Archive for March, 2012

10 e-commerce related ideas to work on instead of creating another e-commerce vertical

Friday, March 2nd, 2012

Diapers, babyfood, wipes. Lipstick, powder, doll-house. Gucci, YSL, <i-can’t-pronounce-this-french-name>. Refrigerator, mouse-pad, USB cable. The list of e-commerce sites sprouting in these verticals and raising equally obscene amounts of money is babylonian. I like the fashion gears selling online and have been trying to convince my wife to splurge on one of the e-commerce sites instead of toting me along in her shopping jaunt. She is not convinced, yet.

That’s the problem with all these e-commerce sites. Customers are not convinced, but yet they are raising venture money like crazy, assuming that they can build yet another vertical online. Most of the entrepreneurs are nice guys, well-mannered, well-behaved, well-educated geeks who somehow jump into dealing with all the bullshit an e-commerce operations job has to offer. Anyways.

If I were the entrepreneur looking to do “something” in the e-commerce domain, I would focus on smaller ideas with nuances of deep technology or maybe some amount of reuse from what has been done elsewhere and heavily customize it for Indian operations. Here are some of the ideas I would fund, if I was still investing. Some of these ideas may already be in execution by startups in niches and filling a void with a hole-in-the-wall operations somewhere in Jayanagar 4th Block, Bangalore or near Orbit Mall in Mumbai. These ideas are broad, can be further broken down/morphed and up for grabs, however, I’m personally attached to two startups who are doing something from this list.

  1. Payments. Talk to an entrepreneur about e-commerce pain-points, payments is at the top. Call up the Director of Technology of any star.kart and he is going to tell you that he has a 25% drop rate. Number-wise, there are fewer payment startups. I feel that there are enormous opportunities both in offline and online payments. But there are few doers and even fewer investors taking bets. Payment is a big-freaking-enchilada, which requires a high capex, opex and deep domain expertise. As a result, very few companies are building anything from ground-up. Most new payment startups being built in India are just a wrapper around someone else who has something already working.
  2. Vertical ad-networks. As India’s consumption story grows, both offline and online stores would push their ad inventory at highly targeted real-estate. Though, the number of niche content sites is still small, but they are surging. People are creating content, traditional newspapers are going online. What’s needed are few vertical ad-networks which aggregate the inventory of automotive, education, electronics, women & fashion, etc.
  3. e-Warranty / Warranty services. Warranties and coverage of items under warranty suck in India. Just figuring out the details of the coverage is challenging. There are multiple opportunities in this area. Consumer-oriented, wherein management of warranties, purchase and front-ending the consumer for all warranty needs. Business-oriented, such as risk management, under-writing, coverage, settlement, aggregation, extended warranty services. This could further go offline with models around network of providers servicing the products which are under warranty and out of warranty.
  4. Music & video-on-demand platforms. Although, the technology of VOD is mature but the logistics of royalties, payments, licensing is still a challenge. A potentially large industry for commercializing already ran TV shows is yet to emerge. Music is big, more than main-stream SRK, KK, SK dose, the money-spinner could be the long tail. Imagine  a native of Jharkhand whose Oraon folk songs could barely do more than 10,000 cassettes sales in last 5 years, does million from an online store doing pan-India. Flipkart recently launched a service for mp3 downloads, but that’s just a cornerstone; the whole side-walk has to emerge such as online radio-stations, monetization services, personalization, etc.
  5. Entertainment content site and data mart. For the current net natives, the only source of gossip, social exchange, discovery of content is either the traditional media sites or facebook. A few pure play bollywood sites tried but went out of business. IMO, a new generation of content site has to emerge to satiate the needs of a person who is a smartphone-native. Data marts have to emerge which provide the authentic database of movies, music and their graph of associated people and everything related to them. In some cases it looks like an IMDB of India, but again, IMDB is non-local. There are a lot of simple ideas to work on, for example, I want every Amitabh movie ever made to have his personal annotation, voice-over commentary. It has to be done now, other-wise, we all don’t live forever and it would be gone!
  6. Photo-sharing (a la Flickr reborn). For the current internet generation Flickr and Facebook are de-facto photo sharing sites, former as a repository and latter for sharing. But for people who are just getting online, there is a  gap. There is an opportunity to build a brand new photo-sharing site from ground-up. Case in point is my household help. She has a 5-year old daughter and all of their family pictures are on pen-drive somewhere (transfered from the phone by the local recharge-walla). Her price point is 40-50 rupees/month (along with her husband their monthly income is 15K) for unlimited photo and storage. If you can build, brand and promote this, a next social network in India can come out of this after 5 years.
  7. Pan-India SKU aggregation. As more and more retailers and ordinary businesses come online, ensuring that each product has the correct meta-data is not easy. Companies going online have an army of data entry operators who punch text, numbers and images from a printed document or illegible PDFs. Apart from books there is an opportunity for agencies and businesses to aggregate meta-data, pictures, usage, nutrition information, etc.
  8. Virtual betting destination (and service provider). We are a nation of gamblers. A betting site done right for real-world events for fun and little bit of profit maybe a big opportunity. As a service-provider to other sites a betting engine has a potential to change an abandoned cart to a converted lead.
  9. E-commerce sales optimization and demand generation tools/services. Currently, the e-commerce companies are busy managing the demand with an astounding success. However, we’ll hit some plateau at 200m actives based on the current intersection of literacy plus banking/credit-card penetrations, etc. The first 200 million net users have to pull the remaining 800 million in India. Various tools and services facilitating conversion and generating demand such as affiliate/referral programs, co-browsing, loyalty/rewards, thank-you page lead capture, etc. need to emerge. There are tried and tested models in mature markets but India is a different beast.
  10. Search. I am ready to lose another bet on search. A separate corpus has to be built for india-specific content. Many tried earlier and failed. Searching on Google simply sucks. Based on my personal search history, I strongly feel that because of Google’s mixed corpus the Indian e-commerce sites are not getting a fair share of more than 20-25% of organic keyword traffic. I think now is the time. India is at an inflection point where content creation is just about taking off. There are many signs pointing to that, such as volume of comments on main-stream media sites to activity on facebook. Bootstrap a small search engine and you have a small portion of my little money. Organic search traffic has deep intent buried and drives conversion. Start small, don’t get worried about catching up with fancy UI/UX. Start with a curated corpus and let the spiders slowly inch up.

Updated Mar 4th. Revised. Fixed the grammar, several errors. I was also thinking of adding a kickstarter-style marketplace as #11, but it’s too early. If India’s manufacturing industry evolves in the next 5-years, a local kickstarter and a local manufacturing hub can outpace any innovation. We are not ready for that, yet.