Start Ups and Hiccups

We always like to idolize people who stand apart from the ordinary and make themselves noticed in a crowd. So while most people around me in college looked up to Edison, Einstein and Hawking as gods, the business minds admired the Tata, Birla and Ambani clan as inspiration. Deviation from the regular job to entrepreneurship might have clicked in the mid-80’s and the era of economic liberalization had started to build the foundation of entrepreneurship.  People who had a sufficient understanding and experience of how to do business in their domain floated on their own. This was what I shall term as the conventional approach: Learn the rules – master the rules – break the rules.

But this chain of order has now been smashed and a new order on the path of entrepreneurship has been established in recent times. It’s the culture of friends and roommates from some of the much revered technical and business schools hatching an idea, finding investors and taking on the world to break the established business practices. It is this radical and rebellion of sorts that makes people like Sachin Bansal and Binny Bansal (Flipkart), Rahul Yadav (Housing.com), Kunal Bahl and Rohit Bansal (Snapdeal) the new age business idols for the current generation.

Every single start up story has almost a similar beginning – the feeling that there is so much we can do to make things better and establish a new order. While some start up entrepreneurs have worked before they went on their own, most these days have an idea developed and launched from their hostel rooms and possibly find an investor in the idea even before they graduate. Not to mention symposiums from established giants like Microsoft Ventures have become like a breeding ground for start-ups and investors to come together and find mutually beneficial interactions – even leave the place with a deal in hand.

There is nothing to deny the fact that the entrepreneur culture is redefining the way business is done and services are provide. Technology and internet is changing the face of what we believed was the only way to do things. I’s sure we all have seen the infographic about Airbnb, Uber, Alibaba, Facebook and YouTube changing the face of various industry verticals and the perception that business can be done only in a defined manner.

While all of might be aware of the success stories, what is the success rate and why do the start-up acts fail? An idea at most times is like the USP or the competitive advantage that gives a start-up an edge and immediate traction. But this can only be in existence as long as the other either don’t catch up or innovate beyond to surge ahead. This is the space where things get a little dicey. Not to mention, investors are in for a long haul and look at break even and profits – not able to deliver is not an option at this stage.

Rahul Yadav has been in the news across for the last two weeks after being sacked as the CEO by the investors. It is not that his venture is not able to deliver; but the fact that every growth phase also needs to be made robust with consolidation and firm rooting before the next level was greatly overlooked. This is the space where great ideas need to be going together with great managers. The people who are needed to hold the company together and possibly also pull off a few decisions that keep the creative minds at rest for a while. It is the evolution of an entrepreneur from a rebel or maverick into a leader that counts at this point.

Three things I have cited recently amongst start-ups as I hunt for job opportunities:

Firstly, the scores of start-up companies which have come up and are looking for people to work with them because they have lost their way. From a number of interactions with such people, I have been able to discover a few startling facts. Yes, most start-ups begin operation with angel capital which is usually the pocket savings of the people involved. With expenses and investment in technology and infrastructure, the ideal turnaround time from the idea to implementation and acceptance needs to be under a year.

It baffles me when there are start-ups with having invested close to two years don’t even reach a beta stage. In one case, the marketing function was required to deliver results in 8 months where a target market was yet to be defined. Not to mention, the idea was already finding feet with established players like Evernote and Google to make the app redundant even before release. In another, a start-up with no clients or established service offering was looking for funding and needed media presence (castles in the air) to achieve this. I feel this is a case of tunnel vision and people often lose touch with reality having invested too much time and effort into their own obsessions.

The second being the fact that people are looking for like – minded people over more than anything else. So an IIT/IIM start up is more skewed for people from IITs and IIMs. It is not surprising that job portals can now have posts asking for a start-up partner, tech partner etc. from the premier institutes only to join the ones with ideas.

On the first level, it sounds good; like minds will gel and people will deliver. But how about another line of thought – an idea is no one’s domain and every IIT/ IIM is groomed to believe they are an invincible lot designed to rule the lesser minds. So how can one accept orders from another equal or not move out to pursue his/her own dream during the formative days? May be I’m wrong, but this seems like a complete recipe for a power struggle in the making.

The third and the one I believe is the breaking point – rapid expansions with no control on costs or break even periods. Most start-ups are technology driven and technology obsolesce cycles are shorter than even what Moore’s Law would have defined. Who could have thought that Orkut could have died and Whatsapp could have almost wiped Blackberry messenger. Not to forget, we are still debating if Amazon has ever reached a break-even point to date. Amidst such confusion, investors are pumping in billions in anticipation of backing the next big idea. These billions are being spent on expansions and hiring people at amazing pay scales. Offices are like party zones and massive monies are spent under employee welfare. So the big question is will there be a pay back to the investor at some point in the recent future and how long will the party last?

It was funny at times where I came across start-ups that were over 5 years old and were yet to make a big impact. Having spent their initial investor monies, they had now taken over a few other smaller players in a bid to attract more funding. Open fissures amongst the founding team, power struggles and crumbling client and revenues were just too evident.

I’ll like to end with a lighter note, a series by TVF called Pitchers which revolves around a bunch of guys preparing to build a start-up. The manager accepts the resignation of this employee, but runs him across a list of names – all his classmates but only a few who made it big. It is easy to think of a start-up, it is much tougher to manage the hiccups. 

Retail Challenge -Breaking the Time Barrier

Retail has been a super dynamic sector for the whole of last year. Flipkart, Snapdeal, Amazon; all have been trying in more than one ways to woo consumers towards them. So far it was a war based on pricing, same day delivery and loyalty discounts etc. which was more or less related to how each one can score over the other. All put together, they were giving the physical retail a run for its money- though in a small sample survey I conducted, multi-brand retail stores were still in contention along with the e-retail as the choice for place of purchase.

