Bharatcraft.com – Business Logistics System for an Online Selling Store

Bharatcrafts.com is a vertical portal for handicrafts from all over India. The portal is into online selling of handicrafts. This is a B2B and B2C portal. This company has no physical stores. They outsource 100 per cent of their product from the craftspeople and the same is then dispatched to the ultimate customer through the courier service. They have strategic alliances with the courier services and the craftspeople.

Whenever an order comes to them via the Internet, it gets processed and put into the sales and operations planning (S&OP) system. Here, in this system the order is checked to match it with the names of the craftspersons along with their addresses. The authenticity of the customer is checked by calling the telephone number provided by the customer; and for individual customers by the agents or regional office people. In case it is a bulk order from a dealer, then the reputation of the dealer is verified before placing the order with the craftspeople (see Figure 24.1.1).

The craftsman is contacted via the Net if he/she has access to the Internet, or the message is conveyed telephonically. Delivery dates are confirmed from the concerned craftspeople and con­veyed to the customer immediately. Payment can be made in two ways:

1. Online transaction using the credit card
2. Payment on delivery after authentication

A general inspection of the product is done to see that there is no slip or misplacement of the products. When the final product is ready, the courier service is notified and asked to pick up the package from the craftsperson’s site. If the craftsperson is not able to do the packaging, the packag­ing vendor is notified when the product is ready for packaging. After packaging and final quality inspection is done by the quality people, the goods are ready for dispatch and are then picked up by the courier people and dispatched to the customers.

When the site goes in for an e-commerce set-up, the basic architecture will be as shown in Figure 24.1.2. When a customer shopping for handicrafts on the Internet orders an item online using a credit card, the processes that take place are as follows:

1. Ordering: The customer enters the credit card details. He/She is presented with a summary of the items, price and billing information.
2. Initiating the transaction: Encrypted payment information, secured with industrial strength encryption, is then forwarded to the merchant CyberCash cash register.
3. Merchant picks up information: The merchant’s Internet storefront receives the encrypted payment message. The merchant’s identification information is automatically added. The customer’s credit card number remains invisible to the merchant.
4. Through the CyberCash firewall: Still encrypted, the payment request is forwarded over the Internet and is received through a secure firewall by the CyberCash servers.
5. From the cyber register to the bank: CyberCash instantaneously passes the payment request to the merchant’s financial institution or a third-party processor acting on behalf of the financial institution.
6. From the cash register to the bank: The request for authorization is approved or declined by the consumer’s credit card bank or issuing financial institution.
7. The bank sends approval: The response of the customer’s credit card bank or financial institution is returned to the merchant’s financial institution or the third-party processor. The response is returned to the merchant via the CyberCash cash register.
8. Transaction complete and captured: The handicrafts product is delivered to the customer.

The costs associated with this transaction are as follows:

• The service provider’s set-up costs for a medium transaction site will be around Rs 20,000 per year
• Charges per transaction will depend on the type of credit card and vary from 2 to 3.5 per cent per transaction

A digital certificate costs around Rs. 10,000 to a few lacs, depending on the type of authenticity. To obtain it, one has to approach some valid parties such as CyberCash and VeriSign.

Source: Sople V.V (2013), Logistics Management, Pearson Education India; Third edition.