Category: Retail

Why are the Japanese not getting a handle on Indian consumers?

Toshiba and Sharp of late are closing down part of their units in India and trying to find other vendors who can take over the assets.  Sony sold their PC business a while ago. Also they seem to have problems of their own in overstating their accounts globally. They seem to have lots of inventory lying around that they need to dispose.

      Be it TVs or mobile phones or other consumer appliances, the Japanese have found it hard to understand and play well in the Indian consumer appliances market which may be the second largest market for them in the world today.  It is going to be Numero #1 because of its youth that are rising up the ranks and would dictate the demography over the next two to three decades.  So, it is not the right time to pack up your bags and leave.

     Japanese products would always be revered for their quality but given these times where quality is a given or a not-much-of-a-care (if the shelf life of the item is small like cell phones), not much can they leverage this value in the Indian subcontinent.   Let along their Hondas or Toyotas, they are struggling everywhere in the Indian B2C space.  

     Here are a few reasons that they are not able to make any dent in India:

  • Lack of proper electronic presence – unlike a LG who has displayed all their specifications that includes prices on their website and have their own website over and above the normal distribution channel, I do not see many of the Japanese companies having their digital presence.  As an example, let me take the case of air conditioners- no pricing details are available, no proper and complete comparison data is available between their own models, and no completeness in their specification.  The MRP should be mentioned clearly and the websites must include both Made in India products and imported goods.   And to make matters worse, they do not seem to be pushing their products through the Flipkarts and Amazons in all cities and towns.  They should also be able to sell online directly to the consumers.
  • Lack of physical presence too – not too many chain outlets carry Japanese products.  Either the discounts and commissions do not work out for them or the products are not fast moving for the outlets to store them , both of which can be easily fixed by being on par with what other manufacturers do.  Actually since most of the Japanese firms want to get a foothold first, they need to do better in both these fronts to have the outlets be able to have a smaller shelf life for their products.  One would notice that the outlets would try to sell a LG or a Samsung even if you tell them you are looking for something else.  Their concept of Solutions Plazas do not seem to work – I happen to go to couple of air conditioner’s Solutions Plaza and they do not even seem to have proper display units on any of their products.
  • Lack of transparency –first, as I mentioned, is pricing – the prices of the consumer products are not advertised on their website.  Second, no mention of a point of direct contact for either sales or support which is important to ask a query or lodge a complaint.  Why are they trying to hide from the consumers?  Many sales queries must be directly handled by the manufacturers and they must assist the potential buyers with the right outlets to go buy their products.  Third, most of the dealers mentioned in their website, are not email friendly – even if any query is sent, no reply comes back.   Overwhelming the consumers with more information is better than not sharing most of the important details.  And in the management side, which I have personal experienced,  the Indian managers working for Japanese companies feel that they do not have any say in significant matters, and none of the top decisions are taken by accommodating them in the loop.   Being open and honest to both consumers and employees is essential.
  • Perception of higher quality can only get you so much – gone are those days Sony had a Trinitron that was regarded the best in class when it comes to Video.   Now if you look at Samsung LED TV, they are truly world class and best in the industry.   The challenge is for the Japanese to deliver superior products at the price points dictated by the market. Japanese cell phones in India do not seem to be renowned for their quality unfortunately.  If the quality is what gives them respect, having some superior proactive servicing capabilities DIRECTLY is what would make things better – if they are outsourcing this service, they must ensure that the parts are available at an affordable price and the quality of technicians are superior and well trained.
  • Not going with global standards – SONY’s biggest mistake was to use their own standards, either physical or electronic and trying to go at it alone without shepherding the global players with it.  Remember Memory sticks and Beta Max?  Once they understand the world is going in a different direction than theirs, it is important to deliver on those standards with reliable products.
  • Pricing it properly– one of the 4Ps of Marketing taught at any management school is PRICING.  For a consumer market like India, majority being middle class who are very price conscious, pricing their products ON PAR with other competitors is critical.  Quality is not going to get you a higher price, because most of the products today are use and throw and no repair or service work takes place.  There is a life time for every product after which most of them gets replaced and not repaired.  For example in cell phones, other than APPLE who have a price advantage because of the  eco systems they built and grew, others compete  on PRICE – I see no Japanese players  in the cell phone market other than Panasonic.  In any product, try not to price yourself out of the market.  Indians want to get what is available in Japan at the Indian price.
  • India is NOT a dumping ground – the strategy that I see Japanese using is to dump their older models into India and keep the fast moving newer models only in certain other markets.  This is totally unacceptable and unethical as one can be surprised as to how much wealth certain Indians have.  I take another example of a refrigerant R22 used in air conditioners which has been either banned or being phased off in other countries, due to its ozone depleting nature, but I see most of the air conditioners from Japan still trying to use the same.   If they are truly conscious of both the market and community, they must take an active role and lead from the front. 
  • Local Leadership and better management – Indian manager are more used to USA and European style of functioning where you feel empowered and decisions moves faster.  But in all Japanese companies in India, I do see only a Japanese expat at the top. Decisions are painfully slow due to the consultative group culture that they practice in Japan and it looks like most of the Indian inputs are not taken into consideration. Outside of Japan, they need to start operating their local subsidiaries differently.   Speak Latin while in Rome.   Being more visible among employees and end consumers would be helpful for a profitable journey.
  • Make in India with high quality – I see lots of assembly and integration work happening, but not everything needed for an appliance gets manufactured in India. They need to have a long term vision and will to make it big in India, and have processes that are identical to their worldwide factories and must be able to export Made in India products to other countries as well. This way we can be assured as well that the price of parts are cheaper and are available for the lifetime of a consumer product.

      It is easier to run away but it is tougher and more challenging to stay put and find your way through the market.  If your cost and hence your price comes down, if you have a good direct sales and service presence, if you are able to be more transparent to both consumers and employees, if you empower the Indian management and allow them to make some decisions, if you are able to change your direction on the drop of a coin, if you have a higher presence both physically and electronically, if you offer India the latest and the best technology, then there would be no fear of failure.   Do your homework properly before entering or expanding in India.   By walking away, do not leave the old Indian customers high and dry.

This article was written in 2014

Six things that E-commerce companies have to get right

Having been part of the e-retail journey as a customer for the past few years and as a consultant  for the past two in India, I have seen pretty much the entire spectrum of sites from really pathetic to very good, although only couple of them stand out at the top consistently.

    As many single retail shops want to get an e-presence now and putting up websites, they have to be conscious of six things (five if you take the first one out) that would lure customers to their site:

(I) Price:  For specialty and high end luxury items, you can discard it as people with big wallets just come in to buy from here for a ‘status symbol’.  But since it is easy to compare across different e-tailers on the web, it is imperative that the PRICE is absolutely competitive with other sites and much less expensive than a brick-and-mortar price with FREE Delivery. Price to be compared is the actual selling price plus any delivery charges….

(II) Security of transaction:  Absolutely critical to ensure the customers are at ease when they transact. The default and safest approach is to do Cash on Delivery (CoD) at no additional charge – I know lots of friends who do not buy if CoD is not available, that too at any extra charge. This makes the seller more accountable as he does not receive the money before the product even gets shipped – he would be longing to close out on his ‘receivable’.  The ONUS is not with the customer – his attitude can be, if it comes great, if not, not to bother.  So the site has to be approved by all the Transaction gateways available that are secure and must be cleared by all reliable known virus software there is.

(III) Ease of Return and Refund:  I cannot understand still why Amazon India cannot do replacement – they do only returns and refunds.  They should not ask the customers to print return slips and keep the invoice and put it back in original packing etc.  Especially if the frame of mind is to return or replace, these are additional pain points that no customer must go through. And their pickup of the goods must be efficient and guaranteed within a time window of couple of hours – not an entire day waiting for it to be picked up.  And the pickup must happen on the very next date after the refund or replace was logged in to the system and the couriers have to be punctual.  I do not see all these happening in most of the cases. Usually we are at the mercy of the couriers who do not turn up on the date or the time specified, and some e-tailers want us to keep the invoice, original package and the return slip printed out – not everyone has a printer here. And anyone in the family who received it would have opened up the package and not retained the invoice! E-tailing is all about understanding the customer’s behavior well.

