Category Archives: india

The App World is Flat!

The App World is Flat

With Apps / Mobile growth, things are changing at a fast pace in the eCommerce / mCommerce space in India & around the world; for purpose of simplicity – calling it eCommerce without bothering about on which platform the transaction happens on.

The world is fast discovering web on smartphones, gets on-boarded to services like WhatsApp & Facebook, doing their first online transactions on Mobile Recharge services like FreeCharge & Paytm, and evolving to eCommerce, On-Demand Services & Travel. Unlike the previous predictions made in 2011/2012 – which were very company specific, this time the focus is largely around the trends in the Mobile App world.

 

The (App) World is Flat!

In old days of Internet Marketing, there were strategies to acquire users / customers by categories through multiple marketing channels – Adwords, SEO, Email, Display advertising, etc

The App World is flat. Be it large commerce startups like Flipkart, Snapdeal, Ola, Uber or the ones that were launched yesterday in any space, the common ground for everyone to get started today is exactly the same – getting the App Installed. This is disruptive in many ways – if someone has $1 Mn to spend on user acquisition – no matter at what stage / scale a startup is, the cost to get the app installed now remains the more or less similar for everyone.

As other core functions of eCommerce like Logistics, Merchants, Payments get more organised & commoditised; and User Acquisition starts with getting the app installed – a new ecommerce marketplace startup that launches today with $5 Mn Series A investment has much better chance to succeed than ever before or give existing large players good competition.

That puts everything in a interesting perspective – As cost is exactly the same, what are the differentiators? Its the core value proposition of the startup – the one communicated before user installs the app and one actually delivered. This change makes every startup focus a lot on building a great product and an awesome consumer experience than ever before!

 

Discovery, Marketing & Product Experiences:

In the ‘web’ world, Google allowed marketers to reach ‘users with intent’ through Adwords (or SEO) and so did Facebook to reach a certain demographic of users on its platform. This has changed fast. For high growth mobile startups that are scaling up in India – Google & Facebook’s share of marketing spends is shrinking when compared to others.

App Installs plays a level playing field in User Acquisition today; networks & affiliates are able to drive App Installs at better volumes with very competitive rates when compared to Google, Facebook or Twitter. Discounts, cashbacks & user driven growth form new means of acquiring users at a exponential rate. Share of wallet from marketing spends for Google & Facebook is going down.

Any consumer app like Flipkart / Snapdeal or Google / Facebook can now read multiple signals off user’s phones – apps, locations, contacts, texts messages, and so on and redefine how users are targeted for advertising. Flipkart’s plans to build online advertising business are well known; could be huge opportunity if kept independent.

Mobile App capabilities can also translate into building relevant product experiences for end users. For example – a Cleartrip trying optimise its Hotel Booking Offering for users when it reads a Flight Booking SMS from Airline website on user’s phone; Housing showing financing options for house from HDFC knowing that the user has the HDFC Bank App installed on phone; or Flipkart showcasing user products based on how quickly they can be delivered; of a Finance App recommending user investment options based on his Account Balance and so on. In one of my recent conversations this came up – today a user’s mobile phone location is his delivery address.

Till now, Ecommerce products today have just transformed from web to app, not essentially unlocked the value the mobile platform brings. If existing players don’t innovate, some new startups will. Focus on building awesome products.

 

App Discovery will evolve:

App Discovery and Install today act as the top of the funnel for every User Acquisition effort. Visiting a App Store to download any app is a redundant step; its not required if app is discovered through other channels. Expect Google Play to take the Install button (or trigger) outside the Google Play Store and let users install apps without explicitly visiting the Play Store in background. If that happens, expect APIs that will trigger app installs for publishers & advertisers making user acquisition & advertising dollars more efficient. Yes – that possibly kills ASO, App Discovery as we know of today on App Store, and Google’s Adwords product for Play Store.

Mobile Apps ecosystem is cursed with high uninstall rates. Users & Marketers would want to move towards the philosophy – you acquire user only once, does not matter through which channel – App Store or Browsers. Users would want the product / service on-demand on every platform – Smartphone or Desktop Browser whenever they want without hassles of user / account management. Expect browsers integrations & enhanced capabilities on Chrome with App Stores (Google Play to start with) that enables users to access the Apps installed on their smartphones on desktop or any other platforms without having to log-in separately.

App Stores like Google Play or Apple iTunes will also evolve from their current stage of ‘enabling discovery of mobile apps’ to ‘authentication of user credentials’. App Stores will retain user information – personal details, payment info (saved cards or wallet), delivery details and so on to transform into 1-click authentication platforms. Example – Users while shopping on Snapdeal, Flipkart or Amazon Mobile App can do 1-click checkout with App Store authentication that gives the Ecommerce service all user information w/t payment information data that is required for Ecommerce sites to fulfil the transaction.

This is something similar to what Facebook did earlier where Apps & Games on Facebook Platform received user information on Login-with-Facebook. Its still early days for Mobile App Stores, they will evolve in big way going forward.

Note: Google is already working in this direction to distribute Install action with App Invites (Beta)

Engagement v/s Instant Gratification:

As consumers get habituated to transactional & on-demand services – social products & social commerce products (like Wishberg – my previous startup) or any other would find it extremely difficult now to scale up or grow without providing the instant gratification experience.

Existing large companies in this space are picking up clues and started to move towards a transactional experience with Buy buttons. To ecommerce companies, working with large networks for such 1-click transaction experiences is a big win.

Expect focus of large social networks (Facebook, Twitter, Snapchat, etc) & discovery channels (Google, Pinterest, etc) to move from top of the funnel (i.e. product discovery or media spends) to bottom of the funnel (enabling transactions or margins). They are currently driving Mobile Installs or Traffic for their current advertisers, going forward may be looking at driving customers. Such products or services know more about users than anyone else.

Products like Facebook, Google will retain customer information (delivery, location & saved card details) and move towards enabling the one-touch buy experience.

 

Frequency is all that matters now!

This topic itself calls for a longish post (may be for some other time), for now the point to note is that Mobile App makes perfect use-case for a high frequency consumer behaviour. There are already many studies that have concluded that consumers prefer to have only few apps on their smartphones – ones that are frequently used.

Apps like WhatsApp, Facebook, Twitter, Snapchat, Instagram etc which see extremely high engagement (and frequency) are less likely to be uninstalled by user while an app that is not used for few weeks (or even days) is very likely to get uninstalled. Ecommerce products would not be able to match levels of usage demonstrated by Social Apps.

Transactional apps that have a daily / weekly use case like Cabs, Food Delivery, Grocery, etc would see better usage compared to others. As that gets discovered, expect Ecommerce apps to expand into multiple categories / segments that could be completely diverse – Paytm moving to eCommerce or Travel, Ola moving to Food Delivery and so on to drive frequent usage.

This strategy works well with two big motives – increases app usage as users have more reasons to open & engage with the app and also adds up to their topline. But for vertical commerce players like Home Repairs, Home Furnishing, Jewellery, Footwear or others – surviving in App World with infrequent usage will be extremely challenging.

Today, Success or Failure of any startup is just an uninstall away!

 

OnDemand Services may disrupt eCommerce forever.

In past few months, many on-demand services have raised massive Series A rounds, the ones focussing on infrequent use-cases like Home Repairs, etc will start struggling with user retention and other ones who are driving high frequency use-cases like groceries, food delivery will start bleeding because of poor unit economics.

Ecommerce today as we know it has its own challenges – relying on third party logistics, depending on unverified sellers & products, deep discounting of products to drive volumes and their attempts to move from cash on delivery to cashless transactions.

On other hand, offline retailers in India are up in arms against online players but have little competition to offer. If OnDemand services like Groffers, Swiggy and others in this on-demand space started delivering users Ecommerce products partnering with your offline retail giants and local stores – eCommerce changes in this country forever.

No more waiting for even for 24-48 hours, the product that you want, from the trusted store of your choice, in the payment mode of your choice, in your hand – in next 30 minutes. The Amazon Prime or Flipkart First experience delivered to you, every time. This changes everything we have learned or known about ‘traditional ecommerce’.

Concluding Notes

Mobile app & growth story is just getting started. Its too early to declare winners because the App World is Flat!

Ecommerce Product Management – Getting the Product Page Right

Just few days back I exchanged some notes with Founder & CEO of a Ecommerce company on why I never shop online with them. This venture is among the best known Ecommerce brands in India, but its product experience never gave enough confidence to transact with them.This post is result of that interaction. All screenshots included in this post are not meant to single out any particular ecommerce website and this is meant to be a general post on best practices.

This post is also an extension to my previous post on the topic – Product Management and Ecommerce that was written about two years back. While that post was about general product management principles for Ecommerce, this one is a series of posts that are specific towards reducing cart abandonment and improving conversion rates in transaction businesses. Limiting the scope of this post only to Product Page -> Checkout, this post is first in this series and talks about building the right Product Page and best practices to be observed.

Getting the Right Product Page for Ecommerce – Best Practices

When users land up on product pages through some effort (search, discovery, social, email, adwords, etc), the intent of a users here is positively inclined towards ‘knowing more about the product’ or ‘making a transaction’ and not towards abandoning the page.

The positive reinforcements on a product page are –

  • Product (the product itself), Photos, Price
  • Shipping Information (and Payment Details)
  • Additional Information – If the product, photos & price do not help make a purchase decision, then the additional information that can assist in decision making process.
  • Alternatives & Suggestions

Building Product Pages is a science & art put together with lots of common sense. They should be built / designed as decision enablers and not with the focus that allows users to look at other options in an event the user is not interested in these products.

a. Focus on One Action – ‘Add to Cart’

Yes this is the obvious point. Why is it here, everyone knows this right?

It is here because everyone knows this and because they also know everything else other than this. Simply look at the product pages of the Ecommerce websites, the number of colors on the design elements of page, multiple call to actions – take away the focus from ‘Add to Cart’ button.

As a standard practice, don’t let more than 3-4 colors creep-in on to the product page. Having a color palette helps here and intelligent use of shades of gray to highlight important information if required. Also most critical aspect is knowing that all information cannot be considered as important.

Showcased below are screenshots from top ecommerce websites in India. Notice the excessive focus on highlighting every piece on information, use of ‘design’ and colors in every product element. Have specifically chosen products that have variables like Size, Color – since those are the most complex ones to get right.

