Should Meera Go Online, and Where?
Meera runs a single footwear shop in Saheed Nagar, Bhubaneswar, with monthly sales of about ₹6.5 lakh. Two-thirds of her stock is school shoes and everyday sandals in sizes 5 to 9, with an average selling price of ₹650. She estimates she loses about 30 walk-in customers a month because a size is out of stock. She wants to sell online. Her nephew suggests listing on a large marketplace: 18% commission plus ₹45 shipping per order, returns accepted for seven days with no questions asked, payouts released after 12 days, and frequent discount events she cannot opt out of. The alternative is a small website with a payment gateway at 2% per transaction, her own courier tie-up at ₹70 per prepaid order, and a WhatsApp catalogue for local customers with free store pickup. She has one helper, no dedicated packer, and can realistically pack 25 orders a day while also managing the counter.
1. Work out the economics of a ₹650 pair sold on the marketplace versus one sold through her own website with local pickup, and recommend a channel with reasons.
Read the worked answer
Marketplace, per ₹650 order:
- Commission 18% = ₹117; shipping = ₹45; so ₹650 − ₹162 = ₹488 before product cost.
- Add the return effect: if 18% come back, the returned pair usually cannot be sold as new, and the two-way shipping is often borne by the seller. A rough effective realisation is closer to ₹430–450 per kept order.
- Payout after 12 days ties up working capital, and the mandatory discount events cut the ₹650 further without her consent.
Own website + WhatsApp with store pickup:
- ₹650 − 2% gateway (₹13) − zero shipping = ₹637 before product cost.
- With her courier at ₹70 prepaid: ₹650 − ₹13 − ₹70 = ₹567.
- She carries the platform cost, the packing labour and all return risk herself.
Recommendation: a split, not a single choice.
- School shoes are a fit-sensitive, repeat-purchase category. A parent who buys size 4 this year comes back for size 5 next year. WhatsApp catalogue plus free pickup captures exactly that customer at almost no channel cost.
- Use the marketplace only for clearance, deep-size stock and non-fit-sensitive items (socks, laces, school belts, sandals in common sizes), where a return is cheap and the reach pays for the commission.
- Do not put core school-shoe SKUs into marketplace discount events; the ₹488 realisation on a ₹650 pair barely survives a return.
Reasoning: the decision is not "online or offline" but "which SKU belongs on which channel". High-return, fit-sensitive goods belong where pickup and personal fitting already exist.
2. Her first 20 online orders include 4 returns; three of them because the customer ordered size 8 and received size 6. What are the root causes and what should she fix?
Read the worked answer
Root causes to check, in order:
- Catalogue mapping. The size option on the listing may not be tied to the correct variant - size 6 stock may sit under the size 8 field. This is the most likely cause when the error is systematic rather than random.
- Bin labelling. Sizes may be stored in one mixed bin, so the picker reads the box, not the shoe.
- No packing check. There is no step where a second person or the packer reads the size out against the order before sealing.
- The fourth return may be a fit issue: no size chart in centimetres, no note that the model runs small.
Fixes, in priority order:
- One barcode per size, physically on the box and on the shelf label.
- A mandatory pack-time verification: read the order aloud (model, colour, size), match to the shoe, tick on the slip.
- Store each size in its own labelled section; never mix sizes in a bin.
- Print the size in large type on the outer label so the customer can see it before opening.
- Add a size chart and a fit note to every listing.
- Inspect, clean and repack returns; never resell a worn pair as new, and record the return reason in a log.
Judgement: a 20% return rate is high, but three of four are the store's own picking errors, not customer whims. Each one costs two-way shipping, resale risk and a review. Fixing them is cheaper than any marketing. She should not expand SKUs until the pick error rate is near zero.
3. Which five metrics should Meera track in the first quarter, and what readings would tell her to stop or to expand?
Read the worked answer
- Return rate, split by reason (wrong item / fit / quality / changed mind). Wrong-item returns are her own error and must trend to zero.
- Order contribution margin per order after commission, shipping, gateway fee and return cost. This is the only figure that says whether online selling earns anything.
- Out-of-stock cancellations. Selling what is not physically on the shelf destroys ratings and invites penalties; the target is zero.
- Dispatch time and pickup conversion for local WhatsApp orders - how many catalogues sent turn into pickups.
- Repeat purchase rate among online buyers. For school shoes, a customer who returns next season is worth far more than one discounted first order.
Readings that say stop or shrink:
- Contribution margin per order below roughly ₹80 after returns on marketplace SKUs.
- Return rate above 10%, or wrong-item returns persisting after the packing check.
- More than a handful of cancellations per week, or packing volume pushing her below 25 orders a day and hurting counter service.
- Marketplace discount events forcing sales below cost.
Readings that say expand:
- Return rate falling below 5%, positive contribution margin, zero cancellations, and the packer able to clear the day's orders before the evening rush.
- Repeat orders from WhatsApp customers, which justify adding adjacent categories such as socks and school belts.
Reasoning: with one helper and 25 orders a day of capacity, growth is limited by packing and stock accuracy, not by demand. The metrics should therefore measure error and margin before they measure volume.