Category — start-up
For the sake of exploring, I signed up to snapdeal.com. Since the intention was to explore the website and not to buy, I went straight on to the sign up link and here’s how it worked after that
Step 1: Click ‘My Account’ Link
Since this is the only link on the menu (no login/signup etc), I clicked it and was presented with the following
Did you see the top most tabs of login and signup? Neither did I. Since I am not quite comfortable signing up with Social Logins I chose to create an account. This page is as far from a neat/uncluttered page as possible and who the hell signs up using “Yahoo” anyways?
Step 2: Click the ’Create your Account Now’ link
After filling up the form, I was sent a confirmation email. Here’s how it looks
Oh wait, did the email say ?
|Now that you are here, we will make sure you eat, drink, relax and have fun in your life.|
|Every day, you will receive an exciting offer in your Inbox. Get ready for up to 90% off on Dining, Fitness & Spa, Entertainment, Travel, Activities and More; all in your neighborhood.”|
Looks like in all the jazz someone forgot to tell the new users that the core business model has changed from local deals to an e-commerce marketplace
Step 3: Click the verification Link
On clicking, the verification link. It asks me to type my credentials again to login.
Step 4: Login
Not sure why on earth is Snapdeal making me do all this work just to sign up ?
Let’s compare this with let’s say Flipkart’s signup workflow
Step 1: Click ‘Signup’ link
Unlike Snapdeal which assumes every user has an account on their website and wants to immediately jump to it, Flipkart’s menu has the following links ‘Login | Signup’. As explicit as it can get
Clicking Signup link opens the following
Much neater and usable none the less
Step 2: Enter details and click Sign up Now!
After filling the details and clicking Sign up Now!, I don’t need to a) click verification email b) login on the website
Voila !! All of this is taken care of by itself
I hope now even a rookie can now appreciate how bad Snapdeal’s workflow is
April 27, 2013 No Comments
If you are part of/related to the Indian e-commerce scene in any manner or read desi start-up blogs, chances are you might be familiar with the concept of Marketplace.
A “Marketplace” connects buyers and sellers who otherwise have trouble finding each other.
Marketplace(think eBay), is simply a model which has multiple sellers providing various goods/services through a platform. In the context of this discussion, an e-commerce website instead of sourcing and fulfilling the orders just manages the listing of products and passes on the order details to the sellers who then handles them.
Recently, India’s biggest online retailer (Flipkart) made their first move as a part of shift towards the marketplace set up.
Other Indian online retailers on scaled up marketplace model are Snapdeal(which recently raised $ 50 mn from ebay and others), Tradus, Infibeam and Shopclues. Let’s understand how the marketplace model and inventory led model compare in execution
The key components of an e-commerce set up are
- Customer Acquisition
- Technology (Customer facing/related and backend)
- Fulfillment (Sourcing, Packaging and Delivery)
- Payment Processing
- Customer Service/Support
Setting everything up for a rookie is quite demanding (capital and effort wise) and will take months to get off the ground, however to signup as a seller on a marketplace and/or opening a shop using SaaS based ecommerce store building platforms like Zepo, Buildabazaar or Martjack is a quickie. So for a newbie it makes perfect sense to open up their own shop (SaaS) and list on various marketplaces as a seller
Based on one’s expertise and priorities there are various ways of building the e-commerce store set up. For eg: while someone will prefer to control the last mile delivery experience, someone would rather let logistics companies take care of that.
The most common model is mix of Inventory led and Marketplace both (think Amazon). Here’s how it works
- Inventory Led – Short Tail (Fast moving, Commodity products, Easy to warehouse for ex: best selling books/movies/pendrives etc)
- Marketplace – Long Tail (Slow moving, Niche products, Difficult to warehouse for ex: medical books published in hindi/very old foreign language films/Furniture etc)
While it might not very clear from the examples but Inventory led model makes sense for products which aren’t perishable(both utility and demand/vogue), are easily available offline too and move fast enough while the Marketplace model makes sense for products which one doesn’t know exist or even if one knows they don’t have any clue on how to stock them, how to source them etc.
Customer Acquisition,Technology,Payment Processing and Customer Support are done by the e-commerce company.