To be honest, I was expecting the top three e-retailers to break the barrier of price- delivery- service with some master stroke, considering they have been hiring the best marketing brains from across and have the deep pockets and funding to build the required backend to change the status quo. But I have been swept off my feet by the most amazing response from a physical multi-brand mobile store- Sangeetha Mobiles. With a back-end technical collaboration with ebay, Sangeetha Mobiles has come up with http://shopno47.com with a promise so big that it might be a game changer- mobile deliveries in 47 minutes to 1 hour and 47 minutes flat. (Currently in Bengaluru, Chennai & Hyderabad)

Impossible??? Just imagine that you have even 10 franchise stores in a city and a backend hub to process the orders which a spoke can deliver- in 1 hour and 47 minutes for a minimum order of Rs. 5000 is most definitely doable. And if you doubt- they have a timer on the ordering page where it says “Order now and get it in…” which is applicable from the time of  transaction confirmation. More so, after 1 hour and 47 minutes, they claim to call the customers and confirm the delivery has actually happened in the stipulated time.

Considering Sangeetha Mobile is pretty big chain in the south with outlets in Bengaluru, Chennai, Hyderabad and other southern towns and is easily miles ahead of places like UniverCell- it can actually deliver on the promise. While there have been so many people I have heard talking about Omni Channel Retail, this is the first and practical example I’m seeing from India. The process as I believe might be pretty simple; the order is taken on the back end which will process the payment and the fulfilment will be done by the local franchise or retailer. I have no concrete idea on the backend and process from any source but I feel this is the positive way it might be happening.

So why am I excited? Well for a change, it is the physical retail which is changing the game and trying to get into a space where the e-retailers might be possibly slower. It is going as per the basics of competitive advantage to play in a field where they are confident of their own strength. What’s more, Sangeetha Mobile is now offering a one year warranty against theft, water & physical damage) + 1 Year pick & drop repair service + 1yr extended brand warranty. This is the first time I am seeing anyone come up with such options for customer service post sales.

Now, there were some questions I had in my mind. What’s the whole gig about 47? Well it seems the first store they had was a Shop no 47 and hence… Then I have my reservations of what might happen if a model is not available close to your place, but I’m sure there is a solution for it as well.

What is refreshing though in the entire thing is the positive intent and freshness of the thought to think differently to counter the competition. It is a move to change the status quo and take the challenge to take on the rest in a bold manner. More so, I’m pleased with the outlook towards the after sales service (most difficult to replicate) which the others have been ignoring for the longest time. 

The Indian e-commerce juggernaut- it’s mobile

I have often noticed this fact typical to the Indian Consumer- considering their restlessness and the variety of choices available in the market, they are ruthless in terms of giving failures another chance.   Chances for recovery when a particular car model fails to appeal or when a mobile network fails to deliver on its promises are very bleak. But there is one area where they have been immensely patient and forgiving so far. This is the magnitude of impact the lower pricing of e-commerce has had on the Indian shopper.

If recent events like the Flipkart Big Billion Day and Snapdeal Big Savings day are to go by, it has exposed the lack of attention to the backend and delivery systems. People I know are still sceptic of buying shoes and clothing online as long as the manufacturing and size standards are not established. Big budget purchasing of furniture through e-commerce is not recommended in my opinion as their prices are still higher than what a large scale furniture retailer might offer. Not to mention, it is always advisable to verify the quality of material and workmanship along with exact dimension (which I found do vary in reality) of the units.

If all these do make my sentiments towards e-commerce a bit negative, I am still one of the millions in India who is fuelling this huge wave of ‘internet enabled shopaholics’. And if the data from last week’s Google annual online shopping growth trends report is anything to go by, (http://www.business-standard.com/article/companies/google-says-indian-e-commerce-market-to-hit-15-bn-by-2016-114112000835_1.html) India will have 100 million online shoppers by 2016 and the market will be worth a whopping USD 15 billion from USD 3 Billion today. Also, the report mentions that Mobile phones emerged as an important access device for online shoppers with 1 out of 3 online buyers transacting on their mobile phones in Tier 1 and Tier 2 cities. In terms of numbers, 50% queries come from mobiles and this was at 24% in 2012. A key driver for the rural consumer is the social elevation offered by the access to the best brands sitting in their own towns and the ability to order over mobile internet.

Experts are now ready to acknowledge the fact that what happened in many other global market by virtue of desktops is happening in India via mobile phones and apps. This is the space where we have to acknowledge the fact that by December 2014, India is poised to become the 2^nd largest market with mobile phone subscribers in the world. With 300 million subscribers, India will launch past the United States and yet be short by half to the 600 million in China. But the point to note in this case is the rise in numbers of the rural consumers. It is this mass segment which is now the driving force in e-commerce. (http://www.afaqs.com/news/story/42537_India-to-cross-300-Million-Internet-Users-by-December-2014) Imagine the numbers- internet users have increased by 39 per cent to reach 101 million in October 2014. It is expected to reach 112 million by December 2014 and 138 million by June 2015.

It just takes my mind back to the actions by the Ministry to Communication & IT in 1999 when they implemented the Universal Service Obligation. Under this, all telecom operators were required to develop the rural telecom infrastructure at a minimum of 10% of its urban presence as well as further licenses were issued in accordance. The seeds sowed then are bearing fruits today with a 100 million new customers added in just one year as we went from 200 to 300 million.