Multiple Components asking for Attention, One of top Ecommerce Sites in India

Multiple Components asking for Attention, One of top Ecommerce Sites in India

Multiple Components asking for Attention, One of top Ecommerce Sites in India

Multiple Components asking for Attention, One of top Ecommerce Sites in India

Know how to make ‘Add to Cart’ stand out – look at a product page from NastyGal.com

NastyGal Product Page - Notice the focus on 'Add to Cart'

NastyGal Product Page – Notice the focus on ‘Add to Cart’

 

b. Getting all Decision Enablers next to ‘Add to Cart’ Button

The most important decision enablers (either features or information) should be as closed to the ‘Add to Cart’ button as possible, not miles away. The information should be presented in a top-down readable format – specially for categories and verticals like Clothes, Shoes and others where to process the order you need Size, Style, Color and other such information.

Factors making up the Purchase Decision

Factors making up the Purchase Decision

It is first essential to figure out what are the most crucial 2-3 factors / information that a user needs to know and also accepting that not all information is must.

Add to Cart on Bonobos

Add to Cart on Bonobos

Add to Cart on Zappos

Add to Cart on Zappos

c. Use Standardized Communication & Symbols

One of the key things to focus on your product page (or anywhere on the product) is user communication. From simple things like should it be ‘Add to Cart’ or ‘Buy Now’ or ‘Add to Bag’ to another simpler things – its a tough job.

Standardization? Its a mess out there.

Standardization? Its a mess out there.

Choose widely used terms for communication. I would always suggest using ‘Add to Cart’ because 90% of other websites use it. Remember user is moving on multiple websites, and he has got familiarized with the term. Do not re-invent things for the user. Even for symbols, Shopping Cart has a universal symbol across millions of website.

Same for terms like Cash on Delivery. Free Shipping.

Another issue with Ecommerce websites is the excessive focus on branding everything. It starts from ABC TrustPay, XYZ Assurance, LMN 100% Purchase Protection or PQRS Guarantee, etc to putting up details for Sellers (Marketplaces) – ratings, stars, % feedback, etc. While all that is great, why does a customer need to know this? If its for assurance – there is no need to copy paste such fancy terms across the website.

Thinking from a consumer point of view, if there is any goof-up on any transaction – user will hold the website liable for its service, whether or not it is a marketplace or a store. A simple message like one from ASOS – “Free Returns. Not quite right? Send it back for Free” or from Jabong – “30 Days Free Return / Exchange” does the trick.

One of the leading ecommerce venture says uses the term ‘Free Home Delivery’ which I relate more with restaurant food deliveries and less with ecommerce.

PS: For some reasons, Indian Ecommerce websites love coming up with their own Glossary of Terms!

d. Handling Exceptions on Product Pages

Some of the best user experience practices are seen on products that handle exceptions really well. Only following a simple principle – “Do not show user information that is not applicable’ goes a long way in removing information overload and simplifying user’s buyer experience.

Here are the few common ones that should be displayed only when applicable –

  1. EMI on Rs. 3000 – shown for all the products even those priced below that limit.
  2. Showing Cash on Delivery for products on which it is not applicable
  3. ‘Free Shipping’ when not applicable or Showing ‘Free Shipping on products above Rs. 500’ when the product is already above that amount.
  4. Ships from Chennai – Shown to user who is from Delhi. (Unnecessary second thoughts for the user – what matters is that product is shipped in time, not from where it is)
  5. In Stock. Of-course, why else would you display ‘Add to Cart’ button.
  6. Offers. Most offers kill Ecommerce profits (and the service too) – but since it is a trend now to show them, display only offers applicable to the product. Avoid blanket offers for a category.
  7. Twin Carts
  8. Asking ‘Are these reviews helpful?’ when there are no reviews.
  9. Private Listing of products shown to all.
  10. Free Returns or Exchange displayed on products that are not applicable like Lingerie, Cosmetics, etc
Showing EMI when not applicable

Showing EMI when not applicable

Dual Carts – Not applicable to > 95% users

Private Listing? Why show it to users then.

Private Listing? Why show it to users then.

Feedback on Reviews not written yet.

Feedback on Reviews not written yet.

Showing Offers when none available

Showing Offers when none available

Product  In Stock. Offer that is super-stretch for the user.

Product In Stock. Offer that is super-stretch for the user.

Ships From? Why a User needs to know as long as it reaches him on time.

Ships From? Why a User needs to know as long as it reaches him on time.

Handling Exceptions are really important for every product that is being sold on a Ecommerce site. Simply because every product is different, so are its attributes and not all of them apply all the time.

 

e. Staying away from Fancy Features

Get rid of fancy features on the product pages, some of them really make no sense.

Some of the top fancy features that are seen frequently on ecommerce websites are listed below. Though its debatable that few of them are required, the point to suggest here is not letting them interfere in the transaction process and keeping them passively available.

  1. Compare products on your site. There are different sites available for comparison and decision making.
  2. Ship to my pincode. While this feature has value, actively showing it to everyone does not. Good execution by Amazon India as a passive feature.
  3. Ask seller a question in Marketplaces. Is it scalable if the response is delayed by hours or days. Even users do not ask questions on top selling products.
  4. Login to Save in Wishlist. Almost everyone has feature – why. How many people come to wishlist on ecommerce sites again.
  5. Add to Favorites. This feature is great for social commerce or 100% design-only focus websites like Fab or Etsy, provided it adds value to user.
  6. SEO Fanciness – Many ecommerce services use without understanding how difficult it is for users to read.
  7. Vendor Information. Yes, we know you are marketplace, but there is a beautiful way to telling who the real seller is. (like Etsy).
  8. The filter for filters. Cool, but over period of time they all die and the data operations kill the user experience then.
  9. Comments on products. Again – engagement v/s commerce. Most services that have comments enabled, see user complaints and customer service related comments that further discourage buyers.
  10. Zillion Reviews that make no sense.
Fits SEO, but how helpful is this for user?

Fits SEO, but how helpful is this Product Descripion for user?

Fancy Filters

Fancy Filters – Helped me discover unknown Brands, Irrelevant Form ~ Touch is Qwerty or no. CDMA. Other OS > All known ones.

Reviews that make little sense

Reviews that make little sense

Facebook Comments - Why?

Facebook Comments – Why?

Favorite & Add to Compare

Favorite & Add to Compare

Definitely users don't want to enter in a relationship with the seller.

Definitely users don’t want to enter in a relationship with the seller.

How does this information matter?

How does this information matter?

Thanks for making this complicated. Users only care for price they will buy it for.

Thanks for making this complicated. Users only care for price they will buy it for.

There is a huge buzz around content + commerce, I believe that both of them should not mix. Content products (like Twitter, Quora, or even Wishberg for example) should focus on engagement and time-sink for its users, while Commerce products (like Amazon, Flipkart and others) should focus on transactions that are completed as quickly as possible.

 

f. Photos: Picture Perfect Product Pages

How important are photos on your product pages. If the answer is yes very important, make it a standard practice for product photos to be over 500 x 350 pixels. Optional images are great, zoom-in to see larger photos absolutely great – but those are optional features, the main product image makes a lot of difference.

Large Product Photos on Etsy. Also look at NastyGal's page shared above.

Large Product Photos on Etsy. Also look at NastyGal’s page shared above.

g. Recommendation that kill the Product Experience

Ecommerce sites should put a limit to the number of recommendations that are shown to the users. One of the best known Ecommerce site displays a stunning 9 set of recommendations on its product pages, that includes 35 products being recommended under pretext of ‘for you’.

Recommendations shown for a Mobile Phone

  1. More Mobile Phones from Samsung.
  2. Feature Phones from Samsung
  3. Recently Sold in Electronics & Gadgets
  4. Products Frequently purchased together
  5. More Android Mobile Phones
  6. People who viewed this item also viewed
  7. Top Selling Mobile Phones
  8. Products You Recently Viewed
  9. Recommendations based on your browsing history

Showing 35 recommendations does probably less for making up a buying decision and more for increasing dropouts or bounce rates of product pages. The ideal number of recommendations to be shown to user are 3-4 sets not more than that.

The ones that are most likely to help in conversion are:

  • Products Frequently Brought Together (provided the combined price is not greater than 3X of product price). This recommendation can be also displayed at Cart Level.
  • Customers who viewed this Product also Viewed. (Actual Recommendations)
  • Recently Viewed Products
  • Recommendations Based on Browsing History.

Flipkart & Amazon India does a great job with product recommendations.

—————————————————————————————————————–
Since I do not want this post to sound like a rant, I have attempted to re-create the first scroll product page (of the one mentioned in the first point here) by applying these best practices that I have mentioned here. This is how it looks. (Note: I am not a designer, this is recreated out of plain copy-paste tools.)

Product Page based on the best practices mentioned here.

Product Page created by me based on the best practices mentioned here. Redesigned the first image.

Concluding Notes:

Indian Ecommerce is coming out of age now, its off to a great start. While challenges like operations, logistics and customer experience are being tackled with great enthusiasm to delight users, it is time to also look at getting product management principles right and ensure users have a right user-experience.

Something I missed completely is that not a single ecommerce site reminded me of their mobile apps, isn’t mobile supposed to be the next big thing? A simple feature like ‘Send this to Mobile’ will do wonders – there is a chance that I will further share the product on WhatsApp and ask friends & family.

Remember, users that come to ecommerce websites are not here to build relationship, they are merely here to transact. Some features like Add to Wishlist, Write a Review, Rate this Product, Comment on this Product, Showing Auto-Pop to ask Email (and later spamming with newsletter), etc are not the ones really care about when they are here to transact. They are passive features, completely optional. Don’t irritate your users!

“I’m not here to enter into a relationship. I just want to buy something.” from the famous post – The $300 Million Button by Usability Expert Jared Spoon.

Ending this post with one of my favorite quotes on this topic – “Every feature has some maintenance cost, and having fewer features lets us focus on the ones we care about and make sure they work very well.” – David Karp, Tumblr.

—–

The next post in this series will be Best Practices for Shopping Cart & Checkout Process.

2014 – India Startup Landscape

Overview of India Startup Landscape – 2014

#GOSF – The Great Online Shopping Failure

GOSF – What is not right about it!

The Great Google Online Shopping Festival (GOSF) is all over my timeline. To be honest, I also had my share of fun.

 

What went wrong with GOSF: 

1. GOSF was down.
The Official Site was down – gosf.in. That is ok, but just that we didn’t (No one did) expect this from Google. .

2. Everyone Got Invited to the Party.
Over 225+ partners were listed on GOSF.in. It looked like a directory of ecommerce sites. It should have been exclusive, invite only and curated.

