Ola Cabs – How Ride Time Charges Could Lead You to Pay More

Ola Cabs – How Ride Time Charges Could Lead You to Pay More

As a startup enthusiastic, I always prefer to become user of it to analyze the entire business setup from the targeted market point of view. Since last couple of weeks Cab Aggregators Ola and Uber both are in lime lights for claiming their effective, efficient and affordable cab service as the best, I thought to be a user of it to analyze if there is any loophole in their system that could lead towards inconvenience of consumers.

So, I booked a cab yesterday morning expecting a smooth ride to reach to my destination. But the frustration started since after I received sms stating that ola cab has reached and is waiting for me at my doorstep. I jumped outside to start my ride and reach to the destination on time. But the struggle started since that moment itself. There was no cab and when I called the driver, he was somewhere around half km away from me. After guiding him around 20 mins on phone to reach to the exact location marked while booking, the journey ended up with higher invoice amount than expected.

Below are the details of ride, charge, possible problem and its solution-

Ola Cabs Ride Time Charges

Ola Cab Charges

Booking time of Ola Mini = 9:15 am

Expected time of Arrival of Ola Cab = 9:20 am

Actual arrival time = 9:40 am

I marked the ride late around 9:40 am via Ola App itself hoping it would be automatically incorporated in the invoice.

Drop time = 10:00 am

Total distance traveled = 9 km

Based on Ola’s price details, my rough estimation for the bill was – Base price (40 Rs) + Travel Price (9*6 = 54 Rs) + Ride Time (20 Rs from 9:40 to 10:00 am) = 114 Rs.

But the Actual Amount Charged was 145 Rs.

Ola Invoice Initial

So it forced me to recheck the bill why there was gap of roughly 30 Rs in a single ride.

The ride time charge that was being reflected in the invoice received via email was 40 Rs. So I understood that the ride time was starting from 9:20 am, including the time of 20 min struggle and further 20 mins ride till 10:00 am.

My Reaction and Ola’s Action

I dropped an email to Ola stating the entire incident but received reply “As per our records, the driver has reached your location at 09:20 and you have boarded the cab at 09:38. I am initiating a follow up with the driver partner involved”

Ola Email 1

So I again filed a complaint stating why I would have keep calling driver since 9:20 to 9:40 am if he was already there at my door step and Ola replied “We have forwarded this issue to the relevant team to educate the driver on this, we have taken immense measures to improvise our service and ensure that such experiences will be minimized.”

Ola Email 2

Since my concern was why any user should pay any amount of money for the unproductive time like guiding the simplest route to the driver, I decided to contact Ola again and explain the same issue with more elaboration. So at night I again contacted Ola their facebook page hoping that this time they would be able to under the exact problem and resolve it. This time Ola refunded the additional ride time charge of 24 rupees.

Ola Invoice Revised

Before going to sleep I again gave the entire incident a thought. If Ola is charging 10-20 rupees additional per person on each ride what additional amount they are generating. (If per day booking are assumed as 1 million). And what could be the possible reasons for such incidents and their solutions.

Problem Analysis and Solutions

As per my understanding, there are two possible reasons for the incident –

[1] Ola Unethical Practice – It might be that Ola itself is charging the additional amount by counting the ride time in wrong way. Since Ola refunded the amount, probability of such practices is less. Users, who are able to raise the concern, get their invoices revised.

[2] Driver Fault – Another possible reason is that the driver marked himself as available at 9:20 and kept waiting till 9:40. User can’t mark the driver availability or ride start time in the App. This control is in drivers’ login only.

So the control of start and end of journey shall be given in both hands, driver as well as rider, and based on the unavoidable time differential of both the marked time, invoice shall be generated correctly.

Ola users must check the ride start /boarding time marked by driver before starting the ride to avoid additional charges.

Offline Shopping – Why not Attract the Online Shoppers?

Offline Shopping – Why not Attract the Online Shoppers?

Today, when I was planning to go outside for shopping with my friends and observed their reluctant to go for offline purchase, I was forced to think why people are so much attracted towards online shopping. Because almost everything that you need in your daily life like cellphones, clothing, electronic gadgets, home appliances, furniture, grocery, fruits, and vegetables, food all are available at a distance of few clicks. Few years ago, shopping malls, stores were the center point of attraction for shopaholics. Today, people spend more and more time on browsing wide range of product available on online portals and buy after a long comparison of features, cost, discounts, cashbacks etc.

A lot of times, I have observed people going on stores, feeling the product and then checking the price of product on online portals. Greatest shock was when last time I went to buy a brand new phone and shop keeper told me the price available on each of the e-commerce site. That time look into his eyes was kind of losing one more customer. A small discussion with him gave a hint that there is a need to renovate offline shopping experience.

So if all of the attractions of online shopping could be incorporated in the existing offline stores, the changing mindset of people could be reversed. Here is small analysis on – why do people prefer online shopping rather than offline? What do existing offline stores offer? What are the changes that should be incorporated in offline store?

Offline Shopping – Why not Attract the Online Shoppers

Why do People Go for Online Shopping?

Let’s first analyze all the factors that force people to go for online shopping rather than to store to grab the product –

  • Time Saving – People having hectic daily schedules are the major consumers of online portals. With few clicks you are able to place order for the desired product and get it delivered to your door step in couple of days. Same day or next day delivery is also available at some additional cost. While offline shopping requires getting ready, to and fro travelling time, waiting time etc.
  • Discounts and Cash-Backs – Cost concerned consumers are attracted towards online shopping because of attractive deals and cashbacks offered by online players. Offline stores don’t have funds to burn to acquire consumers.
  • Availability of Product – Acceptance in tier II and III cities are majorly driven by the fact that limited products are available in offline stores while online shops are offering wide range of product catalogue. So people can easily get the product.
  • Easy Comparison and Sorting – For analytical consumers, online is better option as it provides convenience like easy sorting as per popularity, money etc, and comparison of different products at one place. In stores, you need to check the products one by one and then choose the best available product rather than the best fit product.

