Indian FMCG Startups Are Coming

Over the past 5 years or so, consumer product startups have been slowly but steadily picking pace in India. While their scale might be significantly low in comparison with e-commerce, ride-sharing or food delivery startups, their seems to be a lot of action in the space.

India’s FMCG market is pegged to be around $185Bn. Traditionally, the large players in FMCG/CPG space have operated by owning a massive distribution pipe (Wholesalers, Distributors & Retailer), doing massively expensive marketing campaigns and selling commoditised products. All of this is starting to change.

That smaller startups are trying to disrupt incumbents extended to FMCG category is a natural after effect of the internet penetration and the subsequent second-order effects. Also, as shown below, the CPG brands globally are infamous for their lack of innovation.

R&D Spending in Consumer Goods Cos as compared to Tech Cos


Factors that favour growth of FMCG startups
: Include changes in status quo for:

  1. Innovation
  2. Production 
  3. Marketing
  4. Distribution

Given the rising discretionary spends and ability for internet to help micro target, upstart startups can now decide to make products not for a mass segment but for niche consumers subset. For ex: Instead of making Real or Tropicana Juices aimed at all and sundry, there can now be Raw Pressery or Paper Boat aimed at premium/niche segment of the market.

Since the target segment is a smaller niche, it fundamentally changes how companies approach Production, Marketing and Distribution. 

  1. Innovation (Loved by a few vs liked by a lot): Given a niche customer segment, a startup can focus on making a great product that their customers will really love over a good/slightly better than average product that a lot of people will be fine using. 
  2. Production (Lower Upfront Fixed Cost Requirements): Unlike earlier times, a startup can now think of starting small and launching few niche products with a reasonable manufacturing setup and invest in production as they grow.
  3. Marketing (Lower Variable Costs): A startup these days can get the wheels of marketing rolling but starting with ads on Google, Facebook, Instagram and others with a much smaller budget. Another aspect of marketing is the solid brand proposition that most niche CPG startups are able to drive due to their innovative offering.
  4. Distribution (Lower Upfront Fixed, and Variable Costs): Compared to earlier times of building a comprehensive retail supply chain across the state/country to store and deliver goods, a startup can get started with minimal inventory and deliver products directly to consumer (D2C) through their website/3rd party marketplaces and scale distribution spends as their traction grows.
Source: Dollar Shave Club/ Kantar Futures

VC activity in the space has been on rise with some focussed funds like DSG actively investing in startups. DSG has around a dozen investments in India including Chai Point and Raw Pressery. Consumer Goods startups have raised over $152 mn in 2018 (so far).

via Bloomberg Quint

via Economic Times

via Economic Times

The Bigger brands have also started making their moves in Indian Consumer Goods Startups. 

Bombay Shaving Company, Beardo got funded by Palmolive & Marico respectively 


Some other players that attracted investments from bigger players Happily Unmarried’s Ustra (Wipro Consumer Care) and Forest Essentials (Estée Lauder). The biggest player in the D2C category (not FMCG really) that has done exceedingly well in Lenskart.

With increasing GDP per capita, better penetration of high-speed internet, increasing transition towards e-commerce fuelled by significant VC funding and some M&A activity, the FMCG space is bound to grow and thrive. It’d be interesting to observe how various startups evolve and make great businesses.

On closing note, here’s the great introductory video by DollarShaveClub that set the ball rolling.

Of Errands and Good Procrastination

I’ve never been good at doing certain type of things. This has been the case for as long as I can remember. 

This belief of delaying/skipping things that felt ‘Unimportant’ became stronger when I stumbled upon a blog post by Paul Graham during my first job

PG talks about three types of procrastinations depending on what one does instead of not working on something 

  1. Doing Nothing
  2. Doing Something Less Important
  3. Doing Something More Important

As you can imagine, unlike other cases, deciding to ‘Not Do Something’ or procrastinating in order to use that time to ‘Do something more important’ is actually ‘Good Procrastination’

Boman Irani catches a power nap and gets shave done to save time (3 Idiots)


That overwhelming feeling of a long list of errands that need your attention is pretty frequent for many of us. Errands come in all shapes & sizes and come from all directions. Also, they have an infinite supply. Which means, no matter how many of them you get off your list, there will always be more errands waiting for you once you reach home or start working on something important.