.

3. Selection of Partners

What were Automobile sites, Property sites doing on Online Shopping. Some ridiculous offers included Rs. 10,000 off on your Dream Home (Really?)

GOSF-Deals0
.

4. Quality of Deals
Everything can be excused but not the quality of deals.
– Many partners (if not all) ran their regular promotions under GOSF.
– Deep discounting on Chinese & Unbranded products continued. Up to 90% off on such products.

GOSF-Deals
.

5. Efforts by Partners
– The participating partners (many of them) are marketing it just like any other event (Rakhi, Diwali, etc).
– Existing products & offers that were run for centuries got labelled under GOSF.
– Few sites had bugs (I reported couple of them – down side of knowing too many people).
– Many partners have not made any efforts to even put up even the GOSF banner on their sites or even deals.
.

 

GOSF will be still reported as Great Success. Why?

Post end of event, many Ecommerce partners will claim impressive numbers. I am sceptical of any numbers around the same attributed to GOSF or their own internal marketing efforts.

Because – This is how my inbox looks today:

GOSF-MailBox

Because – This is how my SEO & SEM looks today:

GOSF-SEOnSEM

Because – This is how on-site Marketing looks today:

GOSF-OnSite

 

Concluding Notes:

I am not against GOSF or Google or its Partners (Personally and also because I know too many friends / acquaintances who are associated with the industry). Its a great concept and if it manages to get ‘New People To Shop Online’ (those who never did it before) its a great win for everyone (all professionals) who has anything to do online.

I don’t want to end this note on post as a critic, so here are some suggestions for the next #GOSF:

  • Limit Partners under every category – Max 10 to 15. Limit Categories to 10.
  • Curated by Partners, Approved by Google – Real offers, real deals.
  • Limit number of products / offers by every partner to 100. Again real deals; feature them on GOSF.in
  • Instead making partners spend online (SEM) – It should direct all that traffic to GOSF.in and lets users choose what they want to buy. (Google did the same for Gmail launch).

Signing off. I was just being practical. And, One more thing…

Dear Accelerators

2 years back I wrote that India has a premature incubation model. Things have changed now – Accelerators / Incubators is the new trend here. Simply too many and too much buzz around it, its all smoke without fire. I had a unfortunate encounter with one of organizers of an accelerator who claimed that its program is more beneficial for startups than YC or 500 Startups. That incident still makes me laugh, wrote about it last year.

This post are suggestions to Accelerators and is based on my personal interactions with many startup entrepreneurs, investors and enablers in ecosystem.

1. Stop looking for startups with traction. 

Accelerators start by looking for startups with traction. Its puzzling, because startups with traction are looking for investors, not accelerators. Wouldn’t it be simply awesome if accelerators start saying – ‘Join us and we will ‘help’ you gain / build traction!’.

Unfortunately, since there are too many startups, the competition and market dynamics will not make this real. But seriously, can some accelerator stand up and say – ‘Join us and we will ‘help’ you gain / build traction!’. Entrepreneurs will have more faith & trust in you.

2. Be a little transparent.

Your metric for success is simple – success of the startups that have graduated from accelerator. Tell us that story, maybe you could learn a bit from TechStars that lists detailed performance of its portfolio companies.

No matter how flashy personal brand you manage to build for yourself, all that any entrepreneur really cares about is his / her own startup. So let startups that are applying to your program judge you ‘only’ by performance of your earlier startups.

And if your startup performance report is bad, here is some ‘free’ advice for you – pivot!


3. Prove your worth before asking too much.

With exception of few top accelerators, most startups end up applying at other accelerators after they have failed to raise investment from angels or failed to get through the top accelerators (yup, I am being practical – this is the reality!).

The top accelerators take between 5% to 8% stake in a startup for $20K to $50K. You be the judge how much equity should a startup give you, in my opinion it should definitely not be more than 5%. Don’t act too pricey, you will have to prove your worth before you ask for anything more. There are also bootcamps and acceleration programs that offer similar benefits for startups at no investments / no equity.

Also from perspective of founders, 8% to 15% dilution at accelerator (some startups go through 2 accelerators), 15% to 25% dilution at seed / angel-round, 20% dilution at Series A. By this time with a 10% ESOP pool, entrepreneurs are just left with their skin-in-the-game.

PS: And if you are adding clauses like permanent non-dilution; offering your (little) cash in tranches or after several ‘gentle reminders’ from founders – there is a special place reserved for you in hell.

4. Startups are not one night stands.

No matter how much accelerators would like to think they can change the fate of startups in matter of few weeks – they are wrong. Startups take years to grow, they are not overnight successes as many people perceive them to be and most of the growth comes once they face the real world (which is after the demo day). It takes time to find the product-market fit and it comes with multiple iterations on product.

Your so called focus on batch after batch, this sounds like one-night stand with startups. Founders have trusted you, please get into a long term relationships with the startups. Be there when they need you (and even when they don’t).

5. Your partnerships with Investors means nothing to startups.

Many accelerators ‘flaunt’ their partnerships with venture capital firms to startups and also occasionally drop names of influential angel investors. First time entrepreneurs are often misled by such talks and tend to think it as an assurance that they might be funded on graduation day / demo day or their chance of getting funded is higher through a accelerator.

Honestly – these partnerships mean nothing. Venture Capital firms are always on a lookout for their deal-flow; the word ‘deal flow’ explains almost everything in this industry. Any partnership that any VC has with any accelerator is only for the purpose of deal flow, they do not want to miss out on any hot startup but this partnership is definitely not a investment commitment (unless it is on lines of YC – $80K on convertible notes).

6. Be more transparent on utilization of time (and funds).

Not many accelerators (and also many entrepreneurs) realize that the biggest resource startups should be worried about is not money, its time. Time runs out fast, for everyone.

While there are programs and activities that directly add value in building product, any time that is gone outside of that (relocation, attending events, visiting places and so on) means staying away from building product which decelerates the start-up. Make founders aware of that well in advance – so that they can make their plans accordingly or alternate plans like one of the founder stays back and manages day-to-day tasks.

Same with funds, if there are any programs, costs (legal, travel, etc) that will require startups to pay the accelerators – please be transparent about them and mention that to founders well before they join the program.

7. Mentoring the Startups

The kind of startups entrepreneurs are building today did not even exist few years back. The skills startups required today are – design, data, distribution, product and technology. Unfortunately, we do not have great talent for these verticals in India.

So accelerators are getting investors to mentor startups, this is where the model starts falling apart. 99% of time the investor will be advising / mentoring the startup without using their product or experiencing its service! I don’t mean to offend anyone here, but the fact is – Investors should be investing, not mentoring! (unless they have skin in the game).

Take a break, read this post – Great Entrepreneurs will listen to you but will follow their own instincts.

Read 2: In 30 Days My Startup Will be Dead

Be valuable to the startups in your accelerator and get mentors who can really help them grow. Get Entrepreneurs or Senior Executives (who are entrepreneurial or proven achievers) and have skill sets that startup needs to mentor them. Alternative suggestion – get founders or executives from known Silicon Valley startups to mentor!

Mark Suster said few days back at PreMoney conference – ‘Networks of entrepreneurs helping each other are significantly better than board meetings for learning.’

8. Your over-extensive focus on demo day kills few of your startups.

If I were a part of any accelerator, I would have opted out of the demo day. Simply too much focus on demo day! Of the 12 week acceleration program, 3-4 weeks (effectively 33% of time) goes in its preparation, that is not all since you get in to meetings, introductions and so on, the chances are you will spend next 4 weeks on those follow-up meetings.

Mark Suster says it best – Demo days are showcase of who is best at on-stage presentations ~ coached and polished. They produce too much hype and too little value. Also in another post (more from a VC perspective), Mark explains the importance of proprietary deal flow for investors.

If you are observing this space – you would realize that even the startups graduating out of top accelerators are struggling to raise investments. Not all of them are getting funded or are able to close their investments quickly. Probable reason – too many startups? too much hype? could be anything else.

Elad Gill wrote a brilliant post on VC Signaling last year. I believe similar sort of signaling happens with startups in any accelerator too. In a batch of 20 – 40 startups, investors are bound to choose the best – the top 20%, or the best 4-6 startups that stand out on demo day, rest 80% startups will not find it easy to raise investment.

Worst is negative signaling effect, if any of the startups from that batch are unable to close investment in next 4-12 weeks post the demo day, it will be bit tough for them to close it going forward unless they get some significant traction.

So instead of flashy demo days, accelerators should focus on getting one-on-one interaction between startups and investors. Although it is apparent that from every batch there will be few standout startups., as an accelerator you need to give a fair and equal chance to every startup in your batch. For raising funds demo day works for few startups, but makes it difficult for many startups and unknowingly kills few.

Treat demo days as a demo day – show what product you have built! Not just to investors, but also to influential early adopters and potential partners.

9. Help startups with distribution. Not pitches.

Because of these demo day pitches, there is a certain glorification of startups – even before they are worth glorifying. Companies need to be glorified by their traction, revenue, customers etc not because of a nice punchline and a great deck. Demo days are setting a wrong precedent in the very first place. Pitching has its own importance but most founders today believe that’s the only thing to do.

I have said this multiple times – the easiest thing a startup can do is to build a product or pitch to investors. Toughest thing is – finding product market fit & distribution. Unfortunately, most accelerators are trying to help startups with easier tasks, not the critical ones. Startups don’t fail because of lack of money, they fail because of lack of product adoption.

If it is a consumer startup – accelerator should help it achieve its first 25K-50K users. If it is a enterprise startup – accelerators should make introductions to potential clients and help them get their first 25-50 paying customers. When a startup succeeds on this – they will not require to pitch any investor at all!

Concluding Notes:

Most accelerators ask startups on what they are innovating on, while they are trying to replicate the success of YC. The intention of this post is not to criticize accelerators, but a feedback for them on how they can start being more valuable to their customers – the startups!

Credits: Thanks to Kulin Shah (Co-founder at Wishberg) & Avlesh Singh (Co-founder at WebEngage) for reading the draft and their suggestions on this post.

Tracking My Tech Predictions: The ones that came true!

Over past few years I have been tracking technology trends, analyzing and love predicting things through posts on this blogs, on twitter or through my annual technology trends & predictions. I recently started tracking them in a attempt to see how good is hit ratio. Here are a few of those that really saw the light of day.

