Here are some of the links that I found worth sharing
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‘
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.
First off let me acknowledge that the title of this post is a bit exaggerated and not really apt but I wanted to use it anyways. Onto the topic now.
I’ve been kinda following(not very regularly though) the Indian startup scene ever since my Slideshare days and things have definitely changed in the last year or two. There are a lot more startups(of all sorts) now ranging from deal a day sites like snapdeal to comics companies like Vimanika. It’s absolutely amazing to see people from non tech background also coming forward and creating products/services in their respective fields. However being from a tech(web) background I am particularly interested in web startups.
The majority of current crop of Indian web startups is (not surprisingly) focused on e-commerce and as with the previous wave of Indian social web startups are religiously following the same path. Somebody whom I met last month mentioned that some 20 e-commerce sites or so are registered with payment gateways every month and a vast majority of them are into selling books. Yes, that’s the “thing” I am talking about. Suddenly everyone wants to do e-commerce and guess what they want to sell? Yes, BOOKS.
While it is not at all difficult to understand why selling books online is one of easiest (especially if you are an ex-amazon) and probably lucrative thing to do what defies me is WHY everyone who sets up an e-commerce store can’t seem to think beyond books? Unless I am missing something obvious here (point me if I am) selling books(particularly to begin with) might not be the best thing these days.
Here are a few reasons why I feel selling books isn’t the best way to start e-commerce
- Differentiation: I have told this to at least a couple aspiring entrepreneurs the biggest reason why I feel an e-commerce startup should not start by selling books is differentiation. How on world will you differentiate yourself from half a dozen almost established and established online bookstores out there in the market?
It becomes particularly difficult when you are late in the book market by at least 2 years and will take at least another 8-12 months to figure out(if at all) how the Indian book market works.
- Red Ocean: Loosely related to the first point is the second point of competition. Online book market in India is easily one of the most sought after pie. From independent online retail companies to established bookchains everybody is trying to own as much as they can of this market and unless you have a significant edge in terms of vision/talent, money/resources and distribution/publishing it doesn’t make a lot of sense to join the chaos.
- Logistics: Based on my experience of selling books I’ve realized that this is highly logistics oriented business. Since the whole model is based on economics of scale one needs to sell as many books as possible(very low average cost per item). Handling lots of books means lots of procurement, stocking, handling, shipping etc. This can be a huge pain during the initial days of a startup. This problem of high logistics can be avoided by dealing in other items of higher values where despite having lesser % margins one can make good amount of money.
Having said that I think people who want to start an e-commerce business should actively consider other options which have a demand but no one else is focusing on. Though I must say I haven’t deeply thought about the business/feasibility aspect I would actually love to see some Indian e-commerce company sell the following(in a proper way with due diligence)
- Automobile Accessories/Spare parts
- Gift Items
- Food Items/Snacks
- Fashion Items
I’ve been a regular follower of Seth Godin’s blog and like almost all his posts. However there are some posts of Seth that I like way more than others. A couple posts that really caught my attention a few weeks back were on choosing the customer and training your customers respectively.
Posted at an interval of two days these two blog posts taken together offer a nice(different?) perspective of looking at things when it comes to Customer Development. Against the common notion that you should try to attract all kinds of customers Seth suggests that you choose your customers. Yes, you choose your customers for your business by your brand value proposition, pricing, customer experience and other things. All aspects of the way you run your business attracts or repels certain kinds of customers. You might wonder, why is it important to choose your customers?
It is especially important to choose your customers if you have a perspective/vision and you want things to happen according to that and not according to the terms defined by the market. For example sake, consider two product companies, one of which is very choosy when it comes to picking their customers and would rather prefer a smaller set of customers of the kind that they’d like while the other company is not really that choosy and is open to catering to all sorts of customers, the more the merrier. Assuming they both start from the same point, it won’t be difficult to imagine how differently would shape up after an year into the business. Company A which focuses of select customers will emerge out to be almost on the lines of the founder(s)’s vision while Company B which wants to get as much customers as it wants will have significant difficulty living up to the varied expectations and might just give in to the (un)reasonable demands of the majority.