If we correlate the two reports, there is a definite synergy between the rise of e-commerce in India with the rise of internet access via mobile. Much as India never had a dominant industrial revolution as in the West before the service based economy took shape, we have skipped the dominant phases of the desktops, landlines, land based internet and directly arrived to the highs of the mobile phones and mobile internet. The penetration of retail in the form of shopping malls is limited, but the penetration of mobile app based e-commerce is on the rise.

The wave of e-commerce is like a juggernaut- with the ability to breach the divides of physical limitations and access. The driving force here is the ever growing number of mobile connections and mobile internet capabilities at the hands of millions of Indians; which is paving the road at a super pace. 

Brands have Emotionale

A visiting faculty to my college, Sumit Roy, gave us this powerful statement, which opened my mind to better understand the difference between a brand and a product. Anything that can be put on to a paper and floated around is what a product is. But when it comes to a brand, it is a far greater and closer to heart feeling that people carry towards the brands in their home. It is this feeling that people possess which leads to big words like brand loyalty and cults. The higher order attachment is actually the defining moment in the journey between a brand and its consumer.

Honestly, this is nothing new and people across the management verticals talk about this is ways more than one; basically there is nothing new that I can add here. But there is a critical part of this brand-consumer association which more often than not is the first level of this relation- we call it the brand experience and until recent, this was the biggest area of focus for retailers and brand to concentrate on. Everything that a brand put across to the consumer across all the mediums has a uniformity in terms of content and tone. The visuals and merchandise are in sync with all this. Lastly, it is about a sentiment a person has, an unfulfilled need at times, which a brand experience satisfies.

Brand retail- both as brand shops or Shop- in- shop (SIS) have their own charm. Walk into a Nike or Adidas store and even if you are not a hard core sports freak, you start feeling like one. Shelves full of shoes, jerseys, sports goods and accessories suddenly channel a rush of adrenaline. Spot a Federer or Bolt on the wall or just a face in the crowd out for a run on an empty road inspires one to just grab a pair right there to cherish that dream to get into shape. The sight of a man dressed in crisp formals at an Arrow or Raymond’s section builds the aspiration to make that impression in the meeting room. At the perfumery or the cosmetics section, all brands have testers for people to try it on and then decide what suits them in what kind of a look. Not to forget, at each stage, you have a personalized attendant to show you more options, recommend better products and even in case you are hell bent not to take his words seriously; no one hates if that person shares you a compliment. Feels like magic isn’t it?

Retail is a refined art. It is designed to stimulate your senses in every possible way. Attractive colours and themes on the displays, bright interiors with immaculately put up shelves with neatly arranged wares and smiling sales persons. Even the air within the store is pepped up with aroma candles and oils to make the people feel wanted and cared. Say for the look, an Apple store is expected to be in all white with the silver coloured machines and the staff in black Tees. A Samsung Smart Café or a Mercedes Benz showroom will look the same all across. It is all a part of giving you that distinguished brand experience. The entire affair with the look and feel is so great that clients hire specialized agencies as the people who will build this experience. These are the people who specialize in areas like retail window displays, the look for a season or festival as well as the overall retail design to catch our eye.

No matter what; this aspect of the retail experience is something which I believe cannot be easily duplicated in an online retail environment.  The convenience of shopping sitting in your lazy chair just does not have the charm of walking around in the isles, trying on stuff in a trail room to see how it fits you or at times, make you feel that you are shopping against surfing sites for the best deals. I agree that brands are putting in something very close to the SIS kind of arrangements on sites like Myntra, Flipkart and Jabong, but even with the banners and livery visible on the screen, it sincerely does not inspire the same sentiments. How can holding a pair of Ferrari Puma shoes in your hand be compared to seeing it online? How does one gauge the power dressing rush coming from an Arrow shirt by seeing some firang model wearing it unless you can touch the fabric?

It is good to know that brands are taking cognisance of this and keeping a distinction about what it sells through an online SIS as compared to its own online portals and physical outlets. They are ensuring that their products through a multi-brand online retailer is more aimed at brand penetration through these channels and maintaining a watch on the degree of discounts being offered to ensure there is no cannibalization. For all the pricing games and wars which happen every day on the online ecommerce retailers, there is much need to respect the sanctity towards loyalists through the traditional channels.   

Consumers live by experience. Comfortable, easy-to-use, convenient and ergonomic are what products are designed to be. Brands have a higher order of satisfaction- it is the aura, imagery, style and the ‘feeling-good’ factor added in. This is what makes brands, the emotions it invokes and wins consumers for life. 

Online retail in India- Still a long way to the top

11.11.2014 was an exciting day for online retail and shopping enthusiasts. After an impressive opening at the NYSE, Alibaba and Jack Ma have been in the headlines for all the right reasons. The Singles Day sale on 11^th November was like a show of its might and abilities to deliver and grow year on year. The numbers are simply mind boggling- $9.3 billion in sales with 278 million orders shipped in 24 hours. The figure is a significant rise from 150 million orders shipped last year, which again was a massive improvement from a year ago. It has shown exponential growth in sales and traffic over the past six years. Surely enough, the Chinese dragon is making its presence felt around the globe.

While all this was happening in China, on the very same day, Snapdeal and Amazon were looking at causing a few ripples in the Indian market. Snapdeal Savings Day was being heavily advertised for four days preceding the sale. To keep the shoppers interested, they put up a listing of all the range of products which would be up for grabs on the day and complete with hourly and limited time sale across categories. It seemed to be a well charted approach with special discounts or cashbacks on use of certain cards or modes of payment.

Parallel to them was the Amazon Appiness Sale- an exclusive sale for its mobile app customers and targeted towards increasing the number of mobile based internet users shopping via its app. But this also had a lot of attractive offerings like the chance to win 11 months of free shopping worth Rs 11,000 each month if one buys through the application.

