Archive for the ‘ecommerce’ Category

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.

Product discovery, smaller retailers and Amazon’s entry into India

Saturday, February 4th, 2012

Amazon took a totally orthogonal path with it’s entry into e-commerce in India. It has been speculated that they tried to buy Flipkart, been busy building a warehouse, instead launched as a gatekeeper to products with discovery and comparison site Junglee.

With the amount of money Flipkart, Makemytrip, Snapdeal, etc have been throwing in advertising it became a calling that the online commerce winner would be the one who brands it most and goes out and pops out it’s head on TV, print and other traditional media.

For an uniformed Indian getting onto the Internet for the first time and not knowing where to go and who to trust brings the gatekeeper’s role in the front. As Alok pointed out in his blog post, Google does a crappy job of product discovery. In the west, very few people buy via a search engine, instead they have their favorite e-commerce sites to go to. The Indian online audience is just getting onto the Internet with close to 100 million actives. For them the celebrated bookmarks of the west like Google, Yahoo, Amazon, etc. don’t exist. How does Junglee help where an average netizen going onto the Internet for the first time and traditional retailers who haven’t gone online with their inventory? Here’s what I think.

Curated sellers in a country where there are few laws protecting the buyers The Indian internet audience buying from over SEO-ed, fly by night operators is fraught with hole-in-the-pocket scenarios as the laws around protecting the customer’s interests are very weak. Try arguing for a bad charge on your credit card, or try following up with a merchant who shipped a bad product without return guarantees. Junglee’s opted-in curated sellers may provide at least some validation before making a buying decision.

Breathing room for small ‘I-have-not-raised-$100m-for-my-e-commerce-site’ retailers Not many Indian e-commerce players shall raise enough money beyond the top 5 who will have all the cash in the world to build a brand. With Junglee potentially building a brand, it becomes a front-gate to your online buying needs. Niche sites selling to the hobbyists have a shot in the arm. They don’t have to get lost into eBay’s marketplace where the product display looks like a badly done Web 1.0 page.

Opportunity for large offline businesses to go online with their inventory Every city has retailers with established supply-chain and delivery network, where they have been successfully delivering locally. With someone else taking care of the online presence, it becomes easier to increase the reach within the city by connecting to the local audience. These retailers who are not as big as the cross-country chains like Croma, Reliance Digital, etc. get to play together. The neighbourhood photography equipment-walla who has been successfully importing optics from Germany now stand next online with other giants. This is a huge gap–I’m sure Junglee is busy building tools for the same.

Finding a product on a shopping site and not a search engine Search engines fail at product discovery with peddling content around keyword arbitrage, affiliate marketing and SEO-ed to death sites pulling into the first few pages. A site focused exclusively on product discovery with pricing, recommendations has a better chance of giving what you want instead of a search result page infested with links, content and arbitrage.

Plotting the timeline, India’s B2C e-commerce is in 1997 whereas customers in the United States bought $142.5 billion worth of goods in 2011.

Flipkart, the e-commerce boom, the other view

Wednesday, August 3rd, 2011

The valuation is maddening, crazy, 4,000 4,500 crores for an e-commerce startup which would get 10% net at best is even crazier. Yes, it is crazy but it’s also fearless at the same time.

You know what is exciting? Creation of a category, creation of demand. The fact that my dad calls me from a dusty little town of Dhanbad, after hearing about Flipkart. Adding to his belief that he is ready to shop online all by himself.

Nitty-gritty of the valuation is for fund managers, analysts, think-tanks and people who are not associated with the company or the deal, to take pot-shot at. I think they are plain wrong if they look at Flipkart with a single eye.

It’s easy to create a web-store online. Give me 10 minutes and I’ll get you started. But, it may take you a week to a month to collect payments online. Shipping & logistics is a much bigger challenge than accepting payments in India. If you are a mom-pop operator you can pack, ship, drop on your own. Think about shipping 5 books every minute. No courier company in India is efficient to track delivery and return with guarantees.

Amazon.com was a technology play and they moved faster than people were adopting newer browsers and advancements to the web technology. Infact, the first version of Amazon did not use cookies!  Amazon got the shipping, logistics and payments infrastructure out-of-the-box, sans the web integration part — without worrying about theft, delivery guarantees and failed service-agreements.

People expect that a company in India, of Amazon scale, including it’s loyalty, personalization, great price and customer service can be built in thin air and without lots of money.

220px-Soapbubbles-SteveEF

If history is any fortune teller, all bubbles/booms created long term markets and large categories. The Gold Rush created California; the semiconductor, networking and internet bubble in succession (re)created silicon valley multiple times. India’s OTA created air-travel for the masses. The Y2K bubble created Indian IT. And so on.

Hence, this is business as usual, which will lead to creation of large markets, giving people access to many items for the first time and killing inefficient distribution methods of yester-years. It’s a space to watch, participate. The forces of nature use elasticity to keep the bubble in check. IMO, the choice is easy and you can’t run around with pins. When there are bubbles, be like a kid or have the bubble gun.

