by the gateway provider from the retailers, which is also occasionally passed on to the consumers in part. The increasing number of players and volumes has helped pull down the payment gateway charges to 1.5-3% which used to hover around 4-7% few years back. Factors which differentiate various gateways are Merchant Discount Rates (MDR), failure rates, settlement days, fraud management, integration support and lead time. The flexibility of independent payment gateways seems to give them an edge over Bank led payment gateways. Drop-off rates in e-commerce websites hover around 30% at the payment page. Many e-commerce sites have not addressed integration issues with their payment gateways, adding to the problem. Global players typically undergo more than 6 months of testing with their payment gateway systems before launching the service. Indian players on the other hand are known to do the testing post launch. Technical and connectivity issues apart, there is also the issue of lack of consumer trust in online transactions. While global players like PayPal have strong consumer protection initiatives, Indian players have not yet made too many attempts to improve consumer perception of online payments.

Despite all the roadblocks, innovation is the name of the game. Various e-commerce players have been able to influence payment mode choices through carrot-and-stick approaches. An electronics retailer was able to improve the share of online transactions from 45% to 85% by offering an additional discount of Rs 200 for online payments. Some portals limit the use of coupons and discount codes to online payments only, thus dis-incentivizing the consumer from using other payment modes. Additional promotional offers by credit/debit card issuers also help in making online payments more attractive. We expect the trend to pick-up with more and more players encouraging consumers to move towards cheaper payment modes, especially online payments. Given the level of mobile penetration in India and the motivation of regulators and stakeholders to increase the adoption of electronic payments, India could witness tremendous growth in mobile payments as soon as the appropriate regulatory framework is put in place for the same. The introduction of Interbank Mobile Payment Service (IMPS), revised RBI guidelines around prepaid instruments and pilots on mobile payments/wallets from telecom operators and Banks are positive steps in this direction.

Cash On Delivery

Cash on Delivery (COD) is not a new concept globally. The first British Postal Service used cash-on-delivery as there was no such thing as stamps. But it was adopted much later in the retail space. It was first embraced by Chinese e-tailers as a solution to payment problems very similar to that of India. Today, almost all of India’s leading e-commerce companies have begun pushing COD. Across categories, players are reporting between 40-60% of their overall transactions coming through COD. COD coverage by courier companies has been increasing at a decent pace - and today covers most of the required areas. Also, VPP services from India Post are seen as a reliable means to deliver products on COD to the areas not covered by private courier companies. Third party COD models like Gharpay which enable physical cash collection through agents, have also been gaining traction.

However, COD also has its own set of issues. First, it comes with a cost - which is often higher than that of an online credit card payment (due to the collection charge of Rs 35-65 per transaction and a delayed cyclical settlement period that stretches from 2-3 weeks). Second, it adds another level of complexity to the supply chain in the form of cash handling. Third, and perhaps most important, it often is indicative of lower buyer commitment - and causes a higher level of returns. Notwithstanding these issues, COD is a "necessary evil",that is playing a significant role in making consumer comfortable with transacting online.

Payments Discussion

Analysis shows that 80% of leading Chinese e-commerce players offer 5 or more payment options, while that number remains at 50% in India. We expect the multiplicity of payment options to increase in India in the near future

Besides credit card which is the most common mode of paying electronically, net banking is expected to play a significant role in increasing the penetration of online payments. Demographics favour such a shift as a large part of the young population has had early exposure to transacting (retail/non-retail) on the Internet

Mobile wallets and prepaid instruments hold immense potential, but it is still early to comment on the pace of their adoption. A lot would depend on the aggression of mobile operators and banks, and the evolution of a robust regulatory framework

COD will continue to be a prominent payment mode in India in the near future, but ecommerce players will continue to encourage/incentivize consumers to move towards other payment modes. Increased consumer confidence in online buying, trust in portals, awareness and improved consumer protection measures will help accelerate such a shift

Considering the costs incurred on payments and its criticality in the e-commerce value chain, it won’t be surprising if Indian e-commerce companies closely collaborate with or even acquire payment solutions companies - as has been seen globally in the case of eBay and Alibaba

In coming times, the complexities in online payments are bound to increase. Innovative payment modes like Facebook Credits, BillMeLater (PayPal), Ukash, PaySafeCard, Square, etc. could be the way of the future in India

E-Retail

Globally, e-tailing has traditionally been the foundation of the digital consumer industry. Global trends show that it takes a while to take of as compared to the online travel or advertising, but has gone on to become the dominant space as the sector evolves. Primary reason is the sheer size of the potential market. In 2009, e-retail industry in the US was $145 billion as compared to $ 90billion online travel and $23 billion online advertising.

Retail typically takes time to catch up to the online medium, more so in the developing countries due to two reasons – firstly, the underdeveloped infrastructure and ecosystem that facilitates positive consumer experience and helps build trust and secondly, a different user experience vis-à-vis physical retail due to the lack of touch and feel. All the e-retail companies have been facing this problem of lack of touch and feel globally and have been trying to find effective solutions for the same – identification of low touch and feel categories, standardisation is high and incentivise the customers through discounts, lower prices as compared to physical stores, etc. to make up for the perceived risk in an online. This could be possible to the low cost and high margin nature of e-retail which is inherent in the business model due to reduction in inventory and no requirement of physical retail space which are the highest cost consuming components of physical retail.

