App-only eCommerce: A bad idea

Flipkart has gone ahead and officially stated, that over the year, it will shut down its desktop and (surely) mobile website and move to an app-only store. They seem to be following the sister concern Myntra's move to go app-only from May 1st, a week from now. If you ask me, they could not have got it more wrong.

Recent data might suggest (I don't have this data, but somebody must have used more than their gut feeling to announce such a move, right?) that there is a tremendous growth for acquisition and conversion on Apps; especially a huge potential in 'Tier II and beyond' bases in India. So true of a country where most people get their first taste of internet freedom via a mobile data plan. But, that is just a part of the picture.

Then, there is the theory that suggests internet will go the 'Push way' and 'supply' information you need like a 'utility' such as water and electricity. OK. Enough said. Then there is the other theory that uses the evolving platform/notification features of recent and upcoming Android and iO/S versions with streaming notifications to weakly support that App is the only way to go.

After its Billion Dollar Sale blunder, Flipkart is likely readying itself for another blunder with its app-only move. Agreed, that are many reasons to have an app for an e-commerce set-up and they are great for several good reasons. But does that mean you do not have a mobile website or desktop website altogether? That's preposterous.

I buy a lot, much to my wife's chagrin (generally, about spending), a lot... online. For many reasons, the purchases are split, chiefly, between Flipkart and Amazon, and to a smaller extent, Snapdeal, eBay, category stores and the likes. Then there are the specialized sites in international locations catering to a national population. I go there too. There is no count of how many times I have used and will use the apps of local cab companies to call a ride across town, Airline tickets, hotel bookings, restaurant reviews, product reviews, movie tickets and a few other things I am forgetting, all have been bought online. But, with the exception of Taxis, that too only in the last few months, I have not used apps exclusively for any type of purchase. For all but Taxis, apps is just the last step for me. I would be a typical if not a champion profile of the current generation of digital consumers. So, may be they should be reading this article and considering my perspective. Here it is:

• I like to research the products that I buy. Mobile App, how much ever passionately you built it, sucks for this purpose. Don't take it personally. It's the same for everyone. I don't even want to talk about how difficult it is to filter and sort products (why restrict the filter and sort options on Apps?). Worse, if I am simply 'exploring' a category for what's new out there. 
• I like the big feel of the pictures. No, pinch zoom is a compromise for me; for those times that I am in a queue at a checkout line or killing time at the airport.
• I go to apps, sure, for making that final step of buying and taking that app-only discount or another incentive you have put out there for me.
• I sign out of apps, after I do the purchase. Sometime, I uninstall a shopping app altogether, just to avoid your excitement of 'offers I should not miss'.
• Push is NOT they way for me. Of the several mailboxes I maintain, my work mailbox is the only one that's on Push or Sync mode. I like to pull down the screen to refresh my mailboxes. That's the way it should be. I choose when I want to see the email. If I expect something critical, I will go there more often. But that true for email and it's true for everything else.
• If you figure out my buying journey and 'attribution' entirely and accurately, you'll see that I will come to your desktop site as many times as I need to know more about the product, the comparisons, the reviews (until more reviews get posted) and shipping policies, wishlist, reading book excerpts etc. I do all this on the Desktop site. I grew up reading newspapers and still read a lot of books (checkout my order history, if you can). But, I don't do all the product related reading in a small screen, simply because I have better choice- the widescreen of the laptop (I am not forgetting that App on a Tab also provides a midway solution).

If you read between the lines, you will see themes of usability, user interface, user experience and traditional convenience of a large screen. Mobile apps might be hep and the key thing for your VC/PE pitches, but for me, all's good as long as you keep your desktop sites live and running. Shut down your desktop site and I will leave in a hurry, because you ignored one segment, the likes of me.


Flipkart, India's homegrown eCommerce bell weather might just go down in the history for the biggest blunder yet (even if they later recover from their big bet), should they decide to shutdown their desktop site. Don't do it.

