Category Archives: Business

How Google Glass, 3D Printing and drone delivery will change the world!

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Amazon is working on a delivery mode, where goods will be delivered by drones. Unbelievable it might seem, it might soon be a reality !!

It seems nothing short of fairy tale to imagine a world where goods will be printed by a 3D Printer, shipping by drone and one would need nothing more than a pair of glass to search just about anything, order anything and picture anything!

Let us look at each one of them and see potentially how can they change the way we interact, communicate, create and transact in world, and also the impact on business ecosystem.

Delivery of goods by Drone: Termed as Amazon Prime Air, Amazon is claiming that it will be ready technically by 2015-16.  Can it really happen? I already see lot of people questioning it from the perspective of technical feasibility, security aspects and logistical difficulties.  What I understand from the excerpts that drones can be imagined as  programmed courier person who has been programmed to deliver at 5-6 places before it returns to the source.

Undoubtedly, if it happens, it will change the world of e-commerce delivery. Nothing can beat the joy of having instant delivery.. That is one thing which still keeps offline shopping experience kicking and alive.  This post gives a lot of interesting ideas in which the world might change with drone delivery.  I like this one.. the diaper’s are finished..mother orders the diapers on amazon and within seconds it is delivered by a drone. WOW! 🙂

Well looks like it might take couple of decades even after the technology is established for the service to be commercially viable for delivering just about anything. So will it mean the consumption pattern would change JIT.. so people will not stock goods.. needs to be seen what impact it will have on the whole production cycle of goods?

Amazon testing drones © Amazon.com

Google glasses: This ofcourse competes with 6th sense technology made popular with Indian – Pranav Mistry. Well, I am not an expert in claiming which one will win. But one of the, whichever achieves the end objective of merging the digital experience with offline world will win. In the current avatar, Google glass is just a fancy bluetooth connector, but Google is working on the 6th sense experience everybody expects it to deliver.

When that happens, the world will be a hyper-connected and hyper-transparent place, where consumer can at any point of time check the authenticity of the claim/product etc. by going online and dig all information relevant to decision making in minutes. It will completely change the way people shop offline by helping them compare and review items in real time.  Will it be an end of brand, as information transparency will even make a new good product stand out, letting it compete against big brand ?  In this respect, here is an interesting article which says retailers already hate people who use them as showrooms. Google glass will only accentuate it.  Here is another interesting article which mentions what will be the impact on 5 Industries.

Google Glass: 5 Industries It Will Change Forever

3D Printing:  This seems to be most advanced out of the three technologies and might again radically change the world.  Also what appears is that it will first be adopted large scale for industrial use before it gets common for domestic use.

Without getting in-depth of technology which I don’t understand, 3D Printing helps in creating mass customization which today is unviable for most products. From a consumer perspective, consumers will get umpteen choices and customizable goods. From the perspective of industry – it will give birth to lot of small scale industries / entrepreneurs who will run this 3D Printer to customize a mass produced item by a factory.  This article from HBR also says that it will help industries move closer to consumption centre, rather than being near the source of raw material.

This is a very interesting story of a person who tried making christmas gifts using 3D Printing and gave up. So when it evolves for consumer, it will be radical but it is still long way to go.

So what will 3D printing change. With every customer wanting a customized product, how will the production value chain be altered?  Future shops might look like a catalogue with some products on display and based on customer requirement it can be easily customized.. Will it lead to lesser SKUs by brands, with every SKU having customization permutations & combinations defined?  It will SKT ( Stock keeping template) rather than SKU.

With all these technologies becoming a reality, we would be living in a world of instant search, instant customization, instant production, instant delivery and instant sharing.

Imagine, you see a beautiful T-shirt in M&S store, you instantly google and find out the competitive price in online stores of similar design T-shirt, go to Amazon, customize the item, which gets instantly printed by a 3D Printer and get it delivered instantly by drone… WOW!!

So what it did?   You like a M&S T-shirt but are instantly to get a similar T-shirt from a store which you customize based on your needs and get it delivered instantly at half the price of the T-shirt from M&S.

So the brand becomes powerless….

New set of entrepreneurs emerge who can customize the items…

production is instant based on demand..so is very efficient…

Mind Boggling!!

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Internet Business: From Porter’s Five Force to Three Magnets

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Running an internet business, I wonder whether Porter’s five force model makes any sense for the Internet businesses.

