ValueMax

Internet adoption has seen the evolution of some usual suspects across most geographies and one of the key category is that of Digital Marketplaces. A portal which successfully brings together the supply and demand side forces together.  In India we have seen the growth of such marketplaces for jobs (Naukri, Monster etc) , marriages (Bharatmatrimony), finance (Deal4loans, BimaDeals etc),deals (SnapDeal) and so on.

Its interesting to see how most of these have evolved over the years and in this post I attempt to see where they might be headed in the future.

Phase 1: Information collation + Listings

The early phase for most marketplaces begins with bringing a sufficient number of suppliers and promoting the portal to get consumers (demand side forces). And the key attribute in this phase is that the portal has the most comprehensive listing in that category. Data which is fresh and probably not available anywhere else. So Naukri in its first avatar was just a listing of openings available- a digital version of what people used to browse in magazines and newspapers.

Phase 2: Customization, filtering, meaningful handshakes

In the next phase a marketplace sees the need for tools that would help consumers connect directly to people who are most relevant. This might be done by better profiling, filters, trend based suggestions etc. Idea is that the consumer (& maybe the supplier also) should not waste too much time going through all profiles to get to the one(s) that are most relevant. Job portals have a meaningful profiling section to filter profiles. Marriage portals have gone to the level of checking Manglik/Preferred cuisines of prospective grooms/brides. I was also told about one where if you saw a photo, you could see other profiles with “similar” photos. While the marriage filters might sound too extreme but there is a general perception that these tools bring clear value to the users.

When we launched Deal4Loans, we decided to focus in at this level directly. We invested in a warm body process to call our customers and understand what they specifically wanted. We then applied our understanding of the space to match the requirements with loan providers and did a handshake between the loan seeker and the providers.

What next: Managing the need

While most digital marketplaces have grown because they become the go-to-places for getting handshakes. Most of them have become so big, that its still an overwhelming experience for the consumer. Maybe thats why some of the marriage portals have launch a premiere service , where you get a relationship manager to do all the ground work.

The bigger problem is that in most cases, no one is tracking whether the customer’s need got fulfilled or not. Take the example of jobs. We are looking to expand our team in the new start-up. We will come up with ads on Naurki and Monster etc, but no one will help us see this requirement get closed. We will get CVs, we would call and shortlist them etc. But did we find our next team member? Do we have some special requirements?

Look at our loans business. We do the handshakes and we do it better than any one else in the industry. But we are not yet checking if the consumer’s requirement got serviced (incase it was serviceable). I personally feel, the industry will gradually demand this out of most evolved digital marketplaces, and the ones who invest early on will see increased user traction.

Many global companies have adopted an approach of customizing their products to suit the local needs. McDonalds came up with some Indian burgers to suit the desi palate, Suvidha was Citibank’s experiment at serving the unique Indian market, General Motors shifted the driving wheel from left to right (and forgot to move the wiper and dipper sticks).And HSBC took this as their brand positioning with the World’s Local Bank punchline.

Many others across industries have seen success with such an adoption.And it sounds logical coz you are trying to identify the specific needs of the market and churning out something that talks to the consumers, that says that “hey, we understand you. We hear you and have built something just for you.”

But its surprising that these same companies fail to customize and serve their internal customers- the local employees. I have heard so many cases of a sheer culture mismatch, of the parent US/European culture being forced into the Indian arm so that it feels like one seamless unit. Unfortunately, it doesnt work that way. The recent firings at some of the MNC companies has brought this issue to the foreground.

I heard of two young managers who came back from a sales call during the evening to find their access cards are not working at the reception. Someone came down to tell them that their services have been terminated and they could no longer enter the premises. Wow !

Another team was called into a conference room and told they were being let go. The secretary staff was asked to clear their desks and send the stuff down. The team itself was escorted out directly from the conference room. Wow again ! What were the HR managers and business heads thinking?

India is not the West. Our people have a different set of parameters to judge whether they are being treated well or not. And if the local business heads fail to stand up and protest against these Standard Global Corporate policies (apparently the two above are instances of the co’s standard firing policies) they would lose their positioning in the job marketplace.

I can confidently say that people who know about the above two companies, will not flock to these organizations when the job market looks better.

djoker makes a serious brand

Had a very interesting chat with the guy who runs the sports-shop at the Sports Complex where I go for my regular squash. I noticed that Nadal and Federer were no longer there on his wall and all one could see were Djokovic posters with his Head racquets. One would be tempted to ask whether the change in fortunes at the recent Opens triggered some change in the brands the customers bought.