Other reason of online shopping is that people staying in other cities can easily send the products to their beloved ones staying in other cities.

Why do People Go to Offline Stores?

Another fact that needs an in-depth analysis is why people go for offline stores rather than online players. So here are the major benefits of offline shopping –

  • Physical Verification of Product – At offline store, people can easily view, feel, compare and judge the product which is definitely better way than seeing pictures or videos of the product.
  • Easy Exchange and Return – You can easily exchange or return the products with offline stores. Though e-commerce players also offer the facility of reverse logistics but it takes time.
  • Instant Delivery – At offline store, you don’t need to keep waiting for your required phone or laptop; instead, you get it at once.

Based on the need of the product, people can easily decide whether to purchase online or offline. If the need is urgent and instant, you have no other choice than going to store and buying it, but if you have ample time, you will definitely analyze the product online.

Offline Shopping – Why not Attract the Online Shoppers?

If offline stores try to incorporate the advantage of online stores, more people would get attracted towards it. So what additional offline stores can offer to attract online shoppers? Here is a small list –

  • Screen Display of Products at Store – The biggest problem at offline store is people need to check the entire product physically which is time consuming activity while on online portals you can scan the entire product list in very little time.
    Placing the display screens for your product catalogue would help consumers to view, sort and compare the entire catalogue.
  • Reward / Consumer Loyalty points – Offering cashbacks and discounts to loyal consumers could be a good strategy for customer acquisition.
  • Making Large Product Catalog – If your product catalogue is limited, it’s better to get the trendy products and make more choices available for people.
  • Movable Shops – For capturing time concerned mass, movable shops are good option. Fitted with display screens and delivery from store could be a good strategy to attract consumers.

Apart from above mentioned short term solutions, following solutions could also be considered in long run –

  • Operational Cost Optimization – Since the running cost of Offline Store is quite high as compared with virtual store, so the operational cost must be optimized at offline store to offer more discounts to consumers.
  • Instant Designing and Preparation Techniques – It would be a good strategy to attract online consumers by incorporating techniques that allow consumers to design or customize the product as per their wish and get it prepared quickly.

So the advantage of both online and offline stores can’t be ignored but both have their limitations as well. With huge external funds flow, online stores are able to attract consumers in short span, but with growth of time and technology, these online portals would need new strategies to survive. Offline purchase is a huge market based and the dent made by online players can easily be recovered by acting smartly and offering the benefits of online purchase in their setup itself.

Logistics Startup Business Model

Logistics Startup Business Model

With increase in number of e-commerce players, hyper local delivery, on-demand services etc, the scope of logistics startup is getting increased day by day. Escalation in smart phone users is making the logistics services in more demand. With increasing demand from Tier II and III cities, enhanced logistics services are the need of today market. Hence startups working in domain of logistics improvement are having more success probability.

As per the “Logistics Market in India 2015-2020” by Market Researcher Novonous, the logistics industry is worth $300 billion and expected to grow at a CAGR of 12.17% by 2020. With such huge figures in hand, Logistics give a huge scope to entrepreneurs for improvement of existing way of working and developing their business model. LogiNext, Delhivery etc are few of the growing names of Indian Logistics Startups. This is because of increase demand of e-commerce players that in Jan’16 India Post reported a massive 900% jump in Profit.

FS brings a pictorial analysis of “Logistics Startup Business Model” along with the logistics need, cash flow and scope of further improvements / services in simple delivery business vertical –

 

Logistics Startup - Business Need

Logistics Startup - Business Model

Logistics Startup - Cash Flow

Logistics Startup - Break Even Analysis

Logistics Startup - Further Scope of Services

 

“Survival of fittest” is the key to success for new players entering with their innovative solution in the competitive market. Faster service combined with optimized operation cost defines the long term acceptance and survival. Automation is a necessary tool on which startups must focus to reduce the time of delivery, errors in operations and achieve excellence.

Though simple model of delivery will have limited scope but combined with other service like delivery planning and management services, inventory forecast, allocation and control, other related services like reverse logistics management, after sales services, call center support etc, logistics will become a great scope so success.

Wish you luck for your startup. Stay tuned with FS to know more.

Snapdeal Layoff Planning – Reasons and Its Effect on Indian Startup Ecosystem

Snapdeal Layoff Planning – Reasons and Its Effect on Indian Startup Ecosystem

Daily we read some good or bad news coming out from Indian Startup Ecosystem. It’s buzzing with Hiring and Firing. It has plenty of merger and acquisitions. It has got vibrant personalities who grab headlines mainly due to their utter talent and rarely because of their nonsense. It has got companies which are able to give a fight to world leaders. It has got companies which boast of a possible “Layoff” by throwing some unrealistic targets at its manpower.

Somehow in this bloody battle of market share and profitability, talent is getting manhandled.

Recently, it’s Snapdeal that came in news for its planned way of layoff of 200 BPO employees by giving them unrealistic targets to achieve. Snapdeal justification of so called layoff was that “There have been no layoffs at Snapdeal.  As part of the ongoing performance management and development program, some team members at our Contact Center have been offered a Performance Improvement Plan (PIP). While many team members have opted for this opportunity to improve the requisite skills set, some team members have desired not to undertake the PIP and have instead decided to move on voluntarily.”

If the explanation of Snapdeal is considered truth behind the so called “Layoff”, it implicates that the problem lies with the employer itself and not with the employees. Instead of blaming employees for the same, Snapdeal should have analyzed the possible loopholes in the system and should have taken the actions to rectifying them. First hiring beyond what is actually needed and then throwing them out on the basis of imposed “not achieved targets” is definitely not the way to the top of market.

And this has forced us, at FS Labs, to analyze the present situation thoroughly and then looking into how this stand of Snapdeal is going to affect the Indian Startup Ecosystem!

Snapdeal Layoff - Startup Hiring and Firing Phenomenon

[A] Why Companies Hire Fresh Manpower?