Other Tech Predictions mentioned on this Blog:

  • Feb 2010: Social Platform intermediaries in Social Commerce space with no clear value propositions will fail as larger eCommerce players will self-integrate.
    May 2011: Blippy / Swipely pivoted from core proposition – sharing purchases.
  • May 2011: TRPs will be questioned. Future of TRP is digital. Crowdsourced TRPs,
    Aug 2012: NDTV submits a lawsuit against Nielson alleging rigging TRP data.
    Oct 2012: Startup iDubba launches iTRPs
    Dec 2012: Nielson annouces partnership with Twitter for Twitter based ratings.
  • Sept 2011: Google+ will head no where as Social Product
    Today: Its evident! When did you last visit your Google+ profile.

From 2012 Tech Predictions:

  • April 2012: LinkedIn will acquire SlideShare
    May 2012: Yes, LinkedIn acquired SlideShare for $119 Mn
  • April 2012: Indian Ecommerce will see Acqui-hires
    May 2012: Snapdeal acquires eSportsBuy and then shuts it down.
    May 2012: Yebhi acquires StylishYou and shuts it down.
    Aug 2012: Hushbabies acquires MangoStreet and shuts it down.
    Aug 2012: FashionandYou acquires UrbanTouch, UrbanTouch management takes over.
    Related Post by me: Why Ecommerce acquisitions make no sense in early stage.
  • April 2012: Jabong will be aggressive play by Rocket Internet. Will be in Top 5 Ecommerce players in India
    May 2012: NextBigWhat apparently pointed out that they are.
  • April 2012: Series B crunch for players focused on vertical ecommerce.
    Evident: Many ecommerce startups who raised Series A struggling raising a follow on round.

From 2011 Tech Predictions: 

  • Jan 2011: VCs will consolidate Indian Ecommerce plays within own portfolio
    Feb 2012: Flipkart acquires LetsBuy
    Nov 2012: Myntra acquires SherSingh / Exclusively.in
  • Jan 2011: A large player will enter Group Buying / Coupons space
    May 2011: Times Group enters daily deals business with Times Deal
  • Jan 2011: Pubmatic will be acquired
    Nov 2011: Rumors of Pubmatic in acquisition talks by Amazon. Pubmatic turned it down for IPO
  • Jan 2011: AdMax Network
    Feb 2012: Hinted towards AdMax Network in SE Asia which leveraged local inventory and is a leader in these countries. While I expected something like this to happen in India, interestingly Komli acquired AdMax (No direct prediction here).

Repost + Update: Isn’t it time to re-look how TRPs are measured?

Few days back ( last week of July 2012) – NDTV filed lawsuit against Nielsen for manipulating TV & viewership data. Medianama highlighted few key notes from that – posted here. Later learned that even Prasar Bharati was considering legal action against TAM.

All of this reminded me of one of the posts I wrote last year (May 2011) – Isn’t it time to re-look how TRPs are measured?. Re-posting the same with small edits to reflect change over recent events and few additional notes.

—–

This post is dedicated to John Wanamaker, credited for setting advertising standards and considered by few as father of advertising. John Wanamaker died in 1922. Had John lived today – he would have some interesting quotes to share on RoI in digital advertising. This post is inspired by one of his very famous quotes – “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”


The term RoI became a buzz word ever since Digital advertising started to gain prominence in last few years. Talk to any brand manager today on digital spends through any channel – Search, Social, Display or Email – his quick conclusion on effectiveness of any campaign will be based on ROI. Online advertising has taught digital media professionals to be ROI-driven.

Pitch any campaign today on Digital – both Brand Manager and the Digital Marketer sound no less than a Investment Bankers trying to advice its client on a multi-million dollar deal discussing on its investment, returns, profitability and more. The same Brand Manager or Media Buyer will simply look at TRPs of any channel/program and allocate about 50% of its media spends to Television, distribute a significant chunk between Outdoors, Newspapers, Radio and leave a minuscule 5%-10% to Digital.

Well, this post is not about how Digital Medium today is perceived as ROI driven. This is very unlikely to change in coming years, maybe it is standard now. The question to raise is – isn’t it time to re-look how TRP ratings are measured rather than blindly accepting the reports as provided?

First – to know more about what is TRP and how they are measured using people meters – read this excellent post on Television Point.

For those who have not seen a People Meter – here is one below:

People Meter

credit: image source

 

Here are some questions usually asked about the authenticity of TRP ratings –

  • In India – TRP People Meters are installed only in 16 cities across 9 states; Less than 10,000 people meters are installed – would they be good enough to reflect insights on Television Viewership of a country as large and diverse in demographics & culture as India? (TAM on its about us section says 8150 homes in over 165 cities & towns.)
  • There is little or no transparency on number of households with People Meters installed, techniques of data collection & interpretation, and how the data is extrapolated to whole population. Are there any validations if the meters were correctly operated (they look difficult to operate) and data collected the way it should have been?
  • People Meters were always perceived as expensive devices since invention; with advancements in technology – why have the People Meters not proliferated to a wider reach? This QnA on Nielsen website suggests the cost is $5000 per year (which includes multiple operating and labor costs). Btw, a technologically advanced device like iPhone is much cheaper!
  • Is there any control by Government authorities on collection of this data and authenticity of same.
  • How will any marketer, advertiser or broadcaster challenge authenticity of the TRP ratings released.

And in world of digital economy, let me add few more questions to above arguments –

  • Now people are socially connected through social networks, it is very difficult to spot people who mention they have subscribed to People Meters (note – it is mentioned that their identity is secret.)
  • On Google’s image global index – there are not many images when you search for “people meter”.

In today’s world anything that happens in offline world leaves a footprint online. Absence of digital footprint for “people meter” wants me to question the proliferation of such devices in real world.

 

The DTH Effect –

Direct-to-Home (DTH) or Satellite Televisions are today immensely popular amongst masses. In India – its reach is 44 Million subscribers in November 2011; and India is probably the world leader in DTH subscriptions now. 44 Million would be a better representation of viewership data – compared to the dismal < 10,000 people meters installed in India.

aMap works with DTH service providers – but it is unlikely to capture data across all subscribers and might be following the people meter approach. Brand Managers are believed to be more inclined towards TRP ratings provided by TAM for decision making while aMap ratings are for reference.

Its most unfortunate if DTH platforms are unable to track viewership data. That is like Air Traffic Controllers saying – there are 500 planes in skies today – we are unaware of their origins & destinations, can confirm with pilots only when they land.

 

TRP Measurement – Its time to Change!
Fundamentally – People Meter approach will always be poor representation of the population. As spends on digital media start increasing and reaches a critical mass, sooner or later TRP measurement will be questioned by same decision makers who accept it blindly today.

Existing global players like Nielson, TNS, & others involved need to look beyond people meters – either with a better people meter / larger base for viewership data / or else a Government, TAM or another Neutral agency making it mandatory for DTH service providers to track viewership patterns.

Fortunately or Unfortunately, the future of TRP & GRP measurement will be digital. Here is overview of how possibly TRPs will be measured in digital world –

  • Develop applications across digital channels – Internet, Mobile (Java, iOS, Blackberry, Android, Symbian and others)
  • For every location (geo by country / location) – populate information stream of programs currently broadcasted at that time.
  • Allow users to select the programs they viewed and report the same back to the measuring system through the applications.
  • User demographics will known at time of App-Registration / FB Connect / or otherwise.

There may be ways to authenticate user viewership patterns. Instead of focusing on data collection through people meters, with same efforts & resources – it will be possible to crowdsource viewership data for programs and channels across millions of users – all in real time. The challenge for this apps will be – what incentive will consumers have to report such data.

Had toyed the idea of crowdsourcing public data – on Twitter / Facebook in real time to develop a WRP (Web Rating Points for Television Viewership). But for now this too might be a challenge – currently it is reflection of TIER 1/2 audience hooked on to Social Networking, which too will be a poor representation of diverse India (maybe another set of ratings that will be questionable like TRPs); Another challenge being – its far more easier to create duplicate accounts on Facebook / Twitter and further much easier to manipulate ratings.

Like many internet products today follow the rule – mobile first, web later; Television viewership in few years will be – digital first. And so will the viewership ratings or measurements too. You never know – maybe a Hulu.com or YouTube.com will provide us the future TRPs. Please glance through some of earlier thoughts shared on – The Future of Television.

Even in India, we are seeing a bunch of startups building products around Television Content – like iStream, iDubba, WhatsOnIndia, others. There is definitely some opportunity here for viewership tracking when ‘digital first’ television behavior picks up.

Future Prediction – by the year 2022 (exactly 100 years after John Wanamaker passed away) – people meters and traditional TRP measuring practices will be obsolete. They will be measured through digital medium! John Wanamaker would have proudly said – “Thanks to Digital, I know exactly which half of my advertising money is wasted!”

Why Ecommerce acquisitions make no sense in early / nascent stage

Few (Series B / Series C) funded ecommerce companies in India have started making/announcing acquisitions of smaller players. Recently when I posted about the 2012 Predictions & Trends, I made an comment that in an early ecommerce market, acquisitions of competition or startups really makes no sense. Trying to put few thoughts on that here.

A typical such small ecommerce startup that gets acquired by larger & known ecommerce player is structured as follows –

  • About 2-4 founding team members; 5 to 10 employees; up to 25 or so if the venture has received any institutional stage funding
  • Focused on one vertical – sports; electronics; kids; jewellery – Catalog of 1000 to 10000 product SKUs
  • Order Acquisition Channels – Direct Traffic, SEO, SEM, Social, Affiliates, Email Marketing, Display Advertising.
  • Team Structure: Founders, Product Development & Management Team, Online Marketing, Category Managers, Logistics & Operations Managers, Customer Support
  • Social Media presence – Fans on Facebook; Followers on Twitter
  • Business Partners – Vendors for Procurement, Logistics, Payment Gateway, Customer Support
  • Product, Platform & Technology
  • Warehouses & In-house logistics for Series A funded players
  • Gross Orders – between 50 to 100 per day; few Series A funded players may have from 200 to 500 per day.

