admin
June 16, 2015
Prasad
Sangameshwaran, The Hindu-Businessline
Mumbai,
16 July 2015
This
was a business book launch that was billed as the big debate between
retailers and e-tailers. On one side was Karan Mehrotra, co-founder
and CEO of LocalBanya.com. At the other end was Damodar Mall,
CEO, value format at Reliance Retail, who was present in his role
as the author of Supermarketwala, secrets to winning consumer
India. Keeping things from escalating into an exchange of blows
was B S Nagesh, Indian organised retail’s original poster
boy, who was moderating the book launch-based discussion.
As the debate progressed, Nagesh suggested that the delivery boys had a large role to play in the overall retail experience. Especially, in the case of e-tailers, they were the face of the brand, he said. There were suggestions that companies could work harder at bring in the ‘wow-factor’ at the last mile.
Sitting in the audience amidst CEOs and commoners was Amish Tripathi, the author of the highly successful Shiva Trilogy who was soon going to be launching his next series focused on Lord Rama.
Exactly a week later when Amish’s book launched at the same venue, it seemed like someone was all ears when Nagesh was speaking a few days back. During the deliveries of the book that began from midnight, e-tailing giant Amazon got Amish to personally deliver copies to some of their lucky customers who had pre-ordered the book. “Some came to receive the book in their nightwear and quickly went in to change and come back to take the delivery,” says Tripathi. Ask him whether the idea emerged from the discussion a week back, and Tripathi a former CMO from the financial sector takes no credit for it. “To be honest, it was Amazon’s idea,” he says.
Some laud Amazon’s idea, others are quick to dismiss it as a marketing gimmick. However, there is one thing that cannot be denied. Amazon went to an area where few retailers dare, to create a difference at the point of delivery. Increasingly as e-tailing boils down only to the lowest price, this is one area where many could make a difference in the times to come. As Tripathi points out, “Because of social media customers share such experiences with their friends and it goes viral. It also adds a positive atmosphere to the delivery and the product.”
Delight and customer loyalty
A report titled Insights Into Exemplary Customer Service, by customer loyalty experts AIMIA and TRRAIN (Trust for retailers and retail associates of India) highlights the fact that “in a typical market environment, exceptional levels of customer service are a defining condition for exceptional levels of customer loyalty.”
Still, instances like the Amazon are far and few in between. Ever here, it is difficult for retailers to replicate the experience if the deliveries run into thousands, if not lakhs. Then you just have an army of delivery boys doing the same plain vanilla job. In the AIMIA and TRRAIN report, industry experts like Ajay Kaul, CEO, Jubilant FoodWorks, that manages the Domino’s and Dunkin Donuts franchise in India says, “Our consumer facing staff are literally our soldiers at the front, at the moment of truth. But they also end up being unsung heroes as they tend to get lost in the numbers and hierarchy.”
Retail industry experts like Devangshu Dutta, founder, Third Eyesight, a Delhi-based consultancy point out that given all the constraints that the retail industry faces, due to infrastructure hurdles or otherwise, most companies are merely focusing on making their product or service deliveries friction free. “As of now just achieving friction free deliveries itself is a wow,” he says. Unfortunately that’s a medium goal, but unless that service standard becomes the norm, companies will not push themselves out of the comfort zone and go for the wow. He adds that most companies are now only striving for least-time and least-cost based delivery parameters.
But it is not that retail associates are going to remain unsung heroes for a long time. Nagesh’s TRRAIN has an annual awards to honour excellence at the retail level. Then companies also have their own recognition. Dev Amritesh, president and COO, Dunkin’ Donuts India points out that his chain celebrates birthdays of its store employees every month and every person entering a new role is given a symbolic “key to show that there is a new opportunity waiting to be unlocked”. New employees are treated to lunch by seniors in the first day of their job and so on, he says.
But as Dutta points out, ultimately exceptional levels of service happens out of a delivery boy/girl’s personal willingness to go beyond the call of duty. Certainly, no one will debate that.
(Published in The Hindu-Businessline .)
admin
June 15, 2015
Ankita
Rai, Business Standard
New
Delhi, 15 Jun 2015
Travel,
books, electronics, fashion, classifieds and now local services
– e-commerce has disrupted the status quo in almost every sector.
With Amazon venturing into grocery (Kirana Now), Snapdeal entering
services and Flipkart ready to follow suit, on-demand services
appear to be the next frontier for competition in the crowded
e-retail space.