In case you are wondering what classifies as errands.

What’s “small stuff?” Roughly, work that has zero chance of being mentioned in your obituary. It’s hard to say at the time what will turn out to be your best work (will it be your magnum opus on Sumerian temple architecture, or the detective thriller you wrote under a pseudonym?), but there’s a whole class of tasks you can safely rule out: shaving, doing your laundry, cleaning the house, writing thank-you notes—anything that might be called an errand.

Good procrastination is avoiding errands to do real work.

While it may be crystal clear to you that the task at hand is an errand, to people who want you to do it won’t necessarily think like that. This, could be a source of some tension but then

‘You Gotta Not Do, What You Gotta Not Do’.

I try to think of errands from the lens of  ‘The Eisenhower Matrix’

The Eisenhower Matrix’

Types of Errands

  1. Urgent & Important
  2. Not Urgent & Important
  3. Urgent & Not Important
  4. Not Urgent & Not Important

Type 1: I try to make everyone around me (the errand creators) understand that we should try not to have any items from Type 1 (Urgent & Important). There should be almost no errands that demands my immediate attention. However, if any errand from Type 1 comes about, it has to be dealt with on priority.

Type 2: I try to bunch the important items together and schedule a suitable time to do them

Type 3: I try to delegate these (where I don’t need to be personally involved and it’s not important) to others or figure out if they can be done using technology

Type 4: I try to treat them as they don’t exist (Ignore). By doing this, such errands stop finding their way to me.

Errands are productivity killers and when left unchecked, grow surprisingly fast and tend to take all the time available.

Another, thing with errands is sometimes they can give you an illusion of getting some work done when in reality, a lot of that work amounts to nothing meaningful and won’t help you grow in any way.

I don’t know any successful person who isn’t a good procrastinator and doesn’t aggressively shield their time from errands. Maybe, this says something.

PS: Here’s a super long read by Tim Urban (Wait but why) on Procrastination 

Best of the Web 102

Toy Markets, EU is Furious with Malta, Decision Making, Instagram Story ,Where’s Larry Page, Malls 2.0 & More

US Venture Capital Returns (2004-2013)

While Alphabet faces existential challenges, its co-founder is exercising his right to be forgotten. Read more in Bloomberg’s “Where in the World Is Larry Page?

Dated but very interesting. “Why I would never want to compete with Travis Kalanick” by Chris Sacca. Read here

Founders often don’t innovate because they can’t quite figure out the answer to “How big could this get?” Read more on how to think and navigate the market size aspect here #YCombinator

The union’s least-populous member nation has become a cryptocurrency and online gambling hub plagued by allegations of corruption and money laundering.Read more in “Why the EU Is Furious With Malta

Rewind (Best of newsletter #68)
“As they re-invent themselves, malls in India are trying to become community spaces and not remain just shopping centres.” Read more in “The mall story 2.0” 

“‘The Ultimate Guide to Making Smart Decisions” by Farnam Street. Read here

Two Years Ago, India Lacked Fast, Cheap Internet—One Billionaire Changed All That. This WSJ article digs deeper into Jio. Read here #paywall

Podcast Episode of the Week: Instagram
“You can scale big with a simple idea (and a tiny team!) — but only if you catch the prevailing winds. That’s what Kevin Systrom did when he co-founded Instagram”. In this episode of ‘Masters of Scale’, Reid Hoffman goes into the history of Instagram and their journey to acquisition by Facebook.