Not only this, Seth suggests that businesses should also train their customers. Yes, training the customers by encouraging certain type of behaviour by rewards etc and discouraging certain type of behaviour. For ex: If you’ve priced your product slightly above the market standard then there’ll be lots of customers complaining about your price and trying to negotiate their way down(in terms of prices). Now there are two ways to go about it, one that you let customers negotiate and other is to don’t bother. Over a period of time if you follow the don’t bother policy you’ll observe how some price sensitive customers will move out and the remaining customers will get used to the higher than market price and stop complaining (This assumes that their is something that the business offers to offset the high price).
Another interesting effect that this has is that it helps in building a culture among your customers that’s decided to a large extent by your terms and not the markets.
A couple days back the food giant Nestle(after being targeted by Greenpeace) stepped on the wrong side of Social Media by posting rude and insensitive status updates and comments on their Facebook page. As expected, updates like this
and comments like this
did not go down well with their existing fans and those who checked the page because of the brouhaha. Therefore, Nestle suddenly found itself in middle of another debacle courtesy inappropriate management of their Facebook page. The person handling their Facebook page obviously had no idea (nor does he/she have any now) of the blunder he/she committed.
Now that the mistakes have been made and realized, what next? I’ve read as much as ten posts by Indian and International bloggers/social media whatevers essentially either link blogging what others are saying or making the most obvious and superficial suggestions how the tone of the messages should not have been rude etc. Interestingly none of them offered a direction if not a solution of what can a brand do if it happens to run into a situation like this.
Possibly, it’s because none of those who wrote about the Nestle Crisis have ever managed a single Fan page by themselves.
Keeping that aside here’s a quick list of things that I would have done had I been in charge of the Fan page
( I have intentionally limited the scope of discussion to Facebook Fan Page and Off course I don’t expect everyone to agree with my method)
1) Admit you have made mistake(s):
One of the best ways to start your firefighting plan is by acknowledging your mistake and maybe promising that it won’t happen in future. A big brand admitting they did something wrong and apologizing gives everyone the signal that the brand is conscious of what it is doing and sets the expectation right. Also, most aggressive critics and fans turned critics an ego boost from this.
2) Remove offensive content:
Yes, remove the content that offended people. Irrespective of what others feel I am a strongly believer that you should remove offensive content to avoid it offending even more people. An offensive status message will keep getting more eyeballs with time and it’s best to take it out of the loop.
3) Change the Landing Tab:
This is what one gets if they go to the Nestle Facebook page
The deal here is that it shows you the same things irrespective of the fact whether you are a fan or not. This landing page could temporarily be changed to some other tab, say info.
Facebook Default Landing Tab settings.
4)Turn of “Auto expand” comments:
Slightly below the default landing tab drop down is another option that let’s you configure if the comments
on a status will be expanded by default(with top few comments listed) or will they just show up as *x comments*, only on clicking which one can see the comments. The idea here is to reduce the visibility of negative content so as to reduce others doing the same thing.
These are just a few things that can possibly be done to control the situation from flaring further and in case things go really out of hand temporarily stop fans from posting comments to your page all-together.
All the points mentioned above are just for firefighting a Nestle like crisis on Facebook and are obviously not the perfect solution. Some people for example might have issues with removing the offensive content or making it less/easily visible but then a temporary fix needs to be done to avoid things from spilling over. Also, once the basic firefighting is taken care of the brand must get back to doing the right things and work its way out of the Crisis.
This is a classic dilemma that many entrepreneurs(especially the offline one’s) are likely to run into. Customers as we all know come in all shapes and sizes(and mindsets). While there will be some customers who will talk nicely to you and your employees, pay their bills on time and offer you a piece of advice or feedback whenever needed, there’s also a bunch of customers that’ll act as if they are doing you a big favor by using your product or services, they’ll negotiate endlessly on the price and keep getting into endless debates about the most minute(and irrelevant) issues possible.
