Showing posts with label credit cards. Show all posts
Showing posts with label credit cards. Show all posts

08 February, 2014

Smartphones & Dumbphones

In the early 2000s, there was only one mobile phone brand that was popular in India. It was none other than Nokia. It was considered the “Maruti” of mobile phones, with one model priced at a gap of a Thousand odd Rupees. Customers could choose from an array of models starting from a few thousands to a lot of thousands! Mid-2005, came the BlackBerry. A BB was the ultimate corporate tool that every executive carried; or rather wished he could carry. Over time, the company reduced the entry level prices and it was accessible to small time traders, entrepreneurs, businessmen and their ilk. The Late Steve Jobs, former CEO of Apple Inc. unveiled the iPhone to the public on January 9, 2007, at the Macworld 2007 convention at the Moscone Center in San Francisco. The two initial models, a 4 GB model priced at US$ 499 and an 8 GB model at US$ 599, went on sale in the United States on June 29, 2007, at 6:00 pm local time, while hundreds of customers lined up outside the stores nationwide. The passionate reaction to the launch of the iPhone resulted in sections of the media dubbing it the 'Jesus phone'.The fit and finish and the premium pricing meant that it excluded the masses. It was seen as a toy for the rich and famous. Soon, Apple realized that they had to be a useful product for millions of people worldwide and hence subsequent models such as the 3G, 3GS, 4, 4S, 5 & 5S were released. The latest in the line is of course the hugely popular iPhone 5S which was launched on 20 Sep. 2013. It is also the most sold model for the company.

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Between the rise and fall of Nokia, Blackberry and Apple, several other brands have come (and a few have gone) with their range of smartphones. The commonality of the former three is that they used their own hardware and software whereas all other devices manufactured by brands run on the Android software which is developed and owned by Google. One of the reasons why Blackberry and Apple were appreciated by their customers was that their products were unique. While the most complained thing about the Android devices is no matter how the phone looks (or feels like), the interface is just the same of the Android. The world has most number of Android phones, but that’s probably due to cheaper price points of these phones as well.

Apple has been playing hide and seek in India for the past couple of years. While the market seems promising, its China that’s a bigger opportunity currently for the company. Despite so many efforts by its Senior Management to focus on India, the California HQ team has been reluctant to do so, for reasons best known to them. This has been clearly visible in the Sales and Marketing Strategy, Distribution network and Pricing. Clearly, India doesn’t seem to be among the favourites yet. However, last week, Apple announced that it would commence manufacturing of the now discontinued iPhone4 model to play catch up with the Android device manufactures such as Samsung, LG, Sony, Micromax and others to compete aggressively in the Indian Market.

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I was astonished to see a huge advertisement for this now obsolete model at Delhi Airport’s Terminal 1D recently. Why would a user want to buy an expensive smartphone, which is now obsolete in the developed markets, at a price point where there are several other options! As many say, Steve would have never allowed it to happen. If you have read his Auto-Bio like me, you would know what I am saying. The business team is trying to play catch up in a market which is flooded with cheaper, imported as well as locally manufactured phones.The iPhone4 which I owned two years back was an excellent phone, but was only relevant then. Some of the new features that the competing Android devices currently provide are no match for the older Operating system of apple that this model runs on. Will this bring pot loads of money to the company? Probably no. Will this bring a distribution strength to Apple in India? Yes. Retailers like Croma, EZone, Reliance, Univercell, etc. would be happy to stock these phones and offer them at prices sub-20,000 with buy-back schemes and EMIs on Credit Cards. This is a wait and watch game. Apple has to do a lot more to upgrade users from dumbphones to its range of smartphones. It would not happen any soon. It would not happen with any one model. The entire infrastructure has to be focused on the supply chain-pricing-marketing model. While most Apple users do not downgrade (their models) at any cost, its mostly the users of other platforms who move to Apple. Price alone would not be enough to convert them to buyers and loyalists. Apple needs to do a lot more.

21 September, 2013

Is there something as a Click-Only customer?

