Category: Product

A popular restaurant wants users to order through apps like Zomato or Swiggy because taking telephonic orders in busy hours requires lots of man power. Whereas, a new restaurant latches on to these apps for the new customers they bring.

The first set of restaurant are coming for the tool whereas the second set is coming for the network. Should the commission pricing be same for both? Does it help to know the segmentation and hence approach both set of customers differently? From what I know of last year, Zomato was treating them differently.

Take another example of Star Network vs. TVF on Youtube. Star’s content is popular and has a ready set of viewers. By being on Youtube, Star was giving more to Youtube than vice versa. May be YouTube did not care for the differentiation much, so Star network launched HotStar. TVF has an app but the Youtube channel is what the audience prefers. It’s like a small restaurant trying to make its own app and hoping to compete with Zomato. Possible to save some commission but not worth the effort.

In offline world, popular retail brands like BizBazaar or McDonald’s have the ability to drive footfalls to any corner of the city. Should a mall charge them the same rent as regular brands? They don’t.

On a related note, does a businessman in Delhi take car loan for the same reason as a techie in Bangalore. No money vs. no white-money. Will their interest paying capacity be same? Which of the two is looking for convenience of assisted service vs. lower price of online buying?

Does the person making a CoD order on Flipkart really not have a debit card? Are such users willing to pay a higher price because it helps them consume untaxed money?

It helps to know the real reason why your product is being used. The pricing and User Experience metrics will change when you know that.

Any exchange, crypto or otherwise, has to find the correct brokerage model to balance network growth and revenue growth. There are 3 parameters to look at while deciding the most suitable  model –  User friction, market liquidity and transaction execution.

Here’s looking at the various models followed by popular crypto exchanges.

1. Buyer and seller both pay equal – In India, Coinsecure and Zebpay follow this model. User friction exists for both the parties, revenue burden is distributed but liquidity in market will always be low.
2. Maker and Taker, both pay equal – Maker/Taker differentiation became popular in crypto world. Primarily, this separates liquidity creator from the liquidity absorber. Works in similar way as above for all 3 parameters.
3. Only taker pays – GDax from Coinbase follows this model. Only transactions that absorb the current liquidity from the exchange have to pay. This model does incentivise creating liquidity in the market but there are too little transactions that get executed as the taker has to pay a penalty (the fee). There is too much anxiety with respect to being a taker vs. a maker. If you become a taker, you pay a fee which you wouldn’t need to pay if there was a cent of a difference. If you become a maker and wait, the market might turn against you and transaction might never happen.
4. Only Buyer pays – Koinex in India follows this model. Seller is incentivised to create liquidity in the market. Seller has 0 anxiety. Buyer pays a little fee, which is fine as he was anyways looking to invest in the instrument. As compared to Gdax model, there are more transactions that get executed here, with the same revenue generation per transaction, as one side is still paying.

In ecommerce marketplace, it’s always the seller who pays. On the contrary, Airbnb makes the buyer pay for the transaction/convenience fee, over and above the tag price. Would Airbnb do more transactions if the tag price was the final payment amount for the consumer?

Which model works where? Your thoughts?

When enabling a transaction becomes commodity, the value of marketplace lies in enabling trust. Trust that the marketplace will connect the consumer with worthy service provider. Feedback from past users are the key to building this trust. I have written about this in detail back in 2013 for various industries.

There are few practices in feedback collection that are being overlooked by popular marketplaces that will end up creating less trustable profiles in the long run.