Both the retailers seemed to have their marketing hats on and trying to ride in the mass wave of consumerism that has set in India. But coming hot on the heels of Flipkart Big Billion Day debacle, as an enthusiast and online buyer, I was really interested in how these two giants fared in comparison. With not much to buy available under the ‘Sale’ tag, I was happy to just a spectator and gather information and understanding. Sadly, the reports were not really encouraging.

Snapdeal Savings Day went on much the same way as Flipkart. The social media channels were buzzing about problems right from site not opening to payment gateways unable to check out orders. Comparisons came up rapidly to the extent where people commented that even the while Flipkart managed to get consumers up to some basic levels, the Snapdeal site was unable to meet this. As for Amazon, the social media pages were filled with more of customer complaints rather than anyone talking of the joy of shopping. While the reports in newspapers focussed on another online disaster caused by Snapdeal, the Amazon offer was possibly lost even for the media. The bottom line was clear in both cases: Snapdeal possibly lost more than gained and Amazon failed to build on the buzz.

In my opinion, the online shopping scenario in India is heavily dispersed across retailers who sell in specific categories and then the big ones who have everything under one roof. In the current boom, customers are actually spoilt for choice and thereby there are even retailers like Junglee (used to be the Indian brand by Amazon) which have got into the mode of a search engine for retail to give you the best deals. Sadly, it is too early for people to have formed loyalties and majority of the population sways to the retailer where the prices are lowest for the day. It is hardly surprising that in case of a flash sale, the number of users multiply exponentially and the support structures are collapsing. Also, it is not viable to maintain a backend in terms of inventory, servers and payment gateways for the flash sale volumes for all other days of the year.

Not to mention, physical retailers have been crying foul towards flash sales riding on predatory pricing strategies. Since the online retailers have no direct arrangements with the manufacturers of durables; LG, Samsung, Videocon, Sony and Panasonic forbid their trade partners to sell their products with deep discounts during flash sales on e-retailers, while to buyers of the products are termed not eligible for after-sales service or warranty. I have had one experience where my product was not even handled by an authorised service as it was an exclusive online product.

I guess on an overall, online retailers have to introspect into what they are offering and what they need to make this wave sustain in the long term rather than more of flash sales and heavier discounts.

a)      Market Size: Online retail is on a boom and is looking at exponential growth. But all put together, it accounts for a fraction of total of physical retail sales in India. The number of categories is today limited and growing, but it has many miles to travel before replacing the traditional formats to a significant degree anytime soon.

b)      Deliveries: Last year I was proud to awe my brother with the record 2 days for a standard book delivery by Flipkart. This year the same has been extended to 5 days. My friend over two weeks has been fighting over apologies and no responses after a wrong book was delivered to him. Another one reported of a delivery boy who fainted on the road due to fatigue and overload of pending deliveries over Diwali. All these are just signs of the lack of robustness in the delivery mechanism which needs an urgent shot in the arm.  

c)       Revenues: Every sale so far has had huge spends on media, investment in inventory and delivery and heavy discounts. This is driving the top line of the sales chart- but what about the bottom line? How far can it be ignored? It is known that everyone in this business run in debt, but is this how things will run for ever?

In every business, there has to be a consolidation phase before the next big step. I believe its time it was attended to as well if we do dream to see someone to be India’s answer to Alibaba. 

India- Where even small means BIG!!!

If the market is the prime point to start off while thinking of marketing, India is the land of opportunity. Statistical explanations are most often used by research agencies and consulting firms as a support to show how a small sample survey can be extrapolated and a maximum population under a desired market can be segment, targeted and possibly milked. One of the considerations that most agencies will offer is to concentrate under the bell and ignore the extremes at both the ends.

Somehow this isn’t always true when it comes to India. If I was to paraphrase a very senior and knowledgeable person on India, Mark Tully (BBC Bureau Chief in India for 30 years prior to 1994), with the kind of population India boasts of, even a section termed as the exception can actually number into millions. If put into marketing perspective, even a failure like the World Space Radio had 4.5 lac subscribers in India (the only country to deliver profits) and a cult bike like Royal Enfield hugely affects the stock values of Eicher Motors. It is hardly surprising then that Flipkart can make sales worth Rs. 6 Billion (USD 100Mn) through just on Big Billion Day.

While the above might suggest that there is almost a constant momentum by the side of any product or service which can fulfil the market needs in terms of the price & quality equation. There is possibly no company which enjoys the satisfaction of the ‘S curve’ and the fascination of adding more customers and greater revenue keep the journey within the ‘J’ curve for growth. It is at times that this fascination increases the areas of neglect which are most likely to hamper the desired levels of growth in the near and present future. A case in point, Enfield bikes have a waiting period of roughly 4 to 14 months depending on the model and the consumer choices.

Maybe a cult bike can afford a bit of snobbery; but can an e-retailer in a market driven by cut throat competition afford such lapses?

Flipkart’s Big Billion Day was the first of its kind initiative in India and it almost earned itself the title ‘Flopkart’ thanks to all the technical glitches. The saving grace was for the founders to express an apology to the customers it could not handle on that day. (http://www.dnaindia.com/money/report-flipkart-turns-into-flopkart-on-big-billion-day-sale-2024058 )

We can draw parallels to the fact that the first Republic Day Sale by Big Bazaar (another first of its kind in India) also had caused similar ciaos and almost rioting by customers outside the stores; a situation managed by riot police and a declaration of extension for the sale.