I was recently invited to attend the first edition of the Retail Marketing Summit Chennai, organized by Paul Writer, a leading consultancy which works in the Marketing space and advises various enterprises. The day was very exciting, with speakers from various Retail companies and Brands expressing their opinions. During the course of discussions, there was a topic which was discussed elaborately by the esteemed panel of guests as well as the audience. The topic of discussion was, whether there was someone called a “Click-only customer” that existed, who shops only online. There were ayes and naes but there was no single answer that could be fully validated. On the need for having an online presence and also focusing on the internet commerce business, Mr. Pattabhi Rama Rao, President of Australian Foods, which runs the Cookieman chain of stores felt that the market is too small at the moment on the internet and Retailers should continue to focus on the offline business by providing a better customer experience. In his own words, Man is a social animal and social interactions would never cease to exist. Pattabhi should be knowing well. With over a dozen years behind him in the Hospitality business, he started off the Cookie business 13 years ago. His brand of cookies were priced 10 times as that of a normal biscuit, although such a comparison is odious. He continued his focus in the business and now has over a 50 stores across the country. Most of his outlets are located in prime locations in Malls and Airports. Many of them bake fresh cookies at the store and the aroma spreads all over. It appeals to the senses and therefore converts a passerby into a customer, a customer into a loyalist and a loyalist into a brand ambassador. However, there is indeed an opportunity to sell categories like cookies online, although they are restricted to gifting and occasion based purchases.

2013-09-20 15.10.26

In another panel discussion, Calvin John of Caratlane.com which specialises in the sale of jewelry products said that a customer has purchased 35 times in a few months from their site. And he felt that there were a small but growing species of “Click-only customers” who shopped extensively online. Jessie Paul, the convener of the event and also a moderator in one of the sessions confirmed this and said that she shops grocery extensively online at BigBasket.com, a Bangalore based start-up which has been slowly but steadily growing its online-only grocery business. With more and more people shopping online, it is all about convenience and discounts? Would the charm of shopping (at Retail outlets) dwindle over time? There are references to the West and how things have been changing in developed countries. A lady from the audience says that at Macys.com, sales were 37% of the total compared to just 26% in the previous year during the holiday season. And this was countered with a view that the sales increase was only during the Holiday Season when Macy’s was very badly organized at their stores. In India, the Books category was the first to succumb. Customers (in India) bought books online from Indiaplaza, Flipkart, eBay and the likes not just for convenience but also due to the generous discounts that were being doled out. But for those discounts, would customers have bought online? Perhaps yes, but a majority would prefer browsing and buying at their favorite books stores down the road such as Crossword.

The Internet Commerce business in India is still too small compared to the Offline one. As it is, Organized Retail in India is just under 10% of the INR 200,000 Crores market size. And e-commerce accounts for a decimal percentage of that. Although online retailers are showing double digit growth year on year, the business model is largely led by discounts and there is no hypothesis at the moment to prove that shoppers would still buy online at full prices, except for the gifting and essential categories. In my opinion, there is room for online and offline Retailers, But the bigger growth is offline, given the levels of broadband, internet and computer penetration in India. Payments gateways for credict cards, debit cards and Net Banking is quite limited too. In fact, I would place my bets more on m-commerce - shopping on smartphones which is still an untapped category. So, if you are a Retailer or a Brand, do build an internet commerce site now, if you already don’t have one. But remember, Retail is all about customer experience, and there is no better place than the store to demonstrate it.

30 April, 2013

The Third Place just got costlier!

 

Eatery 1

On Monday, 29th April 2013, The Tamil Nadu Hotels Association (TNHA) observed a one-day strike to protest against the Central Government’s decision to impose Service Tax on their businesses. Speaking to the media, TNHA President M. Venkadasubbu said, “The TNHA had taken the lead to organise similar associations in all states in this regard and a federation, the Federation of Hotel Associations, had also been formed for the first time in the country.The announcement of Service Tax was made by India’s Union Finance Minister Mr. P Chidambaram in the Union budget and had already come into effect, beginning this month… (April 2013). The Service Tax of 12.36 per cent levied out of the 40 per cent of the sales proceeds is illegal and a big burden on consumers who are already forced to bear the brunt of price escalation due to inflation. While the hotels and restaurants were already paying VAT ranging from 2 to 14 per cent, the new Service Tax levied by the Central government would amount to double taxation,” he said. ‘This problem of double taxation was discussed at a meeting organised by the Federation of Hotel Associations (comprising office bearers and representatives of hotel associations from all states) in Mumbai last week and a unanimous decision was taken to launch a nationwide bandh if the Central government did not roll back the Service Tax.’