Listen here

Startup Trivia of the Week: Google 
In 1999, Page and Brin wanted to raise investment from KPCB and Sequoia. They also wanted to firms to split the round to retain controlling stake of the firm. During the process, they gave the ultimatum for a take it or leave it offer to invest $12.5mn each. VCs took the deal and rest as they say is history.

Feel free to forward this newsletter to anyone who might appreciate it. If you’re getting this email from a friend, you can subscribe here.

‘Commute Vehicle’ as a Platform

For a while, I’ve been thinking about a lens or a mental model to look at the opportunities possible while once a user is in a ride-sharing vehicle.

Given that millions are using ride-sharing services like Uber and Ola everyday to commute and that they are slightly better suited to being offered another product or service during their commute makes them apt for some interesting possibilities.

Let’s divide the commute into different segments based on distance covered.

1. Short –  Cabs, Bikes, Bicycles
2. Medium – Cabs, Bikes
3. Long – Cabs, Bus

Out of the commute options above, a couple make for a good fit to be ripe for some add-on opportunities. The contenders include

1. Cabs – Medium & Long Distance
2. Bus – Long Distance

When you think of a platform, the following image comes to mind

The underlying structure comprises of:

1. Users using a platform frequently.
2. Platform allowing 3rd parties (developers/companies etc) to offer products that users can access. 
3. Platform collecting rent for offering 3rd parties a connection to users.

Food Outlets in Delhi Metro Stations


Delhi Metro has had food outlets in its metro stations for a long time. Apart from Advertising on the metro train itself, this is one of the biggest sources of revenue from them.

Unlike iOS/Android app stores where anyone can freely publish an app (subject to certain T&C), with it being a physical play one can’t just set up a shop on a metro station. In that sense, one can think of it as a ‘Managed or Curated Platform’. While anyone can apply for a shop via a Tender, the number of shops is constrained and can’t ever be as long tail as in the digital world.

Keeping the limitations of atoms aside and the fact that most of these commute services are structurally aggregators (Ola/Uber have homogeneous supply, decide which cab to be dispatched and more), thinking about the ‘Commute vehicle’ as a platform lets one imagine various possibilities. Let’s take a look at some options

  1. Advertising (Brand and Transaction Driven)
  2. Commerce (Physical and Digital)
  3. Entertainment (Audio, Video, Games)
  1. Advertising (Brand and Transaction Driven): This one is classic, using the platform for un-targeted/blanket brand campaigns or using the platform for targeted ads what could drive the user to a transaction.

    For ex: Sharing a promo code that enables a special discount to try a new app. (QR codes?)

    I feel there could be an interesting play to build a way to deliver targeted campaigns to users. Given the low scale, smaller/upcoming brands might find it more useful.

Cab Branding for Mobikwik

2. Commerce (Physical and Digital):

This is particularly interesting and under-explored (except for food joints in metro stations etc). Our impulse purchase behaviour, coupled with internet connectivity, convenience and instant gratification makes it powerful.

A few months back Uber tied up with Cargo to enable riders to buy snacks and confectionery. Apparently, Cargo helped drivers earn more than $100 extra per month and has shared over $1mn with its drivers since its launch

Snack Ordering Via Cargo


In terms of fitment, the light snacks and confectionery seems to be a great fit. Want a coke on your ride back from Airport or want to grab a quick chocolate on the evening ride back home? All seems, possible.

Apart from the food stuff, can the vehicle enable you to buy some digital stuff or physical stuff digitally? Could be the boring stuff that one doesn’t get time/wants to do during core hours

a) Ordering food or grocery while I’m on the way to home.
But then one might use mobile apps they already have on their phone, in which case the advertising can act as a nudge to make user transact on their phone itself . 

“Don’t feel like eating home food? Order your favourite cousin and have it delivered within 10 minutes of you reaching home (and get 10% off)”

b) Gifting, Getting Utility/Services work done could be some possibilities

3. Entertainment (Audio, Video, Games): 

This is another natural fit for a commuter. Passengers (and riders) have been listening to music, watching videos etc since forever and offering an extension of the same to the user while commuting is perfect.

