Flash Winners: A New e-Commerce Model for Success
David Abikzir
Westland
Pp 239
Rs 599
E-COMMERCE APPEARS to be the most happening arena right now, with Amazon, Snapdeal, Flipkart, etc, being the most prominent names. The concept sounds exciting because it appears easy. This is because it is based on transacting on the Internet, which looks seamless. Given the fact that most of us look upon technology as the be-all-and-end-all of life today, it is not surprising to be in awe of this mode of transaction. However, we often forget that even though technology enables processes, it cannot be the core of such business. The business, as a standalone, has to be tenable, with a number of ends that have to be woven together cogently. Invariably, we do not look at the yarn. And that is why a lot of e-commerce ventures fail.
David Abikzir in his book, Flash Winners, takes us through these phenomenon and starts off by telling us that around 50% of e-commerce ventures have closed down in a years’ time in India. What is more disheartening is that within three years that number will swell to 80%. This means that there will just be one-fifth possibility of success for a e-commerce venture in three years’ time. Unsurprisingly, the prospect of getting into such ventures does not sound that attractive any more.
Abikzir takes us through the trials and tribulations of these ventures in a conversational mode by creating a character called Teju whose parents ran a very successful mom-and-pop store. But when Teju’s mother tried to run the business through an e-portal, it turned out to be a disaster. The conclusion drawn is that what works at the physical level does not necessarily work in the e-mode.
Gauging the market is tough. And though India looks attractive, given the size and classification of the population based on income as per the National Council of Applied Economic Research (NCAER), entrepreneurs have faced challenges all through. The enticing numbers by the NCAER have tended to sway several companies that have tried operating in India. However, not getting a grip of the environment in which the companies want to operate in can be defeating. To drive home the point, the author gives the example of how a foreign wine producer wanting to set shop in India got all its calculations amiss. People may appreciate imported wine in an exhibition, but once such a producer tries to do business in India, he has problems with processes like permissions, importing channels, distributors and retailers, and ends up with a high price, which is not acceptable. The realisation that India is a beer-drinking, not wine-consuming nation should be appreciated. Going by general market research, which shows that a large part of the population is mobile up the income scale, could have led to erroneous inferences.
Now, coming to e-commerce, one has to choose between an inventory-led model and a market-driven one. The former has a challenge of how to procure, store, finance and handle distribution. Any fall in quality of service can drive away the consumer. When dealing with fresh produce, one has to be doubly careful of packing and dispatching it. Again, distribution channels are important and depending on whether one uses their own transport or hires from a third party, costs vary and the models end up being not so profitable.
The other model is the ‘market model’, which sounds better, as it aggregates over various producers and distributors with fewer issues of inventory handling. Hence to an extent, the costs are defrayed over a wider group. The author provides various calculations to show which model works best given the costs—transport, packing, margins at all levels, warehousing and marketing. In fact, marketing becomes very important and he backs the showroom concept, which is the Web page that actually brings producers and consumers together, just like how a physical store attracts consumers. The strategic positioning of products on the Web page can change the consumer’s preferences.
The author’s model of profitability is to shift marketing and shipping expenses to suppliers, as these are two big expenses in such a model. This would mean having two sets of products—one which customers want and the other that gets high margins. Further, discounts need to be procured from suppliers based on the basis of high volumes, so that profits can be stepped up.
The author classifies all such ventures into three categories. The ‘stagnant’ ones play safe and do not scale up being risk-averse. Their progression is based on a fixed path that is followed and may not be visible to others, as they are not in the race. The ‘losers’ are the largest category, who want to break free, not follow the rules of the game and like to set their own. They are creative and innovative, but aggression also means that they do not understand the cons of their models and falter. The ‘winners’ respect the standards and are able to make them evolve as per the progression of the game.
Hence, while the entire concept of e-tailing sounds very inviting, what goes on in the background is probably what holds the clue to the survival of the enterprise and finally impacts profitability and sustenance. Issues like after-sales service are very important and while a customer feels confident when dealing with a ‘brick-and-mortar’ store, it might not hold when it comes to an e-venture. Payment convenience is important and tying with various payment gateways is essential. Other issues are availability, delivery time, discounts, freight cost, etc.
In brief, Abikzir is able to explain not just the ethos of the Indian consumer, but also the loose ends that have to be tied when starting and running an e-commerce venture. Conventional tools like strategy, market, product format, system and profitability remain the same. But when we move over from a model where there is physical interface to one which is through the Internet, one has to be doubly watchful about the implications of all these tenets.
This is surely an interesting book and would appeal more to those looking to start such a venture. It could also provide answers to existing failures, which can lead to introspection. This is so because while elucidating why ventures fail, the book also explains how one can avoid these pitfalls—and, more importantly, tells entrepreneurs that they have to be open to ‘adapt’ to the situation and work their way through.