Look at what’s in the pipeline. Amazon recently launched Amazon Home Services in the US market. It is expected to launch a similar service in India soon. Online marketplace major Snapdeal has gone a step further with its service platform to include utility payments and a marketplace for financial services besides home services. Given the huge investor interest in the category, a handful of highly localised home services start-ups (such as UrbanClap, LocalOye, Taskbob and UrbanPro) have also thrown their hats in the ring .
This is a big shift, mind you. From being online marketplaces for products you are now moving into services, you are aggregating photographers and tutors and handymen, and organising a highly fragmented but huge market. Look at some numbers. The homecare and installation services market in India is estimated at Rs 90,000 crore; the laundry market at Rs 200,000 crore annually, of which 95 per cent is unorganised.
You can see why e-commerce companies are muscling in, but does it really help the local guy who would like to offer a highly personalised service? Apparently yes, it broadens the prospective client base and gives him a chance to scale up quickly. Experts say an entry in services can also help the large horizontal players trim costs and improve margins. The incremental cost of delivery of services is lower and can potentially give better returns on investment.
Says Devangshu Dutta, chief executive, Third Eyesight, "A search for margin improvement and a desire to be ‘the e-commerce of everything’ are the prime drivers to enter the services aggregation space.
"Merchandise e-commerce has moved from inventory-led models to marketplaces, but once all costs are worked into the equation, even these are margin-negative, if not for the marketplace then for the sellers on the marketplace. Aggregating more services would be a way to generate extra margins and also defray customer-acquisition and retention costs over a wider base of businesses."
For large horizontal players, the ability to cross-sell services can lead to better margins compared to niche players. Also local services can be seen as a differentiator. It allows e-retailers to not just target the retail share of the consumer wallet but the entire consumption basket. "Why would they want to limit themselves to just retail products when there is so much of value-add they can provide through services," asks Pragya Singh, VP, retail & consumer products division, Technopak.
Jabong.com co-founder & MD Praveen Sinha, who has invested in two local services start-ups, Zimmber and Wassup, says, "Local services is the next phase of ecommerce and will see huge growth provided companies are able to execute it well. However, operational complexity is the biggest challenge here."
So what are the challenges an e-commerce marketplace is likely to encounter when it decides to aggregate services? How should it tweak its supply chain network to take advantage of the growing demand for hyper-local services?
The bigger the better
An eretailer can deliver a product to any location from its centralised warehouse through courier partners but the same theory doesn’t work in services. Execution is a challenge as you cannot replicate a successful model in many geographies at the same time.
That said, big horizontal retailers with their established supply chain networks have an advantage over smaller players/start-ups in the category. Consider Snapdeal, which currently offers home/installation services, and financial services through RupeePower. "The home and installation services business is an extension of our home and living category, offering an assortment of 10 lakh products and end-to-end home services that include furniture installation, electrical, plumbing, pest control and professional home cleaning services," says Saurabh Bansal, vice-president, home, Snapdeal.
Online classifieds platform Quikr is also working on a service offering. Pranay Chulet, co-founder and the CEO of Quikr, says, "We are launching a sub-brand called Quikrservices, which will enable better interaction between buyers and sellers. Services is a different ballgame. The availability of buyer and seller at the same time is important. It is not as simple as shipping a product to the consumer’s doorstep."
Experts reckon services can be cracked but only at scale. Simply put, unless you are very large in size you cannot hope to provide customised service. More volume means better customisation and competitive pricing. "Service providers are also able to get more business from a platform, so they can offer better prices," adds Chulet.
But scale can only solve 50 per cent of the problems. Delivering a standardised service experience is a big challenge. Says Debadutta Upadhyaya, co-founder, Timesaverz, a mobile marketplace for services, "Standardisation of processes, skill verification, background checks and soft skill training of service partners are a must." Timesaverz is present in Mumbai, Pune, Bengaluru. It charges a 20 per cent commission from service partners for every transaction and saw 10x revenue growth last year over the previous year.
On its part, Snapdeal has tied-up with service providers such as EasyFix and Hicare with proven capabilities. "We are working to ensure that professionals who perform end-user tasks are trained in customer communication and service delivery," says Bansal.
Most players are making extensive use of technology to connect a customer with a service provider who is best suited to service her unique need. In a way it also makes the local services business more transparent and efficient, says Varun Khiatan, founder, UrbanClap. UrbanClap is an online marketplace that provides services in 20 categories including personal services and events.