Rising Quantum of work at Existing Location

Recruitment process for any of the companies is quite robust. It generally starts with identifying the need for human resource. If  any department within a company registers that it need manpower, then that need should come on the basis of rising quantum of work which that particular department is handling, nothing else. If Snapdeal had hired so many numbers of human resources in the past, we guess they must have done so with a notion that their existing staff was not enough to carry out the work load.

But again this type of manpower hiring is selective in nature. Companies choose limited number of people and check whether its excess workload is being taken care of by the new entrants. This ensures the hired manpower was well needed and is not taken for granted (Sudden ultimatum for firing).

Plan for Business Expansion

Another reason for fresh recruitment is business expansion to a new location. It requires building of altogether a new staff. The recruitment is done exhaustively and smartly. Company ensures that it hires right talent in right amount.

Hopefully Snapdeal, riding on the latest funding and collaboration might have looked to expand its business as well as human resource pool.

To check Attrition

Another reason for hiring fresh talent is to check the attrition rate.  Attrition rate generally goes high in case when there are loads of opportunities in the market. Simply to keep its talent stock alive, most of the companies’ manpower either on bench or on its hiring list.

[B] How Companies Motivate Its Manpower to Get the Best Out of Them?

As per the defined “Ms of Management”, it only “Man” who has the ability to integrate the other resources in the best way to get the optimum output.

  • Having a clear work distribution among team and departments
  • Giving them realistic targets.
  • Giving them required time to achieve desired outcome
  • Keeping a milestone check for every task
  • By promoting the team culture amongst the work force.
  • By appreciations and appraisals.

[C] Snapdeal Layoff – Potential Reasons

Looking for the recent step of SnapDeal FS Labs tried to gather the possible reason for this extreme step-

  • It didn’t hire the right talent – If a large pool of employees (200 numbers) are not able to perform in the expected way, then that means either they are not suitable for the job and the recruitment process was not suitable to judge the fitness of candidate for the role or the type of targets which they were given were unrealistic.
  • It didn’t train the people properly – Once recruited, companies offer some training to mold the mindset of employees as per the need of job role. If large mass is not able to achieve the targets for which they were recruited and molded, the clear implication is that the strong training was not provided to employees.
  • Targets might have been unrealistic – Snapdeal PIP (Performance Improvement Plan) states that employees must achieve 85% customer satisfaction score. Failure in achieving the target would result in termination from the company. As per Snapdeal employees the targeted score was impossible to achieve as the company score had never crossed 62-64%. If the CRM figures are considered as the base for Snapdeal Layoff, it’s obvious that the problem lies in CRM itself.
  • Problem in System Itself – Customer satisfaction is affected by the service that company provides, not by the BPO employees who are just to facilitate the consumers about company existing system.
  • Expansion Plan didn’t work – Whatever business expansion Snapdeal were expecting, that did not happen. So the man power which they hired to cater the need of extended business was absorbed into existing work only and suddenly there was less of work and more of manpower.

[D] Snapdeal CRM Issue – Loopholes and Way Forward

What are the Possible Loopholes in System?

Let’s identify all the factors of Snapdeal business model that could affect the satisfaction level of consumer –

  • Product Related Information
  • Ease of Browsing, Comparing and Ordering
  • Delivery Time
  • Reverse Logistics/Return
  • Payments and Refunds
  • Call, Mail and Chat Support

Any of the above mentioned factors or a combination could be the reason of low customer satisfaction level. When hundreds of other players of same domain exist, customer always starts comparing them on different verticals. So its overall system and strategy which is responsible for success rather than Call/Mail/Chat supporting team itself.

Check points for keeping loopholes aside

Since Customer Relationship Management  is quite logical and emotional subject, Snapdeal should have taken following methods to find the root cause –

  • Historical Data Analysis – Snapdeal should analyze the historical data of consumer behavior that highlights the major areas of CRM concern. Based on the frequency, percentage and weightage of factor, root cause could easily be identified in the existing setup.
  • Consumer Feedback – Dedicated surveys are also a good source to find the root cause why customers are unhappy.
  • Comparative Analysis – Comparison of CRM strategies with other players of same domain could be a strategy to anticipate the impression in consumer mind.

Potential Solutions

Based on the factors that are contributing the most in less satisfaction level of consumers, Snapdeal should have taken the relevant action to overcome the same.

For example – if majority of consumers complaints are because of delivery time issue and product quality related, the logistics team should take care to enhance the performance of delivery item and quality of product should be controlled at vendor base itself.

[E] Effect of Snapdeal Layoff decision on Indian Startup Ecosystem

So Suddenly Layoffs are becoming the trend of startup industry. Snapdeal being at the top of this industry is obviously setting a bad example. Following issues may arise in future as an aftermath of this mass layoff –

  • Talent availability might become an issue for Indian entrepreneur based startups. Poorly laid plans, distant profitability dream and unrealistic targets might force the available talent pool to think about going into startup industry.
  • Job Security in startups might become a dream for even the best of the talents. If market leaders start behaving like a $10 million company which has no future plans for its employees, it’s not the right direction in which Indian Startup Ecosystem is heading to. Anybody would never know how much time a startup would keep them engaged. Forget about job security.
  • Credibility of startup might get affected in external consumers as well. If a company is not able to take care of its internal customers, why external consumers should trust.

FS wish that Snapdeal must have analyzed the scenario very well to understand the problem in its Customer Relationship Management vertical and have taken the mature decision.

Stay tuned with FS labs to know more. Till then happy reading.

Flipkart Nearby Shutdown – Where Indian Hyper Local Delivery Market is heading?

Flipkart Nearby Shutdown – Where Indian Hyper Local Delivery Market is heading?

Two very contrasting piece of news has come out of Indian startup ecosystem within a month.

In mid-January, Amazon shared news of going ahead with its hyper local grocery delivery app launch. Amazon had launched experimental platform in March’15 to check the possibility of exploring new business vertical – hyper local grocery and FMCG product delivery.