Traditional businesses, would create a strategy which limits the Bargaining power of buyers, limits the bargaining power of suppliers, creates barriers of entry for competition and create models so that buyer is not able to replace/substitute the product…

But the internet seems to have redefined all of it…

1. Bargaining power of Buyers:  Rather than curtailing buyer’s bargain power, internet actually enhances it by its very nature

2. Bargaining power of Suppliers: Again, internet businesses typically bring the transparency..unless the company is not very big, suppliers have reasonable bargaining power… example if flipkart tries to squeeze samsung, samsung might decide to abandon flipkart and go to another shopping portal exclusively.. since suppliers are aware that customer switching cost is minimal

3. Threat of substitutes:  Most of the internet businesses have their IPs freely available in public..i mean code base of some algorithm/engine etc.. so technically there is a very high threat of substitutes / competition

So by very nature of the business, customers rule the game, suppliers cannot be squeezed to the hilt..especially the branded suppliers, and threat of competition and substitutes is very high..

If one would have evaluated internet business on porter’s five force, nothing would have made sense.. then why are these businesses getting crazy valuations…

Also, if all forces are against a company, how come this industry creates winners take all companies which are far bigger than No.2

How has the paradigm changed?

1. Customer Stickiness:   Rather than talking about Bargaining power of Customers, this industry speaks about Customer Stickiness… which is why should customer stick around with your product / company?

2. Power of Aggregation: Rather than talking about Bargaining power of Suppliers, this industry talks about Power of Aggregation which again is pro-consumer, denoting how much value you bring to the table for consumers aggregating suppliers and that in a way defines your relationship with suppliers..

3. Speed of Innovation: The model assumes that change is inevitable and only way to defend customer shift to new substitutes is that product constantly keeps on evolving… So speed of innovation defines the fate of the company…

So instead of 5 forces of porter, there are 3 forces – Stickiness, Aggregation and Innovation which defines Internet businesses.. Unlike the traditional way of looking businesses, which assume themselves as fortress and the one which builds the best fort wins, Internet businesses assume themselves as Magnets which attract stickiness, aggregation and innovation..

Car Pooling vs Pooling on Public Transport

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Car Pooling is one are where lot of startups have tried to create product but none of them have really worked.. As an Idea, it definitely looks very promising and one which has great potential..

A car pooling marketplace would ideally create a marketplace where car-poolers can instantly look for available cars for pooling and take a ride. For the marketplace to work effectively, the car pool supply has to be scale up very rapidly so that availability to the last mile (where the rider) wants to ride the car.  That is a like a chasm which none of the startups have been able to cross.  Culture might be another issue as highlighted in  this article, but I think it is more to do with scarcity of supply to the last mile.

Let us look at the practical difficulty which I think is quite detrimental for the supply to bulge. A car owner would typically need to go out of his regular route in order to pick / drop the rider – Who likes it when you are late from the office and are facing huge traffic.

Pooling of resources in public transport like Taxi, Auto or even chartered buses on the other hand can work in India.

1. Autos ply everywhere in India ( sans Gurgaon).  So last mile is not an issue. It is much easier to find another rider who is going the same way

2. Even if auto/taxi has to take a detour to pick/drop anybody – Taxi guy earns for that, Riders save money… so everybody gains..

3. People who own car in India – are not looking at earning money through car pool. For them  it is a platform where they can share and in return be carried by another car pooler sometime. Now that is difficult as the rules of the marketplace are not between a supplier and a vendor, but are more around sharing and benefiting..

On the other hand, people who are riding the auto/taxi are looking to save money and doing that they also help the economy/environment save fuel…

Some of the interesting startups in this space

GetJugaad.com, Taxi.to ,Sharedcab , Smart Mumbaikar, NTL Shared Taxi

 

Twitter on Airtel TV and its impact on TRPs

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Airtel TV announced a one of its kind convergence product where your tweets can be seen in DTH. Read more to understand the impact it might have in long term on TRPs

While the product perse looks very innovative, I still fail to understand the proposition for the consumer.  Why should a consumer see tweets on a Big Screen when he can see tweets on the mobile phone in his lap while watching his favorite program on TV.  Especially, when he will anyways have to use his mobile phone to re-tweet or reply to a tweet.

Shall we call it a triumph of Social Media, which has compelled Airtel to bring it in its stable apart from channel content, or shall we call it a triumph of Big Screen in India and tweeter wants to use that channel to grow its usage in India.  Confusing !!

Essentially what Airtel TV is telling consumer to fidget with the device and de-focus their attention on mobile device while watching their favorite program on TV.  TV Channels for obvious reasons will not be happy if the product takes off since it would mean decrease in their TRPs in long term…which might not be good for Airtel TV as well in the long run..

And now the big question.. who is paying whom for the activity? Is twitter paying Airtel for increasing the usage or Airtel pays Twitter for bringing in the offering?

For news reference, Read this!

How would snapdeal make money from ReGlobe

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Snapdeal, the online marketplace to day launched Reglobe, the re-commerce site where it takes old laptops and phones from consumers and pay them cash based on the assessed value.

Although, it has been existence in US for a while with sites like Gazelle  been in existence for last 6-7 years, it is for the first time a large e-commerce player has launched in India.