Bhavish Announcing Launch of Ola Play


While, I’ve never used the other features (like car control and stuff) I can safely say, Ola Play launched in Nov 2016 is a great and useful innovation.

I’m not too sure on the current model for Ola Play but given its relevance for users and the good execution (network connectivity, hardware, ux etc) it can be a great way to offer more value to the customers.

Some possibilities around Live Streaming Events, Live Gaming, Podcasts, Trial Subscriptions for OTT, Short Length Media, Original Content etc would be very interesting to explore. 

There could be potentially a few more options { in-cab feet/back massage machines?:) } to leverage the 30mins-60mins+ commute time, internet connectivity, fewer distractions, other needs (hunger, killing time etc). 

It’d be interesting to see how various companies evolve their offerings in this space, would the ride-sharing companies act as an aggregator or have a platform play and which of them turn out to be well executed, scalable and profitable.

Delhi Tweetup 2018: A Trip Down The Memory Lane

The last time I met folks from Twitter was around 8-9 years ago. After a long gap the so called “Tweetup” happened again when a bunch of Twitter users met at a quaint restro-bar ‘Chateau De Pondicherry’, in Delhi on Saturday, 8th September.

The idea behind having a ‘Tweetup – Twitter User Meetup’ was to meet and get to know people in real that you interact with on Twitter and also to meet some new folks who are also Twitter users.

Tweetups were a rage globally in 2007-08 and continued to be popular for a few more years. Back then, power users (and later by companies & social media agencies) used to organise the events and promote them heavily online. Since Twitter was also gaining attention among media folks , such events also used to get coverage in Print media which further helped spread the word on Twitter.

Image result for delhi tweetup
A Tweetup I attended while at Slideshare


It’s always great to meet folks you’ve only interacted with online, in person and make friends. The fact that such events are organised organically by the community is fascinating.

User Communities are a powerful force. In case of Twitter, one can argue that it’s because of users love for the platform and the powerful connections/networks that user built on it that Twitter could survive the 2007-2008 ‘fail whale’ days.

Twitter’s Error Message (Now Discontinued)


For the unfamiliar, Twitter was having massive issues in scaling their service between the end of 2007 and 2008. The service used to be give a lot of errors frequently and the error message (show above) was a common sight. Apparently a user ‘Nick Quaranto’ coined a term for this error message ‘Fail Whale’ that quickly caught on. You can read more about the history of ‘Fail Whale’ here 

Among a few others, we also tried to leverage this situation to promote a product called Kwippy that we were building. A remarkable thing (Growth-Hack?) that we did to quickly gather attention was let Kwippy users send a Direct Message to their Twitter contacts inviting them to Kwippy. This worked beautifully well and we acquired thousands of users in a month 

Kwippy Invite sent as a DM to Twitter Users


Here’s a short Tweetstorm I did on How Twitter used to Look in 2007 and how it has evolved since

On a closing note, Twitter has been one of my favourite products on the web. I’ve met some really nice people via Twitter, made great friends and have learned a lot of interesting stuff. 

How Twitter Looked In 2007


Some Pics from Yesterday’s Tweetup

‘The Early Comers’ Lot
‘The Mid-Time’ Lot
‘The Last To Leave’ Lot


PS: If you attended the tweet-up and maintain a blog, ping me and I’ll link to it

The Predicament of being a News Publisher

I was talking with a friend who works at a news publisher and he cried foul on how Google had started showing cricket match scores on the search result page (SERP) itself and how that’d translate into lower traffic on news sites like his.

First Fold of Google’s SERP for a query on Cricket Match score.


The information shared here is sufficient for someone who wants to follow the match score updates. In case the user wants to know more details they have two options ‘Click the downward arrow’ or ‘Click the first search result’.  Which one do you think are users likely to click more?