Down the line, after almost 1 month Flipkart announced shutting down of its experimental localized grocery delivery app – Nearby.  Flipkart had launched its experimental platform for grocery delivery in October’15. Through this Flipkart were trying to gauge the potential of the hyper local business vertical.

How Hyperlocal Business became a Hot Topic?

This brings us to a basic question – why all of sudden in 2015, E-commerce leaders jumped into hyper local delivery market?

As per FS Labs analysis, before 2015 it was only Ecommerce companies which were able to get funding worth 30 million dollar or more. But in 2015 PepperTap and Grofers came on the Indian startup Horizon and these two won hefty funding from Tiger global, Softbank and Sequioa Capital. This sudden pump of huge investments in hyper local delivery startups gave rosy dreams to entrepreneurs.

For Grofers, Tiger global and sequoia capital invested $10 million and $35million in two different rounds in February and April 2015. And then came the blockbuster funding with Softbank joining the board. In November 2015, Softbank, Tiger Global and Sequoia Capital together pumped $120 million in Grofers only; While Peppertap booked a net funding of $51.2 million in 2015 only. Peppertap also acqui hired Townrush and Jiffstore to gain substantial share of business in hyper local delivery market.

As per the market analysts hyper local delivery has a potential of annual revenue close to $18 billion.

If we add the daily orders received by three market leaders – Grofers ( 50k/Day), Peppertap (30K/day), and Bigbasket (20k/Day) with an average value of 800 Rs/order , its amounts to only $435 million only. So the potential of industry is huge. Race from $435 million to $18 billion is on. And this value is what led the E-commerce giants to run for the hyper local delivery “Gold Rush”.

Flipkart Nearby Shutdown

Why Flipkart is then Shutting its Hyper Delivery App “Nearby”?

Flipkart Nearby, hyper local delivery concept which was launched as a pilot project in October 2015 in Bengaluru was announced to be shut down. The shutdown is driven by the major factors like “Poor Consumer Demand” and “Less Profit Margins”. Startups like Grofers, Zomato, PepperTap has already shut down their operations in few cities as part of their future strategies.

As far as Flipkart is concerned, it was actually coming. The only matter of fact was – when?

Flipkart’s experimentation in search of achieving elusive ‘Profitability’ led them into trying hyper local delivery. One thing to note is that here again they tried emulating the steps of Amazon.

One reason for this “App Closure” could be – Tiger Global. They being the major investor in Grofers and Flipkart, might have suggested Flipkart against launching altogether new hyper delivery marketplace. Anyway if Grofers gains enough traction and becomes hit in India, may be after 2 or 3 years down the line, Grofers could be merged with Flipkart to ensues the IPO –which requires profitable business model. But if Grofers leaks money – as it is leaking now, then there is no point of adding one more loss making vertical for Flipkart as they are badly chasing the word “Profitability”.

FS Labs stand on Amazon’s “Kirana Now” Launch Decision

As per FS Labs analysis, Amazon is playing strategically to gain something out of every opportunity. Amazon is the leader in world market as for as hyper local delivery is concerned. They might be having some tricks to run the hyper local business model profitable.

Actually by declaring the launch of “Kirana Now” Amazon might be trying to open one more battlefront for all the Ecommerce players in India. It might be actually a strategic move to let others join “money leaking business vertical”.

And its benefit would sure be a blessing for Amazon, who is not worried about pouring money into India till they win the market leadership game. As far as others like Flipkart and Snapdeal are concerned, they are vulnerable to lose money in such less profitable business vertical. Any fancy step could make their balance sheet look more troubled.

Is Hyper Local Delivery Business is a Pan India Thing?

Recent steps by Grofers, Peppertap and Zomato definitely raise question about the Pan India applicability of hyper local delivery business model. Its success is restricted up to Metro cities only. Metro cities are the one where most of the nuclear and working families live. Hectic nature of job combined with complacency and freely running money boosts the hyper local business model. Workaholics on weekdays, party animals on weekends seldom get time for arranging their daily market requirements. Hyper local delivery is for them by providing convenience and time saving.

In Tier 2/3 cities, every family has got a member who takes pride in arranging daily market requirements on their own. Paying a few more bucks for not so good vegetable is not something what they look for. FS labs thinks Indian tier 2/3 cities are not a good choice for hyper local delivery unless a growth suddenly changes the lifestyle of people living in these cities.

Flipkart Nearby Shutdown – Learnings for Startups

FS brings the learning part for entrepreneurs from Flipkart Nearby Shutdown- Why startup should focus on sustainability prior to unplanned experiments, expansions and cash burn.

Business Model Sustainability

The very first step of startups is to get a business model that should be so much compelling that people are ready to pay for it. The recent shutdown of startups has revealed that the business model with limited consumer base either in terms of age groups, geographical restrictions or consumer traditional mindset, has less probability of survival.

So, entrepreneurs must understand the sustainability of their business model prior to execution to avoid the wastage of available resources like money, manpower, time etc. Here are few guidelines from FS to understand the business model –

  • Check for the Acceptance of your product by targeted market. More genuine the targeted problem is more is the market volume for your concept.
  • Check for the Market Competition for your startup. Direct as well indirect competition should be evaluated.
  • Check for the Infiltration of your concept into others’ market volume. Your concept should be strong enough to compel people to get shifted to it.
  • Check for the Scalability of your business model. All other features, verticals and areas that can be incorporated into your business model.

Based on the combination of above factors, you can decide the sustainability of your business model.

Financial Sustainability

Once the business model for startups is decided, the next step is to optimize the cash flow of startup to earn profit. Shutdown of operations in few cities by Grofers, Peppertap was driven by the facts that the operational cost was high as compared to the revenue generation.

Hyper local delivery revenue model is based on the commission per sale model. If the average order cost is considered as 300 rupees and the commission as 10% (=30 rupees), minimum number of orders required per delivery boy is (15000/30 = 500) per month (assuming the cost to company per delivery boy is 15000 rupees). So the financial stability will consume hell lot of time.