However, service is not an easy space to operate in. Aggregation of local services are open not only to ecommerce players, but also to search giant Google on the one hand (through search results and ads) and local aggregators (sector-specific news bulletins in a city like Noida). "Most domestic services, for instance, are more high-involvement than merchandise buys and the last-mile, last-minute connectivity with the customer is where the relationship is made or broken. In such cases local aggregators with a hands-on approach will have a competitive advantage," says Dutta.
Net-net, while search and service aggregation may appear a low-margin game, over time, technology-powered large e-commerce platforms have the potential to leverage the high volumes it offers and organise this highly fragmented market in the process.
Hyper local isn’t easy: Ashvin Vellody, partner, management consulting, KPMG India: At present, Indian service industry consists of 64.8 per cent of the total Indian GDP, of which e-commerce occupies around 4 per cent. As people move across cities, traditional neighbour-hood and referral networks, which connected consumers with local tradesmen, have broken down. Online services marketplaces are quickly filling this space and finding resonance with the digitally-enabled consumer. However, this model is not without its challenges, the largest of which is limited supply of skilled and certified tradesmen, who could deliver quality services. India has a high number of semi-skilled workers but lacks quality due to chronic under investment in the development of such trade-skills and vocational education. Therefore, many marketplaces would have to spend considerable amounts of time, effort and money in building/upgrading tradesmen skills, such as language and customer orientation. Online marketplaces also have to reach out to tradesmen in each city and invest in enhancing their capabilities before registering them on their websites. The ability to scale up across cities quickly, while maintaining uniform quality standards and competitive prices, is going to a key factor determining success or failure.
(Published in Business Standard.)
admin
June 15, 2015
Raghavendra
Kamath, Business Standard
Mumbai,
15 Jun 2015
IN
STEP WITH GAP
As GAP struggles with flailing customer loyalty in markets across the world, it is looking to script a new story in India. It has opened its first store in India in partnership with Arvind Lifestyle, five years after rival Zara did and a few weeks before H&M announced its plans. The combine has said that it will invest Rs 400 crore in 40 stores over the next five years.
Internationally it has been a rough ride for GAP. Its eponymous brand sales fell last year. Sister chain, Banana Republic, had a flat sales line. Only Old Navy, the value brand saw a five per cent jump in sales. GAP has drawn flak from global media and the analysts’ community for diving headlong into an ambitious expansion plan for Asia even as its brands lose their cool quotient back home.
However the company is undeterred. It has 100 stores in China and last month, it opened shop in New Delhi’s Citywalk Mall, right above that of its rival, the Spanish fashion clothier Zara. Oliver Kaye, business head-GAP India, Arvind Lifestyle Brands, says, "We believe that we have a great offering with our core denim category which forms the heart of the brand. Going by what we’ve seen over the last few days from customer’s shopping, this meets our expectations." Under the franchise arrangement that the two have drawn up, Arvind will invest in infrastructure and GAP will provide support in terms of brand name, merchandise, layouts and so on. To begin with, only the Gap line of products will be brought in and a decision on other brands will be taken later.
Apart from denim, "the second category which will be driving sales for us is kids and baby since there’s a lacuna in the marketing for good products at the right prices," says Kaye. Hoping to leap ahead of its competitors, despite a late start, GAP plans to focus on tier one cities in India, at least to begin with. J Suresh, managing director of Arvind Lifestyle Brands, says "GAP will retain its premium positioning in India and a buyer will find the same stuff here as she may get in a New York or London store."
Devangshu Dutta, chief executive of Third Eyesight says brand awareness and brand desirability are the foremost things for a premium brand to be successful in India. Zara, GAP and H&M are the brands which were popular even before they set up shop in India.
GAP hopes to cash in on the latent awareness the Indian buyer has about its brands. The Indian merchandise will be priced on the same lines as the US one which positions GAP as a premium category brand. Suresh says, "Pricing will be similar to home market though slightly lower given the Indian consumer." A GAP shirt will cost between Rs 2400 to Rs 3300 piece as compared to Arrow which costs around Rs 1900.