Both these are cases where consumer response to the discount sale was far exceeding expectations and the retailers were not planned for the scenarios. But the consumer today is a very different animal. They are high on options and low on patience- which practically implies that they are demanding on their terms and unforgiving towards any slip ups.

With one Big Billion Day Sale, Flipkart has 1.5 Mn orders to fulfil. This is in addition to its everyday sales where it trades its numbers with SnapDeal and Amazon for the top spot. All have been offering heavy discounts leading up to the festive season leading up to Diwali and have together contributed to a problem faced never before by the e-retail model: a breaking strain on the delivery logistics. All the giants use some or the other kind of a courier company as its last mile link and the sheer volume of orders is exposing its weakness.

For the first time, it took 5 days to get me a book I ordered from a seller in my own city of Mumbai. The next was a comparative delay on some electronics which was again 5 days from the date of ordering. The previous benchmark was 2^nd day for a book and 3 days for electronics of similar kind I had ordered previously. While I kept my anxiety aside by convincing myself on how not being a loyalty club member can affect service, an article I read today actually told me that so was not the case; nor was I the only one who is having such experiences. (http://www.dnaindia.com/money/report-e-tailer-shipments-pile-up-on-diwali-rush-2028506)

These are not isolated incidents, nor is this a problem just the Flipkart’s and SnapDeals of the world facing; to me it appears as a critical area called ‘delivery’ has been outsourced and ultimately overlooked. The consequences are evident- cancelled orders, further loss of face for the brands and a bad customer experience to top it. Not to mention, large electronic brands like Sony, Canon and Dell are refusing service under warranty for products bought online as they refuse to acknowledge the genuine-ness of the products. I have already have had one such warranty refusal, but luckily the matters have not escalated beyond.

As a marketer, we are often laid a challenge to think of areas where something named ‘competitive advantage’ can be identified and used to the fullest to surge ahead. Service delivery and aftersales is one area where we often searched for such an opportunity with high impact and difficult replication. 

As I see, the retailers of today have possibly missed the bus and having not planned this as a place to build their brands. It might have been a small area and might be affection a small percentage of the orders. But then again- for India, the small can actually be BIG! While the high volume advertising has made 'Let's Flipkart it' as a new addition to the next edition of Slang dictionary, they seem to have failed at winning customers by building on what can actually be the big advantage. 

Where shopping becomes a drug

Last week, 23^rd September to be precise, the accounts guy in my office walked up to me asking if I was registered on Flipkart. Considering I have been shopping a rather long time with Flipkart, I answered the affirmative. But this was not a usual shopping registration; this was improving odds for the Xiaomi Redmi 1S sale on Flipkart on that day. What we were playing for- being amongst the top 40,000 of 2,40,000 registrations who would have clicked the buy button at the right moment to buy a phone. Call it fanatic; he was delaying lunch beyond 1400 hrs just to try his luck before food that day.

This is not an isolated moment. It has become a need of the hour for online retailers. While offers and discounts are great to attract a shopper for the day; his experience will decide if he may or may not come back. Today there are sites and apps like Junglee which troll the e-retail sites and get back with the best offers and prices for the day across all possible sites. The result I see is complete loss of brand loyalty for purchase of goods. Loyalty now is confined to which site has the best rates for that day. In many cases, while you may track a particular product for a few day on one particular site- the actual purchase may happen on another one- thanks to a special day offer on it.

This is presenting a very unique challenge to e-retailers; you have buyers who are heavy switchers between all possible sites selling similar products. If a particular buyer had come to you by virtue of a special offer, it is not always economically feasible to get him back each time purely on discounts. How do you maintain a steady flow of audience to keep coming back for more after that first purchase and buy at full prices?

The category leaders are actually coming up with a wide variety of programmes to get their customer base towards loyalty and build larger number of repeat purchases. The first was product bundling which was in fact a no brainer. Get a cart worth a certain amount to avail free delivery. Flipkart then launched the Flipkart First, where paying Rs. 500 as a membership ensured faster delivery and distinguished customer service. Typically, this amount is what a customer will pay for minimum ten standard deliveries and is a nice way to ensure repeat audience. The other way most of the websites are racking up audience is higher discounts and bundled offers on weekends- a time when I suppose online traffic take a dip.

Another way employed by Flipkart is something I believe was a test- Rs 1 Sale, where a limited stock of a select set of 6 items was up for sale on 22^nd September. This was valid only for a short window of 2 hours running from 4 p.m. to 6 p.m. on a Monday; which may be the time for the lowest number of hits for shopping on a weekday. Another It might only be time before Amazon and Snapdeal will have to follow something similar to boost repeat purchases. More and more I observe, I am getting to a conclusion that the idea here is to get people to become an online shopaholic.

We had a term while in college known as retail therapy- the best way to break a monotonous day was go window shopping or for groceries as it would transform the mental state away from work or study. E-retailers and now pushing people into an online retail therapy which is easily accessible and highly addictive. I would say this is potentially a drug: where once bitten, you may just find it hard to withdraw from. Yes it is convenient- but also has the possibilities for people to go overboard and ruin the balance of spends versus savings very soon. 

No more Chicken 'n Egg: the rise of mass consumerism in India

It is not s scenario uncommon in India. We don't buy  fancy cars coz the roads are not the ones meant for them. Brands don't want shops in malls with no footfalls and we can't buy brands in our small towns. Some parts of the country have no flights or very few one's with expensive tickets, so we don't prefer to travel. We all might have had these thoughts and the solution we bring in is: Let's do it after someone else improves things for us. But I guess this cycle of 'someone else' has been broken by some sectors. 