Review of Cesky Sen

Saying that the directors, Vit Kusak and Filip Remunda, only intended to pull an April Fool's day prank on 10 million people would obviously be too perfunctory an observation. Pronounced "chess-key sen", the movie literally, 'Czech Dream', is a wonderfully directed documentary comedy on one hand and a reality show on the other. The power of consumerism can be tested in different ways and media's overpowering influence used to make people do things is what the movie primarily tells you.

Two students of Czech Film Academy, by way of their final year project, test the concept of modern consumerism that embodies the notion that a lot of fact is really only part truth when it comes to media campaigning. Their movie is a satirical corroboration to this notion by trying to prove that they can successfully create a 'bubble' out of thin air and make people believe it is real. They do this by conceptualising a hypermarket that will improve the lifestyle of the Czech public with a promise of low prices, great offers and a dream shopping experience. They do this with sponsorships from a top luxury apparel brand house, a media company (who have differences with the directors' motives on ethical grounds but choose to be professional and do the job anyway for the learning it would provide), real market surveys (this part is a small treat for marketing students) with real families and volunteers and before all this even a grant for making the movie from the nation's Ministry of Culture.

The whole process is documented in this film with superb music; a melodious mix of directed music as well as impromptu responses from the public. The 'Hey ho!' is still haunting me as I write this. The music is also a part of the publicity campaign that is both no holds barred 'corporate' as well as replete with double entendres of carefully chosen words- 'Don't bother', 'don't wait', 'don't shop' etc. There is no escaping from the deluge of messages that the dream supermarket ad campaign provides- TV, Radio, fliers, public interviews etc and the public chases the dream to its ribbon cutting ceremony.

In the course of the movie, the directors themselves learn a lot about the science and art behind the marketing promotion of a hyper market. With clothes borrowed from the sponser, they appear in publicity campaigns featuring as the managers of the 'Czech Dream' hypermarket in Prague (whose location they do not reveal till the very end of the campaign). What happens next is an easy guess on most groundsm especially the reactions of the ropable crowd of 'shoppers who meet the surprise'. But some responses from the calm people there are surprising and insightful toward the motives of the directors.

The movie is well cinematographed, even if in 'no glamour, only documentary' style. The music, the script and the natural responses from the unsuspecting participants is quite moving yet funny.The movie was shot, read as the 'dream scam' was played, a few months before the European Union referendum was signed by the people of Czech Republic.The movie aimed to raise questions in the people's mind by brining more people face to face with the need to take a careful look at the national media campaign to vote in favour of joining the EU.

To a marketing student Cesky Sen reiterates that when consumer expectations clash with reality the result is not always pleasant either for the marketer or for the consumer if there is a gap beyond the lattitude of acceptance by the consumer. Like any caricature, the gap is accentuated in the movie. This is a point well made by the award winning directors who have been acclaimed to have a promising future based on the critical success- not sure of the box office success- of their debut venture.

Side-effects of globalisation

In the book 'The World is Flat", read short review here, Thomas Friedman illustrated globalisation via scores of, well, global firms, and one of them was Dell Inc. The supply chain intricacies at Dell lent themselves to the emergence of 'Dell Theory of Conflicts'. Like the book, my experience with Dell, albeit post-purchase, is no less speckled with side-effects of globalisation.

The story begins with the occurrence of a problem that turned my laptop into a lemon, defined here. I have been using a Dell Inspiron 5160 for close to three years now.This should tell you that with the basic warranty long expired and without extended or global warranty I am vulnerable. And until recently, I was oblivious to the existence of #M1004. This is the error code Dell-ians see on the BIOS screen after their laptop is 'preventively shutdown to avoid damage due to overheating'.

I saw this error for the first time few months ago,soon after I upgraded the RAM four times over to 2 GB. I was hoping to get more out of my laptop. I was getting more heat out of it, alright! This paralysed my normal usage of the laptop, since the preventive shutdown happened at 70 degree C, which was reached within 40 minutes of operation. Thus began my research on the problem that had fortunately or unfortunately eluded me since the laptop had arrived at my doorstep. Googling #M1004 gave me more than I had expected. Dell 5150 and 1150 were doomed as far as I could see in online forums.5160, though an evolved version of 5150 with 'fixes to avoid overheating' and at least did not 'melt' or 'explode', still suffered from bad ventilation design. More research told me that the motherboard-heat-sink combo were defective and there were class action suits in Canada and the US. Apparently, even the devout Dell-ians were peeved.