How does GAP view the Indian market? "There is big appeal for American fashion and lifestyle which is aspirational," says Suresh. The brand is also banking heavily on Bollywood which has shown a penchant for its brands – recently Kangana Ranaut was seen sporting a GAP T-shirt in the recently released Tanu weds Manu and Shah Rukh Khan has been seen wearing the brand in several films. GAP does not pay to be starred in films, however, the company says. "Shahrukh Khan has played a critical role in driving awareness for the brand. This helped us in a way, as we saw customer reactions before the brand launched. So I’d say it does help us though we don’t think we can attribute a number at this stage" Kaye adds
Arvind will source the merchandise from GAP’s global sourcing to which they will have a direct access. It is also planning to launch GAP on Arvind’s e-commerce platform by November this year. "We will not offer discounts. We will compete with e-commerce portals with our brands and merchandise," Suresh says.
GAP’s Spanish rival Zara, which is in joint venture with Tata’s Trent, has grown pretty strong in the country while Swedish retailer H&M is in the process of setting up stores. Another rival Uniqlo of Japan is contemplating its entry into the Indian market. Many believe that one big mistake that luxury clothing brands make in India is pricing.
According to Prashant Agarwal, joint managing director of Wazir Advisors, "If you are only premium, market shrinks. There are people who are ready to pay Rs 2400 to Rs 3300 for a shirt. But it will leave out many shoppers," Agarwal says, citing the example of Zara which has launched products in the price range of Rs 1200 to Rs 3000.
Devangshu Dutta says that if brands such as GAP and Zara and others consider India as a strategic market, they should produce India-specific products. "There is an advantage for GAP in that it has a manufacturing base in and around India," he says. That is a call the company may have to take soon.
(Published in Business Standard.)
admin
June 10, 2015
Varun
Jain, The Economic Times
New
Delhi, 10 Jun 2015
Snapdeal
is starting a two week advertising blitz for a home decor sale
and has asked vendors for higher margins to fund the ad campaigns.
In an email to its sellers, the online marketplace sought to raise its margins by 30% during the event and has asked them for a margin of 21% during the upcoming sale, "Decor Carnival", against the current margin of 16%. Snapdeal claims it is organising the biggest-ever Decor Carnival from June 15 to June 30.
According to a mail accessed by ET, Snapdeal is planning to spend big on this promotion for the entire fortnight, and the traffic on the site is expected to be higher than previous occasions. Justifying its decision to raise the margin by 30%, Snapdeal told sellers: "To create a new milestone in terms of sales, we would require extra promotion fee on the value of all your home decor orders taken on website during these days."
When contacted, a spokesperson of Snapdeal said: "Any change in commercials for a specific product line is done in a fair manner by involving all sellers. For such promotional days, our sellers have an option to stay out of the promotional period if they wish to. The promotional days provide a great opportunity to our seller base to increase their sales manyfold because of the increased level of marketing and visibility we provide in this period."
Flipkart, eBay and Jabong declined to comment when asked whether they also ask their sellers to increase margins during such activity. An email query sent to Amazon did not elicit any response till the time of going to press.
However, some of Snapdeal’s partners feel that a 30% increase would be huge burden on them. "We work on very thin margins. Participating in this sale for better revenue by giving 30% extra is not making much sense," said a partner who did not wish to be named.
Another home decor supplier on Snapdeal’s platform said if they back out of the sale, they will not be allowed to sell their stuff during the upcoming activity.
Experts ET spoke to, however, said that this could be a one-off instance and they have never come across a situation where an online marketplace has asked suppliers to give them better margins.
Devangshu Dutta, chief executive of retail consultancy firm, Third Eyesight, feels that for ecommerce players operating in India, asking for better margins during promotional event is not "normal".
"It is not a routine exercise because their business model so far has been about acquiring customers and for that they have been spending huge amounts of cash. Their current margin structures are untenable and not sustainable," said Dutta.
Ratul Ghosh, former head of strategy at eBay and an ecommerce industry expert, admits that he has not heard of something like this before. It is somewhat unusual because when a seller signs up, he does with a particular understanding.
"How do you expect the seller to give a better price after giving Snapdeal 30% more?" said Ghosh. In my opinion, this is not seller-friendly. Also, Snapdeal is not guaranteeing higher sales to every participant, he said. Snapdeal has urged its partners to go all out to make this campaign a success. "To ensure that the campaign is a super success, we will need blocked inventories from all our partners," the mail said.
(Published in The Economic Times.)
admin
June 8, 2015
Sonali
Chowdhury, Business Standard
New
Delhi, 8 Jun 2015
Did
you know that Indians spend 8 per cent of their daily consumption
on gold, only marginally behind medical expenses and education?
