Why I think same-day-delivery models of Ebay Now and Flipkart are unsustainable?
Ebay Now and few others in the US have launched same-day-delivery business models.
There have been fanciful launches of services in the past, and a launch is NOT the same as success.
So whether this works or not, the jury is still out.
Here’s a story on the ebay Now model in the US.
And I have seen the Peapods and the Webvans which struggled (not just with same day delivery but with the general business model that they took on) and failed. And I have a sense that these same-day-delivery models are also unlikely to win.
I hear that Flipkart is also gunning to start these in India, and I see challenges in the same.
Why do I say so?
Here are a few reasons:
- It cannot be economical. Earlier traditional models of delivery of such kinds, got challenged on economics, and gave up. Bundled, slightly longer delivery schedules to get some economies of scale (rather than deliver your one package, can deliver 4 in your area, once in 3 days?). So don’t know how this current trend can sustain.
- It is not scalable. You may end up needing warehouses at various locations, and then a network at each of these.
- You’re competing with the local kirana, local vegetable vendor, etc. who will deliver anyway.
- You’re spoiling the customer. Most times, he doesn’t need it same day anyway. To get your edge over your competitors, you’ll do this, after a while find it hard to sustain, then drop it. Customers will feel let down. Curse you for withdrawing.
- You’ll burn some money for the 6-12 months that you will attempt to do this. Customers are not going to pay a huge premium to get this. So all the local warehousing, and the set up of the network, and absorbing some of the cost to acquire a few fussy customers. Will all go waste. As withdraw it, you will, in time.
Meanwhile, it is an interesting story to get the buzz to happen..for ebay Now there, and soon for Flipkart, here..
So impressed by this Korean retail revolution..
So for all the innovation that the retail industry is supposedly doing, as a consumer, how different is the shopping experience at an organized retail outlet, in say, last 5 years?? Or more, if you have also shopped in organized retail, outside India??
I would think the difference, if any, is marginal. At least perception wise.
Sure, there are more options, perhaps some innovation in loyalty programs (marginal again), etc. If anything, there are challenges as you shop. All the time.
Long queues at the checkout counter. Not finding the item you are looking for, as it is tucked into some inner shelf (because of space constraints, among other things), hassled shelves with products here and there, as people have handled them and the staff has not been able to rearrange them.
So yes, it’s pretty much the same-old-same-old. Retailers have not been able to really crack the code and make the shopping experience significantly better for the shoppers.
And then you see this amazing innovation from Korea:
A virtual store that is “real”!!
So sure, we had e-commerce. Where you saw a picture on a computer screen, small in size, not getting the perception of just how big a packing it may be, and then paying by credit card or whatever, and then waiting for the finite time to receive the products.
And it worked to an extent. But did not significantly dent the offline store business.
People, it seems, still wanted to go to the store and shop. And get a feel of the real thing. Pick up the bags and come back. Make it an interesting experience of walking around, window shop, see new things that have come, maybe talk to someone, and then shop. That experience still rocked! Compared to the computer screen one.
But this Korean way gets you the best of both ways.
Visualize this…
Put these LCD screens with full sized product shelves look inside your store. Beautiful back-lit screens with absolutely life-life images. In anything, better looking than the packaging!! Leave ample space for people to walk around. Except without the shopping carts.
Packaged goods are finally bought largely from the packaging, not so much from touch-and-feel.
Use QR code or some other device* to enable shopping.
She walks around, selects what she wants using the QR codes, and then lands up at the check out counter.
If technology of automated assembly is implemented at the back-end (like a warehouse management system that is used in busy warehouses), the customer’s selected order could be ready by the time she comes to the check-out counter, duly packed. She pays and picks up the bags and walks out. Since the entire billing process is eliminated at the check out counter, the queue also moves rapidly.
Seriously path-breaking, what?
And why can’t some retailer make a first move of this kind in India? I think all it requires is to be bold enough?!
Yeah, yeah… you will ask, “what about the non-packaged products like fresh fruits and veggies, or what about those packaged products that customers like to smell (soaps, perfumes, maybe..)?”
Okay, so a small hybrid model can still happen. All of the packaged goods lines, which do not require anything special (which will be what, 80% of the items at least?!) can still be the virtual LCD panel way, and then 1 or 2 aisles can have the rest of the stuff.
It will still have tremendous impact, and will be a “real” innovation, as compared to trivial ones that retailers love to talk about..
Guess someone’s got to make the first move? Looking forward to this..
(* “Some other device”? – how about giving a small hand-held scan unit to a person when he she walks into the store. Unit has it’s unique code, so whatever that shopper scans around, is recorded for HIS ‘virtual shopping cart’; the code does not have to QR or it could be. Alternate simple coding structures could also be adopted. Shopper brings the unit back to check-out counter and picks up his bags!)
Inspiration
UPDATED INSPIRATION: Current date: March 9, 2021!
Below is the original note on the inspiration that I had to start this blog, some 12-13 years back. That was when I was tracking some startups and evaluating them. I had not updated this blog much in recent days. And now, the focus would be very different, in any case. At this time, the purpose of my occasional blog post here, would be to discuss and debate a business strategy or an investment idea, for purpose of interaction with other like-minded people.
Hope you find it to be of interest.
The original inspiration from 12-13 years back is as follows:
Attending a Bar Camp, Startup Saturday and the Entrepreneurship Summit, in the last 3 weeks, took me back to 1997-98 days when we were starting up for the first time, with Homeindia.com, along with few other first-generation dot com entrepreneurs in India.
I can see the same energy now, perhaps only magnified by the changes in the economy over these years, the emergence of India as a country to reckon with, the maturity of the ICT businesses, the far larger familiarity of the technologies for students climbing out of their campuses, and of course, the awareness now, about an ecosystem that can encourage entrepreneurship.
There is another change. Me. With 11 years of hands-on Internet experience, there is a larger “intuitive” feel on the industry, there is beyond the romanticism of the business, a better understanding of business realities, of markets, of revenues and results. As one young participant respectfully pointed out, there is the “gray hair” difference.
This has inspired me to start this new blog. To share my 2 cents worth, on new startups that I see coming up. Based only on information that is in the public domain (or shared by the company in public forums), and not based on any private information that entrepreneurs share with me. With an idea to give some new perspectives. Ultimately the business succeeds because of the entrepreneurs and they need to trust their gut. But “outside” views help sometime. And which is what I strive to provide here. With only one goal in mind: to enable the entrepreneur to SUCCEED!!
The Gray Hair Speaketh 