• Forced and Untimely feedback: From what I recall, Uber started this practice of collecting feedback about previous transaction at the beginning of new transaction. While it is designed to collect feedback at the end of the current transaction, users have no reason to look at the app in the end. What are the chances that I actually remember my last transaction unless it was horribly bad? What are the chances that I want to pause for a while and put efforts to give a genuine rating. At this moment, the feedback screen is just a pop up with a skip button camouflaged in the rating stars. I wouldn’t want to sound too judgemental and there is always room for improvement so I give a 4 star. Most users end up giving 4 or 5, because thinking, at that moment when you are waiting to book a ride, is too much cognitive load.
  While cab rides are commodity and all factors are hygiene factors (from Herzberg’s theory, not from the Dettol ad), this practice didn’t quite seem right when experiencing on Zomato’s Delivery orders.Solution: Have a time limit. If the feedback isn’t submitted by then, don’t ask. The time limit should depend on the impact of service. A holiday experience could have a month’s time limit but for a cab ride, probably not more than 24hrs.
• Value of Individual feedback: If a person gives only between 3-5 stars everytime would you treat his 3 same as that of a person who only gives between 1-3 stars. If a feedback was given 1 year ago would it still be treated same as the one that was given yesterday? Zomato did a great job with this, described in detail on their blog.
  Lately, Zomato has started treating delivery orders’ rating at par with dine-in’s rating. The basic problem with this treatment is that these 2 are very different services with food being the only common aspect out of 5. For dine-in, I would value service and ambience as well. Whereas for delivery, the packaging and delivery time would also be valued. Now by looking at a rating on Zomato it is difficult to say what this restaurant is good at. By design and the point mentioned earlier, a restaurant that does more delivery will continue to get better ratings.

• Representation of feedback: How reviews and ratings are shown helps make best use of it. Showing who gave the rating (couple on honeymoon or solo traveller), when was it given, what was the rating specifically meant for (product or delivery) etc. helps comprehend better. It is also important to differentiate between what part of the feedback is for the service provider and what is for fellow users.

Should a transaction platform care about ratings and reviews? Ratings are an important aspect for curation. What comes on top of search and collection pages is determined by rating. A misinformed rating creates wrong expectation and that leads to a bad user experience. Remember, payments and delivery are a commodity, trust is the only differentiator.

Notes:

1. Tripadvisor does a great job with reviews. Pretty detailed. Focus is on quality and not quantity.
2. Youtube used to have a 5 star ratings system. Now a binary system. Lesser cognitive load.
3. Flipkart web app used to ask ratings on past orders in a widget on the side bar, never forced over a pop-up.
4. Avoid using reviews system as a way to build content for SEO. A QnA section can do that job better.

SnapDeal, the ecommerce company, has a Sunshine Program to help Charitable Organisations. The program allows organisations to create their shopping list and publish on SnapDeal. SnapDeal promotes this amongst its users, who can order whatever they want to donate. SnapDeal delivers the products directly to the organisation.

Publishing wish-lists and gift registry for birthdays and weddings is popular in some cultures and countries. Letting charities do this brings in a lot of efficiency in the system, as only the most needed stuff is received as donation. And what better place to publish this than an ecommerce store? Users will be inspired to donate through this efficient as there is very little decision making to be done. Since these are usable products and not cash, there is more trust as well. All this while the store enjoys a positive brand recall. A true win-win-win.

The current state of the program is a great start and bringing bulk buy discounts, non-branded low cost products, donation receipts will make this a full fledged default destination for the privileged ones to give back.

Cross posted at iSpirt. 

The rise of Mobile is a big shift in the way Internet is used, thereby influencing commerce over the Internet. In developed economies it is the desktop based users who have started spending a significant amount of time on mobile. For India specifically, mobile is bringing in lot of first time Internet users.

Given that Google Search is not the default starting point on mobile, there is a void waiting to be filled as the platform of the mobile internet. No, Android/iOS is not it. There are 3 services that I believe can be the platform of the mobile internet viz. maps, payments and delivery. Before looking into each of them, the hypothesis here is that the Internet of mobile is no longer about serving information but it is about enabling actions. So what happens to information related stuff? They will move to a Chat like app with a command prompt like interface. It is already happening with Wechat, Line etc. Search would be easier over chat with results showing bite-size info in cards, the blue-link click is only required to dive deeper. Why chat and not current Google search? Because the current Google search is a state-less communication. Two consecutive searches do not relate to each other. The command prompt type interface serving bite-size info will need to be state aware, just like human communication.