And it surely was the case – Babolat is no longer being stocked and its Head all the way. I remember not so long ago, that every one at the complex was using Babolat raquets( well you couldnt blame them, Nadal was on a rampage) with their hard-to-miss two white lines on the frame. But interestingly this phenomenon transcends only to the equipment not to apparel. It seems what most of these aspiring or hobby-athletes wear are still their favourite Nikes and Addidas.

So is it that an aspiring athlete wants to give himself the very best of equipment? Does the same phenomenon work across other segments like say watches and mobiles?

Will someone want to buy the same mobile that Aamir or Priyanka endorse? By the above logic, maybe not, but am sure there are other consumer psychology attributes that we missed in our chat yday at the complex.

Profitability in doubt

The Indian skies are witnessing a strange situation. Most of the carriers who form the backbone of Indian aviation industry are suffering from huge operating losses – from a combined effect of lower ticket pricing and increasing fuel costs – or so they claim.

The ticket selling sites like MakeMyTrip,Yatra etc on the other hand seem to have it pretty good. Though a big chunk of their revenues now comes from tours and hotel bookings but one fails to understand why the airlines still depend so heavily on them. There was a time (the pre internet explosion era) when you needed a lot of agents to sell tickets to ensure the seats were almost full, but now when each airline has its own site why do we let the customers use the internet channel to book through an aggregator.

A customer does this because there is an ease of comparison and the ability to easily find the lowest price or most convenient combo etc across multiple airlines. I am told that aggregators are smart at predicting the traffic they would see on their portals and tend to bulk buy seats (atleast on busy sectors) well in advance. This ensured that the customer was getting a decent price for his seat on the aggregator. Low price + convenience is a very compelling proposition for users.

Fast forward to today. If as an airline, I am not recovering my operating costs per flight, should I not look at transitioning my sales to in-house channels. A drastic cancellation of this channel is not possible as it would lead to a sudden drop in ticket-sales and hence the occupancy rates. BUT why can’t the airlines start a campaign which says for best prices book directly on their own sites. This would atleast start getting them those customers who don’t value the convenience as much as the price differential. These customers might start using the aggregators to search for the best options and finally book the tickets on the airline site.

I also know of some people who travel on sectors like Delhi-Guwahati, take a particular airline always, but still book it at an aggregator site.

Private sector, higher education in India has probably seen a complete cycle of sorts in the last 8-10 years. What started as a gold rush with students willing to pay super premium amounts to get a MBA/Engg/Medical degree, now seems to have hit a major reality check. Institutes are now finding it difficult to get students, students who are graduating are not getting placement offers (atleast not at the expected grade and salary levels) and there is a clear dearth of good faculty.

In the early days, the institutes were playing catch-up with the increasing demand for employees in the services sector. Since there was a healthy pool of faculty to be tapped into, the quality of education was also not compromised. But now, with almost every successful business and businessman having a private college, the demand-supply metrics are completely reversed.

The story is really drastic as far as MBA institutes go. Most are unable to fill their seats. Even if they do, they struggle to find good faculty. In the absence of good faculty, the placements and the long term brand value of the institute suffers. Most students have not done a real summer internship and are unable to handle themselves in any job-interview. There is a clear shake-up about to happen, if things don’t change.

As I was thinking about what changes could bring back the zing, I asked myself a very fundamental question- Why does a b-school need its own campus ?

While some of you are thinking already that I have gone crazy, lemme share with you why I am asking this. I feel the core problem with quality of education is the lack of experienced faculty and administration. The current economics don’t allow a private Bschool to hire a good full time faculty member. Most professors have a few areas of focus and they don’t teach more than a couple of courses. This means that if they are not doing consulting assignments or taking MDP courses, they are not financially contributing to the institute for most of their work hours. This would either force the institute to pay them a meagre salary (which would de-motivate the most critical element of the education system) or ask them to be on a part-time basis. (And yes, this is a problem of scale. At campuses with multiple batches of the same course, its easier to afford full-time faculty members.)

The part time professor also on his part cannot sign-up with multiple institutes as the commute and logistics would be very taxing. Now imagine a scenario where we do away with face-to-face lectures (very radical step I would assume) or we create a university like common campus where multiple institutes share space. They have their own administration, , admission process, fee structure, course outlines and industry interface etc BUT dip into a largely common pool of shared faculty conducting classes at a shared campus.