As an entrepreneur and consultant both I too have run into the thought of segmenting customers into good,bad and ugly but I am not completely convinced if that’s such a good idea. I mean on one hand there’s a thought of optimizing the whole thing for a better ROI on other hand there’s this idealistic thought that customers/clients should be treated fairly and equally irrespective of their spending powers and other behaviors. I for sure would like to get a fair/equal treatment in all the products and services that I use irrespective of the segment I belong to.
If you are committed to offering a delightful customer service the non-segmentation of your customers is highly likely to come in your way. As pointed by Seth Godin here
If you’re going to be obsessed with delighting customers, it’s a lot more efficient to focus on customers that are able to be delighted.
A case in point being if a particular bunch of customers is impossible or way too difficult to delight/please why waste your resources on them when you could focus ’em on some other set of customers that are more likely to be delighted by what you are offering?
A few things I could think of that one needs to keep in mind if such a situation arises are
- Is the customer bad or your offering?
A situation like this can also be a opportunity to give your offering another in-depth look. Maybe the customer is right and there’s indeed a scope for offering a better solution at the same or reduced price or maybe the customer service offered isn’t up to the mark. So before branding a customer as a bad apple, give a second thought to their feedback and see if there’s a genuine problem there.
- How would it affect the Word of Mouth?
While not giving the same time, attention etc to a not so good customer might be a good utilization for your resources it might have a spill over effect. In cases like these it is also pragmatic to ensure that your segmented behaviour will not spiral into a bad WOM loop. To avoid that ensure that this bunch/segment are not influencers/thought leaders or highly connected individuals from your target segment. For ex: If you are targeting a product or service aimed at doctors and for some reason you decide to segment them, try to ensure that your segmentation policy will not spill over to other doctors and doctors as a community tend to be highly connected to each other
- Customer Segmentation != Spending power segmentation
While you’ll find plenty of real life instances in which retailers/suppliers and many more tend to treat customers with high spending powers differently, it’s not the most wise thing to do. When I started this discussion though I included “paying bills on time” and negotiation I never mentioned spending power as the deciding factor. I strongly feel segmenting your customers based on just their spending power isn’t such a good idea
- Do not do unto others as you would expect they should do unto you
One should always keep “The Golden Rule” in mind before taking any call on customer segmentation. This will most certainly save you from some bad decisions
What do you think about treating different customers differently?
Building a brand, product or an idea is like raising a child. You need to nurture and protect it during its early days and slowly set it free to grow. Sounds simple and obvious? Trust it me it’s not, at least for most people.
I’ve seen numerous cases of product(primarily web) founders, small businessmen and more falling into the trap of holding their product/business/idea too close to their hearts to let it grow, grow beyond them. Things are quite easy (in this context) during the initial stages with people putting their blood and sweat into their business and helping it stand on its feet and start walking. The real problem occurs in the next stage in which the business needs to start running not just walking.This is the stage where all sorts of conscious and unconscious forces come into play that tend to prevent the owner(s) to from letting their business/idea take the leap.
During the initial phases the business/idea is known more by the people behind it, both are synonymous with each other and that’s all that there is to it because the business is mostly driven by it’s promoters/founders, it’s known mostly in the promoters’ circle of friends and is yet to grow and have an independent existence of it’s own. Once the business has firm grounding and more people start nurturing it directly or indirectly the pace and scope of its growth depends on how the core group of promoters loosen their strong ties with it.
Essentially it’s all about loosing the tight control and dependency that once the business had on its promoters because these factors now become the limiting force in its growth. The conflict that thus arises is a peculiar one in which the promoters still want to be involved as much as they were some time back in almost everything related to the business, while the business itself strives to outgrow its promoters. This is the stage where like a growing child the business needs to venture out, meet new people, develop new relationships, try new and different things not necessarily within the scope of its founders, in short this is the stage where the business needs to start getting a life of his own.
For some businesses it might mean raising funds, for some it might mean getting more people on board (not necessarily as employees who merely execute the promoters plans/ideas) and outsourcing a part of your business to someone else. The idea of loosing control is what troubles most promoters but the hard fact is that in order to make your business grow beyond you, you need to loose some control and this is what smart people realize.