Screen upon clicking the more/downward arrow just below score card on SERP


For a user following match score one gets most info on Google’s SERP itself. Only in case when the user wants more details (like who is batting, bowling etc) they’d need to click one of search results. Also, if one needs to just see the basic scorecard (updated real time), that has also been taken care by Google.

Notice the green bar under ‘1st Innings’. It polls for updated score every second


The implications for such changes for media/publishers are obvious 

What: Google just shaved off top of the funnel traffic searching for match scores from news/sports sites.
Why: The match score is a “Commodity” which is updated on numerous websites and almost all of them have extremely poor user experience especially for someone who just wants to just know the match score.

Thus, Google decides to serve the customer a better experience by bringing score on Google’s SERP itself.

Google Eyes News:
News is important for a lot of people, though how they consume news has changed thanks to the internet and subsequently mobile revolution. 

While earlier one had to wait for the morning newspaper, radio or TV update to find out news, with Internet, news has become a 24/7 event available to everyone realtime. 

Like me, a lot of people consume news through Social Media platforms like Twitter, Facebook, LinkedIn or Messengers such as Whatsapp. Another way to find out news (over going directly to say news website) is to Google it. 

The importance of news for Google can be judged by the fact that the  ‘Google News’ product is around 16 years old
(Trivia: An Indian named, Krishna Bharat created Google News)

Googling stuff is a much engrained and ever green way to find stuff you need to know. This coupled with facts like

– A lot news is just commodity
– Most news publishers have poor user experience 
– Google wants their users to spend more time on their platform so they can collect more data about them (Most important one)

means that Google would want to serve its users with as much news content as possible (all commodity content) without them ever having to leave their property

Google Eats News

Enter Mobile and the game changes significantly.  Unlike on web, folks on Mobile don’t instinctively open Google.com or start typing their search query on address bar when they need to find something. 

Also, opening the browser to log on Google or opening Google Search app  to find out news and bits like match score isn’t the most efficient way.

Results on Google Search App 


So what do people end up doing instead? 

NEWS APPS: People who follow news tend to use mobile apps by their favourite (assuming they have one) news publisher which they can nibble news on while in the restroom or waiting for their coffee, uber etc.

The fact that most people are spending more time on their mobile (over desktop) and the fact that Google doesn’t enjoy the same share of user habit as it does on web is serious threat to Google. 

Google Drops the Bomb

Google News App (iOS)


In May’18 on their famed I/O event, Google announced launch of the revamped and AI powered news app. Now the thing about Google is, if they say something is powered by AI, it is best for everyone to believe them (as they know what they are talking about).

Some reviews for the revamped ‘Google News’ App

A snippet from Techcrunch on the revamped Google News app
A snippet from Verge on the revamped Google News app

The News app was launched on Android and iOS devices in 127 countries.  

I’m not a news person by any means. I had no news apps on my phone but when I heard about ‘Google News’ app on Twitter recently, I decided to give it a spin. My experience can be summarised below,

“I don’t think I’ll ever download another news app again”

What’s so great about the Google News app deserves a separate blog post.

That aside, IMO it’s a death siren for other big/horizontal media houses or news publishers. While publishers were trying to plan on how to win small battles on the web, Google dropped the nuclear bomb on mobile.

This is a very tough spot to be in for News Publishers.

Whether and how to partner with Google when it competes with them for user attention/usage and this is a great predicament for them.

Mutual Funds Apps in India: A Brief Overview

Mutual funds as an investment instrument have been on a rampant growth in India. So much so that the Total Mutual Funds Assets Under Management (AUM) doubled from Rs 10L Crore to Rs 20L Crore in the last three years. 

With low penetration of Mutual Funds in general and expectations of continued growth in AUM (projected to double again in the next three years or so), there has been a massive interest in offering Investment into Mutual Funds.