What happens when a considerably large & deeply funded ecommerce player (say LargeEcom.com) acquires a small startup (SmallEcom.com) with assets as mentioned above –

  • Category Focus:
    SmallEcom.com will be either a horizontal player or vertical focused player. If horizontal, then most of the products will be already present in acquiring company. If vertical then it might be a small ecommerce startup with about 500 to 5000 SKUs, the acquisition further does not make any sense. The acquiring LargeEcom.com could have directly poached category managers or could have developed that category in-house just by hiring few more category managers!
  • Order Acquisition Channels:
    Any online ecommerce venture’s assets are how they are acquiring new customers. The biggest challenge is not acquiring SmallEcom.com, but making the most of these channels. Post acquisition, these channels are ‘unfortunately useless’ to the acquiring company – LargeEcom.com. Here is why –
    .
    • Direct Traffic >
      If website of SmallEcom.com needs to be shut, the direct traffic will be redirected to LargeEcom.com post acquisition, doing that quickly reduces the value to its existing users. If website is shut – value of all other channels die on its own, explained below.
    • Natural Search or SEO >
      SmallEcom.com’s URLs in Google Index no matter how well optimized will lose rankings when the traffic is diverted to another domain. All time and money invested in search optimization over months / years is diminished immediately.
      .
    • Paid Advertising: SEM & Display >
      Search Campaigns are optimized over a period of time to reach lower the cost per clicks. Though the same can copied from SmallEcom.com in to account of LargeEcom.com’s adwords account, the same CPCs will not be maintained. Well, otherwise the acquiring company LargeEcom.com’s has its own online marketing team, it will be a max one week job to create new campaigns for the catalog of SmallEcom.com.
      .
    • Social >
      Post acquisition, SmallEcom.com’s Facebook Fans & Twitter followers cannot be moved to LargeEcom.com’s brand page or twitter handle. Again – value of the time and money spend behind this channel is reduced to zero on day 1 itself.
      .
    • Affiliates >
      There are few affiliate marketing companies in India, they work with all ecommerce companies. Most likely LargeEcom.com would have better negotiated rates (cost of acquisition) with the same affiliate partners thats SmallEcom.com has partnered with.
      .
    • Email >
      There might be few duplicate email addresses, but is this a reason for LargeEcom.com to acquire a ecom startup with a small number of email addresses knowing that email marketing has diminishing returns over a period of time.
      .

The conclusion is – to retain the value of the startup’s order acquisition channels, the venture needs to be up and running. The big question for large acquiring company – should be it done at a cost of duplicating every resource available – two marketing teams, two product teams, two tech teams, two customer support teams or two operations teams?

The answer is No in both the cases – that is why acquiring a ecommerce startup is senseless; and most of them happening in India now can be termed as Acqui-hires, hired for talent.

  • Founding Team:
    The founders are retained, most likely to quit post the expiry of retention period. Once entrepreneur is always a entrepreneur by heart.
    .
  • Team Structure:
    Post acquisition, most roles will be dual and overlapping in both organizations. Unfortunately many cannot be accommodated since the larger entity cannot have – say two Online Marketing Heads or two Operations Head. Only in the case when the acquiring company has open positions, high chances that the team members are accommodated, else asked to quit.
    .
  • Business Partners:
    Vendors for Procurement – will be added to LargeEcom.com if it was acquiring a vertical ecommerce player and was not present in the same category. Most likely, this will not be more than 100 new vendors; again which could have been easily acquired just by hiring 2-3 new category managers (so why acquire?). If horizontal player was acquired – there would a overlap in vendors too.
    .
  • Logistics & Payment Gateway:
    LargeEcom.com would already enjoy better pricing for both with its partners, needless to say they both work with similar service providers for logistics. Acquiring a startup will not increase footprint in terms of pin-codes served.
    .
  • Customer Support:
    In a small startup, customer support is usually handled by a very small team; often by founders. If acquisition is across city – a Delhi based startup is acquired by Bangalore based one, clearly means that the team is either axed or goes on job hunting mode as they would not be open to relocation. This also holds true for other teams as well.
    .
  • Product, Platform & Technology: 
    The smaller startup that gets acquired will probably be running a ready-to-integrate ecommerce platform. Surprisingly, even the larger acquiring company might be as well running on some ready to use ecommerce platform and struggling to hold it up. There is absolutely no question of seamless integration here, ask your engineering folks! Either ways, since the acquisition is not for technology, the product and platform improvements on the smaller startup’s ecommerce platform will be lost as well.
    .
  • Warehouse & In-house Logistics:
    Few funded startups today have started with own warehouse & in-house logistics. Post acquisition, the lease on such warehouses expire (for two reasons – acquiring ecom startup already has own warehouse in that location with excess space + managing two warehouses in same city at a distance from each other means doubling operational costs). In-house logistics employees are either temps or contract workforce or on rolls of another company.
    .
  • Gross Orders:
    The SmallEcom.com site that was just acquired was doing about 50 to 200 daily gross orders; The LargeEcom.com site who acquired it will usually claim to do between 10,000 to 25,000 daily transactions. On order to order basis – acquiring an loss making ecommerce startup that will does 0.5% to 1% transactions will add any value to large entity? No.
    .

So why are these acquisitions happening?

  • New Vertical?
    No. It is not right to acquire a company for say $1 Mn or even 1 Crore to add new category to your product portfolio. Hire two category managers and have the new vertical rolling in 3 months.
    .
  • Acqui-hires?
    No. They happen if it was a case of known proven talent who build a super kewl product / technology platform but did not hit a right idea or execute it well. Examples – Oink (by Milk), or Gowalla and so on.
    .
  • Revenues?
    No. A large loss making ecommerce entity acquiring another loss making small ecommerce startup – two negatives don’t add up to positives.
  • Assets? No.
    Clearly no assets are doubled post the acquisition. Nothing on revenue, product, process or technology.

May be signs of desperation. May be lets try out something new. May be even VC / PE signaling – ‘Hey, we guys are growing inorganically, new category, new vertical and so on – we will require more investment capital in next rounds, care to participate?’. They may participate or may not – but is this a right strategy to present or package to existing investors where the net value of acquisition post 12 months (or even on day of acquisition) is zero.

However, some acquisitions do make sense – Homeshop18 acquiring Coinjoos or Flipkart acquiring Mime360. (Sorry – I don’t name bad acquisitions). Venturing into new vertical at times makes sense for acquisition – for verticals like huge catalog driven businesses – Books & Digital Music. It takes months together to build a team and build this massive catalog and then start business operations; acquisition makes more sense than building it grounds up; but not for any other category.
.
So Amazon.com acquires? Why can’t we?
Amazon acquires cause it should acquire and own large ecommerce companies to maintain its undisputed lead. It is a listed company, needs to focus on growing is topline revenues and at the massive size that Amazon.com is – it has capacity to absorb losses and yet show some superb green numbers in balance sheet.

My guess is Amazon keeps all acquired ecommerce properties (Zappos, Woot, Diapers, Soap, Audible, etc, etc) live and independent post acquisition not alone for the culture of startups – but for reasons explained above. They need to maintain order acquisition channels for these acquired companies active and generate revenues.

While in India, a Series B / Series C funded ecommerce venture cannot run dual operations or two loss making entities.
.
Concluding Notes:
I am not against acquisitions & exits, they are must for startup ecosystem. And they should be in plenty to keep the ecosystem building. But don’t agree with such acquisitions made by Series B / Series C funded ecommerce companies which end up adding no value to the company. They hurt in long run, when multiple investors get involved – burn their hands and then completely give up on the sector or market itself.

Otherwise I will stick to what I wrote earlier on predications for investments made in both horizontal & vertical ecommerce in India.

 

Predictions 2012: Technology Trends; Investments & Biggest Exits in Indian Internet / Tech Space

This post is a update to one of my earlier post written about a year ago on similar lines.

Multiple new products, investments and its always a good thing for the ecosystem which matures with time. Indian tech industry is changing at a rapid pace, its only fair to go back and recheck those predictions and ensure to keep it up with the times.

Meanwhile, predictions that came true:

  • Had indicated the possibility of this particular VCs (without naming specifically, though evident who) investing actively in Indian Ecommerce merging its portfolio companies to form an large entity. Just few days over a year after this prediction, Accel and Tiger Global backed Flipkart acquired Letsbuy.
  • Mentioned that a large player will enter Group Buying deal space. The coupon/deal space was too tempting for many to resist at that time and as I expected, Times Group (Indiatimes) entered this space in May 2011.
  •  Specifically mentioned of Pubmatic being acquired; There were rumors about a possible acquisition offer by Amazon for $300 Mn which was declined as the company chose an IPO over acquisition. Meanwhile Google acquired AdMeld for $400 Mn.
  • Hinted towards AdMax Network in South East Asia which leverages local inventory and is a leader in these countries. While I expected something like this to happen in India, interestingly Komli acquired AdMax. (Though I did not predict this to happen).

 

Predictions for 2012 onwards:

Product based Ecommerce companies:

Flipkart, HomeShop18, Infibeam will continue to grow; and (no brainer now) that Flipkart will emerge as the market leader amongst the Indian players. I expect Flipkart and these leaders to attempt the following –

  • To ensure profitability of logistic operations, either introduce upfront minimum charge for Cash on Delivery below a certain price value or markup its prices by a small amount.
  • Introduce a co-branded credit card with rewards. Not as a branding or marketing exercise, but to encourage existing users to move towards pre-paid payment mechanisms.
  • Spin-off its logistics, customer care, operations departments in to a different company to ensure profitability of Flipkart before it hits an IPO.

Though many criticize the Samwer brothers (Rocket Internet) for creating copies of successful business models – I see nothing wrong in that. How different are any of the other ecommerce sites with their Amazon.com ambitions? Rocket Internet fellas are aggressive risk-takers, investors and amongst their bets on Indian market, Jabong.com has potential to enter in the top 3 / top 5 spots. At some point of time – they may consolidate Fabfurnish.com and HeavenandHome.com into Jabong and set a stage for IPO or an exit through acquisition (Amazon.com?). Rocket Internet is as smart as any other investor when it comes to getting acquired. Watch them!

Marketplace models like Ebay, Indiatimes, etc may face tough competition owing to their helplessness to control key factors like logistics, operations and product quality; precisely what funded startups are keen to build on.

There are now niche plays coming up – Ecommerce services for Tier II/III towns. Most likely candidates to struggle, conceptually sounds great – but the on-ground reality is much different. Will they not accept user orders if customer is from Mumbai or Delhi? I know you talk about ambitions of Tier III youth, age bracket 20-35, etc – but do they require iPad? if yes – why will not Flipkart serve it.

About Amazon’s India plans – I mentioned of the same in this post about about Junglee.
.

Vertical Ecommerce and More –

Many ventures who have raised between $2Mn to $5Mn – are yet to move beyond the 500 transactions per day mark even after a year. Few yet to cross 200; scalability is must for any Ecommerce venture to succeed. Verticalization of ecommerce has happened before time.