This statistic revealed by the World Gold Council in a report
highlights the popularity of the yellow metal in India. Gold jewellery
makes up for 80 per cent of the Rs 3,00,000-crore gems and jewellery
market in the country. The organised segment accounts for a small
share of 22 per cent, while the unorganised space, comprising
local and independent stores, hog an overwhelming 78 per cent
of the market.
This means two things – one, most of the time the consumer is not sure of the quality of the gold jewellery she purchases; so there is a certain degree of "helplessness” associated with every purchase; and two, since she has no means of knowing what she is actually getting for the money she is doling out, she relies a lot on the recommendation of the jewellery shop owner. In most cases, one finds that Indian households have a family jeweller, who serves them over generations, and who is mostly sought out during family occasions.
Evidently, the relationship is not exactly transparent and in
the absence of a better method, transactions are undertaken on
faith than anything else. And that for Titan Company’s jewellery
division, Tanishq, is an opportunity – an opportunity to showcase
the systems and processes the jewellery retailer has put in place
over the years and what the resultant professionalisation of its
services means for its customers.
ADVERTISING
To this end, the company has launched a television campaign comprising four commercials conceptualised by Lowe Lintas & Partners. Each of the films features a member of the sales staff from the brand’s outlets in Bengaluru, Delhi, Kolkata and Jaipur, who narrates what is billed as a real life customer experience to highlight the value proposition offered by Tanishq. These include the promise of great value (that accrues from the low making charges starting at 8 per cent), the promise of best exchange value, the promise of transparency and the promise of purity (almost all Tanishq showrooms across the country use the karat meter, non-destructive means of testing the purity of gold). "A jewellery brand has to be multifaceted. One of the facets of the brand is the retail officers’ relationship with the customers. This campaign is about why the brand is so special to its customers and the revelations at the moment of truth. This campaign is also in line with what we have been doing so far – celebrating relationships," says Deepika Tewari, general manager, marketing, jewellery division, Titan Co.
Indeed, most of Tanishq’s advertising so far has focussed on relationships – be it between a husband and his wife or parents and their daughter/son etc. Even when it has launched a tactical campaign – say, promoting discounts on diamond jewellery – it had tied in a catchline that said lekin pyaar mein koi kami nahi (but there is no less love). Its 2011 ad, designed to create awareness and to demystify diamonds as a jewellery category, revolved around a husband-wife story played out by Hindi movie actors Amitabh and Jaya Bachchan. Another recent campaign, ‘Pehla Heera’, has focused on customers buying diamond for the first time and the emotional roller-coaster they go through during what they perceive to be a ‘high-value’ purchase.
But with consumers evolving in their tastes and preferences, Tanishq feels the need to broadbase the appeal.
"So far, by focusing on relationships, Tanishq has managed to attract young buyers and differentiate itself from the competition. But in the long-term it has to win over prospective customers who have not stepped into its stores and this must be achieved fast," says Devangshu Dutta, chief executive, consulting firm Third Eyesight.
While the brand is admired for its quality, design intricacy, compelling campaigns and superior retail experience for over 19 years now, not many people are aware of the level of sophistication it has brought into the retail part of the business. "The practices followed at Tanishq stores are of a certain standard and matters a lot to customers. But there was a perception that the brand is beyond the reach of most people. It is high time we communicated the plus points through the experiences of our staff, in a more interesting way," says Rajesh Ramaswamy, group creative director, Lowe Lintas. Tanishq, currently, has 174 stores exclusively for jewellery sales and it plans to add 30 more stores (mostly franchises) in FY16. During FY15, the jewellery segment of Titan grew 9.2 per cent to Rs 9,430 crore. During the fourth quarter ended March 2015, jewellery sales declined 15.3 per cent to Rs 1,827 crore.
Of course, this is not the first time that a brand has touched on these aspects of jewellery marketing. In 2012, Kalyan Jewellers attempted to bring transparency with detailed price tags mentioning making and wastage charges. This helped the brand to create a loyal base of customers who knew what they were paying for. "Tanishq may be reacting to the heightened noise levels from other jewellery makers about making charges, purity testing and gold versus stones, but you must give them full marks for retaining the brand’s confident tone of voice," says Kiran Khalap, co-founder of brand consultancy, chlorophyll.
(Published in Business Standard .)