Over the last few years a bunch of startups have jumped the bandwagon in offering investments in Mutual Funds (Direct and Regular). Some of the notable names include ET Money (by TIL), Coin (by Zerodha), Scripbox, Kuvera, Groww and this week Paytm also launched their Paytm Money app.

Clearly from a consumer standpoint, the more choices the better. Over the last few days I played around the apps mentioned above. Here’s a short summary of my experiences with these apps.

  1. Coin: Zerodha, one of country’s most popular platform for equity trading and investments launched Coin (a platform to invest in Direct MFs) in Mar-2017. Coin launched their mobile apps in June-2018. Coin has over 1 Lakh investors using their platform which have invested more than 2,000 Cr.

  2. ET Money: ET Money has over 40 Lakh users using their platform and have processed over 2Cr transactions. In which case, they are definitely the biggest Mutual Fund platform in the country. 
     
  3. Kuvera: Kuvera seems be the youngest of the lot and has over 15,000 investors with over 250 Cr in AUM (With average investment amount of over Rs 1.5L, this is quite interesting)

  4. Groww: YC backed groww has over 2 Lakh users on their platform.

  5. Scripbox: With Over 100 Cr raised, Scripbox is one of the most funded startups in this space. They have over 3.5 Lakh subscribers with over 600 Cr in AUM. 

  6. Paytm Money: Powered by Paytm, Paytm Money had over 8.5L users sign up to be on the waitlist. Currently, they are allowing 2500 new users daily to start using the app.

Here’s a comparison Snapshot.

A quick overview of various apps offering Mutual Fund Investments

Other observations:
1. The customer service/ops by Scripbox is outstanding.
2. Groww has a nice functioning CLM in place.
3. Zerodha by virtue of offering multiple products (equities, small cases etc) has good network effects and Coin has a great, well functioning website.
4. A few services like ET Money, Groww also let you import investments from other providers/fund houses.

Do you use any of these apps? What has your experience been like?

You don’t have a marketing/growth problem(YET)

Originally published on Medium

I often come across folks who are getting started with their startups. Many of them are looking for advice and their is one question that almost everyone of them asks without fail.

How can we scale up marketing for our startup?

Make Stuff That People Want


It’s like they’ve figured out everything else and the only thing that is to be solved for now is Growth. First time founders are particularly prone to this line of thinking.Typically in most such cases, there are a few things that seem to be working.

Some Traction

  • The site is getting a bit of traffic or their app is getting a few downloads.
  • A few users are signing up or leads are being generated.
  • There are a few active users.
  • Some revenue or repeat usage of the product.

To the founder’s credit, they’ve built a product and figured out some stuff in getting their product in front of the potential users. However, more often than not they end up jumping the gun in thinking that all the basic groundwork is done and all that remains is reaching to more people.

But incidentally, there’s more to it than meets the ‘optimistic founders’ eye. Let’s dig a little deeper.

A startup’s life comprises of multiple stages that need to be sequentially navigated.

Two Major Phases in a Startup’s Life

  1. Pre Product-Market Fit (Pre-PMF)
  2. Post Product-Market Fit (Post-PMF)

Understanding Product-Market Fit

In layman’s terms, achieving Product-Market Fit means

You’ve figured out a way to solve a problem that enough users care enough about (to pay enough for).

This definition covers three core aspects important to any startup

  • Market — You might solve a problem for a handful users but are there ‘enough users’ that feel the pain/need for a solution?
  • Product — You might have come up with a solution but does it ‘really resonate’ with your users?
  • Monetisation — Your users might be using your product to solve a problem but are they willing to ‘pay reasonably’ for it(or is their a different way to monetise like Ads and such)?

While the above mentioned might seem obvious, I’ve seen more entrepreneurs mistake confusing getting a Pre-PMF with a Post-PMF 
(You might want to re-read the points in quotes above).

Amidst all the buzz around fundraising, press-coverage and exists, the urge to ‘grow fast and kill it’ is understandable. However, before worrying too much about the non-existent growth you absolutely need to understand if you’ve found a product-market fit.

