Is E-Commerce Going from Boom to Doom?

BIG  BLACK SKIES OVER MY E-COMM TOWN........

Been thinking for few months to write this but have never found time, although i am jobless and i mean literally jobless. That is another long story for another time.

About two years ago, I came across Fashion & You and I loved it. I was getting so many products that were either not available on in my shopping space or if they were available then they were way cheaper. And thus went on my monthly indulgence on clothes,shoes,perfumes and the likes and with a decent experience too. Then one day I went to my Tech-Wiz friend Manas and told him, lets sell online. Manas was little skeptical and we kept on mulling on the same and I got a new job and life went on but the idea stayed right where it was – ZILCH. And like my good friend Manas says – Idea have no value till executed.

And then suddenly as they started, they started collapsing. FIFO= Fast In Fast Out. They were all selling the same categories and same brands. All selling at similar prices with similar propositions. Posting unrealistic revenues and sky high valuations. Funding stopped and shops shut and the dream was fast fading. Gloom and doom. But I still feel all is not lost. Here s my list of Do’s & Do not’s for the e-tailers or e-commerce or e-shops, whatever we may call them:

1.Product Differentiation - This is very important to move away from the clutter.A different product proposition helps brand recall and also maintain reasonable price levels without getting into price wars. Also e-commerce is misunderstood to be synonymous with discounts. If your product is different then you can charge full price. There are too many deals-a-day & apparel/accessories e-tailers with most of them selling similar brands & categories.

2.Unique Proposition - The website needs to have a USP. You need to offer a service or product that stands out. Like magazinemall- manage & buy online subcription for magazines or playgroundonline-sports goods. They sell at MRPs or very low discounts. They offer a different product category/comfort of online buying/selling brands not available in your immediate vicinity/unique service of managing your subscriptions online. A premium can also be charged for the same.

3. Free Shipping myth busted – I have read many a reports and papers on how free shipping adds to higher sales. They all said few things that free shipping means: less people abandon carts due to high shipping costs, higher average billing amounts; higher transactions at free shipping sites; and thus more revenue. So making 100 bucks on shipping costs will not make you achieve your break-even but analyzing whether shipping costs are costing you sales will.

4. Why people buy online: Unavailabilty or cheaper – So we need to realize why customers ae buying from us. Are we giving them the products that they are not getting in their cities? Or are we giving them products easily available at cheaper prices? This analysis will help build our product,marketing & CRM strategies. If everyone is selling Levis denims then let me offer them at a steeper discount or better deal. If I am one of the few selling Apple i-pads and many people cant buy them offline then I should charge a full price on that or even premium.Like my i-pad stylus broke and I cant find one at any apple store and thus will pay extra to buy it online and have it delivered at my doorstep.

5. Logistics & IT Costs- Before we go ahead and spend on an in-house logistics system with a huge backend, warehouse, in-house distribution team etc and an ERP or IT integration throughout the organization, we need to stop and think. Is my capital situation good enough to sustain that investment which will give returns in the long run? Should I not be happy with using third party logistic partners which are good (if not best) for the time being? Do I need the funds for other purposes like building a better user interface, continuous cash flow for OPEX, invest in product categories or marketing expenditure? Agreed that The above two costs are helpful in the long term and provide economies of scale and better service but is this the right time for it? One year old companies and they are spending money on huge warehouses and own fleet of delivery centres etc. There is a time and phase in the business lifecycle for all.

6. Focus on selling the experience and not product alone – Shopping online is an experience which should be made easy, exciting & pleasurable. It should be a journey filled with new & mysterious products, guided by experts , backed by product info , aided by you would also like and delivered at my doorstep. That’s a fairytale  ending. Sites should be attractive easy to use. Browsing should be fun. Daily changing themes and colours. Compliment what you sell with how you sell it and the consumer like me is hooked for life.

7. Realistic Valuation – A friend has a short-term goal of setting an e-commerce portal, selling it in a year and spend the money on a US MBA.He told me that most e-commerce companies are valued 20 times their revenue. Now I am confused whether its bottomline or topline but I assume revenues mean bottomline (would love to be corrected). The figures are insane and to top it people are buying it. I would keep my valuation realistic and have the last laugh.