Recently I learnt that, since early 2006, Dell had been replacing the defective hardware for free (one time only). Wow and Oops!"Wow!" because the combo hardware costs close to Rs 25K (half the cost of laptop) and it requires substantial commitment from Dell to replace it for hundreds of thousands of laptops sold out of the Inspiron lot. while I also know that from Dell's point of view a case-by-case replacement would be cheaper than a recall. "Oops!" because I m now living in India and my laptop has a US warranty which has expired.

So, I started tracing the steps followed by many to gain temporary or in some cases permanent relief. BIOS upgrade came first. Version 8 of the BIOS cought to optimise fan operation. But it did not help. Cleaning the vents and heat sink was the next possibility. With more research, I learnt to open a Dell Laptop and was amazed at how neatly so much is packed in 1.5 inch thickness (5160 has older design). I stopped short of opening the heat sink assembly. My gut told me that I should contact Dell India and find out what they can do; give me some the minimum coverage at least.

I was surprised by the support Dell gave me. I placed an online request, to which I got a response within 10 hours. As far as the US ownership was concerned, I was told that I could initiate a transfer to Dell India. That would eventually happen, but meanwhile I could run hardware diagnostic tests (I had told Dell India that I am an advanced computer user, hadn't I?). After sharing the results with Dell India, I not only got a phone call confirming the problem but was also , hold your breath, told that Dell would replace the motherboard and heat sink for free!

That I got such good service ought be a side effect of globalisation. Of course, with significant Indian operations, offering service to Indian customers is but imperative. Having made the original purchase in the US probably gave me some edge for getting prompt service; but I have a feeling I would have got it even otherwise. I am saying this based on the fact that last year Nikon India had replaced a defective power module, post warranty, in my digital camera. (They did charge me a service and shipping fee). Nikon USA had at that time made free replacement for cameras within warranty period. Both the pieces of equipment had been widely acknowledged as being defective; in case of Dell, leading to class action suits in North America. But to benefit from an America lawsuit sitting in India?

The ease with which all transactions happened tells a lot about the CRM commitment global companies ought to provide, irrespective of customers' global location. Global companies have to put more effort in giving one face to their brands. They cannot discriminate, because an Indian customer today can be a customer in the US tomorrow or, the day after, one in Japan. American regulatory system ensure compliance to frameworks for resolving to conflicts between sellers and buyers. Be it in the BRIC or other emerging economy nations, buyers are more aware and more enabled, not just by information, read as Internet, but also by the expectations they have from brands. They have the money to buy top brand items. If you are paying top dollar, literally, you deserve top dollar service. This is evident in other popular examples such as the Dell's global replacement of laptop batteries and more recently Nokia's worldwide replacement of certain cellphone batteries.

Hopefully the new heat sink and motherboard will perform better. Whatever the side effect, I am happy Dell customer now. #M1004 anyone?

The flip side of organised retailing
"9th Aug celebrated as 'Quit Retail Day'".This day was famously known as Quit India Day (circa 1942). But "FDI Watch India" and "Vyapaar Aur Rozgar Bachao Andolan" have given it their own flavour. Even if this was expected, the creativity and the intensity of the message sent by juxtaposing the two events is surprising.

The biggest fear among those resisting the Indian Retail Revolution is that of loss of jobs or displacement. The 200 Billion Dollar retail industry in India is highly segmented right now. Only 4%, expectedly, of this is truly organised in the way we see Foodworlds, Fabmalls, Monday to Sundays, Ahmed Bazaar (Bangalore), Shopper Stops, Westsides etc which are chains or corporation, sometimes even listed. The number might also include goverment-run Janatha Bazaars. The remaining share includes the gamut of sellers at all levels who are located near your home or street. I am not sure if the Sabjiwala who rings your door bell is counted at all. Nevertheless, selling remains the biggest occupation in India with 11 stores per 1000 persons. This is a huge number considering that China has 6 and USA 3.8. "What will happen to all these people?" is a question that cannot be ignored and is a common refrain today.