There are possibly three things currently in India that rank high in terms of share of voice in news media- e-commerce, mobile handset devices and airlines. While their individual contributions towards boosting the Indian economy might be an interesting point of study; what they are doing in a big way is improving of accessibility of products and services to the far corners of India.

Some definite trends which are emerging though is a rise in mass consumerism across, larger spread in terms of variety and market penetration for businesses which ally with either of these three. What make it further interesting is the fact that e-commerce, mobile devices and airlines are somewhat related symbiotically in each other’s growth.

The airline industry is actually not at its peak; but there definitely frantic activity in the sector over the last 3 months. The first was the fact that Air Asia started operations in the Indian domestic sector from June. The LCC has certainly caused some waves in the segment where Spice Jet and IndiGo started offering heavy discounts. Some more knee jerk action: Tata-Singapore Airline launch a full service brand Vistara and Jet Airways is looking to dump its low cost Jet Konnect and concentrate on being full service again.

Recent news suggested that Air Asia within its first month incurred a loss of Rs. 26 Cr. within its first 18 days. Though the airline is hopeful it will break even by the year end with more operations on the charts; the plan here is to build more connections. So as of now the score is 1-0 in favour is the Indian competition; but how did this happen? Pretty simple, as against 10 years back, most of the tickets today are booked online through ticketing and travel portals instead of travel agents or directly through airlines. The TG that can fly has made booking portals their choice of purchase point and possibly been the earliest and most popular form of e-commerce so far. In turn, it has increased competition and better connectivity across the country for men and materials to move.

The reason is simple; portals offer a wider choice, have a larger database than any single airline has and it has a larger reach and quicker reaction towards announcing discounted fares. Sure I would have loved to see some numbers here; but take this as an example- large size travel agents like Akbar travels offer online ticketing facility. Want more; I always associated Balmer Laurie as the lubricant and grease company who also were CNF agents at ports- they have started an online ticketing portal. So I guess a safe assumption can be made here- airline ticketing has shifted online as more people are having access to internet.

But what has transformed internet in India has been the faster penetration of mobile phone networks across the country. While the network quality is still debatable, it has eliminated the formidable Indian Postal services to a very high extent. And what has definitely changed the internet access mode to mobile devices is the easy access, availability and affordable mobile handsets. The launch of the Firefox based i-Ball handset at Rs 1999 is pretty remarkable as it will further improve on the smart phone device perpetration in the country. It is not uncommon to see that for a lot of people around, the first phone is a smart phone with an internet enabled connection. 

The penetration of these internet enabled mobile devices is boosting internet led transaction as compared to computers largely due to their affordability. The vast array of apps and services on mobiles is surely the driving force. This aspect is being taken seriously by e-commerce sites with launching apps for online shopping, trading and classifieds. What’s more is the number of special offers and discounts offered by Makemytrip, Flipkart, SnapDeal, Amazon exclusive for customers who use their mobile app. Even on standard product offers, there are additional benefits like next day delivery, zero freight charges and additional discounts over and above the standard pricing. The move is definitely aimed at a greater shift to mobile apps which the sites are seeking.

But another angle of the mobile- e-commerce relation is how the e-retail portals are making full use of the internet capabilities to mutually boost their business. With no requirement for a physical presence, mobile companies are now forming exclusive alliances with e-retail companies and creating a shop-in-shop environment in the virtual space.

The first move was when Flipkart and Motorola launched the Moto-G series exclusively through the portal and with no shop retails. Next, Flipkart associated with Xiaomi in the same way and the lot on sale was pre-booked in 5 minutes. Flipkart now has an exclusive push for budget smart phones; a move I believe is to convert the remaining part of the smart phone transition. Today SnapDeal is going in for a similar arrangement with i-Ball for its phones. In fact, they taking things a step further through an exclusive partnership with Tata Value Homes in selling real estate.

In togetherness, this is how the cycle has broken- Thanks to mobile enabled internet physical presence and distance is no longer a hindrance to access the best products and services from any part of India. Goods can now travel rapidly and to your door step due to better connectivity. And the very phones to enable the access are available through the internet at an affordable price. The biggest beneficiary- the end consumer; the result- mass consumerism across India. 

Mobi-Wars: The attack of the clones

The cycle of who gains supremacy in the mobile phone handset market has taken a fantastic turn and this time Samsung; the world leader in terms of market share, is on the receiving end this time. On terms of sheer numbers, China and India are the largest markets for mobile handsets and local companies from both countries: Xiaomi and Micromax, have taken control as market leaders respectively. While both markets are fast upgrading to smart phones, the erstwhile leaders: Samsung and Apple are headed towards choppy waters.

Xiaomi; the new king of the market in China is just 4 years old and direct entrant with Android based smart phones. Its MIUI firmware was dubbed to be an aping of Samsung and Apple, but its flagship Mi series has definitely caught the frenzy of people. With over 10Mn Mi-2 models sold in 11 months leading up to September ’13, Xiaomi has captured the Chinese and East Asian markets in a serious and rapid. The company is unknown in Europe or the Americas- but its sales from Chinese mainland and parts of East Asia are good enough to make it the 5^th largest smart phone vendor in the world.

Xiaomi is a case study in itself of how a goal oriented approach of a company which began with no manufacturing or sourcing avenues has risen to take up a gigantic shape. To gauge why this is something worth knowing, just put in perspective the following; Made in China: Cheap and unreliable. Though 90% of electronics vendors are from China but have contracts with bigger players who invest in their facilities and so the manufacturing is closed door and customised to their needs. As many as 85% vendors rejected the offer to associate with Xiaomi. So how do you win against such odds?