Here’s how various models are implemented in some of the biggest Indian e-commerce companies.
A couple questions come to the the curious mind.
- Why sudden rush towards Marketplace all across?
- Is Marketplace the future of e-commerce in India?
1. Why sudden rush towards Marketplace all across?
The answer to that question (from what I’ve heard) lies in the deep VC pockets. With the Govt of India dillydallying around the FDI regulations for e-commerce, apparently Marketplace is the only way to get external funding needed to sustain the business.
Also, it could be because the bigger e-commerce companies have figured out that
a) they can’t possibly go that strong on increasing the quality/quantity of the catalog on their own
b) they ran sick and tired of doing everything on their own.
To get a sense, compare how Flipkart was managing these functions in it’s previous avatar and compare it to say Snapdeal
2. Is that the future of e-commerce in India?
On doing some rough calculations based on the information available Flipkart, Infibeam, Snapdeal, Jabong, Bookadda and Homeshop together would be doing around 1,15,000 orders a day (Flipkart and Snapdeal contributing about 60-70 %).
There are a lot more sites (ending with kart and otherwise) who just might be doing another (20-30,000 transactions or more a day)
As per my guesstimate all independent smaller e-commerce websites and platform powered online shops selling long tail products would be doing not more than 5-10,000 orders a day.These numbers could be significantly different from the mark for all we know but based on these numbers before marketplace became the buzzword, top 5-6 established players were doing about 90,000-95,000 orders a day in total while the others in long tail were about 5-10% of their size.
The balance has started to shift towards the marketplace model transactions. For now their share could be 10-15% of the overall e-commerce transactions. Going forward we’ll a lot more smaller businesses and niche startups coming online and by 2013 end their share could be upwards of 20-25%(going by the fact that between Flipkart and Snapdeal they are the biggest online retailers).
A couple of factors to speed this up would be
- More platforms like Buildabazaar and Zepo
- Better payment gateway/cash collection mechanisms (Ghar pay etc)
- Better logistics (for end to end fulfillment)
- Third party SaaS services for other components like (Catalog, Warehousing, Customer Support)
- Some VC investment in 1-2 marketplace companies
The sooner we get to see the above mentioned things rolling the faster we’ll get to the long tail moving online. At some time in the mid term future(5-7 years) the demand for long tail items (Niche/scarcely available/custom made) products could become comparable if not more than the demand for short tail products.
So the marketplace model and independent shops powered by various sites are here to stay and the current biggies like Flipkart, or maybe Snapdeal will evolve into a mix of (Short tail – Inventory led – Self Fulfilled and Long tail – marketplace – Logistics company) models.
April 11, 2013 No Comments
Don Valentine’s Talk at Stanford’s Graduate School of Business
June 10, 2012 No Comments
Get Big Fast, a phrase most commonly attributed to Amazon Phenomenon of acquiring significant market share in your category in very little time but growing extremely fast. The numbers in cases such as these don’t grow linearly but exponentially. The Get Big Fast philosophy requires extreme focus on scaling operations, hiring, aggressive marketing and short product cycles. The targets set for the growth might look unreasonably high to some but that’s the only way this works, Get Big Fast and become the leader in your category before anyone else so that now your Scale also works as a Differentiator.
The other or rather opposite approach that most businesses wittingly or unwittingly end up with is what I call Get Better Slow. This happens in most startups. They have reasonable growth targets and work on a moderate or slow pace to achieve them. Part of the reason is lack of clarity or conviction about the end goal and part is the lack of firepower among other things. Interestingly the Get Better Slow option is the default for most startups and many a times without the founders realizing they approach this with the perspective of doing more groundwork, thinking deep, organic growth and what not.
While I don’t mean to say that a startup growing slowly would stay like that forever but what I really mean is that unless the founders and team consciously choose to set and attain unreasonably high growth targets, their chances of staying in the business as a significant player are quite less. To give you some context, for someone doubling the revenue in six months might be great but for someone doubling revenue in 2 months is the desperate need and unless the need is desperate, ones chances of getting there are a bit less.
Also, in many cases Get Big Fast Vs Get Better Slow turns into Growth Vs Revenue. While one startup might keep focus on revenue/monetization, the other might just do the opposite to make sure that monetization doesn’t distract them from growth. It’s actually one of most crucial decisions for a startup, a HUGE BET which in most cases doesn’t pay off well.