The 3 platforms:

Maps

In the long term, Maps are going to be default page for most of our local needs, like movies, cabs, handyman or anything related to offline commerce. Different reports suggest that about 40-50% of all mobile search is local. Instead of a page with blue links, maps will become our search engine on mobile. China is already seeing this change with Baidu Maps driving all-things-local. Google Maps also recently integrated Uber to show estimated pickup time if you have uber installed (http://blog.uber.com/googlemaps). When you have more than 1 cab app installed, Google Maps will influence which one you choose. In the long run it will also mean that you will not need to install the app but the app will just be backend integrated with Google Maps.

Users currently find it easier to search for “Zomato Pizza Hut” on Google and then go to Zomato’s Pizza Hut page, as compared to first going to Zomato.com, and then searching for “Pizza Hut”. In the same way, people will not look for a cab on a map inside Ola or Uber’s app, instead Ola and Uber’s cabs will be visible together on a single instance of Google Map.

The future of mobile local search is Apps on Map, and not maps inside apps. Just like now we don’t need to bookmark every restaurant site on the web browser, in future we may not need to install every cab booking app. This is the most important and defensible product of Google in the long term. Individual Apps as an interface is an intermediary stage of the mobile evolution until platform level aggregation and deep integration does not come into action again.

Payments

We do not see payments as a platform because it is generally not the starting point or in most cases we don’t even realize if it has an interface. It just happens, and that is how it is supposed to be. Apple and Samsung are working towards that. In India, the wallet feature in apps is being accepted. Mobile carriers and large banks are trying to get into the space. Paytm seems to be moving fastest in this space though. There are still licenses to be issued in this space by RBI and rightly so because this space is more about enabling trust and insurance, the core of commerce, than anything else.

Indian consumers do not relate to payment systems and insurance directly, but in developed economies one can ask their credit card company for a complete refund if the service by a vendor is not satisfactory. So they not only act as a credit and payment company but also an insurance company. Being on a universal trusted payments platform will mean more business. Micro-transaction will happen over a payments app and each little vendor need not have their own app with payment gateway. I should be able to use a plumber’s service and pay via a payments app that both of us use.

Delivery

Delivery of physical goods is a big platform opportunity. What we generally see as an ecommerce company is a delivery company. A lot of commerce, new and used, B2C and C2C, is being limited by the physical movement of goods. While intercity delivery is controlled by large courier companies, the hyper local delivery of goods is still an unsolved problem. Uber is dominant in this space for people movement and now starting for food but their platform doesn’t yet allow movement of small goods from B2C or C2C. In India, Delyver and Grofers are trying to capture this space. Entering the C2C delivery space will be a big move for them. It’s human delivery network now but from what we see, it will evolve into a drone network.

SpringRole is referral based hiring tool. Companies post a job, you discover it and refer a friend, through a Linkedin message, who might be a good fit. If the candidate agrees to talk, you get paid a small referral fee.

In a world where attention in scarce, getting a friend’s mail for a job not only gets the attention but also endorses it. This model has been tried before in bits and pieces though the key to such incentive based programs is spam check and reputation control. SpringRole is addressing both this in priority through a strong data driven algo that works silently in the background.

The whole tool works on top of Linkedin and will hopefully integrate more platforms. Though the profile pages seem more usable here.

Wishberg, an app for maintaining and sharing your wishlist, sends out email alerts with a subject line that reads like this:

You have inspired Pravin Jadhav for a new wish!

The mail is basically an alert for saying someone wished for what you wished. In Twitter analogy this is something like a Retweet. What’s important here is the heading does not say “Pravin wished for what you wished” but it says that “I ‘inspired’ Pravin”. The earlier message sounds more like the follower is same as you and does not make the earlier user superior but in the latter case the original user is made to look intellectually/socially more superior because he has now “inspired” others.

I don’t have the statistical details on the open rate of these mails, but I am assuming it must be pretty high. I have gone to check Wishberg everytime I get these mails.

For a system a click is an action but for the user the copy is the action. For example, earlier Facebook used to ask users to “Become a Fan” but that is now changed to “Like”. The end effect for the system is same in both cases but for the user a “Like” is less obligatory than “Becoming a Fan”. In the same way an endorsement button could be “Like” for FB, RT for Twitter, +1 for G+, Like/Dislike for YouTube or Agree/Disagree for a discussion. An agree/Disagree would not make sense on Youtube video. Similarly, someone Likes what you said is not as powerful as someone Agrees to what you said in a debate. The “share” vs. “recommend” action on Facebook is another one to think about.