The goal rather than trying to have your business as integrated as possible with its founders should be to let it loose as early as possible as only then the business can have a life of its own and it can grow into something big, much bigger than its promoters.
Most people start their businesses in partnernships/collaboration with some one they know. It could be a family member, friend, relative or just a known too. Trust is the first thing that people look for before getting into a venture with other things being what the other person brings to the table; money, connections, skill set etc. It’s commonplace to find businesses being run in a fashion where one or more partners put the money(or maybe contacts) and other(s) put skills and effort(or maybe contacts).
Due to inherent nature of the factors in place(time, effort etc), things get a bit difficult at times as contributions start to vary from what they were initially agreed upon. For example: If two people start a business with one person putting the funds and infrastructure and the other bringing in clients and contacts needed to get the job done. Now in this case it’s easy to quantify the funds spent on infrastructure and other activities but it’s a bit difficult to quantify other inputs like efforts, time spent etc. What further makes the puzzle difficult is when both partners feel they are doing their share of the job as initally agreed upon.
A situation like this can easy reach a deadlock with both parties proclaiming to be doing their bit of the business. What further makes matter worse is if both the partners have agreed upon equal share in the profits. The matter gets really complex if say the guy who was supposed to get business and contacts with his effort isn’t doing his part efficiently but believes he is doing it right and thus deserves and equal share in the profit(which they make due to the efforts of the other partner who was just supposed to put funds for infrastruce etc) as mutually agreed upon initially.
Human Ego is another factor in play in situations like these as even though a person might know that he isn’t putting in the required effort in the job but his ego will prevent him from accepting it and agreeing to get an unequal share in the profits. I’ve had a few direct and indirect experiences in this regard which have forced me to think of a way to reduce the possibility of such situations.
A couple possible solutions that I could think of are
1) To partner with someone who is as equal as you are
If both partners are equal in most respects like finances, contacts etc then I think the scope of running into situations where one feels the other isn’t doing enough is reduced. By quantifying one’s contribution in terms of money, contacts or other resources, the factors which could cause confusion/dissatisfaction are reduced. Also, I feel with equal partners it’s a bit easy to find out and accept if one isn’t doing his bit properly
So it’s a good idea to find out in the start what the other person is bringing to the table and ensure that it’s not too high or too low for your contribution.
2) Decide on a profit sharing model based on one’s contribution:
In case of partners with unequal inputs, it’s a good idea to decide on different profit sharing models based on situations with varying contributions. For ex:
a) For every deal where person X does this and this and person Y does this, X gets 66% of the profit and Y gets 33%
b) For every deal where person X does this and person Y does this and this, Y gets 66% of the profit and X gets 33%.
c) For every deal where person X does this and this and this and Person Y doesn’t do anything, X gets all the profit and vice-e-versa.
I feel predeciding things like revenue/profit sharing in various situations where there’s a possibility of unequal contributions will serve as a base and reduce the number of potential conflicts.
What do you think?
A couple of days back I got to know about a new book titled “Free: The Future of a Radical Price” by Wired Magazine editor and author of bestseller “Long Tail” Chris Anderson. Next thing I got to know was true to it’s name “Free’s audio book is available for download for free“. While downloading the audio book I was wondering if the book is free just for audio format or will it’s e-book also be available for free ?
While browsing the web today I found out that Free’s e-book is also available for free. Excited, I clicked the URL to get my hands on the free e-book.
But to my unpleasant surprise, I ran into this
Frustrated by this(hypocrisy?) I searched around to realize that the not only is the e-book restricted to just US, it’s just free to read and not download. There you go again.
When I got to know about the free audio book I decided to buy a paperback copy for myself soon but given the weird policies regarding book’s availability in other formats I am not sure if I’ll be doing that anymore.
While Chris Anderson & Co figure out what’s the right way to market the book without screwing their economics you can either listen to it’s audiobook or read the book on Scribd(using a DNS proxy like hidemyass.com in case you aren’t in the US) or read it here.