The more I think about it, the more I am inclined to like the Get Big Fast philosophy which involves stretching out to the hilt, tons of small and big experiments and very short learning cycles. On the contrary the Get Better Slow philosophy which appears to be grounded on the thought of making a sustainable, quality/customer centric business actually hurts the startups more because of the comparatively slower iteration cycles which in most cases lead to losing traction or a considerable part of the market to competitors who manage to Get Big Fast, which effectively means that tough you think you are doing a great job for your customers but your customer set is so small that it doesn’t change much in the bigger scheme of things
Get Better Slow: Get Big Fast:: Passion: Obsession
What do you think?
May 31, 2012 2 Comments
Here are some of the links that I found worth sharing
January 1, 2012 1 Comment
Last month I was interviewed for a small video feature that covered 3 booming economies India, Brazil and China. Here’s the link to the video feature.
December 30, 2011 No Comments
COD or Cash on Delivery as we now know it wasn’t no where near its popularity today a few years back. Today quite a few people (who call us at dialabook and otherwise) know and talk about Cash upon Delivery as a concept (books milne ke baad paise de sakte hain?) if not the exact term. COD as we know has taken the entire e-commerce Industry(if we can call it) by a storm.
To give you some perspective, about 2 years back when we(@dialabook) started collecting payment for books on delivery, we had no idea about this term and no notable e-commerce site had this option. Fast forward it to today and almost all e-commerce sites(and a few others like the one below) accept(or rather promote) COD to lure more customers.
While COD as a concept has been there for ages under the name VPP (Value Payable Post) by India Post. Here’s how their website defines VPP
The value payable system is designed to meet the requirements of persons who wish to pay for articles sent to them at the time of receipt of the articles or of the bills or railway receipts relating to them, and also to meet the requirements of traders and others who wish to recover, through the agency of the Post Office the value of article supplied by them.
Govt VPP however seems to have an upper limit of Rs 5000/-, which means you can’t send goods worth more than 5k through them.
Not just VPP, some courier companies in India have been supporting COD since March 2009 at least. Though some startups like @dialabook might have been offering COD locally before, the big shift happened in April 2010 when country’s leading e-commerce player Flipkart introduced COD in April 2010 with a cash limit of Rs 2500/-, followed eight months later by Infibeam (FYI: Indiaplaza announced COD on 25th March 2010, a few days ahead of Flipkart ). It is also worth noting that some services like travelguru.com were offering COD option at least 2 years before e-commerce companies started adopting it. Seeing its success elsewhere, online travel portals yatra and Ezeego1 also launched COD in year 2011
As it turns out India isn’t the only breeding ground for COD. China,Russia etc have been a witness to the popularity of COD for long.
Going by the stats in India, as much as 60% customers of top 5 e-commerce sites in India use the option of paying by cash on delivery (COD) and many of these sites have credited COD for fueling their rapid growth. While COD for obvious reasons makes a lot of sense for Indian customers and definitely opens a new market (students etc) to e-commerce it isn’t exactly what the doc prescribed or should prescribe. Here are some of the things wrong with COD
- Cost: Nearly all courier companies charge extra for collecting cash. This cost is divided in two parts
Fixed Cost: Rs 20-150/- ; Variable Cost: 1-3% of the COD Amount. (This is mostly for high price items like mobile phones, laptops etc). If the item is priced low then the COD charges at times exceed one’s margin in the product and if the item is priced very high then the % COD charge turns out to be in hundreds or even thousands
- Delay in payment: Unlike credit card transactions, COD payment generally takes 1-2 weeks or more to be transferred to your account. This bites your cash flow especially as the COD amounts start becoming huge.
- Delay in deliveries: On an average COD deliveries are delayed by 12-36 hours when compared to normal deliveries. The reasons for the same are mostly non-availability of customer or cash and many a times both. Here unlike regular deliveries the parcel can’t be dropped to a neighbors place
- Higher Returns/Cancellations: Since the customer hasn’t paid in advance, they can always cancel/refuse to take the delivery and sight reasons like I found this phone cheaper locally and have bought it from there or I have changed my mind, will buy a new laptop later
- Overheads: Collecting the cash, collating the receipts and maintaining records et all is a nightmare
With increasingly every online business offering it despite its disadvantages(to retailers) the situation might just go out of hand and turn into a death spiral (at least for some non/less funded businesses that rely heavily on their internal cash flows). Small startups are the ones that should be really concerned about these issues instead of blindly aping others and starting COD.