A thoughtful change in copy can change the user activity manifolds.

Read more on copy change on Facebook Events.

I was talking to a traditional apparels retailer recently. He runs a large store in a tier-3 city. He recently changed the interiors of his store. The western style chairs were replaced with the Indian style seating, that requires you to remove your footwear and sitdown on a Gaddi (cushion on the floor). He reports the conversion rates are now almost 100%, earlier at about 80%. The casual window shopper is almost NIL. He believes the inertia against getting up, putting on the shoes and leaving without a purchase is high, hence the low bounce rate. But what about the inertia of removing the footwear and sitting down? Well, he says, “The cost of entertaining a customer is very high, you have to employ more staff for lesser chances of conversion. A genuine buyer will take the pain of settling down.” By making the efforts of sitting down the customer has already invested in the deal.

Last week, I wanted to get a phone repaired. The case was complicated, neighborhood service centers couldn’t solve it. I put up an ad on Sulekha, got a call from this one store that was 12KMs away, but he wouldn’t give me the exact quote on phone. He needed to “see” the phone to give the exact price. Since his was the only call that sounded confident enough of fixing it, I drove 12KMs. He saw the phone and quoted Rs.100 more than the upper limit he said on the phone. Did I pay him? Yes. I had already invested in this deal by traveling across half the city, I wouldn’t want that to be a sunk cost. Was he cheating? NO. He never committed anything on phone.

Let’s see some online examples: The secret to Freecharge’s (very) high coupon redemption rate is the Rs.10 “courier cost”. That Rs.10 doesn’t really pay up for the courier but by paying something for the coupon the user has invested in it, hence higher chances of him using it. It’s true that lesser people would order coupons because of this Rs.10 cost but in coupons business the only metrics that should matter is the redemption rate and that’s what the focus was.

The Amazon’s way of establishing inertia is Amazon Prime, the free 2-day shipping that you invested in by paying annually. $79 may be too much to invest for shipping but once done, one will spend more with Amazon to make it sound like a smart investment. Amazon is offering products with low marginal cost like movie streaming etc. to increase the purchase of Prime.

What are other equivalent of this inertia builder in the online world? How do you make the user invest in the deal before making the transaction? How do you make the user drive up your key metrics? Isn’t this required more for online world where travelling between shops is only a matter of click?

One example that comes to my mind is “add to cart to see final price?” that a lot of sites do. Although that feature was born of regulatory issues but can it be applied to the stores advantage? Like, “Add to cart and also enter credit card details” to see final price? I remember Via.com showed ‘price after applying coupon’ only when you have filled in your mobile number and email address. Is that enough inertia buildup? Is there something more that can be done?

[Originally published on NextBigWhat.com]

The human race has been trading ever since it has existed, either through a tangible barter, a favor, an obligation to return a favor or through currency. The basic premise of all this trading was trust.  A typical trade revolved around trust that the buyer had about the quality of the goods and trust that seller had that what he got in exchange was worth. A favor was extended because there was trust within the community that everyone else would extend favor when needed.

Traditional Trade

With the achievement of traveling beyond the mountains and oceans, humans started discovering others of the same species but different culture. The products that were exclusive to a particular geography saw demand from far off places.

Soon, producers required travelers who could get their goods to far off land for higher margins. With time market dynamics skewed in favor of these travelers. They would act as locals to the producers and as well as to the consumers in the far off land. They added a layer of opacity in the ecosystem but for them everything was transparent and hence they made the most out of the trade. The traveler was not just helping with the logistics but also ‘making the sales happen’. He was now a trader. Even today most of the margin in farm produce value chain is made by the person who brings the produce from the farms to the mandi.

Some of these traders were really smart. They hired local artists and celebrities to talk about their products and tell the consumers how the package that they sold had better goods than the other one. Goods went beyond fulfilling physiological needs. There was more demand created. Technology helped meet this demand but at times the mass production also created over excess capacity, which in turn created demand for more demand.