The way such a MBA park could work is that the park management does the course scheduling and informs the students about which room to report to for which lecture. Accordingly the faculty is also scheduled with a right balance between the daily hours for both of them. The individual institutes have their small management, which pays fees for using the infrastructure and for the faculty (directly or through the park). They could in fact choose from a wider set of faculty options for each subject.

Such an arrangement removes most of the inefficiencies in the system, but brings about a whole new set of branding related issues. How would an institute create its own unique identity in such a cluttered environment. While I am not sure that a MBA park or a virtual classroom is the best answer, but I think we would need to start challenging some of the very basic assumptions of our education system very soon.

Mobile VAS - Tough Times

In India, the Telecom Value-Added-Services (VAS) was referred to as the business of ABCDJ – Astro, Bollywood, Cricket, Devotion and Jokes. This was the volume and revenue driver for almost all mobile operators beyond the voice and text revenues and it sure was a significant one (if we include the ringtones and call-back tunes within Bollywood or Devotion category).

With the TRAI’s new SMS guidelines, the VAS players cannot send SMS based content to users who are on NDNC. There are talks of partial NDNCs but the fact remains that this business has been hit in a big way. The VAS players had been using SMS both as a channel for marketing and for delivering content too. The ones who have been hit the worst are the ones where the content is the text.

So what now? I think one of these may happen

1. Telcos/VAS players will build a case & convince TRAI. Given the fact that Telco’s almost enjoyed a significant portion of the VAS revenues, this is surely already happening. The VAS players would need to show that the content is being delivered only to subscribed customers and the customers have an easy way to opt out it. (Airtel had started a on/off service for all products, now all might have to adopt it). There would surely be a lot of genuine customers who need a regular dose of ABCDJ delivered on their handset.What the VAS players might not get, is the use of SMS as an advertising channel to sell their services. If this happens, the cost of customer acquisition will go up, and hence the profitability metrics would be negatively impacted.
2. Non-SMS channels for delivery. SMS was the ideal channel for content delivery as it allowed the VAS player to just focus on acquisition and content. Delivery was a no-brainer. There was no classification needed basis handset type etc to see if the content was delivered or not. With SMS gone, the players would want to explore GPRS based rich media delivery of content. Here the customer’s handset type will decide whether the specific user should be targeted with this content or not. Maybe now Telco’s will start focusing on selling smart phones either bundled or as part of a special deal. Any smart phone sold by Vodafone, gives them a customer to whom rich-media VAS can be sold. Maybe now the likes of CellTick will have a second lease of life in the Indian market.
3. More active role by Telco in selling VAS. Till now, the role played by Telco in selling VAS content was restricted to sharing data with the players, and opening up a pipe for them to deliver. Now the Telco will remain the most important touch-point, and if they want the VAS revenues to grow, they would need to “sell” it now. Telcos might invest in a VAS emarketplace of sorts so that pulling the content is much easier.

Time will tell, what finally happens, but my guess is, that it surely is a critical discussion point at most Telco board rooms.

Just came back from a Mahindra showroom here in NOIDA. Its a mess out there with the much hyped launch of XUV 500. There were almost 6 guys trying to check out each of the 3 pieces of this new toy that Mahindra claims will put them in a truely global league.

And looking at how things were being managed there, I was thinking about all the debates that keep happening about spends on Digital media Vs traditional ones. Unfortunately, even my friends from the digital world are more concerned about spends on advertising, not on making the customer experience superior. No one is managing the moment-of-truth.

Here’s what happened:

• We could barely manage to see the interiors of one version of the vehicle
• The staff was overwhelmed with the customers within the showroom, they just couldnt give you enough time to answer your queries
• One bloke had an Acer tab on and was happy to show us the features, when we asked for a brochure. They also had a wall mounted touch-screen display operated my another chap
• Test drives had a queue and one had to leave his/her number at the dealer to get a chance behind the wheels
• No idea/clue on delivery dates. I really appreciated the frankness with which the customer expectation on this critical parameter was managed
• Booking amount was very clearly communicated. Its Rs 40K, but you could do a token Rs10K and deposit the other 30K in 2-3 days. Smart move looking at the popular response.

I saw a huge missed opportunity here, esp in terms of leveraging the digital channels to stay connected with the customers.

1. If only the chap with the tablet had asked for my email id and at the click of a button sent me a ebrochure. I might even have liked the Facebook page button on it
2. They could have checked with me on test drive and done the same. Many like me didnt leave the mobile number. Its only SMS that TRAI has managed to stop as of now
3. If I was on their email list, so many more things could have happened- sending me updates on delivery dates, early positive responses from customers etc etc.