With time as the e-commerce market in India matures, there *might* be more trust in established mechanisms of swiping cards for paying and some people will get over the liking for COD and prefer pre-payments. But, given the case in China, Russia etc it looks like unless the e-commerce majors deliberately start demoting COD and promoting other payment options we just might replicate what’s happening elsewhere i.e 60-85% people using e-commerce sites paying by COD.
Some ways around COD
- Multiple Payment Options (at least 5-6)
- Pre-payment methods (like wallets, cards)
- Mobile banking and SMS payments
- Card on Delivery
- Giving incentives to users for choosing online payment against COD
- Alternative payment methods such as paypal etc
While COD is a good option to have in some cases its double edged sword which should be used with a lot of caution and foresight. What do you think?
December 18, 2011 4 Comments
I am a sucker for remarkable, awe-inspiring, mind-boggling customer experience and can’t think enough about it. The more negative experiences I have as an end user (with consumer goods companies, mobile operators, eating joints etc) the more determined I am to offer the best possible customer service for my business. Obsessing about customer service has had its share of good and bad realizations and continue to help me in connecting the dots. It was in one of these moments that it occurred to me that ‘Empathy‘ or the lack of it could be an indicator for good/bad customer service.
Sometimes while taking care of Dial-a-Book operations I find myself in a situation where I have to deliver an order (because of urgency of the situation and unavailability of other designated resources). Last such case happened 4-5 days back when a student ordered a book in afternoon on a condition that it should be delivered the same day as he had an exam next day afternoon, Fair enough. There was however a little problem in this, we didn’t have the concerned book in stock and it had to be procured locally. After a few hours and towards the end of our office hours when we managed to procure the book, we had no one left in the office to deliver it. Now came the last resort, for me to deliver them personally, when I told this at home that I’ll be at home late as I had to deliver a book, pat came a reply, “You can get it delivered tomorrow by your delivery team”. While in normal course of action that’d have been except in this case it was urgent as the customer had an exam due next day and thus wanted the book the same day.
The reason why I shared the above mentioned case was because I felt I could take care of this case because I could relate to the customer and their problem ( a student needing a book desperately for an exam scheduled next day) . Empathy with the customer had the power to drive me to go out of the way and make sure that the book is delivered the same day.
Isn’t this how this generally works?
If everybody from product designers to the customer service executives could empathize with their customers they would be in a position to offer much better solutions to their problems. On the contrary if the person in question can’t feel the pain of the customer they might not be able to offer exemplary customer experience.
What do you think?
November 13, 2011 2 Comments
I try to read a business/management book every month and happened to pick The Lean Startup‘ by Eric Ries as an impulse buy based on a recommendation on Twitter. Its an interesting book and quite different from the books that I’ve read on this subject. For one it doesn’t talk about grand ideas and other sexy start up stuff (Funding. Marketing Blitzkrieg etc) instead it focus on the most practical aspects of running a startup(esp a product startup) and building a scalable business out of it.
One of the things that struck a chord with me was this thing called ‘The Myth of Perseverance’, which essentially means falling into the trap of believing that the hardwork one is doing for their startup will eventually pay off and result in success. A typical example of this could be a team of engineers & designers working a web product, adding features and making changes regularly and thinking that they are creating value and after a period of time their product will become popular/profitable and their efforts will reap good returns.
This phenomenon is quite commonplace at the individual level as well. There are plenty people who continue to slog in the jobs routinely spending hours at stretch and hoping their designation/pay etc will improve just because they are putting in a lot of hard work.
While there is nothing wrong with doing hard work in startups or jobs it also has its fallout. The biggest fallout here is focusing too much on the hard work in hope that it will somehow work out and in doing this they delay/don’t realize if things aren’t working out the way they were supposed to and thus preventing them from making any effort in this direction. This gets particularly tricky when the business/product seems to be running but not running well enough, this illusion of progress can be really dangerous
In short, be it a job or a startup it doesn’t have to necessarily take years of hard work for finding the stairway to success.