Typical problems faced by the developing countries are slightly different from that of the developed ones, which makes the industry take a detour. Most of these countries face problems at the most basic parameters of the ecosystem. China faced major problems on both payment and delivery side initially but connectivity was the most critical issue, which is very similar to what we see in India now. But, once the connectivity issues got resolved in China, the top players took the onus of improving the other factors in the ecosystem. Once that happened, the e-tailing market in China grew exponentially.

In India, consumer acceptance is not really a major issue as reflected by the success of e-travel sector as it does not depend on physical supply chain for the delivery of services and the ecosystem parameters are proving to be the real bottlenecks for e-retail. But, necessity is the mother of all invention, innovation in this case. Therefore, we can see the major players addressing the ecosystem by taking a cue from the Chinese story and experts believe that with improving connectivity, the market is all set to explode. Experts believe that by 2015, e-retail with come at par with e-travel in India. E-tailing industry in India has already beaten all projections and grew around 80% in 2011 and 139% in 2012

The scalability issues have already been addressed by large firms through a bottom-up approach and the industry was already at an annualized revenue run rate of Rs 4800 Crore ($1.1 billion) in 2011

As per BCG estimates, the overall retail market in India is estimated to grow to Rs 36 lakh Crore (US$ 804 billion) by 2015. With an online penetration of 1.4% in 2015, the e-tailing market will be Rs 50,900 Crore ($11.3 billion). These estimates translate into a CAGR of 78% (2012-2015). In China, the e-tailing market grew at a CAGR of 100% between 2009-2012, and on a much higher base.

Given the small base of the Indian e-tailing market and the quantum of capital this segment has been attracting, we believe the e-tailing sector has already set off on the path that the Indian telecom industry undertook in the last decade. The table below shows the PE and VC funding of top players in India till Aug 2012.

D:\TISS\Acads\Research\Funding_online_retail.jpg

Supply Chain

The ecosystem of e-commerce comprise of several external and internal components as shown in the figure below:

Govt. Initiatives

Risk Capital

Access

Demographics C:\Users\aftyr\Desktop\Untitled.png

For the purpose of this study, we will focus only on the supply chain side of the internal eco-system, which can be represented as follows:

Globally, top players have almost always outsourced forward logistics, while controlling the back-end supply chain such as warehousing and inventory management. Most of the energies of the global e-commerce players have been spent on establishing warehouses that are capable of handling thousands of orders per hour.

But one of the unique issues facing the e-tailing industry has been the variable quality of forward logistics services. Consumers have faced numerous delays as well as deliveries of damaged products. The lack of an established returns process only added to the headache. Cost was an added concern - especially given the low ticket size of transactions in the early days of an e-commerce site.

Chinese companies faced similar problems, and built/acquired logistics capabilities to tackle the problem Chinese companies have faced similar problems in forward logistics as their Indian counterparts. And they have come up with two ways of tackling the problem. Some companies have built their own supply chains, while others have acquired existing supply chains or formed strategic partnerships with such companies. 360buy went on to build its own supply chain after facing delivery bottlenecks. The supply chain allowed it to deliver parcels on the same day or the next day, and this helped them to grow at 300% over the next five years ("China’s E-commerce Market: The Logistics Challenge," AT Kearney, 2011, Avendus Estimates) . Taobao, which shipped 3 million parcels a day in 2009, too stakes in HTO and Star Express, two of the biggest express delivery companies in China. Taobao also has plans to invest $4.6 billion in the next five years to build a warehouse network across the country.

Several players in the Indian e-commerce space - like Flipkart and Babyoye - are now building their own supply chains. They look at it as a strategic option, which not only solves the problems faced on the supply chain front, but also provides the leeway to better manage the consumer experience. In addition, the delivery boys also generate visibility for the brand on the roads - effectively acting as an OOH marketing option.

A comparison of three means to deliver parcels to the consumer - VPP, courier and self - fulfillment shows that self-fulfillment has several advantages.

Delivery is becoming a differentiator

Even with investments in their own supply chains, only 10% of the top players give delivery assurances to the customer and, of them, not many provide an assurance of less than 7 days.

It is likely that consumer needs will cause e-commerce companies to get more sophisticated on this front. Customers will start looking for quicker delivery assurances as well as options to decide on when to get the product delivered (date, time, etc).

Shorter delivery times are likely to (if it hasn’t already) become a key competitive factor as the e-commerce battle heats up. We are already seeing companies investing in technologies to improve their warehousing and inventory management strategies. Most of them are also trying to ensure quicker deliveries, without necessarily providing assurances at this point. Over a period of time, we expect to see a movement towards multiple delivery options (some paid and some free), similar to that of Amazon, which will also provide some leeway for e-commerce companies to optimise their supply chain costs.

The business case exists for ownership of forward delivery

We compared the economics of owning the supply chain against that of outsourcing it to a third party for two prominent categories - books and apparel. Our analysis shows that it would make economic sense for an e-commerce company to own its supply chain in a tier I city if it ships more than 450 book orders per day (in that city). The number comes down to 110 for apparel, due to the higher transaction value.

The much lower number of deliveries in apparels is due to higher returns and a higher percentage of orders being placed at COD. Both, returns and COD are heavily charged by courier companies as compared to relatively inexpensive self-fulfilment. For large volumes, owning the supply chain makes more economical sense but the process of managing the supply chain becomes a lot more complex.