Predict more consolidation in Ecommerce industry in vertical investments. Simply for the following reasons –

  • There will be a Series B crunch. Most investors have already made multiple investments in ecommerce services. Companies will face tough time raising further investments and will require to raise Series B investments from existing investors. Investors hedge risk by investments in multiple ventures, they will require deep pockets to put more money in one venture, diluting founders more and eventually controlling the company. This shall lead to multiple consolidations between portfolio companies (Flipkart + Letsbuy scenarios).
  • There are multiple vertical funded ecommerce companies in market today. This has happened before time, for verticals to succeed, the horizontal ecommerce play itself should be very large. This is exactly why ventures like Flipkart (books), Letsbuy (gadgets), Snapdeal (coupons) who started as niche expanded into horizontal play.

Few players who have launched multiple sites for focused ecommerce approach, other than doubling costs of user acquisition, the only notional benefit it brings to table is SEO. This might not be even proved in Indian context – though a different vertical, we see that Shaadi.com with single brand focus is as popular as Bharat Matrimony with its multiple brands.

Another trend in Ecommerce is online grocery shops – at this stage most of the ventures are focused in single cities, the challenge for every startup in this domain is to replicate this operations in every city, every locality they expand into in a same or much more efficient manner. Unaware of any investments made in this vertical yet; I’m guessing investors are also looking at same – scaling beyond 2 to 3 locations.

Ecommerce for kids – someone shared a joke with me ‘Probably the rate at which online baby stores are coming up is greater than growth rate of India’s population.’ Very little differentiation between existing players, some of them already moving towards a franchise model (which probably beats the economics of online stores).

Amongst vertical investments – many have happened till date in Fashion. This is an interesting space, however already crowded with no differentiation left. Increased cost of user acquisitions, operations and logistics along with Series B or follow-on investment crunch will take a toll on few players. Funded players will try many things – new brands, labels, etc. The question always will be – what differentiation to bring to table? what exit for investor?

There is also a serious talent crunch with many funded ecommerce players, not just at junior but at middle and senior management levels. Another trend that will come up soon is acquihire deals.

Trend you will notice soon – the last slide of pitches will now read acquisition by Flipkart, instead of Amazon. But in an early ecommerce market acquisitions of competition really makes no sense – will write about this some day.

.

Group Buying / Daily Deal / Coupon Companies:

Post the Groupon IPO, the obvious was out – this is not a profitable business to be in. Even the leaders moved away from the Group Buying space – tells us the story of Group Buying or Daily Deals. Has suggested last year that funded players will grow, they did but by pivoting to product driven horizontal ecommerce.

The Groupon IPO spoiled the party for many others who were waiting to be acquired by Google Offers or Living Social. Amazon is know to build large profitable businesses, though Living Social has raised a massive $800 Mn+ in investments till date – its fate might be uncertain. Either hit the dead pool or an acquisition by Groupon itself at a very cheap price!

Back to India, there is nothing much left to say now for this vertical, its just a matter of time when large me too companies who joined the party will start calling it quits. Ebay who experimented with it silently abandoned its play, others like Times, Rediff, Mouthshut will too have to review their presence in this vertical in some time.

Some significant players who made presence felt in the couponing space are – online recharge players like FreeCharge & PayTM. It is too early to comment on their exit, however its a interesting vertical (specific only to India) to watch for following reasons – operators doing something fundamentally wrong as own customers pay bills outside, multiple players have entered the segment, players need to retain consumer interest without causing deal fatigue.

.

Online Travel Companies:

Not much changing in travel landscape. As mentioned last year – Yatra & Cleartrip are clear IPO exits. Last year MakeMyTrip and SAIF acquired Ixigo, Yatra & Cleartrip might as well look at smaller acquisitions in this space, particularly players in holidays/vacations – the likes of mygola.

It has been a while that Naspers/MIH has invested in ibibo; with ibibo.com focusing only on games from now, it might look at some kind of exit with Goibibo.com. Meanwhile, Naspers / MIH / Ibibo might look at acquiring one or two startups either in gaming/travel domain to solidify these two verticals, or to expand in to new verticals since they clearly indicate focused growth now with Gaming (Ibibo), Travel (GoIbibo), Ecommerce (Tradus) & Automobiles (Gaadi).

RedBus.in is the clear leader in online bus ticketing space, it will continue to be IPO candidate or hot acquisition target. Owing to high valuation of RedBus, its now noteworthy competitor TravelYaari will be in better position to be acquired – in all probability by Yatra / Cleartrip or GoIbibo.

Repeat – Dear Railway Ministry, please list IRCTC on stock markets. Massive opportunity.
.

Online Car Rentals:

Just two years back we saw host of daily deal sites, in last month we have seen about 4 investments made in Online Car Rentals space – Ola Cabs, Savaari, YourCabs and TaxiGuide. Predict Ola Cabs to take a lead in this space – and be a possible acquisition candidate for Uber.

This prediction is not based on the fact that they have raised highest of the lot – because its strategy is right. To be successful in this space, they need to concentrate only on the top 8-12 metros, 90% of their target customer base is in these cities. A smart online car rental service will start only in cities where fleet cabs like – Meru Cabs, Easy Cabs or others have significant presence and created the market. For now, more cities just looks good on paper.

Time will prove this right or wrong – as for now, this vertical has just started showing signs of growth (and already getting crowded). It kind of makes sense for Ola Cabs to make a small acquisition in this space and expand quickly.

Advertising Networks – Web / Mobile:

Last year I suggested that this particular vertical is hinting saturation of market. Out of the existing lot (Tyroo, Komli, Ozone Media, AdMagnet, and other players) – clearly Komli has grown out of India and with its series of acquisitions (Aktiv, ZestAds, AdMax) is trying to position itself as large digital advertising company in Asia, indicating its preparation for an IPO or could be acquired by large agencies like WPP, Dentsu, Publicis or similar.

Unfortunately for India, there is not much technology play in advertising networks, most end up working in model similar to agencies (except the creative part). But few niche technology players in this domain are Sokrati (Paid Search) and Vizury (Display Re-targeting). Both have raised smaller investment rounds earlier and could be good acquisition targets; unlikely for Komli for its partnership with Efficient Frontiers (for search) and display re-targeting has been mastered by many now. Of all players, Ohana Media* could be a acquisition target – its behavioral marketing techniques that combine audience data across channels is amongst the best differential technology available in India today.

Tyroo recently acquired DGM India for $0.6 Mn. DGM was India’s largest affiliate marketing company – a small acquisition size may play spoil sport for couple of startups wanting to monetize through shopping / affiliate related models and currently looking to raise funds.

InMobi continues to be the hot IPO candidate in this space. Google acquired AdMob when advertising on mobile web was at its peak time; current mobile advertising focus is shifting towards in-app advertising, which might even make it a acquisition target for Google (Android) or Apple (iOS devices). New players like Vserv or others would have to build a product sweet sport – number of publishers, impressions available per day and so on, very early days for them.

Guruji seems to now have completely focused its efforts on AdIquity – its mobile advt yield optimization and mobile RTB platform (similar to Pubmatic, but for mobile). Good strategy, may provide exit for its investors by a quick acquisition by InMobi or even by Pubmatic or other web based RTB players like Rubicon Project). As Google continues to mess up its core product – search, it is high time Guruji re-look its search business, not for India but for the world (like duckduckgo).

Pubmatic – is IPO bound. Last year I mentioned them as a potential acquisition target. Its obvious Google spoke to them before acquiring Admeld, they reportedly reject Amazon’s $300 Mn acquisition offer.

*full disclosure – I was earlier associated with Ohana as head of product & marketing. the name was skipped last year due to my association.

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Education:

Many people in investment circle say repeatedly that Education along with Healthcare are hot segments ripe for disruption. Well it is, and a majority of them don’t have a clue what that disruption will be (this includes me). There are already multiple investments made in this Education domain till date, most of them unfortunately will be write-offs and struggle for their next institutional round.

Startups / Investments in Education sector can be classified following segments –
a. Entrance Tests (Online test preparations services)
b. Online Applications (Choose college, careers for India & Abroad)
c. Virtual Classrooms, Online Tutors (self explanatory)
d. Hardware Plays (Education Devices & Tablets)

Startups in A & B –

  • Over crowded space (many funded players, pivoted players, existing players with deep pockets)
  • Though India has lacs of students every year; the choice of colleges are limited – Top 25 colleges are key in every stream (MBA, Engg, Medical, etc). The long tail of 10,000+ institutes does not matter. For the skewed supply-demand ration, these top 25 colleges will attract students anyway. If startups are paid commissions for referrals from Tier-2/3 institutes – to monetize these startups might be recommending colleges that they should not otherwise.
  • Consumer value does not extend beyond 1-time use of service.
  • Students & Parents rely more on taking (free) advice from their friends and family; or people in social circle who can share recommendations.

Startups in C –

  • Fancy names – cloud campus will not do much for its business. Internet is and always was cloud.
  • The best content driven organization – Khan Academy. Its free.
  • Changing syllabus, all online courses need to be revamped. Content heavy services, high cost of content creation; no control on content piracy.

Startups in D –

  • Foolish attempts. Anyone who thinks they can proliferate new tablets for education only are bad students of internet.
  • Education is a content play; not hardware play. Students today have access to computers, laptops and soon Android tablets (steep decline in prices). Instead of building new devices – try delivering content to devices students already have access to.

Education by nature is largely offline category and service oriented. Most of these startups are attempting to package them as products, but will be largely service driven plays behind curtains. Investors care about multiple returns on their investments – will they get 10X returns, I doubt.
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SaaS Products:

The fascination for SaaS products continues with investors and will go on for some more time. Since these investments are in very early stage, it will not be appropriate talking about exits. No one has tried to classified SaaS products yet (not to my knowledge) – but let me attempt it as following:

There are Consumer SaaS products that follow a freemium model – Dropbox, Evernote, Hootsuite, Skype and so on, and there are Enterprise SaaS products.

  1. Business SaaS products priced by usage – Typically products that cater to large business spends. Example., Clickable (catering to online advertising), Interview Street (Hiring) or Amazon AWS (Hosting & Computing), Box, 37 signals, etc.
    Companies will continue to spend more on advertising, hire more with time – hence more revenue potential for these startups.
  2. Business SaaS products priced by featuresBill.com (Online Billing), RingCentral (Virtual 800 number), Xero (Accounting), etc. Best way to identify them is the pricing, the revenue potential of such products will not grow significantly as its users grow.