Founder Lei Jun, who was an already established entrepreneur and billionaire from his previous ventures in the 1990’s, hired a set of executives from Google, Motorola and Microsoft. Their efforts in developing the MIUI Android platform ensured newer capabilities every week. A strong feedback loop from beta users and other customers helped them evolve faster and at lower cost. A tie up for touchscreens with Sharp Japan in 2011 was a boost at a time when business with post Fukushima Japan was at its lowest. The faith by Qualcomm in the MIUI platform and the assembler of Apple; Foxconn agreed to set up assembly for Xiaomi.

Someone might argue that you can capture a market if you have a product at an affordable price; in Xiaomi’s case- roughly half of what an Apple or Samsung sells. But unless there is a decent level of quality offered, no one can succeed in a mature market where consumers are informed. From the launch of its first phone in August 2011, Xiaomi surged past Apple by end of 2013 and had Samsung under its heel by August 2014- yes, just 3 years.

The story in neighbouring India with Micromax is equally enthralling though. It started off as a software company in 2000 and got into mobile phones only by 2010, much the same as Xiaomi. While the urban Indian was spoilt for choice with Samsung, Nokia, LG and Blackberry, Micromax went after the bottom of the pyramid. Its co-founder, Rahul Sharma was inspired to counteract the power outages in rural India. Micromax X1 was the first phone launched with a battery capacity of 30 days.

This was a time when some 26 mobile phone brands came into India in a span of 12 months with a similar model of manufacturing hubs in China and aim to capture the low spending-high volume end of Indian market. But Micromax made a distinction for itself by offering Indians not a low end Nokia or Samsung look alike sporting a T9 keypad but the experience of a QWERTY and dual SIM options. While rural was a focus, Bling- a swivel QWERTY phone with Swarovski crystals and a mirror became an instant hit with urban women. Bling was one of Micromax's highest selling models. It was also high on experimenting with the Android platform and came up with the Canvas phablet range in 2011.

Micromax did everything right when it came to marketing itself and can be a great example of the bottom-to-top approach. Hiring Akshay Kumar as its brand ambassador, sponsoring cricket tournaments etc. built awareness for the brand across consumer bands, while a slow and steady build-up of ground network of retailers and service centres built market visibility. The carrot they offered; better margins than anyone else. If the Apple and Samsung’s of the world were out of the pocket range and the Nokia and Blackberry empires was crumbling under the Android wave, Micromax was one of the better known so called low end look- alike and do-alike in the market which enjoyed the retailer push and cost a third of a Samsung of the same specifications.  

When Canvas was launched, the advertising was one with an international look which was boasted then by Samsung and LG. This was a stage when the brand built an image suggesting that it could offer the functionality of a bigger brand at a smaller price tag. But the use of international star like Huge Jackman in its ads gave a sign that Micromax meant business and washed away its me-too perception in the market. With the launch of their assembly unit at Uttarakhand in 2013, the ‘Made in China’ tag is also soon to be cleared off its phones.

The two Asian giants are likely to encounter each other head on very soon. Micromax has gone global with Russia and SAARC, while Xiaomi after East Asia has entered India. Xiaomi’s launch on Flipkart saw its sticks wiped off the shelf in under a minute- which kind of talks of its level of awareness in India already. But one thing is for sure; even if Samsung might refute the survey figures and claims to have not lost its market share, the brands once termed the clones have attacked and the ground is set for them to assume clear leadership soon. 

Break the rules to be the Master in e-retail

One of my professors during my MBA has made this statement like his own- ‘Learn the rules; master the rules; break the rules…’ – not to mention his context was related to photography and the same line echoed in two other colleges where he taught. Strangely, this was very much applicable to any business entity or anyone who was looking to make a breakthrough in their field.

I don’t think I need to reiterate my fascination with online retailing and the sheer pace at which this is transforming the business dynamics. I wrote a blog last month about how distinguishing between two online retail sites is turning into various shades of grey. Almost anything and everything is now going on to an online selling model and while success and longevity of their success are the key areas I question, I will agree that it is making an impact for sure against traditional retail.

In the last one month, I have purchased customised T-Shirts, green groceries, electronics and even furniture from online sites. I have pushed by spending envelop to almost 10K ticket size at one time and I must say, I am getting increasingly satisfied with my experiences. The reason- increasingly, online sites now are going all out towards customer delight.

I was lured into buying groceries on greenkart.com simply to buy 250 gms of cherries for Rs. 25 bucks. To make sure I didn’t pay for the delivery; I added in veggies and other processed foods to get the ticket size cross Rs 400. All the stuff was delivered to my door step the next day at a prescribed time band which most suited my folks at home, something even the regular local baniya never adhered to. Sorted vegetables and fruits of good quality and well packaged along with prices lower than MRP for packed foods was definitely a surprise. So what was the winner here- Quality and Convenience.

I am not ashamed to say that even if I’m not a member of their loyalty circle; I admire Flipkart. In a matter of 4 hours on a particular day, I placed an order for a sound bar, two cell phones and a memory card. The sound bar and memory are delivered in 14 hours of the order booking and the cell phones within 36- all on standard delivery. Not to mention that I was in no haste for any of them, but the Speed of Delivery is a complete delight.

In comparison, Snapdeal was more on the assigned delivery time and Fabfurnish was delayed but within their timelines which talks of working days (the site has no mention if a week is 5 or 6 days).

What has been fascinating though is the kind of differentiators coming up the market every day for these sites so as to build that ‘Wow’ factor and score more customers. Like for instance; Groupon is a ‘Deal-of-the-day’ site but has always come up with areas of making its presence felt in the uncanny manner. Last year, at the peak of the onion crisis, Groupon gave away a kilo of onions at Rs.9; this year they are offering a Rs. 100 cash back for booking railways tickets on Spice Safar.