In the short to medium term, it seems increasingly likely that e-commerce companies will follow a two-pronged strategy - developing their own delivery channel for the metros and relying on outsourced parties for tier 2 and 3 cities where they are subscale.

Business Model of e-tailers

Globally, we can categorise e-tailers into three broad business models based on the inventory risk they carry in the value chain: marketplace model, Sell or Return (SOR) model, and Buyout model. The key differences between the three categories are shown in the table below:

Parameter

Marketplace

SOR

Buyout

Business Model

Acts as middlemen. Sources from vendor after receiving online order

Store the inventory and sell. Return the leftover inventory to vendor based on contract terms

Buy inventory from vendors and store

Listing

Products along with its vendor

Product

Product

Transaction

Hybrid

Between the e-retail firm and customer

Between the e-retail firm and customer

Complaint handling

Facilitate conflict resolution between vendor and consumer

Full

Hybrid, based on warranty terms

Sourcing from

Retailers

Distributor or manufacturer

Distributor or manufacturer

Inventory Risk

No

No

Yes

Revenue Stream

Margins and listing fees

Margins

Margins

Marketplace models have been dominant across the world followed by SOR with buyout model being the least popular due to high inventory risk. A possible reason could be that marketplace models are comparatively easier to setup and are much more scalable than SOR. eBay is a classic example of a marketplace model and they are known to sell much higher gross volumes than Amazon (who works on an SOR model) globally. eBay sold goods to the tune of $61.8 billion as compared to Amazon’s $34.2 billion in 2011. Even in China, 80% of total sales come from the firms in the marketplace model and top 3 e-commerce firms work on a marketplace model.

In India, we see all three models of business in the industry but there are no pure play buyout firms. Some firms follow a marketplace or an SOR model entirely but most are hybrids of more than one of these models. Therefore, we would be talking about marketplace and SOR models in greater detail for discussion and analysis.

The differentiating factor between marketplace and SOR models arises from the control over consumer experience from order fulfilment. While SOR firms have complete control over the same, firms following a marketplace model rely on vendors and supplies to a large extent. The economics for the two models is also different as marketplace firms deal with medium sized retailers while SOR firms deal with distributors or the manufacturer directly. From a revenue stream perspective, SOR firms have only margins to earn from whereas marketplace firms earn from both margins as well as listing fees.

In India, marketplace models were more dominant in the first phase of the industry development (2006-2009) but due to the high dependence on vendors, which was adversely affecting the consumer experience, most firms are either moving towards a SOR or a hybrid model in recent years.

Literature Review

Structure of Literature Review

This review was segregated under the following heads:

Innovation in Business models

Business design

Logistics innovation

Operating model dynamics

Business models of e-retail and Business models of e-retail in India

Innovation in e-retail in India

Innovation in Business Models

E-retail or e-tailing as it is commonly known has emerged as a huge potential industry in India in the last 5 years and the trend of online shopping has moved from travel to retail. Despite travel purchases still occupy the dominant part of the pie both in terms of revenue and number of users; the growth in e-retail has been quite significant and has eaten up a major chunk of travel-related online purchases in terms of market share. The success of any business, big or small, can be directly attributed to the way the business is managed; and a good management of business is reflected by its business model. Cola drinks, fast foods, etc. are great examples of induced demand where customers did not actually know they needed these products till they were offered these closer to home; and the rest is history. By the time India witnessed its first successful e-tailer, E-bay and Amazon had already changed the world of shopping for countries like US and UK and the challenge for the Indian start-ups was to replicate the same success back home. But, for an economy like India, where only (Internet usage data) of population uses computers, out which only Y% has access to internet, coupled by the scepticism of Indian consumer in a) transacting by their credit/debit card online due to security reasons, b) buying a product without physically seeing or experiencing it, c) paying 2-3 days in advance for a product, and d) Guarantee or warrantee issues; e-retail was never going to be an easy business to be in.

Business model definitions, frameworks, evolution

"Business model is an old concept widely used and many time mostly undefined, but the interest on it has risen exponentially in the last decade. This growing interest can be explained largely by the impact of globalization, deregulation and advances in Information and Communication Technologies (ICTs). In fact, scholars and practitioners argue that the ability to take advantage of these structural changes by innovating in business models can explain firm’s current and future competitiveness (IBM, 2006, 2008)" (29 - Business model innovation and sources of value creation in low-income markets, Pablo Sanchez’, Joan E Ricart, European Management Review (2010) 7, 138-154). "Researchers have suggested that business models are critical constructs for understanding value creation (e.g., Amit & Zott, 2001; Chesbrough & Rosenbloom, 2002; Mahadevan, 2000)" (17 - The Business Model in Practice and its Implications for Entrepreneurship Research, Gerard George & Adam J. Bock)

*Source - 17 - The Business Model in Practice and its Implications for Entrepreneurship Research, Gerard George & Adam J. Bock