(IV) Own inventory and courier helps a lot:  A 100% market place sort of E-tailer is at the mercy of the vendors.  The E-tailer in this case just provides a platform for all businesses to sell. They have absolutely no control on the way the vendor packs the goods, ships it on time or not, and no grip on the quality of delivery.  If the vendor packs something and it comes in broken to you, you are asked to send photographs of the same back. If the vendor does not ship on time and it does not meet the guaranteed date, then this is a big issue – this happens when we need something for Diwali or some event and the goods do not arrive in.  Having their own inventory shop and go downs in major cities for easy shipments eases a lot of issues and since they buy in volumes, their own shop gives the best price in the catalog.  As for having the courier of their own, this ensures that the entire chain is managed by them, thus increasing accountability of the delivery. Being at the mercy of the inefficient external third part couriers is going to degrade their business. Unless someone ensures that they are in the check point process with all the vendors to ensure the packing, shipping and delivery is correct, and take complete ownership and not blame the vendors for any incidents, your entire commerce system is susceptible to criticalities in its chain. Customer can and will hold E-tailer responsible.   Of course, there are local laws and regulations that may prevent the e-tailer to also be the seller, especially if it is a foreign company, but there must be ways to circumvent the problem legally.

    Having said that, it is in the best business interest of third party couriers to align with several good e-commerce sites and take them as customers and adhere to their vendor policies and regulation and make the best out of the situation. They should not act as if they are the ‘outsider’ in this transaction but a value-adding partner in the whole commerce.

(V) Customer Experience:  Along with the above owned inventory and courier, this is the other most important part that E-Tailer has to provide without any excuses. By experience, I mean ease of the website to transact, the website having detailed and right description of the product and all reviews associated with it, ease of different options for secure payments, getting the products on time EVERY time within the guaranteed date in normal delivery, having the products delivered in good quality so that it meets what they are looking out for, thus avoiding any replacement or refunds(‘one gets what they asked for’), keeping the customer informed if the product is getting delayed due to various factors, etc. so that the customer is at ease at every step of the transaction and delivery.  Better still is to have some good escalation path clearly documents names with phone numbers and email – this shows they have the utmost interest to improve and delight customers.  If you take the Ahmedabad based e-tailer Infibeam, who are pretty decent, somehow they lack the refund and replacement button in the order chain which makes one feel uncomfortable about the experience in the site.  Lots of metrics must be tracked on a regular basis by the management, rogue vendors must be taken off for repeated mistakes so that they do not spoil the name of the e-tailer, refund processed within a day, etc. all these would add to loyalty of the customer to come back.  I somehow feel Flipkart (and Myntra which is part of FlipKart now) and Snapdeal are to be appreciated here although I believe they still have a long way to go and they must be improving on making the CUSTOMER HAPPY All the TIME.

(VI) Respect for Local TAX and Accounting:  If an international chain wants to set up shop here, it is better that they understand the LAW of the LAND – they must look before they leap.  They cannot complain after having started their enterprise in a local country that the laws are not conducive for their business.  If one has not done their homework, and has not understood how to run a business here, it is no fault of the local government but purely theirs.  Failure to understand the market to do business in is totally unacceptable and I would certainly blame the management for the same.  Being LEGAL in the land they do business in is critical. There would be lots of foreign direct investment (FDI) regulations that one has to adhere to, as the local government would like to protect the local interests first and not to give undue advantage to anyone from outside to do business in one country, all things applying equally.  If they want to have certain things change, there is always a legal lobbying route that they can take to address their problems and work out things with the local government.  This is certainly not the area that I can talk with confidence but there are experts who can guide any multinationals to do business in one country and there are many successful ones who are running their show for a long time now.

   As I write these, I am sure we would be a few successful ones standing after a few years in the e-commerce arena and a handful of logistics companies doing a great job as well, but most likely that many of the today’s e-commerce players and logistics companies would not exist in couple of years.  Not everyone can be a reliable e-tailer.  It takes some good leadership, strong accountability and conducive commerce laws that would differentiate the best from the rest.

The author is a business consultant based out of Bangalore and has been in the IT industry for two decades across various domains.

Retail E-commerce today in India – to boom or go kaboom?

Last week started off by Flipkart announcing a big sale on Oct 6th which seemed to show lots of products at unbelievable low prices and netted $100M in revenue on one day but left a lot of customers dejected – it is not that they lost money, but rather seemed to have lost an opportunity to get a deal.  Looks like they could not handle the high traffic and many of the product’s prices did not match what was advertised. So, a mixed results in my opinion.   But I love the fact that they accepted the failure on their part and sent a personalized email out to all their customers – a very courageous move indeed, much like what Intel did when the first Pentium flaw came out and they offered to replace them all – this indeed gets a lot of loyalty to the brand in the long run.  But definitely Flipkart has to have a much better system to take care of the traffic and the day spikes, have enough inventory of items to be sold at a good price or mention how many items in that price to be sold, and have better relationships with the OEMs who cry out loud that Flipkart is lowballing the brick-and-mortar stores which compromise 90% of their sales today.   I am sure everyone would have teething problems to begin with and it is better to be addressed properly and I guess I would see this as a courageous move by Flipkart to really take the bull by the horn at this early stage to learn and adapt.

     In the meantime Snapdeal also had a great sale going on clocking 100 crore per hour, and this being the season of Diwali it looks like everyone wants to be on Top gear to maximize their sales this month.   I do not understand why the store retailers have a hard time when it comes to better pricing on the net – the margins are thinner and the warehouse cost is much lower than the real estate of the stores in prime locations.  Also, it is a great way to compare and shop for the best item you want instead of believing the not-that-knowing-salesman-in-the-shop who just wants you to buy one particular brand because their commissions are better. I will not even think twice to go with an e-tailer for books, movies and music, camera and phones and their accessories- as long as the warranties are proper.

    Having the government look into the e-commerce segment and being forced by the store retailers to curtail them is something that is not right for the customers.  Instead of that, it is better to see what is best for the customers and make laws accordingly.  Otherwise, it would be like countries like France where an e-tailer is not allowed to sell any book at more than a few percentage discounts from the MRP which makes the French folks go outside and buy them at better prices whenever they travel.

    So, where are we now with E-commerce (web and mobile included in this) in Retail in India? My focus here would be India as this is the story that is developing for the past 5 odd years, but many of the facts scribed here can be relevant to any geography depending on the maturity of e-commerce in retail in that country. I am more confident to write about the Indian story as I have been following this for the past few years, both as a regular customer and also as a consultant and the story unfolding come with a bag of mixed emotions.

  Benjamin Disraeli said “How much easier it is to be critical than to be critical”.  Yet, I chose to be critical here and hopefully correct.  Let me segment some of the areas of retail where e-commerce is a player, over and above the brick-and-mortar shops, and highlight some of the inherent issues being faced.  The issues are not confined to any particular e-tailer but rather a common occurrence in this segment.  I am not going to touch financial transaction as an e-commerce example here as we all know that this is the one what has the maximum penetration in India, thanks to the banks and insurance companies doing  everything online now.

Furniture:  Yes, one can get an entire Kitchen done or bedrooms finished, or just purchase a coffee table or an end table or just a ward robe, both antique and regular, all online.  Half the time, the bookings get cancelled as the vendor is not able to make the product or ship it in time.  But they need to take an advance of 10% only instead of the entire amount for furniture, especially if it has to be made after the order, and ask for the remaining money only when they are ready to ship.  Just before they ship, they must be able to send a short video of the actual product to the customer for the final approval which would ensure they meet quality requirements. 