This myth is applicable to anything from Business to Relationships. When things don’t seem to work even after doing everything you can think of, maybe its time to ‘Pivot‘
October 8, 2011 1 Comment
I’ve been wanting to write this post for quite a while now, glad this long weekend gave me enough time to finally sit on it.
A lot has changed since I started working on Dial-a-Book some 2 years or so back(then part time though). Back in Q4 – 2009 e-commerce was quite nascent and VC funding for it was not even half as common as it is today. There were just 2-3 online bookstore or e-commerce sites that looked like they could go anywhere and every week a new online bookstore was being launched. Indiaplaza was probably the most popular one.
All these existing and upcoming online bookstores were pretty much doing the same things, building a half decent website, listing a lakh odd books and giving heavy discounts in hopes of wooing the online audience. Two years into it, a couple of the popular sites at that time have grown enormously, another couple new sites have emerged and attained very good scale and almost all the remaining ones have either shut down or are doing just well enough to sustain the owners.
I’ve always been a price conscious book buyer with likings but hardly any loyalty to a bookstore. I remember when i first discovered Midlands who offered me 20% discount on all books how I moved almost all(leaving a few impulse buys here and there) my book purchases to them. Kinda same thing happened when I discovered the desi online stores, the fact that they offered even more discounts and could home deliver(for free) almost any book in a few days time was a good enough reason for me to move all my book shopping( a few books/month on average) to them.
Back then I was one of the only few people in my circle to buy books online and almost none of my friends/colleagues had much clue about the online book buying scene. The booksellers on the whole turned out to be surprisingly unaware of the developments in the e-commerce(mostly book selling) space. They hardly had any idea about online bookstores and those who did were quite dismissive of them by saying ‘Such things work in the US not in India, here people want to touch and feel before buying’, ‘These online sites give too much discounts, they can’t last long’.
Circa 2011, the same bookseller is now offering a recently released book by Amish Tripathi at 1/3rd discount, which is just 3 Rs more than the price (Rs 192) at which it is being sold at most online bookstores.
So what changed? More importantly, what led this change?
Q 1. What Changed?
A 1. The Market Dynamics
1) More for Less
Giving a 33.33 % discount on a newly released book would have been unthinkable for any bookstore, especially the ones which sells 200+ copies of each new release every month with a standard discount. But now the whole game has changed, today’s reader is exposed(and addicted) to heavy discounts, highly efficient and user friendly customer experience and the only way to survive is to offer competitive pricing coupled with widest possible range and great overall experience. Gone are the days when the booksellers used to decide which books to import/stock, how to price them and to procure locally available books on customer request (if at all) and take a week for it.
Every search on twitter(for a big online store) would reveal at least a couple tweets mentioning how people now browse books at landmark/crossword and buy them online. You can see the shift happening right there.
2) Let’s Get Online
Seeing the stellar growth of some of the famous online stores a few bookstore chains also woke up from slumber and started developing and promoting their online stores. Landmark, Crossword, Odyssey et all now have online stores where they claim to offer hugh discounts (interestingly on some books the discounts are even even more than anywhere else)
Not just this, even the smaller chains(like Sapna, oxford) and individual bookstores are online and spending money on google ads and social media to promote themselves.
Apart from these there are some publishers (like Pearson) and some distributors(like Prakash) who couldn’t resist the temptation of taking a shot and online bookselling and thus too have jumped the bandwagon and are doing their best to well, give more discounts.
Going further all the e-commerce stores which were focusing on other categories (mobiles etc) also have started adding books to their product list. In news recently was Homeshop18′s acquisition of Coinjoos
That’s not it, the grapewine has it that still more companies from different sectors dazzled by the million and billion dollar valuations of popular Indian e-commerce stores are planning to take the plunge and well start another online bookstore
3) Better Support
Thanks to the success of round 2 of e-commerce especially for books a lot has improved on the backend i.e at the end of publishers and distributors. Lots of processes have been initiated and followed regularly at the vendors end. Most distributors now stock their data and share stock reports bi weekly/weekly, publishers regularly share information about new and upcoming releases. Most of these guys are no better than sloppy govt officials who take enormous time and effort to do things but in order to survive some of them have learned to be better organized and efficient.