Eating out has become extremely expensive over the past decade. I remember, when I was in Graduate School, with pocket money of less than Rs. 300/- per month, we could meet most of our out-of-home expenses including filling fuel for our bikes. Not so these days. The purpose of having a meal outside home, The Third Place as it is called is not just eating. It’s all about building camaraderie and relationship/bonding with family and friends. Ray Oldenberg defined the third place as an alternative to Home and Workplace in his research paper in 1991. Oldenburg calls one's "first place" the home and those that one lives with. The "second place" is the workplace — where people may actually spend most of their time. Third places, then, are "anchors" of community life and facilitate and foster broader, more creative interaction.There were already numerous such spaces all over the world. Cafes, Restaurants and other Eating Spots are among the most sought after third-places. In India, cafes and eateries have burgeoned all over the country in the past few years. Café Coffee Day, India’s largest café chain has over 1,400 cafes across the country. Starbucks, Costa, Coffee Bean and Tea Leaf, Gloria Jeans, Mocha and many other such international and domestic café chains have their outlets spread across major cities, providing an opportunity to people to hang around and discuss everything under the sun – from personal banters to professional meetings to matrimonial discussions, one can find all of those out there. Apart from Coffee Shops, there are over half a million eateries of various shapes and sizes across the country which provide Food & Beverage options. For nuclear families, eating out is one of the biggest entertainment these days, what with very little time to spend with the family!

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With the proposed new tax, food bills are expected to go up significantly to consumers. For example, on a bill of say, Rs. 1,000/- for a family of four, the Value Added Tax ranges from 2-14%, so lets assume its on an average of 8%. So, the bill goes up to Rs. 1,080/-. The service tax of 12.36% is applicable on 40% of the Sales, so that works out to Rs. 49.44, rounded off to Rs. 50/-. Hence the total bill to consumer now is Rs. 1,130/- just because this family chose to eat in an air-conditioned restaurant…where such a tax is applicable. The definition is quite clear – whether serving F&B in an air-conditioned area is a sale or a service. As per the recent amendment in the Law, its both. While food is cooked and sold, it is also served (by waiters) and hence considered a service. Also, the a/c facility is meant for seating and consumption, thereby making it amply clear that it is indeed a service. While this rule will bring about encouraging revenues to the Government, those that are meant to suffer are the middle-class consumers. For students and youngsters, visiting their favourite coffee shop or a fast food joint would get more expensive, thereby creating a dent on their pocket money. However, for the affluent and well to do, the proposed hike may not mean much, given that their spending power is relatively higher. In most cases, such individuals / families don’t even check the bill – probably pay (usually by a credit card) and sign-off.

While inflation and cost of consumption have gone up significantly, the income rates haven’t gone up proportionately. This has left the middle-class with fewer options for recreation. And Eating joints may not be the most preferred Third-Places anymore! For F&B Retailers, it means reduced number of visitors. And business too.

26 March, 2013

Alternate ECommerce–Auction Sites

There was a cover story about Alibaba.com, China’s largest ECommerce company in recent issue of The Economist. Quite a few facts. That it is turning out to be one of the largest ecommerce companies in the world, with sales of over $170 billion, which is Amazon and eBay put together. That it has a financing division, viz., AliFinance which provides micro credit to small firms and consumers; and that it has 6 million vendors registered on its site. What was started in 1999 by the firm’s founder, Mr. Jack Ma, an English Teacher as a B-2-B portal connecting small Chinese manufacturers to overseas buyers has now transformed into an internet behemoth. “EBay may be a shark in the ocean,” Mr Ma once said, “but I am a crocodile in the Yangzi river. If we fight in the ocean, we lose; but if we fight in the river, we win.”Taobao, a consumer-to-consumer portal not unlike eBay, features nearly a billion products and is one of the 20 most-visited websites globally. Tmall, a newish business-to-consumer portal that is a bit like Amazon, helps global brands such as Disney and Levi’s reach China’s middle classes.