Amazon is not left behind; as they have introduced eGift Cards as a means to eliminate the need for thinking your brains over for giving someone a gift. Innovative; well Amazon always give vouchers in case of a make good; but now they are roping in customers through their existing customers.

Lastly, I got an emailer in my box today from a site called trophykart.in which is an online portal to sell trophies, mementoes and medals through an online site. This many not be a mass consumer product category; but has huge potential as for business units and corporate houses. I have personally worked on projects where I was expected to get some kind of trophies for people to be felicitated. The problem was that even in Mumbai there are a few reputed suppliers doing the job and as a result, it is more of a sellers’ market. Payment terms and deliveries were never up to the mark for meeting expectations and overall it was a convincing game people had to play to negotiate. This site has the potential to overcome these hassles as payment over a card of bank transfer is possible. One area I feel will not be addressed samples- as there are at times multiple levels of approvals and physical appeal required to get the design across.

What will work, what will not- it is still unclear to me. But at present one thing is for sure; everyone is looking to build that edge on the competition as the battle for survival intensifies. This is one game where ‘this is not the way things function’, is a taboo. The Master here is one who will challenge the rules and break them to surge ahead to forge new rules.  

Let’s go Karting on dot.coms

About six months ago, I wrote a blog post on how online retails were making hay with 30% growth over Diwali, while the economic slowdown was hurting sales across malls with drop in footfalls of 10%. Things The dynamics of the online business have been shifting gears rapidly in the interim with the likelihood of a scenario in the near future where lack on online presence may be harmful as say not having a store at the proper location.

Unlike the developed markets, online retail in India is actually an online market place where the buyer and seller trade goods with the online retail portal serving as the intermediary. So basically when you order a book or any other goods, the order is actually placed against a supplier or a local trading company which fulfill the order. The online portal earns a small margin on every transaction.

This is exactly the reason why e-shopping is so cheap; there is no inventory to be managed by the retail portals and no showroom spaces needed by the sellers and traders. The system functions on one well-coordinated web of online ordering and ERP systems that integrate the buyer- portal- seller at one shot. Yes, Flipkart had tried the warehousing model initially when they started off with books, but it was not the way ahead with an increase in number of categories.

Much like the real world, e- retails today also host various categories today ranging from specialty verticals to the mega stores which sell everything under the sun. Buy furniture and furnishings at Fabfurnish, Pepperfry or Urban Ladder, get groceries from Bigbasket, Localbaniya or Greenkart , the kinder get their needs from Firstcry or Babyoye. Every kind of personal accessory is residing on Lenskart, Watchkart, Jewelskart. Jabong, FashionAnd You, Yebhi are mostly for clothing and accessories. The sharks of this ocean are Flipkart, Snapdeal, Junglee (Indian arm of Amazon) and Amazon India.

So is this the great shift of the Indian shopper from floor space to web space?

There is enough reason to believe this, considering some indicators. The very fact that Motorola’s went ahead to launch its smartphone range in India exclusively via Flipkart was a bold statement in this direction.

Darwinism is also evident as historic presence has made no difference. Old timers like ebay, Rediff shopping, Indiatimes shopping have no space today. Adapting to change and migration has been the key. TV based shopping networks like Homeshop18 and StarCJ were initially launched for them to capitalize on the fact that Satellite TV penetration was higher than internet. I guess smart phones have changed that equation. Retailers like Crossword, Shoppers Stop have websites with exclusive online deals, so does Future bazaar. Seventy MM which offered online DVD rentals closed the business of DVDs and got into retailing in 2012.

And most significant, IRCTC; the online railway booking king which gets the maximum traffic in India by far, has got into shopping- mind you, stuff here isn't cheap by any lengths.

The biggest question in my mind tough is will this boom survive?

It might be a tough question to answer at this point, considering none of these sites have any significant USP to differentiate it from the rest. If we evaluate these sites on classical Marketing theory of the 4 P’s, this is the result as I see it:

Product: All of them are following the market place model where suppliers are the kings. If the suppliers overlap, there is uniformity in the products. Also, other than Amazon (Kindle, Fire phone and Pinzon range) and Flipkart (Digiflip), no one has any product lines or brand which they own. This eliminates exclusivity in products.

Price: Yes, the consumer is definitely price sensitive and much like a regular market, a buyer visits 3-5 sites comparing prices once the product is final. But, since the back end suppliers for many of these markets are the same, the selling price equations will always remain:

Selling price= Supplier price+ Margin,  if supplier’s are same and its price is constant; it’s a war on who can bleed on margins and survive for how long. A point to note, even on a global level, Amazon is still in debt.

Place: Let us take this as delivery and we may find that same day delivery, free delivery etc. are fairly easy to ape. The segmentation by geography is where the biggies have tried to map the market differently. Flipkart is an urban hot seller and Snapdeal is targeting tier 2. Amazon is tying up with the Indian Post to cater to the remotest buyers where a courier may not go. This in my view can be a sustained advantage for some period.

Promotion: Spams! That what every send me in my mails. I get ads on social networks, TV, on my mobile apps and games. It is as cluttered as can be.

Service: This is not a P, but usually the best way to make a difference amongst alikes. But a look at the websites and they all appear the same. The customer service is not much to choose as well.

The bottom line is there is little or no scope for any site to build their brand persona or consumer experience that can lead to loyalty amongst consumers. In that case, this will finally be an online kart race where survival will depend on who can work on the slimmest margins to stay afloat. It is only a matter of time for us to know how it flows.