While today a user can sell his used goods on Ebay, ebay only acts as a facilitator/platform enabling consumer to sell the goods based on the market economics and Ebay takes a transaction fee in the transaction.

In the case of Gazelle or Reglobe, consumers need to ship the goods, they are assessed by the company and then paid in cash.

What do Reglobe of the world do with the used goods :-

1. Set up an ecommerce shop to sell the used goods to consumers:-  Sell Snapdeal verified second hand electronic goods. Possible, but user would prefer to shop for used goods on ebay where the user is likely to get a better deal because of platform-> auction etc. In short, ebay has all incentive to make the marketplace transparent because they have no business risk in doing that… but on the other hand, snapdeal would want to maximize the profits from used goods

2.. Sell them back to consumers on sites like Ebay, Amazon: –  Not sure how profitable it is to sell used goods on internet because of the lemon’s problem.

3.  Sell the goods to third world countries / third world markets: This is interesting, because in third world markets, used goods will be valued more.

2. Sell it to scrap dealer / for recycling:-  This is again very interesting, because the perceptible value of a scrap phone ( not in working condition) is much lower than the actual value in terms of recovery post recycling.   For more information read this: Your Dead Iphone is a Gold Mine

The punch line is, there’s more gold in a pound of electronics than a pound of gold ore,

 

 

Make your own Desert Online

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With reference to my earlier blog mentioning that there is an opportunity for Online FMCG brand, Online Only FMCG Brand, looks like that there are some early stage companies already trying that….

Custom Made Chocolates: Happiness Bars , LovelyChocos

Custom Made Icecreams: HokeyPokey. They are a premium ice-cream shop, now graduating to e-commerce.

Time is not far, when we will have e-commerce portals enabling consumers to…

Make your own soap , Make your own cookie, Make your own Namkeen, Make your own Shampoo, Make your own Jam etc..

 

 

Thrillophilia claims 3 crores of revenue but raises paltry funding…

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Thrillophilia seems to have decent traction as per this report from Techcircle….Thrillophila doing 3 crores of revenue

The site indeed looks very well done and they have fantastic collection of short and long excursions.. But why did then only raise 1.25  crores of funding…. At a revenue of 3 crores, it should be valued at 15-20 crores atleast.. What is the interest of investor in holding less than 10%…??… Or is the valuation very less because bulk of revenues is coming from B2B…??

Redefined MLM/Network/Referral Marketing

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Limeroad, the Online Social shopping platform has launched a new initiative which enables to earn while promoting the products they like…

Source: LimeRoad allows users to earn

Limeroad enables users to create their scrap book in which they can add the items they like. They can later share the scrap book with their friends on the social network and they get a commission on the sale of items initiated through scrape-book.

A good scrap-booker can earn 10k a month….Here are the details

So it is, Social Referral Marketing, where the company gives incentive to users to market their product to other users…. very much similar to the existing MLM marketing popularized by Amway, but it utilizes the power of social network and also users need not buy items and become a member to start selling/promoting..

Also interesting is that Referral marketing on internet is moving from Site referral to item level referral.  How would Limeroad ensure that every user gets the incentive based on his selling effort… eg. he only gets incentive for item A bought by users in his social network… ..

Housing.co.in plans to expand globally

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There is quite a bit of action in Online Real Estate space lately. While, the Indian market still remains largely driven by Newspaper Ads and Brokers, Housing.co.in has decided to venture into US and other Asian countries… And they have spent a whooping $1 million to buy Housing.com domain and special number in US.Housing.co.in to expand in USA

That’s a pretty bold move given that the big daddy Zillow.com is also only present in USA.  All the best to Housing.co.in team!

From the consumer perspective I believe that, one needs to crack the dis-intermediation by eliminating brokers from the value chain. Housing.co.in model actually helps brokers to list properties for free, whereas the consumer needs  broker-free market-place.  Isn’t easy though.. Read this Why Zillow, Trulia and Redfin haven’t killed the real estate broker?

Online Only FMCG Brand

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Online Only FMCG Brand!

With interesting e-commerce/ online startups springing everywhere, I wonder why nobody is thinking of online only FMCG brand.

Cracking the distribution has always been a strong entry barrier for a new FMCG player in the country. The distribution model favours the existing large players and only helps them diversify the product range.

For a new entrant, online only strategy can help in dis-inter-mediating the entire distribution channel, and also targeting the audience through digital marketing vs. spending crores of rupees on TV and print.

It is far more easier to create product differentiation in FMCG compared to clothes etc.. where we already have internet only brands like Zovi… Then why is nobody thinking of launching internet only FMCG brand.. I would think that packaged food is a right candidate for the same.

Shipping cost is ofcourse a concern, but can be accommodated in high value-low volume product… ex. packaged sweets, packaged namkeens etc..