     Once they ship, installation, if any, by local carpenters that they align with has to be done smoothly to the customers. I have personally have had my orders cancelled more than three times after  about 6-8 weeks, the e-tailer had taken my full money during booking and it is a good way to get interest collected without sending a products – bad way to do business.   Such things have made me NOT buy furniture on-line anymore. Once the delivery of an end table happened 3 months later, after I reminded them a month after I booked, and the drawers were not fixed properly and a local carpenter really drove some nails in and made it a little ugly. So, my suggestion for furniture is, go to an actual store, select some options and haggle on the price and have them delivered to your address, and pay them by cheque on delivery.

Tickets to any shows or events:  Again, a great way to get cinema tickets but the service fee can add up to a significant amount (Rs 30 to RS 50 a ticket for an Rs 200 ticket is 25%). Why cannot the actual PVRs and other multiplexes have a direct online booking without any additional service charge?  I realized when I went to a cricket match in Chinnaswamy stadium and the Davis Cup Match in Bangalore recently, only 60% of the tickets are allocated to be sold by the third party e-tailer and we could still get some privileged tickets in better stands that we do not see while booking online through them.   The worst error of all would be to have the same seats sold to a different set of customers – this is a big flaw in their system and this happens definitely. And the worst part is, when two customers with the same tickets happen to confront the e-tailer, they start investigating the customer instead of serving an apology unconditionally and trying to fix their end.  This is ugly arrogance of the e-tailer at their peak.

Taxis:  Honestly hilarious to charge a service fee if we call them up over the phone – their excuse is someone has to pay for the call center person –  why should this be a customer’s headache? I am going to assume this may be illegal as well.  Also, a new company now milks the customer for the amount of time spent in the cab over and above the actual per km charges, instead of taking it up with the city planners about it… knowing India and the metro traffic, this is a huge drain on your wallet.  And the worst of all is they do not have any control over the drivers – if the driver does not show up or seems arrogant or charges extra by adding stuff, then the customer is left unhappy. They have a long way to go in terms of actual fares, driver control, transparency and making the customer eventually happy.  And believe me, when you need them the most, none of the cabs are available. Try getting a cab during a rainy day in Bangalore!

Auto Accessories:  A good product to get online. But when I once got a helmet from a leading e-tailer, they gave me another design and their support staff does not even get back to you when you report it.  Again, an example of the problem inherent of a bazaar-type e-tailer who does not have any control on what the actual vendor ships and does not own the quality requirements before shipping.

Lighting Fixtures and bulbs:  Although you may get better deals online, it is better to go to a physical shop, try the bulb or the lighting fixture actually and then buy it after some bargaining. Despite some heavy packing, the chances of the light fixtures or the bulb breaking are very high – their transit is tough on Indian roads.   And once it is broken, they would ask you to take some photos of the broken item and send them by email before they can act on either refund or replacement.

Sporting goods:  if you are buying some balls for tennis or football, or a racquet for badminton, or some wrist band, online purchase is definitely a great thing to do as long you know the grip size and understand the material being used on the frames so that its weight is not a strain on your elbow or wrist.  It is better to go to a sporting goods store, check out their prices, and get a feel of what exactly to buy and then try online for the best price and see if you can get one. If not, go back to the store the next day and make the buy. 

Footwear and Apparels:   If you know the brand and their particular size that fits you, I guess buying it on the web saves a lot of money.   Remember, as in apparel, every brand has their own size that fits you – a Eur 42 may not be the same between a Puma and a Nike sandal.   An L size is not the same between an Arrow and a John Player, and you need to watch out for slim vs regular.  Again, it is better to get into a name brand store, get the size done and see if the same is available online to buy, if not, come back to the store and buy the same.

Home Décor:  This is one item where it is always about look and feel, and people need to see or touch them to buy them. Although plenty of choices are available on the net, I guess these are impulsive buys and more festival aligned and hence, in my opinion, would be something customer would still prefer to buy from the actual stores.   And the chances of getting an inferior thing as compared to what you saw on the web is very high – say for ex, one gets a bed sheet at a good price but finds out that they run colors or it is so thin or it tears after the first usage  that it cannot be used later – a total disappointment.   Buying a statue or a vase that it does not feel like what you expected would be another disappointment.

Perfumes and cosmetics:  Again, this is one area where you see lots of ‘pirated’ ones available on the net and even in a store, we do not know if they are actually the original or not.  Complicated purchase pattern and the deals on the net are not usually great and would stay in the realm of the actual store.  And you can regret the fact that that the fragrance can really be strong and against your senses that you are not able to use it on you. This is a very personal item and you really have to experience the odor before making a decision on the purchase – what others like may not fit your senses.

Wine and beer:  This being something that government has a big say in and can get into some law issues, may not be something everyone would buy on the web, let alone it being delivered to your home or office which may make us uncomfortable as well.  And definitely no price advantage for folks to get on the web and buy them. In India, again, most if it can be impulsive – the mood, money in your wallet and quick occasions are the ones that you drink for and hence would not have the time luxury to go online to buy them.

Electronics and Kitchen appliances:  Big ticket items on the web has got into some tricky OEM antagonism due to some ‘predatory pricing’ on the web but if you know what you are looking for, it would be great to have it bought online.  This is where I see a huge market for all the manufacturers – they just need to open up front ending stores that carries almost all their models for the customers to come and check, and then give them an option to go online and buy them up to get it delivered.. They can actually give some gift certificate with a short validity to force a purchase of their product.  This way, the stores do not need to have inventory of all the items and the same can be applied to multi-brand stores like Girias and Croma as well.   Someone is going to have an online price that is much cheaper than the store price and there is no need to go through the store in that case as long as the warranties are the same.    Many OEMs are not fully supporting e-commerce pricing yet as they do not want to antagonize the store retailers but this is a bad strategy in the long run – they are setting themselves back in ages. Customers need to reap the benefit of technology and not to fall back on older ways of doing things just because they have been better in the past.

  So, what can you reliably buy on the web?  E-commerce started off with Books (Amazon worldwide and Flipkart in India) and they are still the best buys – it is unfortunate that nostalgia rules over common-sense amongst customers like us who would like to have a purchase done in a Higginbothams or Sapna but get disappointed by lack of discounts at the physical store.  Also the variety in selection that an individual customer has access to on the web is something unimaginable.  Office stationaries may be something that can be purchased on the web as well. Crossword and Landmark have no excuses not to offer the same price like an Amazon or a Flipkart if they have a strong online presence as this just would complement their store offerings.   

     I guess the penetration of e-books is going to happen, thanks to the pressure from the lobby against cutting down trees, and this would see an upswing – this is going slow because we are not comfortable yet with a reader device and the lack of standardization of the e-books publications.  The only way I see old classics coming alive would be on e-books only.  So, whether the shop owners like it or not, and fighting the wrong battle in going against the Flipkarts for selling books at rock-bottom price, it is the advent and explosion of e-books that would be their dooms day.   

    And the next good buy on the net would be music and movies DVDs  and game DVDs – you need to ensure they fit the region you need to play them in and your DVD player at home can play that region and this is a LEGAL copy.  Beats buying from the store any day and this has made getting those ‘illegal’ copies on the street a thing of the past as the price points are too good for originals on the web. Also, Moser Bauer offering low cost DVDs of classic movies has helped the case to get the best legal editions of good movies.  I do not know why Flipkart walked out of their mp3 store as this was the best thing in India to follow in the same lines of ITunes store of Apple – customer could get affordable music of their choice at the right price with all the IP protection.

   Definitely Groceries – how convenient is this for all of us! Surely it makes us lazy too that we avoid even that neighborhood walk nowadays. Given that this sector is most unorganized and run by neighborhood Kirana stores, e-grocery is definitely something that is going to change the way we shop for groceries. Since you can pay upon receipt, you can also reject things you see are not fresh then and there. One can definitely avoid searching across aisles, waiting in queue at the cash counter, searching for a parking spot close to the grocer and lack of efficient customer service by sticking to online purchases. Nonperishable is definitely a good buy online and everyone delivers on the same day now.  As the technology grows and somehow the fridge and the pantry gather intelligence to inform what is there and what is not there, if this gets automatically dialed up to the grocery store, the whole thing can happen automatically based on some analytics in the back as well.