Another interesting thing about e-retail in India is that it has created a new market for existing products and services. Fir the same, understanding, exploiting and changing market behaviours for Indian consumer will play a very important role in determining the success of the firms and the industry as a whole. "Market behavior can be shaped either directly, by building or removing constraints in the buying experience, or indirectly, by creating new customer and competitor preferences or by reversing current customer and competitor preferences." (18 - New Market Creation for Breakthrough Innovations: Enabling and Constraining Mechanisms, Gina Colarelli O’Connor and Mark P. Rice, J PROD INNOV MANAG 2013;30(2):209–227). Cash on delivery is a brilliant example of influencing consumer behaviour by tweaking the typical purchase process to suit the consumers. As mentioned earlier, Indian consumers are not as tech savvy and very sceptical about using their credit cards online due to security concerns, cash on delivery, which contributes to 80% of online transactions in India, as compared to 20% in the developed economies (http://articles.economictimes.indiatimes.com/2012-03-13/news/31159922_1_online-retailers-online-transactions-cash), has given a new confidence to Indian consumers which is in line with their behaviour of physically checking the product before paying for the same. Having said that, the COD method is not sustainable as it increases the cost of transaction by $0.60 to $1.20 per transaction (http://www.about-payments.com/payment-markets/india-online-retail-sales/) which eats up into the margin of already low-profit low-ticket retail items. In my understanding, the whole idea of COD was to get consumers to trust the products and services provided online by getting them to try them once. In the past year or so, we have seen the percentage of COD going down and going forward, it is expected to further decrease as the consumer behaviour matures. But, this is just an example of a breakthrough innovation where a slight change in the buying process can actually facilitate the entire industry in the long term. "Transformation processes create new markets through the development of an effectual network, a chain of stakeholder commitments over time." (18 - New Market Creation for Breakthrough Innovations: Enabling and Constraining Mechanisms, Gina Colarelli O’Connor and Mark P. Rice, J PROD INNOV MANAG 2013;30(2):209–227)

A company can use one or more strategies to gain competitive advantage like – price leadership based on lower costs, better products and services, better information and variety or personal/customised selling. Any of these strategies would only become effective if they are backed with the suitable business model. While considering a business model, a firm must consider its strategy separately from its business model and then try to align the two and make them complementary rather than trying to mix and match. This will differentiate its processed and models and set out clear objectives that they are designed to achieve.

Innovation in Business Model

"A business model improvement is any successful change in any business model element (who ,what, when, why, where, how and how much) that delivers substantially enhanced on going sales, earnings and cash fow advantages versus competitors and what customers can supply for themselves. Matching what competitors and customers are already doing is merely business model catch-up, not business model improvement. Improvements affecting four or more business model elements constitute a business model replacement. Such replacements that offer products and services previously unavailable to customers are also business model innovations. The on-going management process of developing and introducing improvements and replacements is what we mean by continuing business model innovation." (5 - Donald W. Mitchell, Carol Bruckner Coles, (2004),"Establishing a continuing business model innovation process", Journal of Business Strategy, Vol. 25 Iss.: 3 pp. 39 – 49)

In relation to the business sector, innovation can be classified into technological innovation, organisational innovation, and market innovation (Tidd et al., 2001) (7 - Ross L. Chapman, Claudine Soosay, Jay Kandampully, (2003),"Innovation in logistic services and the new business model: A conceptual framework", International Journal of Physical Distribution & Logistics Management, Vol. 33 Iss: 7 pp. 630 – 650). Here in this article, we will primarily focus on technological and organisational innovation, more so on the later. And I believe that the former two automatically leads to market innovation since technology and business changes creates new market, as discussed later in this section, and thus result in market innovation.

Dimensions of Innovation

*Source - 7 - Ross L. Chapman, Claudine Soosay, Jay Kandampully, (2003),"Innovation in logistic services and the new business model: A conceptual framework", International Journal of Physical Distribution & Logistics Management, Vol. 33 Iss: 7 pp. 630 – 650. Here, we are talking about innovation in process and services and the innovation can be incremental to transformational.

"Many studies assess the relationship between technology innovation and business models or the change in business models. This perspective frames business models within an innovation context, defining it as "a coherent framework that takes technological characteristics and potentials as inputs and converts them through customers and markets into economic outputs. The business model is conceived as a focusing device that mediates between technology development and economic value creation." (Chesbrough & Rosenbloom, 2002, p. 532). A business model would be a component of innovation commercialization separate from product and process innovation. Here, business model development and change are punctuated phenomena that follow disruptions or enactment of new opportunities. An adaptive framework for innovation suggests that business models adjust in parallel to the firm’s life-cycle evolution (Andries & Debackere, 2007). Business model change at the firm level would then be especially prevalent among immature firms in capital-intensive and high-velocity sectors. The business model may be an important link between innovation and organizational structure. It remains unclear, however, whether business model change results in reconfiguration of the firm’s organizational structure (Francis & Bessant, 2005) or whether organizational design and knowledge management determine business model structure. The business model has been described as the link between innovation and value creation (Chesbrough & Rosenbloom, 2002) as well as the cognitive link between entrepreneurial appraisal of the opportunity and its exploitation (Fiet & Patel, 2008). Others focus on the transactive element and view the business model as the mechanism for opportunity exploitation (Amit & Zott, 2001). If the opportunity is uncertain, the optimal business model cannot be rationally determined (Heirman & Clarysse, 2004). The business model is sometimes equated to the underlying "business idea" or the firm’s value creation mechanism (Afuah, 2003; Markides, 2008), but separating the entrepreneurial opportunity from the established firm’s profit-managing process has not been addressed. Research on venture capitalists’ use of business model frameworks links business model development with perceived commercial potential (Franke et al., 2008; George & Nathusius, 2007)" (Cited from - 17 - The Business Model in Practice and its Implications for Entrepreneurship Research, Gerard George & Adam J. Bock)

4 - Henry Chesbrough, (2007),"Business model innovation: it's not just about technology anymore" says "Every company has a business model, whether they articulate it or not. At its heart, a business model performs two important functions: value creation and value capture. First, it defines a series of activities, from procuring raw materials to satisfying the final consumer, which will yield a new product or service in such a way that there is net value created throughout the various activities. This is crucial, because if there is no net creation of value, the other companies involved in the set of activities won’t participate. Second, a business model captures value from a portion of those activities for the firm developing and operating it. This is equally critical, for a company that cannot earn a profit from some portion of its activities cannot sustain those activities over time."