I feel that in a dealer led model, the parent brand/company needs to bring the digital tools right at the dealers showroom and manage the conversation from there on. Its only then that we would have leveraged the true power of customized communication. Other wise its just ads and Facebook pages that will keep happening.

I hope some of the ad agencies are listening to this and would build this in, in their next pitch.

Its an oft repeated statement that an

No more SMS SPAM

optimist see opportunities where others see challenges. It can not be truer in a business scenario esp when something changes drastically in the overall environment.

One such change has been the TRAI’s gag over SMS- the true bane of India’s mobile growth. We used to get 20 SMS daily about new housing projects and a similar number of messages for increasing height or losing weight. So apart from the customers who are genuinely happy, its very interesting to see how businesses are reacting to this change. Do remember that mobile (& SMS specifically) has been a very strong and efficient channel for many businesses because

• It ensured delivery + view (unlike emails which might not be opened or hit SPAM)
• It was real time, so alerts could be sent and verifications could be done while the customer was online
• Cost effective, the cost per SMS from many a providers was as low as 3-4 paise

So once the SMS were put on hold, earlier this week interesting responses have been witnessed from players.  Here’s some of the interesting ones:

1. Talk it out with the regulator – The JustDials of the world seem to have done this, coz by the evening there was an announcement with a new clause that allowed JustDial/Zatse and few others to send SMS to customers who call in for local search. Similar benefit has been extended to Google/Facebook etc kind of brands. This is interesting because all along, the draft that was circulated contained only a few pre-decided categories where transactional SMS  would be allowed.
2. Read the fine print and find a way out – Apparently all this applies only as long as you use the pipes of Indian telecom operators to push text SMS to customsers. There are players now offering SMS’s delivered through international gateways (although at a much higher cost).
3. What? When did this happen – Its very funny to talk to some call centers and hear their agents give the standard response that you will get a SMS from our side. Here it seems, no one within the company bothered to check/find how it affected their processes. I am sure their Ops guy in on an extended vacation.
4. No Problem, we will innovate – well this is the segment that does proud to the word – “Jugaad”. There are players out there selling a “missed-call” solution in lieu of SMS verification. A very smart alternative indeed and the robustness of the current system is the only constraint.

While the change is very recent and many more innovative solutions would come up, one thing is certain- it has casted a death spell on very many business models (read that as VAS services, players selling mobile numbers, mobile marketing services).

India Fastest growing ecommerce market

Had an interesting conversation with an investor friend yesterday, who is really active in the start-up/seed stage. We were talking about the many niche plays that are coming up with the well funded steep growth we are witnessing in the ecommerce industry.

While there is no doubt, that Indians have started buying/shopping/ordering online and in a big way, what can also not be debated is the uniqueness of the Indian model, which throws up its own set of challenges. Lets look at a few of them:

• Almost 70% of our ecommerce transactions are Cash-on-Delivery (COD)
• Many big portals have seen return-rates upwards of 30%
• Current ecommerce growth is happening predominantly from tier 2 and tier 3 towns

What all of this translates into, is some serious logistics issues namely, collecting payments from COD customers, inbound logistics for returned goods and finally having an efficient distribution network, which is spread out really far and wide.

A few interesting plays are being introduced in the Indian economy

• Players like Chhotu.in who are focusing only on ecommerce logistics including cash collection. This company has a simple pitch that it will help reduce the return rates and also ensure higher efficiency on the COD segment.
• Niche players who are focusing only on the cash management for COD piece. One such player is riding on the positioning that it will enable ecommerce players to get sales proceeds into their accounts within x days. A payment guarantee that allows the ecommerce player to do what it does best- focus on demand generation and driving transactions.

If these challenges are very unique to our economy, it could mean the difference between the success of a local experienced player vs the success of a global ecommerce giant like Amazon.com.

The today’s list of Most Trusted Brands presents an interesting change.

• Nokia is the only hardware/electronic brand in the top 10. Surprising because it has been steadily losing market share to Samsung/MicroMax/Android phones and all the chinese brands.
• 7 out of 10 are CPG brands – Colgate, Luz, Lifebuoy, Dettol, Brittania, Maggi, CloseUp
• No financial services brand in this list of top 10. LIC used to be a regular if i remember correctly
• Airtel 5 spots ahead of Vodafone. Looks like “Har ek friend” positioning left the pug far far behind.