   The most commonly utilized e-commerce deals are in travel – be it rail, air or bus booking or hotel reservations or vacation packages.  Travel constitutes most of the internet commerce both in India and worldwide today. I guess the days of going through an agent are long gone. Even visas nowadays are being applied online.  If I have to name the top two for ecommerce, it has to be travel and books/e-books.

    All watches just show time, but still it is considered a prestigious fancy item and people can have much more than one with them at any price range suiting occasions.  Now with the affordability of many to splurge, watches priced at lakhs are available in the hands (no pun intended) of any customer… it is going to be better with phone like features on them, whether we like it or not.

     Stay away from an e-tailer who does not give a phone and an email on their website and try their support line before you even start any dealings with them.   It is a good practice to always go with the cash-on-delivery option as much as possible as many of the sites, even the reputed ones, fail the Internet Security software’s checks.  Or always have one card or one bank for net banking with low balance for all online purchases… ensure you have an OTP check before you make a purchase.

       If the e-tailer has shipped a wrong size of the product you asked for, then again, their quality check somewhere has gone bust and there is a strong likelihood they would do it again and again.  They would always say that they do assume their vendors take care of it.  And you see the product delivered in a particular size not at all the same as what was provided on the website (ex. Size 10 is 41 cm when the one delivered is only 27 cm but still says Size 10 for a sandal).  But if this wrong size happens, there are still companies like Amazon who do not do replacement but just do only returns – honestly, it ticks the customer off.   And there is no excuse for an e-tailer not to give all the relevant details about the size, materials, color etc. which is still missing in a wide range of offerings.

     It is important as a customer, to write an honest and relevant review of every product one has got from a seller, so that it helps the buying decision of others.  When it comes to apparels, your size is not consistent across all brands – each brand has their own size that fits you.  

What can the customers do?

  • Be careful about the security (or lack thereof) behind the umpteen e-commerce sites and believe in the ones that is more famous.   Check for safe pay channels that they use.  As much as possible, try to do Cash on Delivery.  Ask your friends where they shop online.
  • Check for a good customer support system – check their phone and emails before you make any purchases.  See if they offer replacement and not just refund.
  • Books, travel related purchases, Groceries, show and movie tickets, music and movies, and sporting goods are all items that are better online, both in terms of convenience and price.
  • Avoid buying furniture, shoes and apparels (if you are not sure about the size fitment), perfumes and cosmetics, and home décor items online as most of these are very subject to personal tastes.

   Since the E-market seems to be more dispersed now, in the next 3-5 years, we would see only 3-5 brands remaining, thanks to some solid consolidation, in the general e-tailer market whereas the niche players and the brick-and-mortar shops that have their own internet shopping presence would still see a good business online.

What are some of the key expectation of customers from the E-tailers?

  • Better real time customer support – by means of WhatsApp, Email and Phone, with a resolution of any issue within 24 hours
  • For big ticket items, getting the full money upfront is unacceptable, especially if the delivery happens after a month or so, esp. in furniture. A token amount of 10% to be used as booking amount, and rest of the payment during delivery is key.
  • Warranty of all items sold should be solid and should be backed by the manufacturers
  • If some deep discount sales happen, it is imperative that they advertise the number of units to be sold at that low price and set a counter as to how many are remaining so that customers do not feel dejected about a potential opportunity lost.  It is always first-cum-first-serve basis, even on the Black Friday, the day after Thanksgiving, in the USA.
  • Definitely there should not be any excuses of not able to manage surge in traffic or peak loads – the site must be available and fast for all customers
  • For cab booking related sites, it is illegal to charge the customer for calling to make a reservation and pay for their call center person. How does the customer care about one’s operation cost?
  • Most important for those ‘marketplace’ e-tailer who operate on bazaar type model, is to have total control on the vendors who are listed in their site, have a good quality process both in terms of quality of the product being shipped and the time within which it gets shipped and take FULL Responsibility and ownership of any issues that may come, instead of having customers waiting for response from the vendors who never seem to do anything.  This is mission critical for customer’s loyalty and their business success.   The more hassles the customers face and more frequently they face them, they slowly would start looking elsewhere.
  • The other key aspect is the logistics part of delivery. Every e-tailer must have a logistics partner or have total control on delivery so that the delivery happens at the time customer requests them.  Expecting someone to stay home during the weekday is not a reasonable thing to do. They need to invent better ways to deliver – may be in the evenings or weekends, and ensure to a time window of couple of hours max within which they would make delivery. It makes no sense to try a delivery when the customers are not there. Or have a pick up place in a location close to the customer’s home and offer them the facility to pick it up at their time of convenience.   The delivery guy must know exactly where it has to be delivered and when, instead of repeatedly calling for directions to come – in most of the cases, I get these calls when I am in meetings in office and this really gets annoying.  If they do not know the address, they should not be running a courier service, period!
  • If there are issues, treat customers as if they are not guilty and investigate the process first and see where the problem is, before jumping to conclusions.
  • Any legal issues or sales and GST tax issues should not be affecting the customers.

    Summarizing, I guess I feel a little patriotic to see Flipkart giving everybody a run for their money and of course, a cause of envy to the guys who do not know how to compete. Flipkart (with Myntra) will be to e-tailing as Infosys was for the professional services industry and I want to see them that way as a pride of India.  E-tailing is going to be a disruptive technology use case that is going to do magic, esp. in congested cities where folks have no time to spare to shop effectively. So far their customer service and engagement has been absolutely great and added to their purchase of Myntra, which has the same traits, I see a winner in our hands which has to be nourished and not be to be reprimanded.

Disclaimer:  I do not have any association with Flipkart or Myntra, two of my best loved e-commerce sites, based on some great experience – just a loyal customer so far.  After having shopped literally in almost all leading sites, I would give these two very high marks for satisfying customers and having a great transparent process.

This article was written in 2014

CUSTOMER RECOLLECT & RECONNECT

An interesting CRM business story

What do these establishments below have in common?  How do they survive and grow?

  • A neighborhood specialty exotic pizza store that uses wheat dough?
  • An exotic flower boutique that provides bouquets for special occasions?
  • A made-to-order shoe manufacturer that does fit-to-walk shoes for you?
  • An organic fresh-from-farm outlet that gives you the most tasty fruits and vegetables?
  • A specialist dry fruit and nut store that sells around-the-world products?
  • A baker renowned for tasty and nutritious bread and biscuits.

       Yes, you are right.  They offer specialized services, not run-of-the-mill sort of solutions.  They may all be family-owned and they may be one of a kind, and most likely, do warrant higher margins than the rest.  They may be pricier than the common pizza or a florist or a normal baker which means they would have lower volume of business (not necessarily though) but definitely a particular type of customer who wants to enjoy the very best. They survive due to the patronage of these customers and their word-of-mouth campaigns.

     But a growth question always bothers the owner of such establishments – how do I grow? Should I grow?  What is the best way? As any consultant would say, the answer is simple – “It depends”.  They definitely take care of all their customers who walk into their door well but going above and beyond this is something that is not in their DNA.   Believe it or not, many of these businesses make anywhere on the upward of a quarter of a million dollar a year.  I will explain to you how and it is simple- let us say on an average 50 unique customers order a specialty pizza and a drink at an average price of $15, which makes the owner get to the annual revenue an upward of quarter of million$.