Q 2. What Led To The Change?
A 2. Lofty Ambitions Backed By VC $’s
A quick look at the new release section of most online book stores will put many a booksellers into depression. A new release on an average is on a 30% discount and depending on the hype surrounding it, publisher and competition it could go up to 50 % (Yes, that’s the cost which even the publishers might not give to their distributors but if you are luck that’s what a new release could cost you with free home delivery).
The logic championed first by Amazon (and thus replicated ad infinitum) is, give heavy discounts on new books to get more eyeballs/buzz and bigger volumes thus better topline and better pricing from suppliers. Repeat.
You don’t expect a regular customer to understand(or bother with) all this but seeing massive discounts on the online portals make them feel that there’s a huge margin in books and as if all this while their neighborhood/favourite bookstore chain was ripping them of by not giving as much discounts.
For a customer who has bought a book at 30-40% discount will hardly ever buy a book at 10% or no discount at all
Though as a customer this would have been a dream come true for me but being on the other side of the business I too am surprised at how its working for some sites. You can now order a 95 Rs chetan bhagat book for Rs 57-60, make it two books and its free home delivery and the book is home delivered in 1-2 working days via class A courier (Bluedart if you are lucky). It doesn’t leave much to imagination that no one, even the publisher can possibly make any money in these transactions.
A lot of small booksellers ask me “How can online sites give this much discounts when the big distributors themselves don’t get as much discount from the publishers?”
The answer more often that not lies in the fact that most sites are not focusing on making money on these transactions here but on just getting more customers. With millions of $’s in VC funding the formula is simple
- Position yourself as the cheapest place to buy stuff online.
- Buy a lot of online ad inventory from Google/Yahoo et all
- Point these ads to a web page on your site which list books at ridiculously low prices
However in all this merry making of deep discounted prices there’s a catch.
For every 5 or 10 super cheap transactions there’s 1 transaction on most popular online bookstore in which the customer ends up paying price more than the its price on a bookstore of at times even worse paying more than the MRP/MRP for Indian Market.
‘The Goddess In India: The Five Faces Of The Eternal Feminine’ by Devdutt Pattnaik (ISBN: 9780892818075) is one such title. I personally bought a few copies with Rs 395/- sticker on them and on checking online the same book (picked from the same source because I can compare the delivery time on the site) being sold for almost 4 times the price.
A possible trick here could be: Stock a few copies as per the local market MRP of book which is scarcely available, once the copies at suppliers run out, sell them at international market MRP and deliver them in 2-5 days (because its in your stock).
Such cases are more common in categories other than general books/novels, especially where chances of price comparison are less. This is clearly a minority case
This is kinda similar to what a popular bookstore in Delhi does with their super discounted sales. Buy books as per local market MRP(which is easily half or less than the international market MRP) and then sell it on the MRP pretending it to be on heavy discounts . Ex: A book with local MRP of Rs 350 is being tauted as being for Rs 1200 and after 70 % discount it comes to be for Rs 350/-. So the customer ends up paying the local market MRP (no discount at all) but might think he saved 70 % and got a great deal
Going online one can leverage efficiencies like just in time inventory, virtually unlimited list of products, pre-orders etc which in itself offers a significant advantage over traditional bookstores but selling books with -ve margins, plastering the internet(or TV) with your ads is something that cannot be competed against.
I’ve heard of some booksellers and publishers taking up this issue of excessive discounting with online bookstores and they apparently have made some progress like this popular publisher of general books has told one big online store to not offer more than 35% discount on their new releases. For every big publisher that is able to get their concern heard and acted upon there are five smaller publishers that are given a choice to shut up completely or face de-listing from the site all together.
Having said all this I feel the time has arrived for every bookseller to re-think their way of doing business and figure out how are they going to sustain themselves in these times where their much bigger and deep pocketed competitors are willing to do anything that it takes to own more customers.
And if you are beginning to start an online bookstore(e-commerce store if you will), you better have a really well thought out execution and funding plan.
August 15, 2011 No Comments