Important: A vastly important point here as I’ve learned over the years is that Market > Product. “Which market to operate in” could be a great heuristic to work with. More on that in a later post.

Why is Product-Market Fit Important?

Product-Market Fit is the Holy Grail of Startups

Nothing kills a bad product faster than good marketing


Premature Scaling or spending effort and money on marketing a half-baked product to solve a half-thought through problem is potentially dangerous.

It requires a significantly harder push to market a product that claims to solve a problem most users don’t realise enough(they have) in a way that doesn’t make sense to them. By resolving to spray and pray marketing you might acquire some users, a few of which might translate into paying customers but more importantly, it will give you an illusion that you’ve figured out what people want.


It’s this precise illusion that’s the biggest problem. Most people who find themselves in this illusion end up adding more features into their product, continue their spray and pray efforts to acquire users, trying to raise funds and more often than not reach the woeful end of “Running out of money”.

Contrast this with a situation in which you’ve found Product-Market Fit. In which case, every single step mentioned above will seem like a breeze (ok, almost like a breeze).

Also, it’s worth noting that one important and often overlooked factor that seems to add up to the illusion of figuring out PMF is the founders psychology. While things begin with a sound footing, many a times the empathy to truly solve a customers problem and delivering a wow experience is quietly taken over by a personal insecurity and need for validation. Once in this zone, the founders tend to look and even gloat in any metric that confirms their illusion. So, being self-aware about your psychology is a must for course-correction.

What does Product-Market Fit look like?

Marc Andreessen on what PMF Looks Like


In essence,

Having a product-market fit means it’s much easier to convert users and retain them

Let’s refer to the user funnel to find more. Here’s what a typical user funnel for B2C/B2B startup looks like

User Funnel


Whether you have found a product-market fit drills down to two metrics really

  • Conversion Rate — 
    (No of engaged users/No of users) or (No of customers/No of leads)
  • Retention Rate — 
    (No of repeat users /No of engaged users) or (No of customers/No of repeat customers)

And out of these two also, I’d prioritise Retention over Conversion as it’s a definite indicator of PMF

Retention vs PMF


If these two metric are reasonably good, chances are you have attained PMF 
and can now focus on scaling growth. On the other hand, if these two metrics, especially the Retention Rate are in single or early double digits there’s a problem. It’s likely that you are yet to find a PMF and you need to go back to the drawing board and figure that out.

Let’s take an example of an app that lets you improve your health by connecting with you a nutritionists or fitness coaches. To check the PMF status we will have to look at the user funnel numbers.

Sample Funnel Data for a Health App


As visible from the data above, it looks like a case of Pre-PMF as both conversion rate and retention rate are weak, therefore they are better of trying to first find a PMF and then worry about growth.

PMF Discovery Tip: Go through your user data and see if there’s some segment of users that has significantly higher retention than others. This just might be the niche for which your offering makes perfect sense. Next, you can double down on sharpening your offerings further for them and then get to finding more such people

I’d like to conclude by saying that at an early state of your startup while you must continue to feed top of your funnel by acquiring some users (more data to analyse the better) but don’t be too eager to press the gas pedal on marketing or growth till you’ve figured out a set of users (around 100 for a B2C business) that truly love what you are doing.

Till the time you’ve found out those users, improve your product offering or consider targeting a smaller niche with your existing product.

Thanks to Sameer Guglani, Navneet Singh, Monica Jasuja, Aditya Sahay and Lakshay Pandey for their feedback.

Flipkart Plus: Customer Loyalty Program by Flipkart

Flipkart, the country’s biggest e-commerce company announced the launch of their loyalty program or customer benefits program (as they are calling it) on India’s Independence Day .