On similar lines, we can bifurcate the business model of e-tailers into "value creating" activities namely – IT, procurement, storage or warehousing, channel partners, logistics, delivery, packaging, etc. which are basically non customer facing and takes care of everything the moment an order is placed till it is delivered to the final consumer. On the other hand, there is value capturing functions such as website design, server bandwidth, support functions, etc.

"Business model replacements and innovations most often succeed when they focus in a few areas." (5 - Donald W. Mitchell, Carol Bruckner Coles, (2004),"Establishing a continuing business model innovation process", Journal of Business Strategy, Vol. 25 Iss: 3 pp. 39 – 49)

Another way to look at innovation in business model is Design Innovation. In design innovation, the emphasis is to create innovations that have a good fit with users. The focus shifts from products that people use, to what those people do – their behaviors, activities, needs, and motivations (Kumar and Whitney, 2007). Successful innovations are built around what we can learn from all these factors of people’s overall experience. For example, a company designing an MP3 player would focus on the experience of ‘‘listening to music’’ rather than on the device itself. Or perhaps a food manufacturer’s focus would shift from the food product to the larger experience of ‘‘eating and drinking’’. Focusing on experience can lead to surprising opportunities for innovation that are nonetheless firmly grounded in people’s daily lives. (1 - Vijay Kumar, (2009),"A process for practicing design innovation", Journal of Business Strategy, Vol. 30 Iss: 2 pp. 91 – 100)

*Source - 1 Vijay Kumar, (2009),"A process for practicing design innovation", Journal of Business Strategy, Vol. 30 Iss: 2 pp. 91 – 100

For the purpose of this article, we will only evaluate the value creating activities and restrict them to logistics, supply chain, warehousing and IT.

India, as a country is very unique in terms of its economics as well as demographics, both of which present their own sets of challenges and opportunities. Therefore, Innovation in Business Model innovation is considered an imperative element for entering into low-income markets (29 - Business model innovation and sources of value creation in low-income markets, Pablo Sanchez’, Joan E Ricart, European Management Review (2010) 7, 138-154) like India.

Since, the onus of success of e-tailing in the country lied on innovation in business models to make it as consumer centric as possible while addressing the scepticism of a typical Indian consumer mentioned above. Since the Industry itself is so nascent, and most players are still struggling to go "in-the-money", there is a dearth of literature on business models of e-retail in India in the Indian context.

"Schumpeter (1934) distinguishes between five types of innovations: new products, new methods of production, new sources of supply, exploitation of new markets, and new ways to organize business. Much of the literature so far has focused on the first two types of innovation (e.g., Shan Walker, and Kogut, 1994; Banbury and Mitchell, 1995; Eisenhardt and Tabrizi, 1995; Schroeder, 1990; Katila and Chen, 2008; Leiblein and Madsen, 2009; Roberts, 1999; Adner and Kapoor, 2010; Leiponen and Helfat, 2010; Zhou and Wu, 2010)." (21 - Cited from Business Model Innovation And Competitive Imitation: The Case Of Sponsor-Based Business Models Ramon Casadesus-Masanell And Feng Zhu2, Strat. Mgmt. J., 34: 464–482 (2013))

"At root, business model innovation refers to the search for new logics of the firm and new ways to create and capture value for its stakeholders; it focuses primarily on finding new ways to generate revenues and define value propositions for customers, suppliers, and partners (e.g., Amit and Zott, 2001; Magretta, 2002; Zott and Amit, 2007, 2008; Baden-Fuller et al., 2008; Casadesus-Masanell and Ricart, 2010; Gambardella and McGahan, 2010; Markides, 2010; Teece, 2010). As a result, business model innovation often affects the whole enterprise (Amit and Zott, 2001)." (21 - Cited from Business Model Innovation And Competitive Imitation: The Case Of Sponsor-Based Business Models Ramon Casadesus-Masanell And Feng Zhu2, Strat. Mgmt. J., 34: 464–482 (2013))

Innovation in logistics

Logistics is arguably the most important function in any e-retail firm. The success of a venture depends to a large extent on how quickly a firm can service its customers. This translates to delivering the products after an order is placed at the earliest. And this is only possible if a) you have the stock ready to move, b) the packaging is done at the earliest, c) the item is dispatched immediately, and d) the mode of dispatch is fast, reliable and efficient. We can understand a typical e-retail operation as follows:

* Source: Opportunities & Challenges for Online Retail in India. by Iksula Services Pvt Ltd

Here, the fulfilment function at the back-end largely consists of operations and logistics, apart from IT. Therefore, I believe innovations in logistics can play a very critical role in an e-retail firm’s success.