David Abikzir
Westland
Pp 239
Rs 599
E-COMMERCE APPEARS to be the most happening arena right now, with Amazon, Snapdeal, Flipkart, etc, being the most prominent names. The concept sounds exciting because it appears easy. This is because it is based on transacting on the Internet, which looks seamless. Given the fact that most of us look upon technology as the be-all-and-end-all of life today, it is not surprising to be in awe of this mode of transaction. However, we often forget that even though technology enables processes, it cannot be the core of such business. The business, as a standalone, has to be tenable, with a number of ends that have to be woven together cogently. Invariably, we do not look at the yarn. And that is why a lot of e-commerce ventures fail.
David Abikzir in his book, Flash Winners, takes us through these phenomenon and starts off by telling us that around 50% of e-commerce ventures have closed down in a years’ time in India. What is more disheartening is that within three years that number will swell to 80%. This means that there will just be one-fifth possibility of success for a e-commerce venture in three years’ time. Unsurprisingly, the prospect of getting into such ventures does not sound that attractive any more.
Abikzir takes us through the trials and tribulations of these ventures in a conversational mode by creating a character called Teju whose parents ran a very successful mom-and-pop store. But when Teju’s mother tried to run the business through an e-portal, it turned out to be a disaster. The conclusion drawn is that what works at the physical level does not necessarily work in the e-mode.
Gauging the market is tough. And though India looks attractive, given the size and classification of the population based on income as per the National Council of Applied Economic Research (NCAER), entrepreneurs have faced challenges all through. The enticing numbers by the NCAER have tended to sway several companies that have tried operating in India. However, not getting a grip of the environment in which the companies want to operate in can be defeating. To drive home the point, the author gives the example of how a foreign wine producer wanting to set shop in India got all its calculations amiss. People may appreciate imported wine in an exhibition, but once such a producer tries to do business in India, he has problems with processes like permissions, importing channels, distributors and retailers, and ends up with a high price, which is not acceptable. The realisation that India is a beer-drinking, not wine-consuming nation should be appreciated. Going by general market research, which shows that a large part of the population is mobile up the income scale, could have led to erroneous inferences.
Now, coming to e-commerce, one has to choose between an inventory-led model and a market-driven one. The former has a challenge of how to procure, store, finance and handle distribution. Any fall in quality of service can drive away the consumer. When dealing with fresh produce, one has to be doubly careful of packing and dispatching it. Again, distribution channels are important and depending on whether one uses their own transport or hires from a third party, costs vary and the models end up being not so profitable.
The other model is the ‘market model’, which sounds better, as it aggregates over various producers and distributors with fewer issues of inventory handling. Hence to an extent, the costs are defrayed over a wider group. The author provides various calculations to show which model works best given the costs—transport, packing, margins at all levels, warehousing and marketing. In fact, marketing becomes very important and he backs the showroom concept, which is the Web page that actually brings producers and consumers together, just like how a physical store attracts consumers. The strategic positioning of products on the Web page can change the consumer’s preferences.
The author’s model of profitability is to shift marketing and shipping expenses to suppliers, as these are two big expenses in such a model. This would mean having two sets of products—one which customers want and the other that gets high margins. Further, discounts need to be procured from suppliers based on the basis of high volumes, so that profits can be stepped up.
The author classifies all such ventures into three categories. The ‘stagnant’ ones play safe and do not scale up being risk-averse. Their progression is based on a fixed path that is followed and may not be visible to others, as they are not in the race. The ‘losers’ are the largest category, who want to break free, not follow the rules of the game and like to set their own. They are creative and innovative, but aggression also means that they do not understand the cons of their models and falter. The ‘winners’ respect the standards and are able to make them evolve as per the progression of the game.
Hence, while the entire concept of e-tailing sounds very inviting, what goes on in the background is probably what holds the clue to the survival of the enterprise and finally impacts profitability and sustenance. Issues like after-sales service are very important and while a customer feels confident when dealing with a ‘brick-and-mortar’ store, it might not hold when it comes to an e-venture. Payment convenience is important and tying with various payment gateways is essential. Other issues are availability, delivery time, discounts, freight cost, etc.
In brief, Abikzir is able to explain not just the ethos of the Indian consumer, but also the loose ends that have to be tied when starting and running an e-commerce venture. Conventional tools like strategy, market, product format, system and profitability remain the same. But when we move over from a model where there is physical interface to one which is through the Internet, one has to be doubly watchful about the implications of all these tenets.
This is surely an interesting book and would appeal more to those looking to start such a venture. It could also provide answers to existing failures, which can lead to introspection. This is so because while elucidating why ventures fail, the book also explains how one can avoid these pitfalls—and, more importantly, tells entrepreneurs that they have to be open to ‘adapt’ to the situation and work their way through.
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