     My observation on these establishments is that even today, in these connected times, they do not seem to be going after customers, neither new nor old.  Once they have decided to grow, all they need to do is to simple things would make their dreams come true.   Let me tell you a real business story and how we worked with them to help them grow(some of them are already done, some are being done and some planned but I thought I would add this all up in this story)- there was this businessman in New Delhi who sourced the top notch variety of dry fruits, nuts and spices from Turkey, Iran, Afghanistan and other parts of the world etc. whose average daily revenue was $1000 (on an average he had 20-25 customers walk in to the store and buy items worth $40 to $50) – on weekends he made double.  He normally sits at the front desk, had couple of helpers packing stuff for the customers and had one computer for billing.  He had a small storage at the back- his “go-down” which was used to replenish the items in the store.  His customers are from all walks of life – from tie-wearing executives to politicians to seemingly rich business men.  They come to the store, look at the basket and based on their perception of freshness (all of the products are relatively fresh as there is not a stock for more than three weeks and he gets fresh products every fortnight) and their desire, pick up items, get them packed, get billed, pay the money and they are out – all within 10 minutes.

    This dry fruit and nut man Mr. H definitely wanted to take the next step and grow.  Honestly, he is not a typical client I get as I usually work with the manufacturing or information technology business, but I was excited and wanted to give it a shot. So, I verified with him if he can get a bigger store, can he sell online and hence can he work out better logistics and packaging for the same, can he get into a bigger social presence online, etc. and for all my questions he answered in the affirmative confidently. Then I had him do a desired sales projection on a monthly basis for the next two years.  Then I asked him for the increase of input cost he sees as he has to source more materials and operations costs would increase due to additional helpers and packers, and he gave me a reasonable estimate. Then I knew he had it in him and he was serious – he knew all about WHAT is to be done, and I told him I will help with the HOW part and we agreed on a partnership and a financial relationship and we both would work on attaining the same goal.

   There are three things that can be done to improve the way one conducts business, all of them related to one another:

  • Some low hanging change to the way one operates.
  • What can we do socially and online – either in person or through umpteen websites?
  • What extra can we do for our customers – the ‘above and beyond’ rule.  In any selling business, statistics show that more than 70% are repeat customers – why cannot we make their experience levels delightful?

What can be changed in the way one operates his business?

    From the first month on, he had one of his helper welcome each customer at the entrance and get their contact details – their phone #, email address, their social accounts their location of residence in New Delhi and important dates in their family (birthdays and wedding days) – during the wait time, they volunteered this information which was keyed into the system by the end of the day.

   After every week, and every month, he had a summary tally of how much and what each customer bought.

    He also started offering a card membership stating that after an overall purchase of 5 kegs or more, they are entitled for 500g of Golden Raisins.  This made his customers stay a little longer inside the store which helped his store helpers push other items that they do not usually buy.  The system automatically resets after they take this freebie and they are given a new card.  Just like a Starbucks card!

  After a few months, once he was getting good results, he started another shop in another corner of Delhi and had his son take control of this one.  His son was also made responsible for all the online sales.

What did he do online or socially?

   First he got into Pinterest so that he can start using PINS for his business and he also got lots of ideas from this social site from other store owners globally.  Although Pinterest is not that prevalent in India, it gave him some exposure to other similar businesses and seeds ideas into his operations and offering.

  Next he started testing the online market – he outsourced to develop a website for his store and also selling his goods in one leading e-tailer in India.  After about three months, he added one more leading e-tailer.  In both these e-tailing option, he captured the customer’s data to the level he could so that he can start sending advertisements to them during festival days.  Now he has perfected his packaging in a more cost effective manner based on the initial feedbacks he got. After some initial hiccups in review, the customers started giving him good feedback.  His only complaint was the credit time to get the money from the e-tailers is a bit longer, and his return rate either due to bad packing or some customer not liking the product was about 8%.   Slowly he moved some of his e-tailing customers to his website as well.

  He had a business page setup in Facebook and then he started adding the social accounts of the customers that were given to him.  Every fortnight, he would suggest some recipe to be made out of dry fruits and nuts and spices, and also would send out an advertisement for his local customers of Delhi region.

Customer Delight:

 This is the best part.  He had info about most of his customers who visit his shop and the anniversaries. Whenever they had one anniversary, an email was sent out to them (as well as a Facebook message) to make their next purchase on which he gave anywhere from 2-4% off. If he is close to one of the two shops, he would deliver it in a basket.  The customer just loved it.   Due to this alone, his original customers just started selling his store everywhere in NCR region.

   For his online customers, he made a database separately and asked for the same information about their anniversaries, social account etc. and although many did not respond as they preferred to shop through recognized retailer, he did manage to get some of them to his online store direct and had similar promotions for them.

    During 4-5 festival days, he prepared an awesome newsletter stating his promotions, even interviewed the less known chefs of local restaurants that were famous in the Delhi and had their favorite recipes published (this was easily recognized by his Delhi customers as they identified with the restaurateur), health benefits data of his produces and a small write-up of the origin of his dry fruits and nuts.

   Let me tell you, a year into this journey, he stood by his personal and financial commitments with me and he does send a sumptuous sweet box and a nut and dry fruit box on two festival days of the year – our New Year and Diwali.  We did some more than what has been published here, and it takes the passion and diligence of the business owner to be sold on the suggested idea to make this happen.   His intent must be clear combined with his passion and desire to grow, and then a small nudge by a consultant like me can help him achieve it.   For me it was a great experience and first of its kind as usually I work only with the IT and manufacturing folks.

   Due to him, a few of his business friends have started talking to me about their business.  Just like practicing Yoga or going to a much needed training program, both of which can be accomplished as home through self-study, it takes a mentor or a consultant to guide you through the process and partner with for success.

    So, RECOLLECT your customers for repeat buy and RECONNECT with them as much as possible, in a sensible non-intrusive way, so that there is a win-win both for your business as well as the end customers. Research has proved it takes 5 to 7 times more to acquire new customers (mostly advertising and marketing) than to retain repeat customers, existing customers spend 67% more than the new customers and 50 to 70% of the sales occur due to repeat customers.  There is a Pareto figure that states that 20% of the customers provide 80% of the revenue, and 8% of the customers account for 40% of the revenue.  Doing the math well, why should one have to spend 7 times to get a sales volume of < 30% if there is a high probability of a sale to an existing customer?  You definitely need new customers for revenue growth and higher market segment share and this must be a key focus area as well. This is something I always preach the specialty segment that your uniqueness does sets you apart from the crowd but you need to have the momentum going your way to enable more business to happen by trying out small things in a periodic way with little investment.

The author is a co-founder of Business Intellects and operates out of Bengaluru, India and is a business and technology consultant and a corporate trainer. Their motto is “We Make Success Happen”.

Are Shopping Malls dead in India, thanks to Mobile and Internet Technology?

Digital sales are slowly replacing physical sales.  Multi brand multinationals will not have it easy in India as this may be too late for these brick-and-mortar giants to enter the market.  Without an online strategy in place, their entry would not be very attractive for the youth who seem to be the regular shoppers now.  The internet shopping in India is here to stay and would only improve from here and if not the way to go, would be a strong alternative for the normal shopping in stores. 

   We already know that Metro has its limitation due to ‘political’ pressures in competing with the local small time shops.  IKEA is announcing its entry with some ‘forced’ restrictions and will not give the look and feel of IKEA elsewhere. .  Walmart has been waiting and waiting for a long time, initially by setting up an alliance with Bharti who already have the local Easyday shops.  Now with problems at the top with the CEO resigning and everything, something does not seem to be well at the top and hence with Wal-Mart itself in India. 

    Personally the frequency of visiting Metro has diminished to once or twice a year from once a month couple of years ago for me and my friends– the reasons being the distance travelled as they are situated in either North or South of our city, more instinctive buys that results in large bills, not much of variety in the store as they seem to carry only the hot moving items, not much price differences now between even an Easyday or a MK Retail and too much crowd. All these factors disappear when we buy online as we buy only what we want, gets delivered at home and price is better.