In the past, India has seen huge displacements, be it during industrialisation during the early Five Year plans or urbanisation that followed it and which continues today, or the IT and ITes revolution that is gripping youth today. Of course, the challenge of displacement from ITeS is at a different level altogether (acedemia and R&D bodies fretting the trend involving loss of qualified engineers and science graduates to high-paying jobs) while that in question is in a more basic stratum.

But one must not ignore the fact that these changes have happened over the years, if not decades and Retail Revolution will be no different, even if technology enables it to bring about changes faster. In addition to technological enablement, acceptance and inertia to life style changes play a great role in moulding mindsets.

Organised retailing will create its own opprtunities. To fill the boardroom-to-field gap, companies always look for local subject matter experts. Who better than middlemen can fill this gap? Sure, one can follow the principle of 'try to beat 'em, if you don't want to join them', but that is a diffent argument. Contract farming will provide farmers opportunities with ensured income. New job streams are already cropping up what with Retail Sales executive diplomas and Degrees in Store planning making rounds in newspaper classifieds. People With a little sensitivity, interest (or need) and attitude can easily find avenues in in-store salesmanship. With growing organisation in retail will come more back-end operations. Employment opportunities in the bottom layer will see the most growth.

There are other long term effects one can foresee changing the way we live in the next decade or so, as a direct consequence of the type of set-up organised retailing will require. Since food, especially seasonal, will slowly become independent of local climatic conditions (already happening for some items) with perennial supplies planned for and achieved, food processing will gain prominence. Food processing and preservation is what will help corporations maintain their stock levels and meet demands across geographies.

Almost all of us eat fresh produce, today. It may not be so easily available once processed foods become a norm. Canned-everything is what most American families shop for and live on (emphasis on organic and fresh produce is the reaction to this phenomenon). Today, we can find Rasgulla's and baby corn with Indian labels. These cans will more and more commonly hold tomatoes, spinach and carrots to name a few, something that we would find too convinient to ignore. Talk to DINKs and SINKs living in nuclear families and you get a perspective on how consumption of ready-to-eat foods is gaining prevelance.

All these changes are inevitable. How the Indian system adapts to it is the area of concern. India will move forward, urban Indians will move faster. Only a good system-social support, health, judicial, legal- will ensure uniform growth in all socio-economic categories . Government should enforce policies that bring accountability for and quick addressal of genuine concerns people could have out of corporatisation of retailing. Vocational training programs will ensure that opportunities flow equally to all geographies of India and strata of society.

There is little point in being protectionist about the Retail Revolution. Energies need to be focussed on enabling the Indian system to handle the inevitable changes which have the potential to transform the way we live now.

A case for Organized Retailing:

The Bhart-Walmart Cash 'n' Carry alliance with a 50-50 joint venture arrangement is now official. There are mixed emotions around this announcement with traders crying foul and FMCG people welcoming the move. While the traders will be affected on grounds of relative combined buying power of the duo and consequent fall in their own profitability, FMCG players like HUL are optimistic about the huge volumes this organization will generate.

While doubts have been widely cast on whether Wal-Mart-like retailing would work in India, it is altogether another question whether dewy-eyed Indian players are not already showing ambitions of emulating the US retail behemoth. Subhiksha and Reliance Fresh are only waiting to see the results of their low-hanging-fruit experiments with retail models, before launching off on bigger formats. APMCs in Bangalore protested earlier this week, governments move to amend APMC act to accommodate contract farming. Reliance collection centers in proximity to farmers have already induced a lot of fear in the traders. Indian retailers can play but foreign players cannot? Seems like we are deliberately un-leveling the field here.