Indiaplaza, which was also founded in 1999 back home in India is unfortunately facing its toughest time yet. With over 80% of its 150+ workforce having quit over the past six months, the company which pioneered ecommerce in India has no takers today. With a weak b-2-c model based on product listing by various partners, the company has just not been able to scale up over the last few years, thus allowing late entrants like flipkart, myntra, jabong and coupon sites like snapdeal and groupon to surge ahead. To be fair to Indiaplaza, most of the Ecommerce sites in India are on deathbed, awaiting Angels to come and save them. The top three players, Flipkart, Jabong & Myntra with sales of over USD 600 million collectively are only making losses and there no signs of any profitability in the immediate future. Offline Retailers have had a slow start without much success in this arena. Croma, part of the Tata Group’s Trent Ltd., Crossword, India’s largest book store chain along with Landmark and Shoppers Stop,  India’s largest Department Store chain are the only few large Retailers who have attempted an Ecommerce entry over the past years. With FDI in Retail not included for Ecommerce businesses, the Government’s backing has been minimal in this regard.

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Even as I was thinking so, I came across an article which mentioned about an auction site named QuiBids (spelt as KweeBids). More out of curiosity, I set-up an account to know how this works. Registration was simple.GBP 0.40 is the value of each bid (for the UK Site) and can be bought online at the store in bundles that the user can choose, which in turn can be used while placing bids or while buying an item on the site after discounts and offers. The joining fee will be refunded in full or part thereof if bids are not placed for the said value. They have listed hundreds of items and all of them are on auction. The products are genuine and the processes are audited by Grant Thornton, one of the top audit companies in the world (I have personally seen the audit assurance report which is published on their website). One can bid an item only 5 minutes before the bid time comes to an end. Which means, users keep track of all those items on bid and are probably hooked on to the site all through, if they want to participate in the bidding process. Each time a bidder places a bid, the time slot for the auction increases by 20, 15 and 10 seconds in that order. If the number of bids the user holds is over, then he/she cannot participate in the bid anymore but the value in their account can be used against purchases. Also, the value of the product is discounted to the extent the bids are placed by users. Which means, if a product is priced at, say GBP 100, and the auction ends at GBP 32, with a discount of GBP 9, then the user can buy the product for GBP 91 (less the value that is already in the account). Shipping is charged depending on the size and weight of the product. All in all, it is a win-win for the company and the user. The company makes a thin margin on sale of such products while the loss on bid money is usually written off against a publicity fee paid by the brand to feature their products. And on top of it, users also buy the product which is at a discount for them but which fetches a margin for the company. In addition to this, users may also buy “bids” for set values, so as to keep on bidding. At the end of the day, a user will only gain from the tremendous discount that he gets out of the product even after buying bids.

The prose above may not be fully convincing, so do log on to www.quibids.com to explore.

Auctioneer

According to their website,

“QuiBids was started in July 2009 as an attempt to improve the Internet auction model by making it more exciting, safer, and more reliable. We're based out of Oklahoma City, Oklahoma and our goal as a business is simple: To provide an exciting online auction model with better deals for the consumer than any other website in existence."

You can win all sorts of popular products at incredibly low prices. Look at our homepage to see what products are up for auction right now, and if one catches your eye, buy some bids for a low price! When you place a bid, we add a maximum of 10-20 seconds to the timer - to give someone else the chance to bid if they're interested. This is similar to the "Going Once...Twice...SOLD" approach of auctions.

If no one else bids and the timer reaches zero, you’ve won a sweet deal on QuiBids! If you don't win the auction, you never have to go away empty handed. Any time after you've placed your first bid in an auction, you can choose to buy the product for a discount using the Buy Now feature. This will help limit your losses so you don’t have to leave all your bids on the table. You’ll never have to pay more than the Value Price for any products on QuiBids.

I have never come across such an exciting business model which I can comfortably say is an alternate Ecommerce model. There is hardly any publicity that I see for this company or for this form of Ecommerce and yet there are hundreds of dedicated users who are constantly bidding to win their favorite products at rock bottom prices. I guess the typical profile of the customer would be in their 20s and this is almost like a contest for them! Internet penetration is quite important for the success of this model and I presume the success of this model in western countries, which is not so the case in India where most of the internet consumption still happens at workplace with curious onlookers peeping into each others’ desktops and laptops. With Wifi (at home) using the iPad and other tablets and 3G on mobiles such as the iPhones by Apple and Blackberry gaining popularity coupled with the deeper penetration of Android smartphones starting at $ 100 (Rs. 5,500), chances are more young ones in India will appreciate and participate in such promotions in times to come.

Indian Ecommerce players need to reinvent themselves to stay ahead in the game. Afterall, everyone remembers who is the biggest of ‘em all, and not really the one who started. Such is life.