    The question now is: Is India having the Walmarts, the Ikeas and the Carrefours too late? Do these huge all-in-one brick-and-mortar retail megastores make sense in this day and age? Where do we have the real estate to establish these huge megastores in an area where people have easy access to? Is this going to be a dumping ground for cheap quality Chinese goods into our market? Most importantly, are they going be better in quality at the same time cheaper in price than what exists today?  This is key for them to flourish and maintain the same global standards that they are known for and they have to source locally as well.  They definitely would give a run for the money for stores like Big Bazaar, More Super stores, Star Bazaar and Reliance Mart which is definitely needed as what we get from these stores is not worth the time and money spent there and I sincerely hope we are in for better service which is totally not in the charter for our Indian counterparts.

    With the boom in internet shopping, is it really worth an investment for these stores and is it really worth our time as customers to venture into one of them, but for the fun and excitement of seeing a huge megastore where you get everything and get getting trapped in getting produces that we do not need just because it is cheaper than outside. With technology, should not the world become smaller as it always has been – remember when airlines were introduced, over time, global travel has shrunk in time.

    Our shopping brains are thinking different now and would evolve to getting the next hot fad, at the best price, delivered at our home after an in-house trail – why travel the distance in this maddening traffic and with escalating petrol prices?  

    There is a great way to get the right products and this would be through the VAS route if the phone operators can come up right applications based on context, location and social means.  The mobile ads are already catching up now in India and it is time to focus them to an actual sale.  Yes, depending on the place we are, through GPS, we can be attracted to the right place to get what we want, which is based on a match with a shopping list application that we have stored in our mobile and that informs us that the ‘time is now to buy it’.  This would be Nirvana.  This way we address only our NEEDs and not our WANTs.

M-commerce growth and trends in India (as opposed to how many have internet connections and total population):

  • Population of India in 2013:  1.239 Billion (Ref 1)
  • Mobile internet growth surpassed  more highly monetized desktop Internet usage in May 2012 (Ref 2)
  • There were 904 million subscribers in October 2012 according to TRAI out of which only 78.7 million were Mobile Internet users (accessed internet on mobile at least once a month) and projected to be 87 million by Dec 2012 and this is expected to double by March 2015 to 164 million. (Ref 3)
  • In India, e-tailing has the potential to grow more than hundred-fold in the next nine years to reach a value of $ 76 billion by 2021 from $0.6 billion in 2012. The growing broadband users along with mobile Internet users will drive this e-tailing story. (Ref 4)

   With the slashing of the 3G data prices by almost all leading service providers like Airtel, Idea and Tata Docomo, and the decrease in roaming charges suggested by TRAI,  this trend is very healthy and we hope to see lots more data flowing on the mobile internet.

   It is important for any E- shopping site to have the following – secure way to transact, trust of quick delivery and quality guarantee, ease of returns, and a good touch and feel.  The last of these, touch and feel factor, is the one that would attract anyone to a site and make them comfortable to shop inside due to that site being attractive, being relevant to what one needs, being easy to use, has a good graphical interface and has a ‘virtual trail room’.  The security part has to be enhanced and must be foolproof and every step must be taken by the e-tailer not to sell our information to anyone (in India especially this has to be implemented stringently – how else can you explain the umpteen garbage messages that flood your mobile with offers?). The quality must be equated to ‘what you see is what you get’ with no aberration whatsoever and no replacement without your knowledge, and also return policy has to be free, fair and easy. Every step must be made to return the stuff to the courier itself if this is not suitable after a quick home trail, and this means the delivery must be more specialized to include return delivery too.  Right now, most of us go for Cash on Delivery (CoD) and if the charges are extra for the CoD, more than half of the e-shoppers drop the idea of shopping.  E-tailer enjoys as they get the cash or credit before or as they sell the product, which is the best business model to be in, as this was what made Dell popular – they deliver the computer only after you make the order and sign your credit.

Some of the top E-tailers online in India:

    There are three types of online shopping sites – Focused, generic and marketplace type.  Although there is a thin line between the last two in terms of their offerings, it is better to classify them different.

  • Focused (Niche):  A customer usually logs into this site for a particular product (for ex. wines from Four seasons), or a particular brand (for ex. Reebok or Bodyshop) or a particular segment (Zovi for clothing, BeStylish for footwear, etc.).  Many retailers who have a brick-and-mortar store have an online presence and if you one who buys only from the same store or brand, this may be the site you would go to.  This type of site with the particular segment concentration can easily expand into other areas in due course and become a generic store (like Flipkart did beyond books).
  • Generic Online Mall:  Somebody who carries more than one segment even a mega store where one can shop for most of the items you would find in a departmental store, such as Flipkart, Infibeam, Myntra.
  • Marketplace (Bazaar type):  This is more like a hosting site for different vendors to put their products in and can be sort of compared to any travel site like MakeMytrip from where one can buy any airline tickets and accommodations- both work on some commission basis, such as shopping on Rediff, Tradus or Craftsvilla.   Here the seller is verified by the ratings given by the online store and these ratings give the end customers the confidence to buy stuff from them – it is important that customers give the feedback for very purchase made.

Here is a list of some popular websites today in India for shopping online: (disclaimer – these not necessarily an exhaustive list)

  • Myntra (www.myntra.com) – identified as a clothing and footwear website and carries only brand name apparels and shoes and accessories.
  • Flipkart (www.flipkart.com) – started off as an online bookstore and Indians started using it as a Noun for any online purchase of any kind, sort of an Amazon equivalent for India.  Right now they called themselves an Online mega store and offer electronics, appliances, clothing, footwear and watches to name a few. But when you say Flipkart, the shoppers associates them only for books/e-books and then for mobiles, laptops and toys. They did try to do an Apple store replica by selling mp3 digital downloads through their Flyte store which they closed down couple of weeks ago. 
  • Landmark (www.landmarkonthenet.com) –  they are into books, mobiles, cameras and toys and this is one shop that started off in the late 80s as a brick store and have managed to get into online as well which gives them an advantage in terms of  30+ years of retail experience. They are presently owned by Tata group.
  • Infibeam (www.infibeam.com) – I would say they are Flipkart competitors and give the other companies a fight for their money in their pricing.
  • Snapdeal (www.snapdeal.com) –   Again competitors to Flipkart and Infibeam.  But may a times, they do not honor their commitment and got for refund which is pretty good. I am assuming they are not able to handle their vendors well.  This is a back side route that Ebay is taking in India indirectly as I see it and they are also major funding partners for Snapdeal.
  • Homeshop18 (www.homeshop18.com) – A generic mall type like the above three, but has an added advantage in having a shopping channel on TV.
  • Jabong (www.jabong.com) – they are again into fashion, furniture and footwear.
  • India times (shopping.indiatimes.com) – a Times of India Group Initiative that carries a wide variety of things online.
  • Rediff (shopping.rediff.com) – more a marketplace concept where lots of small businesses offer their products for sale to customers. This is one site that asks for shipping charges for each and every item which can add up eventually.
  • Zovi (www.zovi.com) – a clothing and accessories only store with their own brand names and slowly adding more varieties of clothing and accessories.
  • Tradus (www.tradus.com) – a marketplace store that sells a lot of products with some good deals on a daily basis.  One of the worst customer support site based on my own experience, where they have not even bothered to reply to my umpteen emails for a defective carpet they sent me.
  • Amazon (www.amazon.in) – Debuted in Indian market just this month. Their Junglee concept has not taken off the ground and slowly evolving into a comparison site. Amazon itself may be too late to enter the Indian market, but since they are loaded with cash, they would be ready to buy some established players and consolidate their position – I can never write them off.
  • Yepme (www.yepme.com) – more positioned as a competitor to Myntra offering clothing and footwear.
  • BeStylish (www.bestylish.com) – a footwear and accessories specialized store.
  • Big Basket (www.bigbasket.com) – grocery and household goods store doing same day delivery.
  • OfficeYes (www.officeyes.com) – an office supplies company that sort of focusses only on SMEs.
  • Bookmyshow (www.bookmyshow.com) – an online place to book any of your movies, events, sports or theatre tickets.
  • Fourseasons from UB (www.fourseasonsvineyards.com) – sells wines from Four Seasons online.
  • Watch shop (www.watchshop.in) – sells branded watches at challenging prices.
  • Craftsvilla (www.craftsvilla.com) – a bazaar type store that sells crafts and furniture from artisans from around India.