So, entrepreneurs must check for the financial stability of their business model in long run. A business model dependent only on funding has very limited probability of survival –

  • Check for the Cash-in and Cash-out of your startup periodically. Cash burn must be aligned with the allowable liquidity.
  • Seek for the External Fund Flow for expansion to avoid liquidity break down.

Management Sustainability

The next step of successfully handling the business model and funds is managing the entire show in a planned way and altering it as per the fluctuating needs of market.

Here are few tips from FS to entrepreneurs to ensure the management sustainability –

  • Pre-plan the work on all the aspects to avoid future failure. Work Schedule, Time Frame, Cost Estimation, Quality Parameters, Communication Flow, Risk Mitigations and Opportunities Enhancement Plans, all related verticals shall be pre planned.
  • Continuously monitor the progress, downfall to take the required actions on time. Gaps in actual and expected results give the scope of improvement.
  • Control and Change the work as per the changing needs of market. Market competition and consumer expectation decide the guidelines for required alteration in the existing business model.

This was the analysis of hyper local delivery market analysis driven by Flipkart Nearby Shutdown. Stay tuned with FS for more updates.

Better Cash Burn Tactics for Customer Acquisition

Better Cash Burn Tactics for Customer Acquisition

“Cash Burn for Marketing and Customer Acquisitions” has become a common phenomenon among the funded Indian startups. The very first thing that startups are doing to enhance their consumer base, profitability and brand name once getting funded is the discounts on their product and expansion in all the major locations of competitors. Heavy discounts on products – Myntra’s discount strategies on selected product catalogue, Shopclues Rs 1 sale, Excessive Cashback on purchase of products – Paytm Cashback strategies, Discounted orders from Zomato and Foodpanda, Discounted rides by Ola and Shuttl; these are some of the ways tried by Indian Startup Giants to lure and acquire consumers.

Though cash burn in form of discounts, cashback, referral earnings etc are decent strategies to get initial traction but the probability of consumer getting back can’t be ensured in long run. Reason being lot of startup work in one particular domain and since the cost of product is near about same for all the players, the undoubted winner will be the one who is capable of cutting the expenses in a phase wise manner and simultaneously grabbing the next pie of funding before the startup runs out of cash. In this way Startup reserve which is source of discount to customers remains green and sustainable growth in terms of number of customers is possible.

But the current situation in Indian startup ecosystem is not that rosy. Thinking about phasing out the discount is not taken as a good initiative for any founder. Customers which are accustomed to buying things at discounted rates. and that too since last five years or so, would obviously not accept this as a noble idea. There seems no end to this discount cum cashback cum flash sale cum cash burn. Every single startup out there is loosing money – Flipkart, Snapdeal, Amazon, Myntra, Paytm, Shopclues – bigger the name bigger the losses.

Better Cash Burn for Customer Acquisition

Rise of such cash burn strategies for the sake of traction is affecting the Indian Startup Eco-System and changing the mindset of all the stakeholders –  

  • Small players with good service are not able to stand against the consumers luring discount strategies of biggies. FoodHotLine, Gurgaon based food tech startup was shut down due to cash burn tactics of FoodPanda, Yumist etc. Taxi for Sure was sold to OLA just because TFS founders were unable to raise funding ( courtesy     Uber accident). Trevo shut down was cold blooded which shut down within one month of initiating operations in Gurgaon – they were somehow got caught in the battle of Ola Vs Shuttl.
  • Panicked Big Giants start burning huge cash just to avert the risk of losing customer to a “guy  next door startup”. Sometimes these biggies go out of the way to buy the competition who are only  booking losses but have good prospects or they target altogether new segments which are on the radar of investors.  But all this actions leads to more blood bath only. Flipkart acquired some music based platforms like Chakpak and Mime360 with an aim to build an online music and movie store. But strategy somehow didn’t work. Flipkart lost some money and Mime360 and chakpak were wiped out of startup arena.
  • Consumers are so much getting addicted to the tempting words like “Discounts”, “Cashback”, “Free”etc that they are ready to give 72 crore rupee just in 48 hours for an unknown smartphone. They keep switching from one to another just because new startup is offering 100 rupee cashback on next 5 orders and hence none can predict the everyday sales fluctuations of startups.
  • As a result, disappointed from not making the big bucks, Investors are forced to consolidate the market to ensure the existence of their portfolio in the market. Tiger global refused to participate in the new rounds of funding of commonfloor. CF which was unable to manage the show due to cash crunch got consolidated with Quikr – another Tiger global owned startup. Valuation which CF got was way beyond what was its real worth. But somehow Tiger global was able to consolidate its portfolio which was nothing but a big news for startup story portals.

The overall effect of such “cash burn” and “discount centric customer mindset”is that the newbies are not getting enough opportunities to take initiatives. If a young entrepreneur want to start an e-commerce portal for villages, the first fear that he is going to face is that Flipkart, Snapdeal, Amazon etc might start burning their cash by distributing goods at free of cost at any point in time to kick him out of the market. Nobody would check what innovative idea that fellow had put in. May be if founder is able to make some crores, his journey would be featured in some “he made crores” type storytellers. But not everyone’s that lucky.

But the most devastating effect of this cash burn and discount centric mind set is not what we just discussed. It’s – where India as a startup nation is heading to? Our Prime Minister works tirelessly to give some advantage to entrepreneurs to promote Make in India, Think Big, Make India center of world innovation type of things ; But media and Junta cares least about innovation or new product. What they care about is a damn cheap piece of china/ Taiwan made fiasko which is next to being worthless. And we bet this is not the right way where Indian Startup ecosystem is heading.

FS comprehended the better cash burn tactics for startups to acquire loyal consumer base that would be beneficial for each of the stakeholders –

[A] E-Commerce

The major marketing and customer acquisition strategies adopted by e-commerce player are as follow –

  • Myntra – Discount on selected product catalogue. Eg – Straight 70% discounts, Buy 1 get 1 or 2 or even 3 etc.
  • Flipkart – Discounts on product, exchange offers etc.
  • Snapdeal – Specific discount for specific category of product etc.