"Logistics innovation refers to any logistics-related service that is seen as new and Logistics innovation helpful to a particular focal audience (Flint et al., 2005). Logistics innovations can be very basic to very complex and can be applied to internal operations or services with business partners (Flint et al., 2005).

A number of scholars tend to resonate with the above thought. An effective logistics operation can provide a competitive advantage for a firm and increase a firm’s market share (Daugherty et al., 1998; Mentzer et al., 2001). Logistics has also been shown to enhance customer value and logistics executives believe that it adds value to a firm’s output (Novack et al., 1996; Stank et al., 1998). Much of this value is generated from the ability to reduce costs and provide delivery solutions according to customer needs." (8 - Scott J. Grawe, (2009),"Logistics innovation: a literature-based conceptual framework", The International Journal of Logistics Management, Vol. 20 Iss: 3 pp. 360 – 377).

Moreover, logistics also consists of a significant cost in any e-commerce business model. It has been noticed that the firms who have been successful in controlling their logistical cost have been more successful than others in the e-retail business. A reason for that is that typically, there is a lot of downward pressure on final prices when sold through an electronic channel. "Brynjolfsson and Smith (2000) (30 - cited from E-Business And Supply Chain Management: An Overview And Framework, M. Eric Johnson And Seungjin Whang, Production And Operations Management Vol. 11, No. 4, Winter 2002) found that prices in the late 1990s for homogeneous products like books and CDs were 9–16% lower in e-channels than in conventional outlets."

A classic example of innovation in supply chain to control cost and deliver high customer value is Dell. Important to note here is that Dell, for a very long time, sold directly to customers only through the online channel in India with just one retail outlet in the entire country. A very important reason for the same is that "Dell carries very little inventory: the whole organization concentrates on speeding components and products through its supply chain. Dell delivers new products to market faster than its competitors and does not have to sell old products at a discount, because it has none." (31 - Inventory Decisions in Dell's Supply Chain Author(s): Roman Kapuscinski, Rachel Q. Zhang, Paul Carbonneau, Robert Moore and BillReeves, Source: Interfaces, Vol. 34, No. 3 (May - Jun., 2004), pp. 191-205)

Therefore, a firm can only sustain margins and remain profitable by controlling it’s cost of logistics and at the same time deliver value to consumers.

I will use the following factors to understanding what are the innovative ways by which e-retail companies in India are managing their logistics and whether or not it translated to their business success.

The use of 3PL or logistics outsourcing will further increase a firm’s logistics capability and enhance its performance by leveraging the third-party’s expertise in order management and fulfilment. (32 - Logistics capability, logistics outsourcing and firm performance in an e-commerce market, Jay Joong-Kun Cho, John Ozment, Harry Sink, International Journal of Physical Distribution & Logistics Management, Vol. 38 No. 5, 2008 pp. 336-359)

Articles referred

*Vijay Kumar, (2009),"A process for practicing design innovation", Journal of Business Strategy, Vol. 30 Iss: 2 pp. 91 – 100

Sérgio Cavalcante, Peter Kesting, John Ulhøi, (2011),"Business model dynamics and innovation: (re)establishing the missing linkages", Management Decision, Vol. 49 Iss: 8 pp. 1327 – 1342

+ (imp. Read and incorporate) Donald W. Mitchell, Carol Bruckner Coles, (2004),"Business model innovation breakthrough moves", Journal of Business Strategy, Vol. 25 Iss: 1 pp. 16 – 26

*Henry Chesbrough, (2007),"Business model innovation: it's not just about technology anymore", Strategy & Leadership, Vol. 35 Iss: 6 pp. 12 – 17

*Donald W. Mitchell, Carol Bruckner Coles, (2004),"Establishing a continuing business model innovation process", Journal of Business Strategy, Vol. 25 Iss: 3 pp. 39 – 49

Ross L. Chapman, Claudine Soosay, Jay Kandampully, (2002),"Innovation in logistic services and the new business model: a conceptual framework", Managing Service Quality, Vol. 12 Iss: 6 pp. 358 – 371

*Ross L. Chapman, Claudine Soosay, Jay Kandampully, (2003),"Innovation in logistic services and the new business model: A conceptual framework", International Journal of Physical Distribution & Logistics Management, Vol. 33 Iss: 7 pp. 630 – 650

*Scott J. Grawe, (2009),"Logistics innovation: a literature-based conceptual framework", The International Journal of Logistics Management, Vol. 20 Iss: 3 pp. 360 – 377

+ (imp. Read and incorporate) Donald Mitchell, Carol Coles, (2003),"The ultimate competitive advantage of continuing business model innovation", Journal of Business Strategy, Vol. 24 Iss: 5 pp. 15 – 21

Business Model Design and the Performance of Entrepreneurial Firms: By Christoph Zott and Raphael Amit December 5, 2005

Collaborative Business Engineering: A Decade of Lessons from the Field: Mariëlle Den Hengst and Gert-Jan de Vreede: Journal of Management Information Systems, Vol. 20, No. 4, Information Systems

Organizational Innovation and Organizational Change, Author(s): J. T. Hage, Source: Annual Review of Sociology, Vol. 25 (1999), pp. 597-622