10 January, 2013

E-Commerce Economics–Questionable?

I have been without a pair of floaters / slippers for over two months now. Just that I’ve not been able to find a Retail Store closeby where I could find a couple of options. And I have another peculiar issue – that my foot size is 11 and I don’t get options so easily across brands. In fact, I ‘ve been buying my shoes from Brand stores located in North India since the body/foot sixe of customers is generally larger there than in the south (and it applies for other forms of retail such as apparel such as shirts, trousers, shorts etc. and even accessories such as caps and belts. In the month of Dec. 2012, I was traveling down siuth towards Coimbatore, Karur, Bangalore and a few others and then was in Bihar for a couple of days before ending the year in Kerala for a vacation with the family. And in the new year, I finally decided that I need to get a pair of footwear immediately. A chance view of an eadvertisement on some news website took me to jabong.com which offered a 70% discount on a particular model of Lee Cooper floaters and thankfully, they had my size as well. Bingo, and I ordered my pair immediately. The entire transaction from browsing to selecting the size to payment confirmation and then finally the payment gateway took me all of 6 minutes flat. And yes, this happened not on my laptop but on my iPadmini what with its fast processing speed and convenience to hold. I was quite pleasantly surprised that jabong.com had its web page optimised to the tablet – given that the size of the ipadmini is considerably smaller than the regular iPad. Within a few minutes, I received an SMS confirming my order and that the folks there were working hard to get the product to me as soon as they could. This was at 9.45pm.

When I woke up the next morning, there was an SMS as well as an email that the product had already been shipped – and they shared a tracking number as well. Around 11am, I received an SMS that the product had reached Chennai (from Delhi where their main warehouse is located) and that it was on its way to my home. Around 1.15pm, the product was at my doorstep, neatly packed in its original box with an outer covering that was branded “jabong”. I was indeed delighted to get the product and wear it – was happy like a kid who received a new toy. From shopping to receiving the product it took less than 18 hours which I felt was simply superb. Impeccable Customer Service.

ecommerce customer

After a while, I was thinking about the economics of the entire business model. The product was at a 70% discount, so I would guess the e-tailer had a 5-10% margin if at all, had a warehouse to stock the product(s), a team that was working overnight to process the order, pack and ship it immediately and a shipping agency that delivered the product free of cost at my doorstep! No to mention the operational costs of running an e-commerce company. Well, was this worth the effort? Ecommerce specialists (and there are tons of them out there) call it the cost of acquisition – that a customer who once shops on their website would get used to the idea of shopping online and would indeed come back to them and buy once again in future. Atleast that’s what most of them in India have been doing for the past few years. But that isn’t the case. Various studies have shown that e-commerce loyalty is negligible in India (as is mostly the case outside too) and most customers who shop online are seeking better price and convenience of shopping rather than looking for a full range of products. Another recent experience confirmed this too. On 12-12-12, a book was released to commemorate the birthday of Tamil Film superstar Rajnikanth. The name of the book is “Rajnikanth – the Definitive Biography” by noted journalist and author Naman Ramachandran. I was wanting to get my hand on this book for quite some time, just that I was hoping there would be a kindle version so I could read it on one of my devices. But that doesn’t seem to be launched yet. So, I decided to buy the hard copy paper back which was priced at Rs. 699/- at Landmark, the retail venture of the Tata Group in India. Landmark is a specialty Retailer and mainly sells books and stationery, music, toys etc., among other things.  There wasn’t any discount on the book – given the fact that many hard core fans such as me would buy it whatever crazy price.

ecommerce methodology

While I was browsing the internet on Sunday evening at home, again on my ipadmini, I was curious to check out the price of this book online. To my surprise, the same book was being offered at a 30% discount across various online retailers. And I chose to buy from flipkart.com which claims to be the largest etailer in India in terms of number of billings/shipments and turnover. I bought the book immediately, my second ecommerce transaction on a hand held device within a span of two days. In this case, the shipment wasn’t as quick as in my previous example. The order was processed on Monday noon and the book arrived at my home on Tuesday. I had proposed COD (Cash on Delivery) – and hence the product would be paid for only after delivery. The delivery boy was kind enough to call me on my mobile while I was at work since there wasn’t anyone at home, After sorting out the same, the book was handed over to someone at home. And pronto – I get an SMS in a while from Flipkart – that the book was delivered to a family member. Technology used to its best, I felt.