The better consumer acquisition strategies that could be adopted by e-commerce giants are as follow –

  • Enhanced Discounts on Related Product of Previous Buy – Offering the additional discount on the purchase of related products and accessories of previous buy would help in ensuring the frequency of same consumer visit and buy. If a consumer buys jeans, then giving additional discount than usual on t-shirts or shoes which would force him/her to buy the same.
    Benefit : Consumer – relevant product suggestion, trust and reliability, money benefit; E-commerce Player – enhanced frequency of consumers, loyalty
  • Service of Products – Offering the free or discounted service would help consumers in selection of right portal for purchase. If consumer buys a laptop, offering him additional warranty would force him to choose the player considering the long run.
    Benefit : Consumer – one stop solution, money benefit; E-commerce Player – Brand name, consumer loyalty; Service Providers – Extra business with e-commerce player

[B] Hyper Local Delivery

Grofers, Peppertap and other hyper local delivery startups are acquiring consumers by giving first time user discounts, discounts on order above certain value etc.

These hyper local delivery startup could change their customer acquisition tactics in following way –

  • Additional Discount on Repetitive (Monthly/ Weekly) Orders – Offering additional discount on monthly/weekly repetitive orders would be beneficial for consumers as well as attracting. Grocery need is quite frequent and fixed for every person, if he/she is getting it on frequent time span, the player would get loyal consumer base.
  • Eureka Delivery optionEvery customer of a locality could be targeted by simply sending a representative at customer’s end at the start of the month. Customer’s monthly requirements will be noted down and approx amount will be charged by the service provider. It has got number of benefits – The service provider could avert war footing delivery and gets ample time in collecting and delivering the requirement of a customer, Service provider will get advance money to run his show without the need of funding. It’s a win win situation for customer and service provider, given the service provider is able to win the heart of customer.

[C] Travel and Hotel Booking

Targeting each customer deferentially – office goers/ weekend trip planners / monthly trip planners separately could do wonders to the travel service providers. Linking to corporate houses for planning out their official visits – travel and hotel could also give great returns.

Nowadays religious visits are not even on the radar of any of the travel service provider. Its a segment waiting for a right step from an entrepreneur.

[D] Cab Service

Cab service providers like Ola, Uber etc are acquiring consumers by giving referral earnings, discounts etc. Better cash burn tactics to acquire consumers of cab service could be following –          

Reduced Prime Time Charges for Loyal Consumers – The biggest pain area for the consumers of can service providers is the prime time charges. So by offering discounts to loyal consumers on prime/ peak time would help in enhancing the frequency of consumer return.

FS Outlook

So if instead of burning cash for short term unstable traction is of limited use for startup. Strategically planned cash burn techniques would help startups to get the loyal consumer base. 

Stay tuned with FS Labs to know more.

Manufacturing Startup Business Model

Manufacturing Startup Business Model

Website or app based online shopping portals, aggregator business models, search directories, social networks might be the attracting avenues for entrepreneurs as well as consumers but the importance of manufacturing sector in our daily life can’t be avoided.

The impact of manufacturing sector even on startup ecosystem is huge. From a small screw to the luxury car, each product owes its birth to a combination of manufacturing processes. In fact all the dot com, ios, windows or androids based business portals are useless in absence of basic manufacturing.

In absence of a suitable hardware, like mobiles or laptops – which are nothing but an assembly of complicated and craftily manufactured products, all the software would be useless. If car manufacturers like Suzuki, Toyota, and Mahindra etc stop producing the cabs, there would be no Ola or Uber aggregating the cab service providers. If there is no production line to manufacture iphones, tablets and laptops, shopping portals like amazon, flipkart would be of no use. If there is no two wheeler, what travel mode the delivery guy would use to serve your daily necessities? And how you will get your on demand food?

Manufacturing startups are rare. Now-a-days everyone is trying to catch huge monetary benefits riding just on dotcom business boom. Few give reasons like manufacturing is long term game, return on investment is low etc. But the major driver for any economy is not only the dotcom boom, Manufacturing startups are equally important.

Manufacturing Startup Business Model

FS comprehended the manufacturing startup business model – cash and work flow in simple info-graphics –

Manufacturing Startup Business Model- Cash Flow

Manufacturing Startup Business Model - Work Flow

The next step is to calculate the production cost of your product. So apart from the fixed cost (one time investments like land cost, machinery cost etc), additional running cost that is required for production per piece can be estimated in following heads.

Manufacturing Startup - Product Cost Calculation

Manufacturing Startup - Product Cost Calculation Info

Above mentioned heads should be precised based on the type of product being manufactured.

Though the manufacturing based startups involve a huge amount of capital investments – fixed as well as variable, continuous demand of such products ensures the return on investment. Stay tuned wiith FS to know more.

Peppertap Shut down Operations in Major Cities – Why startups should focus on Depth rather than Width

Peppertap Shut down Operations in Major Cities – Why startups should focus on Depth rather than Width

Just after the shutdown of operations in Tier II cities by Grofers and Zomato, it’s PepperTap who is joining the list of unplanned expansion experiments of startups. Recently, the hyper local delivery startup Peppertap shut down operations in six cities including Mumbai, Kolkata and Chennai and would be laying off about 400 delivery guys.

Though the founders of Grofers and Zomato shutdown the show in Tier II cities stating these spots were not ready to accept the hyper local delivery,  Peppertap founders decided to deepen their roots in the limited cities like Delhi, Noida, Pune, Hyderabad, Ghaziabad, Gurgaon, Bengaluru rather than expansion in different geographical locations.

Navneet Singh, CEO of PepperTap stated “The startup has decided to focus on depth rather than breadth, given the short to mid-term investment climate outlook. We are digging our heels in for the long term. We will focus on building a stellar customer experience by providing additional categories and services that differentiate us from our competition in cities where we continue to operate.”