As for the incubation of which city leads in establishing such online store, Bangalore has taken a lead here by seeding the Myntras, Flipkarts, Zovi, BigBasket etc. whereas Infibeam comes from Ahmedabad.  They usually have warehouses in few cities from where they ship items to the customers or deal with the manufacturers directly to get the product for the customer.

 What Indians are buying and how?

Travel constitutes nearly 3/4th of all the commercial transactions that happen online for B2C.  The days where we used to get our travel arrangements made by Thomas Cook and other local travel shops are getting numbered. Now one can buy bus tickets on redbus.in or ticketgoose.in, train tickets directly from irctc.com or yatra.com, and air tickets either through consolidators like makemytrip.com, cleartrip.com, goibibo.com or yatra.com, or directly for any of the domestic and international airlines, directly online. These consolidators are a better way to look at the options available and they pretty much give the same price as the airlines themselves. Also they are great to choose the best time of departure/arrivals, airline, lowest layovers, price, etc. If we can get the forex part online somehow as well and have it delivered at home, which is already there with most of the banks as long as you have a relationship with them, then we are all set to travel abroad just by sitting before a computer or a smartphone. Travel insurance can be taken online and procedures to get visa is listed for each embassy as well.  Based on the word of mouth, one can book for holiday packages and do what your friend or family recommended and once you have this covered, we can book them online as well.  And with a site like TripAdvisor, one can land up in the hotel of your choice based on real reviews from real people and in the price range one can afford.  So, pretty much the entire travel plans but for the actual travel can be done online.

While we grew up with ‘analog’ cameras with 24 or a 36 roll film from either Fiji, Konica or Kodak, we were so fascinated in taking photo prints of our travels or special occasions, in either matte or glossy, in either 3.5 x 5 or 4 x 6 and have them inserted into photo albums for sharing with friends and family. Whereas now except for printing passport or visa photos or wedding albums, nobody knows or interested to know such a place like a photo studio exist and we are all busy sharing the digital copies of our photos online or through social networking sites to let others know about your travelogues instantly.

Footwear:  The online stores that enable any footwear purchase are Yepme, BeStylish and Myntra.  The footwear names like RedTape, Relaxo, and even the sports shoes companies like Reebok have online presence to buy their products, either by phone or through online directly.  The problem with buying shoes online is the fitment – simply put, across the sites, the nomenclature for UK vs. Euro vs. US sizes differ.  So, if one is happy with a particular brand and knows the size and shape they are comfortable with, then this is easy to shop online for the best deal.  Otherwise, the old school of trying it in a physical store would be the best.

Perfumes and Cosmetics:  This would be an interesting online experience – although you can buy them online, you do not know how they actually smell.  Looks like IBM and some other companies are working on a technology that allows our nose to sense smell and be able to buy online.  We have always grown up by knowing that once we sniff two or three strong aromas, the nose does not get the rest right after that – this is why when it comes to perfumes as well, tried and tested works – the couple of names or flavors you and yours have accepted well is the best thing to shop.  It is recommended that duty free shops are the best places to buy perfumes and not even online.

Clothing and Designer Brands:  The non-travel, non-business e-commerce is pretty much in this area and almost every player competes here although Myntra for brand names and Zovi for its own products are well known.  I feel that Myntra today is a trend-setter in the way they are retaining the customer and playing the price factor by sending individual emails now and then.  And also since they sell quality products from brands around the world, customers do not even wink before they buy.  Also their delivery has been impeccable – always right and on time.

    Flipkart is also into clothing now although they started off as a book vendor and it is difficult to change the mindset of old customer as they associate Flipkart mostly to books and electronics.  The opposite effect would also be true if Myntra starts selling books, I would be reluctant to go them at the cost of Flipkart. Hence the ‘niche’ segmentation applies for e-tailer in terms of what ‘mind space’ each e-tailer occupies. 

    Government enterprises, like that of Jharkhand (www.buyjharcraft.com), some established silk sari stores like Rasi, Nalli, etc. as well as clothing megastore like Shoppers Shop  have made it easy for customers to buy their goods online.

Wines:  We have FourSeasons from UB and Kinvah Wines from Nandi Valley who already have an online store and they can deliver your favorite bottles home.  Some vineyards have detailed description of their products online like Grover Vineyards and Sula but not selling online yet – it would not be too long for them to do as well. Being from Bangalore, there are lots of wineries around the Nandi Hill and nearby areas which make good wine and may be easier for local population to get access to them as well directly from the manufacturer.   Since sale of alcohol is also controlled by state regulation, it is difficult to get a country-wide audience for the same as some states like Gujarat prohibit the sale of alcohol.

Chocolates:  Every local city have their own places to buy their favorite home-made chocolates  and in Bangalore, we have couple of places that I know of (surely more) – Chocolate Philosophy who takes phone deliveries and Rage chocolatier who have an online store.  Just like flowers bouquet (there are lots of florists online), the Chocolates are great gifts to be sent to your family and friends for their special occasions.

Toys: Flipkart and Landmark have a good selection but there are specialty online toy stores like Redbell that would make any purchase more fun for kids.  I wish Hamleys comes online soon, but the need of the hour is an online store which would make school life more interesting by making a range of educational toys available to purchase by the click(s).

Books (and eBooks):  The choices are many – Flipkart, Infibeam and Homeshop18 and Landmark to name a few. It is always easier to buy a book online as the same book does not differ from one shop to the other and the store that have it available and offers it at the best price wins the customer.   The old book houses like Strand and Gangaram are feeling the heat now unfortunately and stores like Sapna somehow are surviving with a good student loyalty base.  There is one retailer that is worth a mention – Landmark – they seem to have a good physical and online presence and managed to time the market right by evolving with the market condition. Strand has not been able to although they do have an online presence.  Take the case of CrossWord which is closing stores– they are not able to maintain their margins with their high cost stores.  Pretty simple, why should ANYONE buy a book at an expensive store if they get DELIVERED at a much lower price at home? 

Office stationaries and equipments:  For those SMEs, we have the likes of OfficeYes.com and PrintVenue.com that takes care of most of the customized needs.  For generic needs, Flipkart and others do have a wide range.

Spectacle and sun glasses:  Lenskart and GK Opticals seem to be marching ahead here.  Although just a small thing to do, and this is a great first step in ‘virtual trial rooms’, it is great to be able to try out different frames with your own face photo uploaded.  Then all you need to do a few selections, and the retailer comes to your doorstep with those frames, you can try them at home and select the one you need and pay for it.  Once you are done with the frame, you can have the retailer take the prescription for fitting the right glasses. 

    Like printers, where the printer is offered at a bottom price and the manufacturers make money from the cartridges, in prescription non-designer spectacles, the frames gets subsidized a little and money is made from the glasses.  It is important here to note that designer frames can be brought online for a much cheaper price as do non-prescription name brand sunglasses.  It is equally important to ensure that you go to the right place for the prescription glasses as even a small annoyance in the power can give you headaches literally. The good thing is you can get good frames to fit your needs independent of the place you get the glasses and get prescription glasses from an online store that has a physical presence too like GK opticals so that if there is any issue, you can go and rectify it immediately.

Jewelry and watches:  Again, I feel that this is an area that needs to grow and get more publicized as the market can be huge.  Some may ask what is great about watches, especially the classic analog ones.  For them, I ask have you seen how many Titan showrooms are there.  Watch is something, although it shows the same time in every hand, is a segment that can go from Rs 2000 to Rs 10 lakhs and beyond as well, depending on your affordability and fancy.  