Again, there wasn’t any logic for Flipkart to sell it so cheap – if they would lose 30% margin for a transaction (and most items on their site are on discount), then where do they make money? Assuming that their Gross Margins is around 40%, this is a ridiculous business format, to say the least. Over the months, PEs and Investors have shunned away from encouraging E-Commerce businesses in India. A prominent Indian etailer which was also one of the earliest to pioneer the concept of online shopping seems to have run out of cash and hasn’t paid salary to its 100+ staff for over two months. Half a dozen of them have either shut down or been bought over by their peers and competitors during 2012. And many more will go out of business in 2013. I am neither a prophet or a pioneer to predict what would happen to the fate of such businesses but when an etailer is operating at –15% or more (negative) margin, then isn’t it logical to say so?

Print

29 June, 2012

Another New store Opening?!?

Retailers in India seem to be continuing their efforts to open new stores, despite a slowing economy, higher import values, a falling rupee, increasing inflation and a weak consumer sentiment. This has been evident in the Retail Sales over the last two Quarters of this calendar year especially in high-value items such as A/Cs, Refrigerators, LCD TVs, automobiles including two-wheelers and four-wheelers. On one side, Retailers are offering huge discounts to lure customers – in India, Q1 & Q4 (for Financial Year starting April onwards) are essentially the most difficult times for clearing inventories and it is relatively easier in Q2 & Q3 due to the impending Festival and Marriage seasons. The above mentioned macro-economic factors haven’t helped them either. And Product ECommerce (excluding Ticketing services which account for over USD 8.5 Billion) which is estimated at over USD 2 Billion (approx. Rs. 11,500 Crores) is the biggest competition today for many Brick & Mortar Retailers, at least in the metros and mini-metros where Consumers have a reasonably quick and safe internet connectivity. And on the other side, large stores are being inaugurated in the hope that consumers would still like to visit and shop. We truly live in two contrasting worlds, to say the least. India's largest retailer, Future Group, which runs Central Malls, Pantaloon Fashions – a Department store chain, Big Bazaar Hypermarkets and FoodBazaar supermarkets among various other formats and models has scaled back its expansion from 2.5 million to 2 million square feet this fiscal year due to an economy growing at its weakest in nine years. The growth rate was 5.3 percent on an annual basis in the March quarter.

Viveks

To drive footfalls to the store, continuously and consistently is one of the key challenges for Retailers anywhere in the world. That the population in India is huge is a bonus factor. However, conversions are miniscule. In the apparel and lifestyle formats, conversions range from 8-15% (those who buy as against those who enter the stores) while in consumer durables and brown goods, it is even lower. For Malls, which are destinations and are expected to attract significant footfalls, the conversions range from 3-5% and maybe lower in some cases (on a lower base of footfalls, usually). Given this fact, Retailers are in a frenzy opening newer stores within existing cities as well as in newer cities. One such example is Viveks, one of the oldest Consumer Durable Retailers in South India which was also the first one to start an EMI option in the early 90s when the Indian Economy was just opening up. It is rather surprising that the Retailer chose to remain a regional player, unlike its later counterparts such as EZone (part of Future Group) and Croma (from the house of Tatas) who quickly increased scale and went national with their presence. EZone is having operational challenges but that is not because of expansion but rather due to internal issues. To add to the woes of Consumer Durable Retailers, Hypermarket Chains such as Hypercity, Big Bazaar, Star Bazaar, etc. also stock Electronic Goods.

Challenges for Consumer Durable Retailers

Footfalls

To expect continuous footfalls all through the week is rather not practical. Instead, Retailers focus on weekend shopping festivals, usually for short durations. This is the time when Shoppers visit Retail stores and chances of conversion are higher!

Service

Superior Customer Service is something everyone talks about but is not generally followed all the time. And Customer Service is not just a gentle staff doing some smooth-talking and smart selling. It includes all the moments of truth – from hygiene factors such as lighting, A/c, Parking, etc. as well as product knowledge and friendly staff.

Differentiation

Multiple Retailers sell the same Brands and products. So why should a customer actually shop with one Retailer and not with another? Honestly, there is no clear answer. Consumers do not buy products, they buy Brands. And this includes the Retailer’s Brand Value as well, on which they should be focusing on.