Peppertap Shut down Operations in Major Cities – Why startups should focus on Depth rather than Width

Apart from resource wastage, such kind of unplanned expansions are developing the lessons for other startups as well. FS analyzed the entire scenario of Peppertap shut down operations in major cities, and comprehended the right direction for entrepreneurs –

Customer Acquisition Cost and Profit – In Established Vs New Location

Let’s assume you are hyper local delivery startup just like Peppertap and with huge funds available you want to hit the entire market volume by enhancing your geographical presence. Let’s assume the following before jumping to cost estimation –

  1. You are able to manage to run the show in some cities at least at break-even volume. So you are running the entire business model at no loss on running cost.
  2. Since the demand of the new location is based on the experiences and expectations so the manpower planning is pre-defined.
  3. Fixed cost of assets and detailed breakup of cost components is not considered in the calculation for simplification of the concept.
  4. Only method that is involved in revenue generation is the commission per order.

So you can precise the calculations based on the verticals involved in your business model.

Cost Calculation

With reference to the above calculations if the number of orders per month is less than the calculated break-even point 23,644 , business model is running at loss.

Let’s consider two locations – Delhi where the show is already running at least at break-even volume and Pune which you have selected as a potential market for hyper local delivery.

The first priority of any of the business is to earn the profit. In case of the considered starteup, you have two choices to enhance your revenue – 1. Deepen your presence in the existing locations 2. Expand your business to other locations. Let’s do a small comparison of cost involved in the both of the choices –

Delhi Vs Pune Comparison

In Delhi, the cost that is coming into picture is the additional marketing cost that is required while in Pune the entire setup cost is going to come into picture. So in Pune, first struggle is to convince the consumers to use your business model, reach the break-even volume and then start earning the profit while in Delhi, consumer trust is already built so the probability of getting more market volume is more.

The next question is if there is any additional market volume available in Delhi. So here is the market analysis of Delhi-

Delhi Market Volume Estimation

From above analysis, it is clear that Delhi is better choice from business profit point of view. Since the funds flow fluctuations are unpredictable – very first day of your operations you might be able to get huge amount of funds while for next couple of years no investors might show interest in your startup concept, the better choice for startup survival in long run is to ensure the sustainability of business model first.

FS Outlook 

FS advice to entrepreneurs is to first focus on the sustainability of the business model and then start thinking for expansion in other dimensions. The depth and well as width of startup brand name is important to gain consumer trust and loyalty but the survival of startup is above all.

Read here the learning from other startups shutting down their operations in Tier II and III cities. (Grofers and Zomato)

Wish you luck for your startup. Stay tuned to know more.

Valentine Week – How Startups are Attracting Lovers and making Money

Valentine Week – How Startups are Attracting Lovers and making Money

Valentine’s Day is on the horizon and with that comes the opportunity for the clever sellers.  Which spot Lovers are selecting to meet up? Which medium of transportation they are going to use for their romantic date? What type of breakfast, lunch or dinner are going to be on the radar of love birds? Not to forget the “Red Rose & Chocolate delivery”. What could be the unique service which would make the experience on this Valentine’s day a special one?

You See – potential is huge and startups are trying innovative ways to be a partner in your Valentine’s day celebration. Some of them are offering simple promo codes while others are trying a bit harder to serve you with a fantastic approach into your personal space. Some are attracting their customers by helping them in selection of the perfect romantic date gift and celebration while others are recommending the most innovative ways to impress their loved ones. And why should they not try their best to win the loyalty of their customers? After every single good service to a customer these startups win at least two hearts and not to mention “word of mouth” publicity.

FS Labs has done the research on how startups are impressing the love birds on this valentine’s week. Their services  are impressive, innovative and value for money for their customers.

Foodpanda – Customer Trends

Forgetting the most important date is natural for the guys like us. When there is a T-20 match going on with Kohli going bonkers , who remembers about some “Rose day”?  These “who cares” attitude  comes with its own reward. We get lectures on how we remember some “98” scored by Tendulkar twelve years back but not being able to recall the most important day of our own life. And then we realize how big a crime we have committed. The entire scenario gets closed if and only if we accept our crime and adopt some innovative way to make “Her” happy.

Foodpanda is attracting customers by sending the lovers’ chit-chat screenshot or cartoon-ed scenario via its targeted email marketing strategies. Here is the screenshot for you. Aren’t they hitting the sweet spot? And let me tell you – In my case this was the savior.

Food Panda Valentine Week Email Marketing

Ola – Customer Satisfaction

Traveling  to your favorite spot with your loved one for a romantic date on Valentine’s day is next big thing you could think of. On Such occasions budget is not always a thing which people look for but when a service provider is offering a discounted service just to make your day special – it’s an offer which no one will refuse to accept.

These Ola Guys are trying to win hearts of hell loads of customers by offering an one shop solution to all the “Valentine’s day” needs. “Gift – Shop – Eat- Travel” these four pretty much sum up the Valentine’s day.

  • Ola is trying to attract customers by offering discounts on ride and gifts – Ola has partnered with Flaberry to help customers express their love. Ola would send 100 lucky customers’ beloved a bouquet of 6 roses, a cute teddy bear and 2 chocolates on their behalf.
  • Ola has also partnered with selected restaurants in Delhi-NCR to give discounts on food bill. Ola would offer 25% discounts on bill amount at the selected restaurants between 8-14 Feb if the Ola travel invoice of same day is presented.

Ola Valentine Week - Customer Attracting Strategies

Snapdeal, Amazon, Flipkart & Grabyourlooks – Customer Convenience and Suggestion

What gift should be given to the beloved is the biggest challenge in front of every person. The probability to get woo by your partner is quite low if the selection of gift is not appealing.

E-commerce giants like Snapdeal, Amazon, Flipkart have categorized their product catalogues to recommend their customers with the best choice of gifts fitting to the occasion.

Grab Your Looks is trying to attract female customers by aggregating the selected product catalogue of e-commerce players at one place. It’s a superb market place which suggests girls the type of dress based on the occasion. Nothing could be better to impress your girl than suggesting her the dress for Valentine’s day .