Disclaimer: I don’t work at Flipkart nor have any direct stock holding nor the founders/management team have picked up my beer tab in the past.

Image lazily lifted from Wikipedia.

Relationship Commerce: Are Indian Internet users ready to play the dating game?

Friday, February 18th, 2011

Last week, I was reading the New York Mag article titled, “Geek Kings of smut” and was wondering about the relationship commerce industry of India. The New York Mag article was on how geeks monetize porn, but my thought was more on the very basic relationship commerce viz. dating. Then I saw Facebook ads on dating and singles targeted towards Indian users. A lot of them.

Dating ads

Dating Ads in Facebook targeted to Indians

Globally, dating is a 10 year old industry. People in the United States spent close to $1.2 billion last year on dating sites alone. Though, this number is small change compared to the overall online commerce which is more than $100 billion, but is growing faster than the overall e-commerce segment.

eHarmony, which is a cross of match.com + BharatMatrimony + traditional Indian point-based matching of partners, has close to 33m profiles and clocked close to $250m last year. eHarmony and match.com control 50% market for dating in the US.

In US/Europe, the industry is rapidly evolving with upstarts like Zoosk, which is playing on top of facebook. Zoosk did well in 2010 with a rumoured $80m in revenues with 40m members. A quick search revealed that Zoosk has active members in India, but I suspect these are nothing more than front of the traditional escort services.

In India, ‘Relationship Commerce’ has been about helping people find a soul-mate aka matrimony and then monetizing based on subscriptions from parents of the bride & groom. This is how the newspaper matrimonial classifieds worked and their internet counterparts are exactly the online version of the old model. This sector in India has been dominated by Bharatmatrimony (with it’s 50+ individual niche portals), Simplymarry, shaadi.com, jeevansaathi.com, etc. The newspapers and traditional media sites have started offering similar services.

The big question is, “Are Indian Internet users ready to play the dating game?” This comes right before matrimony.

I think the big game of dating in India would be on mobile and not on the internet. There are too many singles around toting their smartphones. Good food for thought for us and yeah, wishing you a (belated) Happy Valentine’s Day!

The status quo of payments in India

Thursday, June 24th, 2010

I still do not have a valid credit-card in India. The KYC (due-diligence mandated by the government aka ‘Know Your Customer’) norms require that Coin of Alupas of Udipiyou have an office (or fake it) but must have a land-line at office. If you work from home then you are out of luck! Does not matter how much money you have in bank or a few international credit cards to carry around. I have a debit card which is not accepted by any online portal (Thanks to Hongkong bank).

Net, net. I’m just like the other 88% Indian population which does not have a debit card or the other 98% who do not have a credit card. But, the good news is that I’m part of the 500m population who has a mobile phone.

As a result, I’m not able to show my purchasing power to the various portals selling books, gadgets, t-shirts and other trinkets online. I’m not able to show my fickle mind by making a purchase of Rs. 300 and being happy about it.

Prepaid or “stored value” card (or cash card) may be the solution, but they have a very poor distribution and I have to go out and buy a card from a travel agent; if you are lucky to find an agent carrying the cash-card.

Banks in India are busy in shoring up their mobile banking offering a la check your balance, make fund transfer, etc. I don’t know why there is so much push for mobile banking as the urban population; the users of mobile banking via a GPRS connection, already have access to ATM and Internet which can be used to do the same functions in a larger form factor.

Though Reserve Bank of India (RBI) has been raising the transaction limit of moving cash from the mobile; the problem is that the whole thing is tied to a bank or a credit card, which makes the installed base the same 2% for card holders and 12% for debit card holders or netbanking customers. So much so that RBI has allowed transactions to happen without using the traditional encryption techniques used in issued card-based transactions, but there has not been much uptake.

RBI does not want the operators to become banks, which is very valid as it would give rise to money laundering and of course operators then would disintermediate the banks. However, most operators are already making tonnes of money on VAS like premium SMS, ringtones, downloads and such. Why there aren’t any instruments which allow me to do a payment transaction which is not attached to a card or a bank account for things which are not sold by the operators? The lack of the same led to the downfall of mchek, they are on 100m phones but then only a fraction of the owners have a credit card or a bank account.

What is needed here is innovation to allow purchases to The mud road aheadbe done through the phone directly and billed to my monthly statements or debited from my top-up.  Banks are too big to be worried about longer tail of small value transactions, operators do not have the teeth, nor the desire to deal with the complexities of 3rd party purchases flowing through them. The laws are falling in place, consumers are ready to make those purchases — missing is the technology piece and a desire to experiment in these areas. This is a space to watch. The potential is beyond imagination when convergence of commerce and owners of mobile & users of internet takes place.

PS: So how do I buy tickets for the travel I do? I call up a few good friends to get it done and pay them cash later.

The coin shown above was used by a minor dynasty in coastal Karnataka called Alupas. Pic courtesy of Reserve Bank of India (RBI).

Pic from the road to startup gurukul.