Restricting only to Business SaaS products – Type 1 SaaS startup will maximize its revenue per user as its customers continues to grow, spends more on advertising, hire more, use more hosting, etc. Type 2 SaaS startup will require more clients to maximize its revenue.

Amongst Indian SaaS products, currently Interview Street is probably in the best position to be acquired (may be by LinkedIn). Freshdesk is also a great product, that has a long way to go building a differentiated model from its competitors (which are in plenty). Another Indian SaaS startup I am a big fan is Practo, but it might take them a while to be considered for acquisition since technology is yet to transform health industry, most big giants in health-care yet to embrace tech.

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Online Gaming:

We will continue to hear of online gaming for few more years, examples of Zynga or Rivio (Angry Birds) for some more time to come. Will there be a exit for any player – No. Take clues from Zynga’s $200 Mn acquisition of OMGPOP – it takes a hit game like Draw Something (massive traction with over 10Mn installs in first 30 days of launch, and cross 50Mn+ early this month) to be noticed and get acquired.

Same happened with Rivio for Angry Birds. The key is simple – keep building till you get that winning game on hand.

Online Matrimony:

Nothing changes here. Bharat Matrimony is profitable play to my knowledge and is looking for its IPO towards the end of this year or early 2013. With Shaadi.com – unsure of its IPO happening any time soon, just as Ias mentioned last year, very unlikely before Consim Group.
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Online Classifieds:

JustDial as known by everyone is heading for IPO. The online-offline model and discovery through phone & web seems to have really worked for them. Really wanted to write something about other players in this segment, but they seem to be busy monetizing more through Google Adsense – so leaving them to rust in peace.

The whole hype about Craigslist was probably the reason why everyone got on to this play. Having said that, not just in India – but globally the online classified vertical is now open to disruption – there are interesting startups like Taskrabbit, Zaarly and more.
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Applications:

Waiting for an Kodak (Oops, I meant Instagram) moment? You may see it soon with Saavn. Amongst all the apps I have seen till date, Saavn is the hottest in terms of distribution, reach and usage.

Tweeted this once – Flipkart should acquire Saavn. There are multiple synergies – Saavn has a vast catalog (subset of Flipkart’s digital service Flyte) and Flipkart has no mobile presence for its digital service. Rather than building a mobile app, waiting for its distribution, Flipkart can start monetization with Saavn’s near 10 Million users from day 1.

Expect in next year or two, this section will have more (and interesting) names!
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Other Exits related to India –

  • Slideshare – expect it to be a great exit story. LinkedIn should probably evaluate the opportunity, once business contacts are made – its time to prove move ahead on keeping them engaged with business content, Slideshare is an excellent fit for then; the other player is of course Quora as written earlier.
  • BookMyShow is another super product in making. Scalable web business models are all about aggregating demand/supply – BookMyShow is well positioned and has all potential to be the largest entertainment company in India.
  • One97 is also set for IPO.
  • Another company I admire is Zomato – but for whatever reasons the company is focused on content and is not building a great product. There is so much more they can do in this space, not sure why they are happy with old & simple play of content + advts.

 

No Clear Exits:

My list of no clear exits has some new names. Like last year – SMS Gupshup, PayMate, mChek continue (read: what problems are mobile payment services trying to solve); will add SeventyMM, SatNav & MapMyIndia to that list (Google Maps and GPS on smart phones has played flattener for their offerings).  For reasons mentioned earlier – majority of players in Online Classifieds & Education vertical have no clear exit plans. Also Onward Mobility (if continue with offline distribution of their apps) is on the list.

Have taken off Guruji from the list – for reasons explained above. They will exit for AdIquity, not for its search business.

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Concluding Notes:

All views are personal opinions indicative of on-going trends, don’t take them too seriously. I was outright rejected by one VC when applied for role as technology (internet + mobile + new media) investment analyst for lack of relevant experience. A top consultancy firm thought it was in our mutual interest not to join them 😉

The only unfortunate part of this post is taking names of startups/companies, many of them founded / managed / invested in by people I know personally and have great respect for; few as friends, entrepreneurs & acquaintances. Having said that, I analyze trends and will be really happy to be proven wrong by passionate entrepreneurs. When it comes to investors, admire those who have placed their bets on companies or products where exits are/were not obvious. That is what risk-taking is all about!

Cheers till them. Will revisit these predictions next year.

Have a different opinion, would be great to hear. Write to me on pj@beingpractical.com / follow on twitter.com/beingpractical.com

What has Product Management got to do with Ecommerce?

Everything! No, that will be a over statement. But it is definitely an integral part of value chain, which is completely ignored by many Ecommerce services in India. Few completely clueless about it, on what product/platform to develop and often mistake UX as product management (which is also an important function in itself).

Ecommerce is (still) hot. In a domain that has many funded companies today in this space; everyone is struggling for differentiation. With an exception of few; to say that we do more products in one category; we have strong vertical focus; our cost of acquisition is low; our seo is better; etc, etc – does not make any sense. These differentiating factors can be replicated overnight. If everyone is on-board same plane, its absurd to claim that someone will reach destination before others.

Rather than subjective opinions about Ecommerce which are in plenty already, this post is specifically targeted towards one aspect – Product. Internet businesses are all about building awesome products backed by a super technology team presented in an intuitive user-experience, nothing else. Its kinda unfortunate to see dollars spent on advertising by companies that have raised investments that continue to run on ready to use Ecommerce platforms installed over-night.

I’d be happy to see fellow entrepreneurs implementing / following basics of ecommerce product management and investors emphasizing focus on product before writing their next cheque for yet another ecommerce investment. On twitter (@beingpractical), I have tweeted number of times about lack of product focus by Ecommerce companies in India – here is why I keep saying that.

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1. On-Site Search:

The way Google is gateway for searching the web, same applies for on-site search for users to discover the 100,000+ products in catalog. On-site search as a discovery tool should contribute minimum 15% of all sales generated. A kick-ass search algorithm should contribute to 30%-35% of total sales.

On-site search is broken if –

  • Total search queries per day < Total unique visitors per day
  • 20% of all search queries generated show zero results
  • Even a single search query of Top 100 searched keywords shows incorrect result in position 1. For next 400 keywords, in first 5 results.
  • Contribution of transactions generated through on-site search is < 15%
  • Order Conversion Rate of onsite search is < 2X of site average.
  • Option to search on homepage is not prominently highlighted; Take clue from Amazon.com – as you always do 😉

What users search for on your website is the true-indicator of what consumer demand is. Rather than bidding for expensive keywords on paid search, analyze how effectively on-site search queries can be converted to actual sales.

To simply put, if X effort is put behind search engine optimization & Y effort is put behind paid search marketing, then effort spent on on-site search should be X + Y.

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2. Search Engine Optimization:

Why SEO is mentioned here? Because content experience should be delivered as a part of product. Many Ecommerce sites continue to believe that search-bots transact online and their product pages forcefully include content snippets. Design web pages and build user experience keeping real users in mind and not for search-bots.

SEO should be integral part of product, not random content/text written and inserted across product or category pages merely to increase keyword density of the page. Understand dynamics of content wrt to product in catalogue. There will always be two types distinct type of products – standardized (eg. Canon PowerShot 550D camera) and non-standardized products (eg. Diamond Ring for your Valentine). Focus on each type of products should be separate. (Have explained a bit of how it works in this post – Junglee and how it impacts Indian Ecommerce).

Search Engine Optimization is about playing with Google search index. Don’t overplay with multiple pages, unwanted content – in short don’t spam Google index with similar content. Maintain a healthy product to page index ratio of 3X-5X (indicates if there are 100,000 products in catalog – the search index should not exceed 500,000 in any case).

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3. Persistent Shopping Carts:

By now persistent shopping carts have should have became a standard, but there are few who are yet to enable this. For starters, there are tons of resources available on the web on benefits of it; for advanced product managers – there is simply much more to do –

  • Link shopping cart data persisted with a user session whenever is in a logged-in session.
  • Send email notification to users to remind of items still in shopping carts (please don’t spam – just a gentle reminder).
  • Over a period of time product prices decrease, once the same happens for a product that is lying in user’s shopping cart inform him via email.
  • Abandoned shopping cart is still an incomplete intent, convert that into a sale at a right opportunity.

Enable smart product marketing through a product versioning system. New Apple iPad is a successor to Apple iPad 1 & Apple iPad 2, inform users when next version of product is available. Similarly for Books or Music, when next book by an author is available or even a new sound track by Madonna. Remarket abandon carts when such event occurs.

 

4. Multiple Sites, User Communication and more.

In recent days, couple of ecommerce services have gone ahead and created specific domain for every vertical they are expanding in. Abc.com for electronics and xyz.com for fashion. These are most pathetic executions of product management since they tend to leverage existing platform for efficiency and end up being perfect playground for chaos.

Here are the most common mistakes that happen (all real experiences) –

  • Register at one website, receive welcome message from another.
  • Same Order ID sequencing is followed for multiple sites.
  • Same database used to store user information – imagine the chaos with operations, customer support, logistics, packing, and do so on – order from abc.com shipped with xyz.com packing. Its a product management mistake, and employees in operations are suffering.
  • Using same platform to collect any behavior information (if collected) for all sites. All algorithms will work incorrectly, expect Apple iPad recommendations to include a T-Shirt or even a Diamond Pendant. To patch up with a fix will lead to further complications, cause basic data collected itself is incorrect.
  • All email sender names, communication, notifications, marketing messages, are mixed up.

 

5. Deals to Product sales; expanding to new category. 

Many deals sites have pivoted to pure play ecommerce or with every passing month ecommerce services move to a new product category. To use same catalog or database structure is the simplest thing to do, but in order to really conquer every new category or verticals, some focused effort is required.

There is a huge difference between selling a travel coupon and selling a complete travel package. To win in every category some focused effort is required, which typically takes a backseat once launch target dates are set and to meet them the team ends up utilizing the same platform used to sell iPad, Spa coupon or travel package.

 

6. Controllable v/s Non-Controllable Factors.

Their is a weird assumption with few ecommerce companies that product management is limited only to consumer facing aspects – like website or mobile app. Its not, let me explain with an example.

Recently ordered an product from an site, its order id was 20579512UE82852111. First reaction – even morse codes are easy to decipher! Of all the calls received on customer care, 95% are order related queries. Just imagine the situation of consumers trying to communicate an 18 digit order id in variety of Indian accents. Complete chaos! There are bounds to be mistakes in communicating leaving room for multiple mistakes. A simple product management mistake leads to an exponentially higher average handling time per customer at its call center and increased hold time for customers wanting to connect.