Amazon Valentine Week - Customer Convenience and Suggestion

Grab Your Looks Valentine Week - Customer Convenience and Suggestion

Urban Clap – Customer Recommendation

To think of something different, apart from conventional gift options chocolates, cake, soft toys, flowers etc, to force the customer to think in different dimension – Urban Clap is recommending its customers with different ideas for memorable Valentine’s day like Live Music at Home, Personal Chef at Home, Romantic Décor, Complimentary Gift etc.

Adding to their unique service list Urban clap has also joined hands with Bombay Shaving Company to gift the guys – yes you have read it right –  a  the ultimate grooming experience – a professional lather, shave, and face massage that’ll make him feel like a changed man at just Rs. 799! and this will work wonders for those ladies who do not like the “bearded look” of their Hero. Check the snaps below. Though the look on the guy’s face is alarming – but the luxury of getting a that experience at home with a reasonable price is worth trying.

Urban Clap Valentine Week - Customer Recommendation - Save the Date

Urban Clap Valentine Week - Customer Recommendation

FS Outlook

Customer Relationship Management is the essential element of startup success. Suggesting and recommending your services to consumers as per their trends and need is a good strategy to attract the consumer base towards your product or service. Startups must focus on maintaining the healthy relationship with their customers to expect the best response from consumers.

Stay tuned with FS to know more.

[Image Sources – Foodpanda Emails, Ola Blog, Amazon Portal, Grab Your Looks Portal, Urban Clap Blog]
Entrepreneurs are New Age Pirates

Entrepreneurs are New Age Pirates

Pirates

History tells us about the Vikings who looted right from Western Europe to Persia. It tells us about Moorish, Irish and Arab Pirates or the Blackbeard – a Caribbean pirate whose hidden treasure was never found. They all were fearsome, their occupation was plundering and killing, their passion was gathering treasure. They loved risks and were fond of adventures.

While old age piracy was about looting the gold or silver or currency or taking ransom for releasing hostages, it changed its meaning when privateering came into existence. Privateering meant for the kind of targeted plundering or capturing of a ship related to a particular country on the behest of another country. Then came the present day piracy – Somali Pirates, Great oil plundering all around the world. On some accounts today’s sea Piracy is as big as 25 Billion USD per year!

What fascinates the most and what is common among old and new age piracy is “The Risk Taking Ability of Pirates”. Economics has a term called Risk Aversion. Every person has an aversion for risk. Which means, anyone when readies himself to take a risk, he has to be awarded properly (read monitory gain). Higher the risk associated with a job, higher will be the reward which has to be given to the person. So what was the payout of the Piracy?

Going out to sea in a small sized boat, with hundreds of men on board, would have sickened even best of the captains. Managing the greedy beast out of everymen and then coming to a plausible solution for dividing the booty were the challenges which could put most logical men into a crisis situation. Extensive touring, unpredictable rewards, not supporting weather and looming threat of fight with protective agencies – Pirate life was tough.

There were little chances that anyone could become rich beyond measures just by gathering prizes from plundering few boats. Most of them met the fate of Blackbeard – they were either shot dead, hung till death or drowned in sea.

Risk Aversion algorithm which pirates used was the most fuckedup. They actually lusted after that risk. The potential for riches was just an argument for the venture. But the real payoff was the pirate life itself.

Entrepreneurs are new age pirates

Entrepreneurs

There is another league which uses the same – most screwed up Risk aversion analogy, and this league consists of those who have left their jobs to embrace Entrepreneurship. Like piracy, chances of success for an entrepreneur are little – only few out of many taste the success. Entrepreneurs are new age pirates.

Throwing away the well-paid jobs, security of healthcare and monthly paychecks to try luck in the success of an idea (which most would argue is destined to fail) is the trademark of founders. There comes a time when even closest of the relatives & dearest of friends show concern about what you are doing. Unless your venture becomes the next Flipkart, nobody knows what you have been doing.

Entrepreneurs, though, are all screwed up. They don’t need to be rewarded for risk, because they actually get utility out of risk itself and they like adventure. In Entrepreneurship as well, the potential of getting rich is one argument for venture. Getting rich depends upon how well customer accepts the idea of a new product or service. Those who come to Entrepreneurship with a target of becoming rich soon, see their friends leading easy career path (read working for others) making more money. Those who think they have customer in their pocket; they face the uncertainty of customer behavior. Everybody becomes an entrepreneur with an aim to get success at the earliest – and exactly that doesn’t happen.

Making your first hire and getting someone else joining your venture to support you in the fight ahead, with getting first funding from some crazy venture capitalist who sees some green light in your idea, selling your product to a customer and counting the cash which you earn, then to a day when you sit stunned with all funds burned and you are clueless where it has gone – These experiences, just like the life of a Pirate, is what an Entrepreneur’s aspiration and reality.

But then only an Entrepreneur or a Pirate could tell you – how he has tasted the blood. Like “Man in the Arena” only an Entrepreneur could tell you why some people in old days loved to live a life of Pirate. Was it the Risk or the adventure or the success or the failure? I say all contributed to it in some way or other.

There is “PayPal Mafia” and there is “Traitorous 8” who has made fortune out of Entrepreneurship. And for that they have left the cosy jobs under a Nobel Prize winner or under the big name of Ebay. One group went on to make the “Silicon Valley” and other group has been at the bottom of “modern startup boom”. They are the pirates who are really successful; they are the names who have given Entrepreneurship a new dimension. They have given people a hope what an entrepreneur is capable of doing and what payoff the risk of being Entrepreneur has got.

Fuckedup is a phrase that captures all the emotions associated with the startup journey.

If no concept clicks in your mind, you feel frustrated. If you are not able to manage a proper team for your startup, you feel irritated. If funds, revenue, expansion etc don’t take place as per planning and expectation, you feel infuriated.

To keep you away from all these feeling, FS is continuously providing you to the best guidelines, practices and market trends. Please share your feedback at contact@fuckedupstartups.com