Ecommerce

Showrooming – a prevalent concept in the West where shoppers visit Retail stores to check out products and prices but ended up ordering on Amazon.com or other ECommerce portals is brewing in India too. So, the difficulty of touch-and feel is negated. Another challenge is paying by Cash which is also something that ECommerce players have started over the recent months. Lastly, the convenience of getting the product on hand immediately – something that ECommerce players are finding it difficult to deliver but are successfully meeting customers’ requirements within 2-3 days in general.

With so many challenges, I wonder at times whether Retailing is worth the effort at all. For some, it’s a question of growth, for many it’s a matter of survival. With the opening of FDI in Retail sooner than later, the Big boys with boat loads of cash are going to lap up market share easily and faster. Interesting times ahead.

29 March, 2012

Instead, they drive away footfalls!

Shoes on Sale 2

I was recently in Chennai and happened to see an advertisement in the newspaper from a leading footwear Retailer announcing End of Season Sale and massive discounts. Someone within my friends circle had even mentioned about it on Facebook. Excited I was like many others, landed up at the store on a Saturday evening. To my utter disappointment, the store was in complete disarray. The owner was standing in one corner with a long face and the sole salesman was running pillar to post, literally. There were atleast 20 customers within the store – a few on the lower level and mostly women on the upper floor. I will not mention the name of the Retailer who is well renowned in Chennai and I only assume that this incident was an aberration than norm. Hope it gets better sooner than later. How I wish...

Shoes on Sale 5

Some key learning that I took out of this episode;

  • End of Season Sale is not just a season to liquidate stocks. It is also an opportunity to attract newer customers from across the town
  • To mention “Upto 40% Off” in the advertisement and finally offering unknown brands at such a discount or lower is a wasted effort
  • Women are slow shoppers – they spend on an average 2-3 times the amount of time than men while shopping and also try 3-4 times more footwear than men
  • It didn’t make any sense to stock women’s products on the upper level – while most customers did walk up, it would have been a better idea to stock them downstairs and allow them more space to move around
  • There were just two boys running around helping customers in each floor. Knowing fully well the additional footfalls that are expected due to the newspaper advertisement, it would have made sense that there were more helpers in the store to assist customers
  • There is a tendency to believe that discount-seekers are of a lower profile than normal customers and hence it is ok to serve them less! Bad Idea! There were more cars parked outside the store than two-wheelers. And most of them who paid for the product used a debit or credit card
  • Worst of all is to stock the products badly – in carton boxes and allowing customers to search for their sizes

Shoes on Sale 3

At the end of it, I found nothing interesting that were on Sale; instead I walked out of the store rather disappointed. disgusted more on the owners’ interest levels and attitude than the fact that not much was available to buy! Will I visit the shop again? Yes. I guess it was more of a one-off case and would allow the Retailer to correct themselves!

26 February, 2012

eCommerce in India -



I was recently interviewed by Mr. Pawan Gupta who manages the E-Business India Forum on LinkedIn. Here are the excerpts;

Pawan: Indiaplaza has been one of the oldest & successful online stores in India with 10 million products. What is IndiaPlaza.com all about? 
Shriram: Indiaplaza.com is the only e-commerce portal that offers a reasonable breadth, width and depth of products across several product categories at very low prices. There are various e-comemrce portals today in India that are category specific, but Indiaplaza.com is the only horizontal portal that offers a choice and range to e-shoppers to choose from. So while someone has purchased a mobile phone for themselves, they could also consider buying a bottle of perfume for their loved ones or toys for their children. From household appliances to daily use cosmetics, it is all available at Indiaplaza.com under one roof. Within the next six months, the range is expected to double, while also improving our customer service to world-class levels. And most importantly, Indiaplaza.com is the only place where shoppers earn loyalty points for their purchases.


Pawan: What are the challenges in the SBU you are heading at Indiaplaza.com and how do you plan to deal with them?
Shriram: Our business model is unique while compared to that of others. We do not follow a warehouse model, thereby saving millions of dollars to the investors, while at the same time offering and serving our customers to the best of our abilities. Selling Lifestyle products to customers online is easier said than done. While for generic categories such as perfumes, cosmetics, baby wear and toys it is easier to sell without a trial – without a “touch and feel”, it is indeed challenging to sell footwear and formal wear shirts to men or gowns and dresses to women. However, we are building a portfolio of products which are reasonably standardized and therefore customers can buy without bothering about size and (mis)fits. Further, Indiaplaza.com allows a no questions asked return policy, thereby allowing shoppers to buy their preferred products without any concerns. Over the next six months, the Lifestyle selection at Indiaplaza.com would boast of a full range of products that fulfill the entire wardrobe requirements – from shampoo to deodorants, from customized collars and cuffs on shirts to awesome footwear!