Controllable factors like number of transactions, quality of search, payment gateway approvals, cart improvements, etc should be measured in improved efficiency of funnel & micro-funnels (explained further) conversion rates; while uncontrollable factors which are mostly about logistics, customer support, operations, COD operations, repayments/refunds, etc should be measured in amount of time saved.

 

7. Micro-Funnels: 

For every Ecommerce service, the only one determining factor to look at how efficient its transaction process is the conversion funnel ratio. Only few players have actually gone ahead and have started measuring performance of micro funnels in an matrix format per product vertical or category.

A conversion funnel cycle is typically Visitors > Product Pages > Added to Cart > Payment Page > Order Confirmation page.

Micro funnels typically mean building such funnels under each of the following 3-4 criteria –

  • By Traffic source: Natural Traffic, Natural Search, Emailers, Affiliate Marketing, Paid Search, Social Media, etc
  • By On-site properties: Search, Categories, On-site promotion banners, Product Recommendations, etc
  • By Product Categories: Fashion, Electronics, Health, Books, etc

Deep dive in data, 1% improvement at any stage of any funnel – will significantly improve volumes of transactions. Keep constructing micro funnels, they are fun and they are plenty more – by transaction size, payment types, and so on. In addition to dull excel sheet reports that have number of transactions / avg ticket size / gross merchandize value – look at such micro funnels data. If you have $100 to spend, it will tell you where exactly to get $200 returns.

Label your weekly friday reviews as Funnel Fridays!

 

8. Payment Gateways:

Payment Gateways or Logistic services are usually most blamed in this country as hindrances to growth of Ecommerce services. About two years back just before the ecom boom started, I wrote a note about – “How Reserve Bank of India can facilitate ecommerce and online transactions in India“. Not much has changed, and Cash on Delivery became the default payment mechanism.

Order rejection rates on transactions processed through payment gateways successfully are < 5%, in most of the cases only if incorrect product is shipped or there is a physical damage. If 100 orders are shipped, 50 are pre-paid transactions and other 50 are COD, on an average between 20-25 will be returned. The operational cost involved in managing COD orders will be close to 2X of pre-paid transactions, dissatisfied customers not accounted for.

Product Managers, make payment gateways work. There may be no science to this – but work with multiple payment gateways. Alternate the transaction flow between them and figure out the best time, best payment gateway from time to time. When payment gateway transaction fails, then offer Cash on Delivery or payments by Cheque.

Take clues – Number of transactions for online recharge services for prepaid mobile services are on increase; they allow users to only pay electronically through either credit cards or net-banking. Then why not for Ecommerce services? This is the same mobile subscriber base living in missed-call economy and maintaining average balance of less than INR 100.

 

9. Cash on Delivery and Logistics:

Since the last point discussed on Cash on Delivery, this comes next.

A strange equation about COD is, if an additional convenience charge between 25 to 30 INR if levied on all transactions below the avg ticket size of Ecom service, their entire cost of COD operations tends to break-even (Try this with historic order data, the number will be close). Maybe Cash on Delivery should be the last attempt to acquire a customer instead of first motivation to transact. But this does may not happen in real world, so COD is the biggest USP of this business now.

For any post-paid order (read COD) that is delivered within 48 hours of order, rejection rate is less than 10%. COD order delivered after 7 days of transaction, rejection rates might be as high as 70%. Product Managers need to find out smart ways to make this complete process efficient to ensure 90% of deliveries within 72 hours, this includes –

  • Maintaining dual address (work / residence) of users to ensure prompt delivery.
  • Call / SMS / Email notification before delivery to ensure user keeps the said amount ready.
  • Maintain performance of COD acceptance or rejection rates by users / pin codes / and logistic partner; shuffle logistic partners by performance for every delivery location. Some logistic partner will always deliver better than other for every pin-code. Find them and route more deliveries to them.
  • Extend this to pre-paid orders as well.
  • Work closely on technology with logistic partners that ensures quick reverse logistics, which is the biggest challenge in operations and also nightmare for customers.

 

10. Track Performance of every Property owned:

Heard of an website called – milliondollarhomepage.com? Have similar approach about every pixel on homepage.

Go insane about about deriving value of every homepage property (search, banners, browse, featured products, etc) similarly as retail outlets do about shelves – sale per shelf. Once every homepage property is labelled similarly, figure out its value based on transactions/revenue generated per day, get the average value of sale generated per property on homepage. More microfunnels to manage for homepage.

Shuffle between product categories, price range, images, product offer text, etc for every property. Understand distribution of transactions by every property, gather such information in logs, mine data and productize this marketing strategy – strive for efficiency.

 

11. Affiliate Marketing. Show Respect and build this Channel.

There are only few categories that have a lower acquisition costs, but with the amount of competition coming up in every horizontal / vertical segment – this is bound to increase with time. The average customer acquisition costs for any Ecommerce website in India today varies between 400 INR to 1200 INR, one company acquires customers at 2000 INR to sell them – pen drives worth 399 INR.

In between all this, there are few really effective business channels like affiliates, price comparison portals and so on who really work hard and acquire customers by sending qualified shoppers. Most of them have extremely poor affiliate commission structures which are typically between 100 to 250 INR, much lower than cost of acquisitions on paid search or display advertising. Show respect, they are acquiring customers at a cost that is usually less than half of the site average.

Nurture this channel and make them available with a series of affiliate tools similar to the Amazon Affiliate program. This channel is currently under-developed / un-explored, any ecommerce service providing better affiliates product and awesome commission structure can actually take a big leap ahead!

 

12. Email Marketing

I had once tweeted this – ‘Buying from you is not my consent to SMS/Email spam’ mentioning few brands I admire. Later Hursh (Cleartrip) wrote an interesting piece about it later on their blog – ‘Why we don’t spam our customers.

Email Marketing has a diminishing value proportionate to the rate of emails per user per month. Though an important channel for traffic/transactions; if abused, at a certain period of time the cost involved in sending a mail to million subscribers will be much larger than the revenue earned from the email campaign itself.

Product Managers need to put in rules in place to ensure that the marketing activity remains contextual to users interaction on the site and also user is sent the emailer at a certain time where buying intent by user still holds true. Ensure adequate gaps (of about 30 to 45 days) between two marketing emails if sent to same user. Consumers behave much like us, will they really buy watches or sunglasses on a daily basis? Find a context!

 

13. Product Recommendations

Unlike what many think, the amazing product recommendations of amazon cannot be build overnight with correct context. It requires tons of data which can be only generated post millions of transactions, product views, buying patterns and an platform that really enables up-selling of products.

There are different aspects of an Amazon Product page – which can be observed on any one of its product page. The experience is so delivered that it brings multiple benefits to Amazon – highly content rich pages that affects search engine traffic positively (as mentioned in point earlier, productize the SEO content), Promotions available at that time, Up-selling related products,  customer actions, product details, description, related purchases, customer reviews and related products.

Enough to satisfy consumer of all his questions, alternatives and options. All packaged beautifully with appropriate content on a page with multiple opportunities to up-sell or cross-sell. Ain’t that good? See how far it seems to go. Love data, insights and bring it to users, don’t be satisfied with plain jane product pages.

 

14. Behavioral Data Trends and creating Marketable Insights.

This completely comes from the stuff we build at my previous stint with Ohana Media – capabilities to track every user interaction, generate tons of data and segment that into trends and actionable data. (They call it bigdata these days).

A brief explanation of the same is on this presentation – Audience Clusters & Intent Analytics and also another deck that Shameek presented at Adtech 2012 on Online Marketing Success Strategies for Ecommerce companies.

While at Ohana, we had pitched this platform to one Founder & CEO of an funded Ecommerce company. Answer – “Not sure if this stuff works.” Result, we went ahead and signed an exclusive non-compete deal with their competitor and today their cost of acquisition has reduced by more than 50% in less than 12 months. Another Ecommerce founding team we proposed replied, “Cannot use this product. Data collected by this platform resides on the same server as our competitor.” That stumbled us, don’t 1000s of Ecommerce sites run on Amazon instances (every customer had his data stored in private cloud). Having a product person driven by data & analytics is essential in every founding team or should be one of the first people to hire in senior management.

Discover cross-channel marketing efficiency like –

  • Natural search keywords converting are automatically bid for on paid search.
  • Automatically decrease bids when competition stops bidding or lowers their bids.
  • Email intent data is used to remarket category banners on-site
  • Search to Display remarketing
  • Onsite customization based on users previous intents.
  • This list could be endless…

Respect data and figure out capabilities to increase its efficiency across medium. Same users reaches you through multiple doors – Search, Paid Search, Social Media, Display, Emails etc. Unless you are able to gather his intent-cycle over a period, it will be impossible to have efficiency in marketing. Every 1% increment on top of funnel conversion may lead to 2X at its bottom.

Full Disclosure: I led product & marketing for Ohana Media in my earlier role. Its founder Shameek Chakravarty is on Board of Advisor of my startup. Both presentations linked are in public domain.

 

15. Team Structure

Since last point touched based on the people aspect, want to extend it bit beyond the purview of direct product management. While one big mistake could be not having a product focused person in founding team or in the senior management team – other simply is how teams are structured within an organization.

Have noticed that in multiple organizations, the User Experience, Product Team, Technology and Online Marketing teams working in silos heading in different directions. It will be subjective to mention what is a right structure and there is no thumb rule to decide that – one common criteria should be love for data, numbers, & micro funnels. Stitch it all together and build an rocking platform.

This pointer is a filler, 15 is a round number. Nevertheless, message is important.

 

Concluding Notes – 

There are couple of posts I wrote earlier which might be also in line for Ecommerce services –

Signing off. Oh yes – a $75+ Mn valued company is still running a Facebook advt since its day of launch (about 2 years back) promising a Blackberry for INR 1999. Its CPC must be 8-12 INR and I have clicked on it innumerable times trying to find out that phone. Online marketing inefficiencies? – maybe will reserve that for another post. This one is already too long.

Going back, product / platform is the core differentiation for every Ecommerce service. Love data and believe in numbers. Every aspect of ecommerce business can be divided into two aspects – controllable (managed internally) and uncontrollable (managed externally like logistics, operations, etc); measure efficiency of everything that is online with improvements in micro funnel conversions and everything that is offline with improvements in time.

Want more inspirations – for online look west (at Amazon); for offline look east (at Taobao).