Organizational Integration and Process Innovation, Author(s): John E. Ettlie and Ernesto M. Reza, Source: The Academy of Management Journal, Vol. 35, No. 4 (Oct., 1992), pp. 795-827

Edward Giesen, Saul J. Berman, Ragna Bell, Amy Blitz, (2007),"Three ways to successfully innovate your business model", Strategy & Leadership, Vol. 35 Iss: 6 pp. 27 – 33

A Design Theory Approach to Building Strategic Network-Based Customer Service Systems, Author(s): Brohman, Piccoli, Martin, Zulkernine, Parasuraman, Watson, Decision Sciences, Volume 40 Number 3, August 2009

+ (imp. Read and incorporate) The Effects of Culture and Structure on Strategic Flexibility during Business Model Innovation, Adam J. Bock, Tore Opsahl, Gerard George and David M. Gann, Journal of Management Studies 49:2 March 2012

*The Business Model in Practice and its Implications for Entrepreneurship Research, Gerard George & Adam J. Bock,

*New Market Creation for Breakthrough Innovations: Enabling and Constraining Mechanisms, Gina Colarelli O’Connor and Mark P. Rice, J PROD INNOV MANAG 2013;30(2):209–227

Melão, N. and Pidd, M. (2000), A conceptual framework for understanding business processes and business process modelling. Information Systems Journal, 10: 105–129. doi: 10.1046/j.1365-2575.2000.00075.x

Assembling infrastructures and business models for service design and innovation, George Kuk & Marijn Janssen, Information Systems Journal, doi:10.1111/j.1365-2575.2012.00418.x

*Business Model Innovation and Competitive Imitation: The Case Of Sponsor-Based Business Models Ramon Casadesus-Masanell And Feng Zhu2, Strat. Mgmt. J., 34: 464–482 (2013)

The Fit Between Product Market Strategy And Business Model: Implications For Firm Performance Christoph Zott And Raphael Amit, Strat. Mgmt. J., 29: 1–26 (2008)

A Firm-Level Analysis on the Relative Difference between Technology-Driven and Market-Driven Disruptive Business Model Innovations, Solomon Russom Habtay, creativity and innovation management, volume 21 number 3 2012, doi:10.1111/j.1467-8691.2012.00628

Creating a Process and Organization Fit Index: an Approach toward Optimal Process and Organization Design Sung-Nyun Hearn and Injun Choi, Knowledge and Process Management Volume 20 Number 1 pp 21–29 (2013) DOI: 10.1002/kpm.1400

Organizational Structure and Product Market Competition, JUNG HUR and YOHANES E. RIYANTO, Journal of Economics & Management Strategy, Volume 21, Number 3, Fall 2012, 707–743

TOWARDS A SOCIOLOGY OF ORGANISATIONAL STRUCTURE, Graeme Salaman, The Open University, 1977

Huang, Kristal, and Schroeder: The Impact of Organizational Structure on Mass Customization Capability, Production and Operations Management 19(5), pp. 515–530

VALUE CREATION IN E-BUSINESS RAPHAELA MIT and CHRISTOPHZ OTT, Strategic Management Journal Strat. Mgmt. J., 22: 493-520 (2001) DOI: 10.1002/smj.187

*Business model innovation and sources of value creation in low-income markets, Pablo Sanchez’, Joan E Ricart, European Management Review (2010) 7, 138-154

*E-Business And Supply Chain Management: An Overview And Framework, M. Eric Johnson And Seungjin Whang, Production And Operations Management Vol. 11, No. 4, Winter 2002

*Inventory Decisions in Dell's Supply Chain Author(s): Roman Kapuscinski, Rachel Q. Zhang, Paul Carbonneau, Robert Moore and BillReeves, Source: Interfaces, Vol. 34, No. 3 (May - Jun., 2004), pp. 191-205

* (V imp for logistics) Logistics capability, logistics outsourcing and firm performance in an e-commerce market, Jay Joong-Kun Cho, John Ozment, Harry Sink, International Journal of Physical Distribution & Logistics Management, Vol. 38 No. 5, 2008 pp. 336-359

Business Models of e-retail

Innovation in business models or best-practices need not necessarily come from the same industry. It is dependent on a number of factors like demographics, external environment (PESTEL), consumer behaviour pattern, etc. What worked for e-bay or Amazon in US might not work for Flipkart in India; or what worked for Flipkart in India may not work for Infibeam in India itself, due to differences in their approach towards customers, vendors and business as a whole. A classic example of the same is the hospitality Industry. The hospitality industry adopted their best-practices from Formula 1, where the pit crew is expected to service a car in 5-7 seconds (which includes changing 4 tyres, refuelling the car, replacing damaged parts, etc.), without any deviation time after time and a difference of 1000th of a second can effect a drivers podium position. Similarly, the hospitality sector believes in servicing it’s customers in the quickest and best way possible and a slight deviation can result in losing a valued customer. As Richard Branson explains, "I have no regrets trying to break the mould and taking a different approach. That has resulted in Virgin being one of the best known brands in the world". It is not about replicating what others in a different industry is doing, rather it’s about understanding what suits your context the best and then applying that in your own domain and organisation. Just like there is nothing like a perfect human, a company cannot produce and have all the perfections and best-practices in every aspect of its business or industry. Successful firms have the knack of gathering and tweaking the factors of other’s success stories.

Similarly, I firmly believe that the e-retail sector in India must innovate their business models by replicating best-practices from other industries, which we have not seen so far.