Birth of Communication Technology

 

Meanwhile, technology was growing fast and it went beyond production. Information was being exchanged between far off lands within a matter of days, then hours and now seconds. The producer was now finally able to see the huge margins that the trader was making but sharing very little of it with the producer. The trader was again being reduced to a logistics enabler.

The trader was being removed from the value chain but then it just wasn’t viable for the producer to produce, market and trade, all by himself. The producer was good at producing and nothing else. It wasn’t rewarding enough to learn new skills to monetize his micro production.

A new breed of connectors are occupying the value chain, they were fondly called Internet Startups. These connectors on the web realized the opportunity and are bringing a different kind of service to the value chain. They are enabling the producers monetize without worrying about everything else. That is making micro production viable enough as a business.

So why is micro production such a big deal when technology can mass produce everything?

Micro production allows you to add creativity and it’s efficient by design. Micro production is human. Most importantly everybody is doing what they love doing, entrepreneurially. Mass production as seen above is an outcome of greed that further creates the demand for artificial demand. Most efficiency and scale around mass production is not to make the production efficient but to make mass production manageable and profitable even when the product is commoditized. The buyer does not need to pay for the over capacity that is mass produced.

Fashion

The fashion industry is a good example of success with micro production. Most designers generally have their own mini-production house that allows them to maintain a boutique of their best creations and keep all profits to themselves. Each creation is unique and customized for the consumer.

Music

In the information age, Apple iTunes was amongst first to allow micro consumption of music. Paying for only the singles that you want and not the whole album was liberating. This also enabled music makers to produce just 1 song and sell it. The cost of distribution of magnetic tape cassettes and CDs did not make it viable to do so earlier. The same is being extended to utility and game apps by app stores. Today ofcourse, this ecosystem of app/music distribution has matured so much that one would find it senseless to having buy a suite of bundled apps or an album of pre-selected singles, unless subsidized.

Publishing and Distribution

This Industry has already seen disruption with the advent of blogs. Large media houses are facing stiff competition from independent bloggers. The very well-known news and content channels would soon be reduced to only a distribution network. The best of reading platforms like Feedly or Flipboard are helping us discover more of the kind we like and they are going to lead the way for micro consumption of content. Social media is helping discover new content, the dependency on a professional distributor is being curbed.

Bed and Breakfast

Watch an old Hindi movie or a mythological series, you would always have this traveler who needs to halt at an unknown village for the night before he can continue his journey through the jungles. He would knock at random doors to find someone offering him free bed for the night and breakfast the next morning before he leaves. Wisdom is exchanged over breakfast and this serendipity sometimes converts into long term relation. Of course, the world is not all that utopian anymore. But that does not mean that everyone is bad either. With services like Airbnb or Oravel it is possible to micro produce as little as just 1 bed night per month for travelers. These services are a great platform for the future of hospitality business.

Soon, it may not be economically viable to mass produce 100 rooms in a single building for this purpose that all look and feel almost the same from inside irrespective of what city you are in. The basic desire of humans to experience something new is not served by them. So what is the problem that these hotels solve? They are predictable in terms of service. You know what to expect at a Taj vs. a 1 star property. This is again defined by the service layer on top of the real estate. The hotel chains might soon be reduced to management services that help independent properties be better serviced.

Local Travel

 

Though services like Uber have made it easy to hire a cab for local travel, the real revolution of local travel lies in ride sharing. Services like HopOn, ZingHopper, Ridingo enable you to micro produce as little as 1 ride and still make money out of it. The other way to disrupt this space is to enable renting of cars that lay unutilized in office parking lots most of the day. Currently the mass produced local commuting lies underutilized and hence the user ends up paying high fees for the service. True liberalization of this space lies in enabling hiring of only the car, only the driver or only a seat in a moving car. All of these need to be owned by individuals and not mass produced to allow efficiency to prevail.

Courier

Any village in India has couple of people who travel to town daily for work. On most days this traveler would be required to bring back something that his family or neighbor asked for. He would do this happily without charging for the “courier” service. There are 2 parts to courier, the long distance carrying and the last mile delivery. Services like DeliverWithMe are solving the first part and there is still lots to be done here.