     Many of the leading reliable pearl shops of Hyderabad like Mangatrai and Krishna, and jewelry shops like GRT and Krishniah Chetty have an online presence where they proudly display their catalog.     It still amounts to the fact that one can gloss over some the catalog items and need to visit the store to make the transaction.  But slowly there is a move from the stores that once your selection is done online, they bring the 4-5 jewels of similar kind home and then you can make a purchase sitting in the comfort of your own home.

Grocery:  I am sure within walking distance from wherever one lives, you would have a grocery store like Foodworld, More or a Reliance Fresh, or even a Hopcom that allows you to pick the right vegetables and fruits.  But for the lentils and the rice, that one gets for a month or so, either a discounted local store or the likes of BigBasket and ZopNow is a great asset – you do not need to carry these stuff home as they get delivered at the time of your choice and usually in a good condition (you can return if the condition is not acceptable) and on the same day.  Pretty soon one would have intelligent pantries and fridges at your home that informs what is needed regularly, connects it directly to an online store of your choice where you have the credit and it automatically gets delivered to you. The apartments we live in are getting smaller in size, thanks to the affordability (or lack thereof) we all have, and hence buying non-perishable products and storing it for more than a month does not make sense – in fact, more you buy in excess, more they decay.

Electronics and appliances:  Flipkart, Infibeam, Homeshop18, Snapdeal and Tradus to name a few are places you can compare and buy the right appliance, mobiles and laptops you need.  All seem to be working fine and have their own best prices for selected items and it is good for the customer to shop around between 3-4 sites before you get it delivered.   Specialty mobile retail stores like Sangeetha, The Mobile Store and Univercell all have a good online presence from where you can pick up your favorite phones.

Sporting goods:   Decathalon is a Europe based sporting goods provider that has established a niche market, both online and in physical store format.   More local online stores would be nice to have in this segment with a lower price point.

Home décor and furniture (includes Crafts):  UrbanLadder, FabFurnish and Cauvery – a Government of Karnataka enterprise (www.cauveryhandicrafts.net)  are three such sites that offer furniture and other craft items for customers to choose from.   Then there is a market place called Craftsvilla that offers products from across India from various artisans which looks unique.

Lingerie and inner wear:  This type of clothing does need some privacy to shop and what better place to shop from home either directly from the manufacturers like Lapeches or from clothing stores like Rediff and Myntra.

Entertainment tickets:  BookmyShow and TicketPro are good means to get tickets online for any event, theater or sports, and all the Cinemas like Fame, PVR, and Fun etc. have means to book your tickets online for any show within the next 2-3 days and choose your seats too.

Personalized gifts:  Zoomin, PrintVenue and other stores do cater to this population and this is a great idea for giving away corporate and personal gifts.

   I have not mentioned some trivial items like movies and music that are readily available either in media form or digitally online from various sources. Pharmacy and health care products are sensitive for online purchases, especially the prescribed ones and hence may not be a good option to do online.  That leaves Cafes, Restaurants and fast food and finger food joints and ice cream shops which cannot be experienced other than one being physically present there to enjoy.

   Something like HomeDepot that takes care of home needs (bathroom fittings, electrical fittings, lights, and construction related items) needs to happen in India so that our dependence on increasing labor in these areas can be taken care of personally with a how-to-do-guide – a nascent field for online growth.  And Education and related items would be a hot topic as Indians spend close to 30% of their salary for education of their children – this is another segment I foresee lots of changes happening and pretty soon only tablet will replace the umpteen books the poor students carry today.

    Think about the future malls as just warehouses or small fronting shops with just trial rooms and selected merchandise where you can also do online purchases of their own goods.   Every shop can even have an ATM-type front end which shows their catalog and one can just touch and shop then and there. The other shops I see in a mall of the future would be sporting places like bowling lanes, and lots of eateries.

     The biggest advantage is you can shop 24 x 7 and after you come back from office.  It can be done from your home in a relaxed manner without any stress and the entire family can participate in the purchase decision without travelling together.  The other advantages being comparison of the same product from various vendors and also better prices.

  With Mobile internet and Internet of Things (everything on the net) becoming popular, it is high time for late adopters to start getting into the net bandwagon now.  Selling directly online in India can get the wrath of the distributors and the non-brand stores as it eats up on their heavy margin.  But customer is king and this mindset change will happen through couple of totally consolidated online stores who have no baggage of the past to maintain. This would change the way we see and do things and hopefully the margins would be passed directly to customers as discounts directly from the seller and this is the day we would all wait for.

This article was compiled and written in 2013

Ref:

  1. EconomyWatch.com’s Econ Stats database – June 2013.
  2. Kleiner Perkins Caufield & Byers have released a report on Internet trends around the globe for 2012 & 2013)
  3. IMRB i-Cube 2012, All India estimates, October 2012
  4. Study by Technopak, from TechGig.com

Are Aggregators just living the moment?

    It is the Uber and Ola that have come to influence us getting a cab nowadays. Or a Grofers to put the nearby grocery store together and offer you delivery at some minimal discount. Or a Zomato or Foodpanda who have their collection of restaurants that you can order from.  Or a Redbus to help us choose from various operators for travelling by bus.   Even some e-tailers are just marketplaces!

    Who are these folks?  Do they have any assets at all?  These are the new breed in business circle called “Aggregators”.  Putting it simply, they put everything in one umbrella for the customer to search and order but they do not own any of the assets, be it the cab or the restaurant or the grocery store. In old times, not very long ago, we called them “Brokers” who operates on a commission or the Middleman to facilitates trade – unfortunately  however you call them, they do operate on commissions and being in their nascent stages of business, they throw away the venture capitalist’s money in terms of discount to acquire more customers like you and me.   And overall this is similar to the ‘bazaar’ concept where many traders are lined up to offer their goods to customers like us.  At this point, they are not held responsible for the quality products being offered by them, be it a rude driver, or a bad bag of rice or food poisoning. So add ‘no responsibility’ as well. What a way to do business  – no assets, not answerable for quality(in a way), no products of their own except an app, no engineering development in them except for some web developers (which they can outsource) and purely only a marketing organization.

    This is all great for the customers now(personally, I am smiling) , but in the long run, once they get into some sort of monopolistic mode, they do have the power to increase price and take us for a ride (literally, yeah, with Ola and Uber).  Possibly.  But my own feeling is they cannot.  Gone are those days that any company can last that long and not morph quickly through acquisitions or other growth areas, because the technology is growing so fast they either have to adapt or perish.  Some other new guy with a newer business model would eat their lunch shortly… stay tuned.

     Who is monitoring the driver if he had not got his required sleep of 8 hours – what happens if a tired driver is at fault? Who is monitoring the time it takes to deliver food for you or its quality?  Who is tracking the part if the nearby grocer is getting rid of old stock (but not expired yet)?  The Answer is No One.  You can say “reviews”, but we all know how the reviews are done.  If you happen to pay the ‘premium service’ to these aggregators, your reviews is always above 4 out of 5.  If not, you are finished. It is somewhat like media – they chase after TRP and not deliver the news without bias.

       They say an Ola cab driver makes about a grand a day in India.  He would be making the same amount even if he had not opted for Ola but he has joined Ola which would keep him busier. 

     Why cannot the Uber and Ola have a stricter licensing law for the drivers – give them a stringent test both on the road and on road rules, and only if they exceed the standards, they are allowed to continue.  Pay their insurance premiums for comprehensive and third party liability to ensure protection of the customers. And check the condition of the car every six months and ensure they go through proper maintenance process.  These are some of the value adds these aggregators have to do to differentiate from others – they do not seem to want to do this.  So, sustaining this business model is going to be hard especially if you are living on venture capitalist money and not making any profits for years together.  And the differentiation between like companies is none – there is no USP that they can boast – if someone adds a new feature, immediately the next guy follows with something better.  The same situation exists even for e-commerce players here.  Certainly all these companies would not be Buffet’s babies!   But keep these coming, as we are ready for the RIDE as long as it lasts, LITERALLY.

The Author is a business and strategy consultant and a corporate trainer based out of Bengaluru, India.