8.Hire good talent at decent packages for long term – Another aspect to look at. I heard of people who joined at astronomical salaries and were also quickly fired. Ofcourse we cant find people from the similar industry as it’s a new industry. Thus new talent needs to be built and people should be hired from diverse industries. They can all contribute to newer processes, breakthrough ideas that are required for any new industry or business model to work. 

Ok. Thats it. Looks like a research paper rather than a blog. Blah.Comments invited.

Green GDP

I read in an editorial piece in TOI , a month back about parameters that go into GDP calculation & how that conflicts with environmental issues. Since i have lost that article (yes i had cut it and kept it safe apparently & am not spending time searching it online), so whatever i say herewith is my own understanding of the editorial. So yes back to the point. The things that really matter in the calculation:investment in sectors which in india is being driven by mainly in power/fuel/infrastructure/retail which are again exploitation of natural resources by biggies or making concrete jungles while cutting forests and reclaiming lakes.Another is Consumption - driven again by apparels& accessories/electronics/cars/white goods/FMCG/residential properties which again is leading to consumerism/industrialisation & then government spending & export-import. And we all know how all that works.

So here is where i come.I thought that so much stress is being laid on environmental issues/global warming/deforestation/land reclaimation/disappearing water bodies/save our tigers/keep groundwater clean etcetra etcetra etcetra and the list goes on. But the growth of an economy is dependent on GDP and every nation is running in the race to be at the top. Suddenly the entire world believes that super-powers of yester years are going out of power soon and the top spots are available & everyone is plundering & looting their own country. So why cant GDP or Economic Growth have an environmental friendly factor or parameter included. Phew. There i said it.

Thus,GDP/EG should give credence to afforestation i.e. how many acres of new forest land has been created.How many natural habitats or national parks have been created for animals? how many rivers are being cleaned & pollution stopped in them? Land laws are being modified to include saving ponds & lakes from reclaimation. Stricter regulations laid down for illegal mining & plundering the natural resources.Are tribals being reinhabited in their natural environment.Industrial waste in not being thrown around like candy wrappers for wind to take them everywhere.

Its high time we put our money where our mouth is and stop this nonsense that 'we all are going to die by 2012' . Nations need to take a stand and make environment issues a parameter when they applaud a country on their growth. Make countries who have maximum carbon emissions skip the award ceremonies.Developing nations who are selling their natural resources to big corporations should be sued in international courts.

P.S. If anyone else has written on this, then i am ignorant of it.kindly share with me.

Cheers.

The Step-pets

I have never really been fond of pets even though we had a pomeranian bitch for a long time . And yes mom named her Zoya, her favourite character in a tv serial that came on Doordarshan (yes, i am ancient).

So, you will never find me crooning over your fav pet Cadbury or Pebbles or whatever you have named them and i wont be kicking them either. But atleast that am clear on my limited love for pets and zero hatered for them. But enough, the article is not about me, its about Step-pets.

Step-pets is a word that came to my mind and i immediately thought to write about them someday. They are that unfortunate class of pets whose masters have them in the house for a upper class social status purpose. These pets are just kept in the house to show-off to neighbours ,friends or visiting relatives to raise once social status in the society.

The owners hardly ever pet them or let them sleep on the couch or in bed with them. They dont bother bathing them or taking them for their pooh-pee walks (only when the park is littered with other high-society pets). The pets are not cared for like babies that most pet lovers do. They are often chained and petted once in a thousand years. They are fed by servants or their personal caretakers. Pets regular Vet visits are also undertaken by the driver or the servant.

I wonder why such people keep pets? am not an animal rights activist but is'nt this violation of their rights as well. Why would people keep dogs,cats,parrots, rabbits, turtles etc etc etc when they do not love and care for them. It such a heartbreaking thing (even for a non-petlover like me) to see these living creatures chained and not even looked at all day. It pulls me to go pat them when they look at a newcomer with longing in their eyes and wagging their tails or making noises to be noticed and loved.

I think the government should have all owners register their pets and go to government appointed Vets for regular checkups and get a health certi from them. Government departments should tie-up with animal right organisations and make sure these pets are protected and treated well.

I dont know if i would ever get a pet , but if i do, i would be love them and care for them. Period.