While Kerala has announced on national television that it will do anything to prevent Reliance from entering God's own country, new models are being experimented in parts of Mumbai and some towns in Gujarat. In order to beat Reliance at its game, scores of store owners have formed clusters within parts of towns in order to increase their buying power. Each of these clusters will ensure similar formats so that locals in a part of the city get same price, assortments and layouts in all stores in a cluster. On closer look this is nothing but the bottom-up evolution of a chain. If the likes of Reliance pump money from their coffers and roll out store designs from their boardrooms, local merchants are pooling in together to form their own little corporation (co-operative?). If the clusters have a uniform design and operations are directed by a group of cooperative-heads, the personal touch of the local kirana owner is anyway lost. To maintain their cash flows (cooperatives can be assumed to have no huge caissons); the kirana owner's personal credit policy disappears. With the corporatisation of the local cluster (bound to happen), the individual kirana owners will lose their ownership. They would be encouraged to sit and home and count their share of the profits. Whether this model is sustainable, only time can tell.

The current times can lead to germination of Indianised models of organized retailing. It is possible that something innovative may come out of the churning happening right now. Kerala's might be a knee-jerk reaction and in time laws might be amended when the success of oragnised retailing generates happiness in the public in the rest of the country. But, these are early times and it may be several before any such things happen.

Now coming to a basic question...will organized retailing succeed in India?

Firstly, the need for organized retailing will keep the ball rolling. Not as self-defeating a statements as it seems, since India is probably one of the few countries where in one corner farmers kill themselves unable to make profits from their surplus (causing too low selling prices), while people in another die waiting for rations to arrive. FAO has capacity to store, but not the capability to maintain its storages. Public distribution system is a shame, what with kerosene, sugar and grain mafia degrading local distribution efforts. More than 35% of the produce, especially in grains and staples rots and gets wasted. There is a dire need for better mechanism to move food grains from source to destination. Oraganised retailing can provide just this bridge.

Secondly, the prices of commodities can be more controlled with better facilities and distribution systems that will be set-up by the big players. Investments made by such retailers in storage facilities will ensure constant supply of goods, especially foods, throughout the year. Fluctuations in prices (typically, they shoot up in monsoon) will be reduced and more uniformity in price and quality can be achieved. This may not happen overnight, but some form of stability in each of these dimensions can be achieved with a sustained effort of organized retailing.

APMC regime is largely hierarchical. Between the farmer and the consumer, one can expect at least 4-5 levels of agencies or middlemen, who add to the cost of goods- especially grains and fruits. To both the ends- farmer and consumer- there is little benefit. Reliance Retails has set-up collection centers in proximity to producers. One must remember that farming in India is not land intensive as in North America and some other parts of the world. In India, it is labor intensive with large number of farmers owning small patches of land producing, in some cases, largest quantities of fruits and grains in the world. To an average farmer, a reduction in the cost of transportation will make a large difference. So, instead of going a longer distance to an APMC Mandi and auctioning his produce, he would prefer to go the short distance to a predictable-price-offering at a nearby Reliance Collection Center. This ploy may already be smelt by APMCs and they may (being a government-run agency? But, let's give them the benefit of the doubt) set-up their own proximity mandi's or react by providing predictability in pricing, but in the end it will be only competition where consumer and farmer would benefit. This can be third benefit of the organized retail network.

Private sector players, and not in the least foreign chains, have the muscle and the know-how to set-up efficient supply chain systems, invest in forecasting and logistics systems to make 'all that' happen. The crawling and creeping corrupt public system has not done much in this regard in the last half-century of its existence. Yes, the e-governance is just taking off, but the attitudes and motives of those who run the system require a lot of overhaul, before any sweetness can be derived from the e-governance efforts.

Lastly, an economic benefit of allowing foreign retail chains in India is the increase in volume of exports. Currently, Wal-Mart sources about $600M from India. Compare that with USD 27B that China exports to only Wal-Mart. If Wal-Mart opens stores in India, the giant's India sourcing would grow multiple folds in a couple of years. And Wal-Mart is only the most significant example.

Flip side of the coin... (Next time).