Competitors join hands to tide over supply-chain challenges amid lockdown


April 6, 2020

Towards the end of last week, at least three such tie-ups were announced

Written By Shubhomoy Sikdar

While such a strategy is not entirely unprecedented, experts see the crisis as an opportunity to focus on each other’s skills

Businesses, much like everything else, continue to reel under the impact of Covid-19 and the resultant preventive lockdown. Tie-ups among brands and corporations operating in seemingly unrelated or even competitive sectors seem to be one way of getting around the supply-chain challenges.

While such a strategy is not entirely unprecedented, experts see the crisis as an opportunity to focus on each other’s skills and customer base to not only create businesses for themselves but also to keep things moving. This is imperative, particularly when supply chain bottlenecks in a curfew-like condition threaten access.

A by-product of this strategy is enhanced brand visibility and the message that it cares for the consumer —something that is expected to linger on even after the crisis subsides.

Towards the end of last week, at least three such tie-ups were announced: Ride-hailing app Uber said that it would deliver essentials for grocery delivery firm BigBasket. Marico joined hands with delivery apps Swiggy and Zomato to enable the consumer to use the platforms of the two rival foodtech companies to access products under the FMCG player’s brand, Saffola. Similarly, ITC partnered with Jubilant FoodWorks, the master franchisee of the Domino’s brand in India, to deliver essential commodities to the consumer’s doorstep.

There are other associations also triggered by the Covid-19 crisis such as Apollo Hospitals’ partnership with budget- and mid-scale hotel chain OYO, Lemon Tree and Ginger Hotels to set up 5,000 isolation rooms.

These are temporary collaborations among players in different businesses. Rewind a little further and we have the case of direct online grocery competitors Amazon, BigBasket and Grofers, with the former’s widespread delivery business clashing with the other two, coming together to give a message of solidarity with the #TogetherForIndia film. The film was created by merging clips containing bytes from delivery executives working with these players along with one by online medicine app Medlife.

So are we waking up to a new era of co-opetition? Or are such steps more tactical in nature? In other words will this kind of cooperation among rivals wither away as the Covid-19 threat subsides? There is no one answer to this —as they say, we look at the same picture but see different things.

According to Ananth Narayanan, CEO and co-founder of Medlife, co-opetition is indeed the mantra of the moment. “When you have certain sectors with a temporary surplus of manpower and others facing a staff shortage, this is the best way to make things work as well as control expenses,” he says.

Ravi Desai, director, mass and brand marketing, Amazon India, weighs in on the larger message. “The organic reach and engagement received for this message is a testimony to the spirit in which the message is being received. There may be delays in deliveries during this time, but people are joining in to recognise the effort and commitment of the heroes on the ground,” he says.

Under normal circumstances — as chief executive officer of retail consultancy Third Eyesight Devangshu Dutta puts it — such tie-ups do not happen easily because the companies are moving in their own directions and a collaborative turn depends on a whole lot of things going right. But a crisis gives such collaboration a certain impetus.

Author and corporate advisor R Gopalakrishnan shares how a crisis led to the coming together of two competitors in the late 1920s and laid the foundation of what is one of the biggest corporations in the world — Unilever. “The British company Lever Brothers making soaps and the Dutch company Margarine Unie manufacturing margarine were not competitors in the marketplace, but were competing for raw material on the supply side. The suppliers of vegetable oils and animal fats needed by both the players saw the competition as an opportunity to drive up prices and both the companies were being exploited. The players decided to go for a co-opetition and merged. Now they could control the raw materials because the vendors found that they were now one huge buyer,” says Gopalakrishnan, who is also a former vice-chairman of Hindustan Unilever and a former director of Tata Sons.

More recently and closer home, there were reports of automobile company Mahindra and Mahindra initiating talks with Ashok Leyland, Renault and Hyundai to supply its electric powertrain to these peers given the recent policy push towards electrification.

It is also not unusual for industry bodies to talk in one voice whenever such crisis happens — be it the auto industry demanding relaxation in the wake of BS-VI compliance orders or the broadcast industry in the wake of tariff revision almost a year ago or the plastic manufacturers during talks of a ban on single-use plastics. However, in the current situation, co-opetition assumes a different significance, believes Harish Bijoor, brand guru and founder, Harish Bijoor Consults Inc.

“The instances of co-opetition we see today is a model pushed to the fore to create a positive image for the industry of doorstep delivery. Under the circumstances, the delivery-at-doorstep business itself is going to be viewed with some degree of consumer trepidation. It is important for the industry to stand together and make the right noises,” he says.

Siddharth Shekhar Singh, an associate professor of marketing at the Indian School of Business, Hyderabad and Mohali, offers a slightly different perspective as he links with this the coming together of online and offline. “The situation has presented the online players an opportunity to get rid of a villanised image for they have been accused of predatory marketing practices and artificially reducing prices. So together they are trying to balance that in the public perception conveying that online has its own uses.”

And you don’t always need a crisis for competitors to come together or take a relook at existing arrangements. Take Procter & Gamble (P&G) and Walmart. The two came together for data sharing and collaboration in 1987 to share sales data in real time, lower certain costs for both. This whole “taking up an association to the next level” is said to be the outcome of a somewhat unscheduled, canoe-trip meeting between Walmart founder, the late Sam Walton, and corporate living legend Lou Pritchett, who was then a vice-president with P&G. “In those days, we desperately needed Procter & Gamble’ products, whereas they could have gotten along just fine without us,” Walton recounted in his autobiographical Sam Walton: Made in America.

Source: business-standard