Launch Emailer

Here’s a quick summary of the program

  1. Opt-in membership with zero fee
  2. Free Expedited Shipping
  3. Exclusive access to promotional offers on Flipkart
  4. Reward points (coins) for purchases on Flipkart, which can be redeemed to buy offers on & off Flipkart (other vendors like Bookmyshow, Cafe Coffee Day)
  5. Superior & Priority Customer Support
Membership is just a click away

Flipkart Plus Landing Page

For an e-commerce company to become a sustainable business at scale, customer loyalty (aka retention) is a must. With increased competition and massive customer base, retention is the most obvious and un-avoidable path for all sizeable e-commerce companies, thus the recent public push towards launching loyalty programs.

Coming back to Flipkart, Flipkart Plus is their second attempt to launch a loyalty program. The first attempt was made in 2014.

Flipkart First (Launched in 2014)

‘Flipkart First’, ran for 2-3 years before the company quietly setting the sun on it. Since I was an active customer back then, I purchased ‘Flipkart First’ membership twice to avail the benefits. 

Here’s a quick overview of how the two programs compare with each other

Flipkart First Vs Flipkart Plus

Summarising the key changes:

1. Waving off Membership Fee 
2. No commitment over delivery time and charges
3. Adding early access to exclusive deals
4. Superior and Priority customer service
5. Introducing 3rd part offers and reward points

Let’s try to quickly unpack these changes

  1. Free Memberships:
    Positives — Increased Uptake
    Negatives — No additional revenue from membership fee

    IMO a loyalty program without membership fee is not reflective of brand power and will always restrict goodness you can provide.

  2. Free and Expedited Delivery:
    Positives — Increase in both order count (significant) and revenue (insignificant)
    Negatives — Extra shippings costs.

    Since membership is free and so is shipping, essentially users have no incentive to consolidate their orders and thus they can & will choose to place standalone order for low ticket items but will they spend significantly more because of this, I don’t think so.

  3. Early Access To Exclusive Deals (Actually just Exclusive Deals):
    Positives — Depends on quality of deals. Could lead to more orders & revenue
    Negatives — The deals on low ticket item products can put further pressure on shipping costs.

    The way I see it, I don’t expect great deals for Plus members. Let’s wait and watch on this.

  4. Superior & Priority Customer Service:
    Positives — Difficult to measure and communicate value to users. Negatives — If some changes are actually done at CRM, process and team levels. The costs for this could be significant.

    Unless a customer buys extremely regularly and interacts with CS often they can’t really see the difference. Even if the experience is better, I’d actually prefer to not having to talk to CS at all.

    Also, I’d never want customers to feel they are treated unequally. So generally speaking, I don’t like this feature.

  5. 3rd Party Offers and Reward Points:
    Positives — Additional benefit to customers, should bring some additional revenue from 3rd party. 
    Negatives — The offers currently are unpleasantly few and the usage terms are not friendly (to the point of discouraging impulse use).

    Giving formulaic reward points for purchases in form of coins could have been good had they allowed people to redeem them while shopping (think Paytm Cash) but in the current form, users can redeem coins to buy offers on 3rd party or Flipkart. First option currently is un-exciting and second one involves fair amount of friction
Expect a lot of low ticket orders like these

Unfriendly Terms: Of course I will remember all this two days in advance

Redeeming Rewards: 50 Coin Offers

50 Coin Offers 

Rs 250 earns you 1 Coin, so you need to spend Rs 12,500 to earn 50 coins. 
There’s also a catch, you can’t earn more than 10 coins in an order. So in effect, a user need to place multiple orders (5 big orders or 50 small ones) of Rs 250 or more to accumulate 50 coins.

Once a user has spend Rs 12,500 they are eligible for these offers 
– Rs 1000 worth free Flipkart Voucher (8% cashback)
– Rs 1200 worth BMS voucher or Rs 1900 worth Zomato Gold.

These offers are definitely interesting for regular customers as they get all these benefits for free.

Would people spend more often on Flipkart or move to Flipkart because of these benefits (more offers to come) would be interesting to see.