Use of IT in B2B Supply Chain

"Web-enabled business-to-business (B2B) e-commerce enhances inter-organizational coordination, resulting in transaction cost savings and competitive sourcing opportunities for the buyer organization. However, organizations are uncertain whether this is an improvement over existing information technology, such as EDI. In particular, what is the value of B2B e-commerce to a buyer organization, and how can it be measured? What factors most affect the realization of the value of B2B e-commerce? Research on the impact and value of inter organizational information systems, and particularly the use of electronic data exchange, has shown that they are largely positive in improving the efficiency of business processes and the overall performance of organizations [19, 26]. Electronic processing and communication of inter organizational data improve the timeliness and accuracy of the information, allowing trading organizations to better plan and manage their assets, such as inventory [4]. The use of IT improves the process quality, which in turn improves the level of output [20]. Impacts of this type occur mainly on the operational level and result in cost reduction, higher productivity, and improved quality [19]." (1)

Hour-glass supply chain in e-commerce

"HGSC (Hour Glass Supply Chain) is an e-supply chain structured like an hour glass, with customers at the top and grassroots suppliers at the bottom, see Figure 5. The purpose of HGSC is to provide a platform on which every entity in an economy can join and transact, using Internet technologies. Its structure creates unprecedented opportunities for small companies and grassroots suppliers to participate and profit using the potential of Internet. However the biggest strength of HGSC lies in its independence. No entity will own the chain, while the involvement of many MNCs in the chain will provide much more business opportunities for suppliers and manufacturers. Along with, the benefits of PSC like lower costs of doing business, creation of new markets, and improved services and sales are accompanied as well." (2)

DeLone & McLean IS Success Model

"The six success dimensions of the DeLone & McLean IS Success Model can be applied to the e-commerce environment as follows:

1. System quality, in the Internet environment, measures the desired characteristics of an e-commerce system. Usability, availability, reliability, adaptability, and response time (e.g., download time) are examples of qualities that are valued by users of an e-commerce system.

2. Information quality captures the e-commerce content issue. Web content should be personalized, complete, relevant, easy to under stand, and secure if prospective buyers or suppliers are to initiate transactions via the Internet and return to a site on a regular basis.

3. Service quality, the overall support delivered by the service provider, applies regardless of whether the support is delivered by the IS department or a new organizational unit or is outsourced to an Internet service provider. This dimension is more important in an e commerce environment than ever before, because the users are now customers rather than employees, and therefore, poor user support will translate into lost customers and lost sales.

4. Usage measures everything from a visit to a Web site and navigation within the site to information retrieval and execution of a transaction.

5. User satisfaction is an important means of measuring customers' opinions of an e-commerce system and should cover the entire customer experience cycle from information retrieval through purchase, payment, receipt, and service.

6. Net benefits are the most important success measures, because they capture the balance of the positive and negative impacts of e-commerce on customers, suppliers, employees, organizations, markets, industries, economies, and even society as a whole. Have Internet purchases saved individual consumers time and money? Have the benefits, such as larger markets, supply-chain efficiencies, and customer responsiveness, yielded positive net benefits for an organization? Have country investments in e-commerce infrastructure yielded a net positive growth in GNP? Have societal investments in e-commerce infrastructure and education reduced poverty?

Benefits of e-commerce

Net benefits measures are determined by the context and objectives of the specific e-commerce investment. There will be a variety of e-commerce net benefits measures, but many will be the same ones that have been developed and tested for information systems investments in general. Net benefits success measures are clearly important, but they cannot be analyzed and understood without system, information, and service-quality measurements. For example, in the e-commerce environment, the impact of a Web site design on customer purchases cannot be fully understood without an evaluation of the usability of the Web site and the relevance for purchasing decisions of the information provided to the prospective purchaser." (3)

Interactivity, connectivity and agility

As anticipated in the definition of e-commerce, e-commerce businesses each have the three dimensions shown in Table IV. The three variables (interactivity, connectivity and agility) have each appeared many times in e-commerce theory. Interactivity here refers to virtual and physical and the relation between them (the click-and-brick balance). The emphasis here is upon functional integration i.e. qualitative deployment of knowledge, rather than simply the multiplication of functions. Finally, interactivity here is purposive and not an end to itself. Complex knowledge embodied within hidden computers may, for commercial purpose, produce as rich an interaction as a learned e-forum discourse.

Nagel and Dove (1992) have used the term agile enterprises to mean a firm with long- term inter-organisational relationships from which they learn in addition to learning from environmental scanning. Here the term also means having the absorptive capacity and/or knowledge generating ability to resourcefully participate in knowledge networks. Critically, the term means the capability and desire to continually innovate organisational or technological change in order to remain aligned with unfolding business opportunities. Agility is knowledge and action, agilmente.

Our argument is that models of e-commerce are now more crystallised than when Timmers proposed his multiple and integrated functions and degree of innovativeness quadrant methodology. For example, it appears that use of buy, bid or barter are (mainly) tactical rather than strategic decisions, and that B2B and PA2C are likely to yield greater value in the short- term than B2C. In the following, we review some of the business developments associated with e-commerce, in particular, intermediation/re-intermediation, virtual supply chains and Internet communities.

Intermediation

Just as it was the white space gaps in the old hierarchic diagrams that were m