Pawan: What is your view on e-Business growth in India?
Shriram: Indiaplaza.com (formerly fabmart.com) has been operating in this space since 1999, when there were only 3 million online users. According to various estimates, that number is now hovering around 100 million users, of which over 10% of them are active e-commerce patrons. The coming years are going to be rather interesting. With the internet moving away from traditional desktops to laptops, tablets, mobile phones and smart phones, there would be more opportunities for shoppers to consume online. Shopping on the internet is not just about saving a few bucks, but also about saving precious time and the effort associated with it. Imagine the time spent driving a few kilometers to reach the nearby Mall or Shopping Centre, parking your vehicle, reaching out to the store – only to find out that what you wanted wasn’t available and end up buying what was! Shopping online will serve this need. Even if the product is not available, the shopper can leave a “Notify Me” message to the e-tailer. Once the product is made available, the potential customer is informed. While this is possible in the real world as well, the shopper has to undertake two visits for the same purpose, spending precious time, money and fuel. While ordering online, the customer also gets the product delivered at their doorstep free of cost from Indiaplaza.com for most items – all with a few clicks while having some free time.
I also believe that e-shopping will become a family activity sooner than later. For example, if a family plans to buy an LCD Tv or a Washing Machine, the whole family can spend a few minutes at sites like Indiaplaza.com and choose their preferred model. For mundane day-today activities such as buying grocery and household items too, internet would become the preferred way to shop. I wish this interview is played back after 4-5 years!

Pawan: What are Interesting challenges you see in e-Business growth in India? And what do you foresee the key drivers for e-Business growth in India in years to come?
Shriram: The biggest challenge (read competition) to e-commerce players is, well, the offline retailers. The effort lies in moving the customers from physical shopping to online shopping. Even in Metro cities like Delhi, Mumbai or Bangalore, e-shopping is restricted only to a few categories. This will grow exponentially due to the obvious reasons of word-of-mouth and convenience (due to lack of time). Things would be more interesting in the Tier II and III cities. Organized Retail penetration is restricted with one or two shopping centres and not many retailers have their stores established there. Even if they do, they may not carry their entire range of products – across sizes and colours 24/7, 365. Many Retail Brands haven’t taken up the E-Commerce opportunity too seriously today. While they are happy to sell their products outright to e-commerce companies, they are not too keen to walk the path. One possible reason for this could be that such an act may threaten (seemingly) their franchisee stores or their own stores. But this would change sooner than later. Well, there wouldn’t be an option I guess.
Many years back, I was part of the team that set-up (Organized) Travel Retail in India at Bangalore International Airport (BIAL). At that time, most brands were reluctant to enter this segment.  Today, between Delhi, Mumbai, Bangalore and Hyderabad – these four airports manage a Rs. 1,000 Crore Turnover! While some brands realized the potential early, many missed the bus. I see the same thing happening to online retail. It is in the interest of the brands that they jump this bus sooner than later!

Pawan: What is your advice to budding Indian Entrepreneurs for building successful online businesses?
Shriram: First and foremost, one needs a great idea in the online ecommerce space. To sell a category / a range of products is not an idea for Gods’ sake. In a competitive environment such as the one that we are going through, there needs to be a distinguishing plan – one that stands apart from the others. And many of them confuse it with providing superior service. Hey! Customer Service is a given, that cannot be a differentiator! Today’s customers – online or offline are particular about the way they are served. While they are reasonable enough to give us (The Retailer / etailer) a second or even a third chance, there has to be something that the portal offers which is far difficult to replicate. Most players believe in large scale advertising, gaining quick traction and grabbing eyeballs through a heavy ATL Marketing Program – but this exists only till the cash in the coffers dry up. Thereafter, one needs to have a strong play to perform and to outperform the others in the game. To be an entrepreneur is a dream that many people share but one shouldn’t confuse passion and business. They are two different things. While it is good to follow your dreams, it is equally important to build a robust business plan – one that talks about profitability and value creation for investors and stakeholders and not just popular advertising…


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