Ofcourse, anyone pooling in for such service will have to stop and wait but then the environmental cost that we are paying for moving fast is just not sustainable.

Food

Food and cooking is still an unsolved problem for the urban Indian. Most men are yet to learn to cook, thanks to the upbringing they have received, and most working women find it difficult to cook for mini get-togethers. Restaurants have solved this problem partially but ordering for decent food from restaurants at the cost of dine-in is just not a viable option. Good food delivered from restaurant generally comes with the cost of ambience that you did not experience. Startups like Imly, mealnut and HomeChef from Delyver are dis-integrating the cook from the eating place. There are wonderful cooks in every Indian home but it is not viable for them to set up a diner and employ staff for service and cleaning to monetize their ability. They can now micro-produce as little as 1 item on the menu and still monetize it.

Mass producing food the way restaurants do is neither healthy nor economically efficient given the over capacity that they create. This means that the mediocre places that neither have a great ambience, nor justify the prices with only food, are going to have a tough time. What’s going to survive in the restaurant business is the experience of eating out, not the utility of having food.

Loan, Investment and Banking

Traditionally, banks have not only played the role of managing transactions but also investments. The problem is that a typical deposit in the bank makes considerably lesser money for the account holder than what the borrower is paying to the bank. Banks get paid to reduce the risk by taking distributing onus of the loss caused by individual loan defaulters. All deposits to the bank get paid equal interest but the bank charges different interest rates for different loans. This does not quite sound liberal. LendingClub is changing that by allowing you to choose returns based on risk. Managing risk involves identifying potential loss and LendingClub does that well by checking borrower’s credit rating. Traditional banks on the other hand have been heavily underpaying lenders to account for the bad investments they made that convert into NPAs.

Education

 

The changes in education industry that micro-production is bringing seems to be the most disruptive of all. For long, the society has given the power of imparting education to institutions. Writers for books are chosen by publishers and teachers are chosen by universities. Students are required to enroll into single university for all their education so that they can earn a well-recognized certificate of knowledge. One has to buy a full book even when only 1 chapter is useful. Both, students and teachers are limited by the capabilities of the 1 institution that they enroll into.

Coaching classes are a great example of micro-producing education for single subjects and they have been doing well for the teachers as well as the students. Most students do not go to higher education institution for knowledge but for the certificate. And for teachers the institutions have become a platform for marketing their coaching classes through subsidized content. Coursera is killing the need to have education institutions and there is Attano that is doing for course books what itunes did for music, by enabling single chapter purchases, instead of the whole book.

Are these transaction platforms doing enough to disrupt the space and make it big?

A recent report in Forbes suggested building a “transaction platform” as the surest way to achieve one’s goal of making a Billion Dollar Internet Company. While that has been true for Internet until now, it won’t be the case going forward. Enabling transactions was a new new thing until now but has been commoditized lately. Soon individual verticals of transaction will be commoditized as well. 2 sellers, 2 payment gateways, 2 booking engines are mostly different only in their price not in the ultimate value delivered.

The next big thing won’t just enable us to make transactions but save us from making a bad transaction. It should reduce my risk of trying. It should act like a guide against a bad transaction that I am going to make, before I make it. All this without reducing the rewards for the seller or increasing the price for the buyer.

How exactly will that happen?

redBus tells me to not take a certain bus because it is bad. Bus ticketing is a commodity but that cautionary message is my friend. Zomato has to stand up and speak when a transaction goes bad. Phone number of restaurants isn’t a value anymore, separating the good restaurants from the bad ones is what matters. All this because the community trusts these aggregator to reduce their risk.

As the world opens up to trade with anybody and everybody, trust is going be a big deal. If you are in the business of simply selling more, you are going to be out of business, sooner than anyone has ever gone before, thanks to the same web that brought you to the top so fast. If you are in the business of making sure I only buy the good, you are my friend. I trust you. I won’t let you die.

The trust that was taken away from the trade will need to comeback and then it will kill the mediocrity that greed brought in. The business that tells the trustable from the non-trustable is going to be a big business.