Sunday, July 7, 2013

Should Flipkart be Worried About Amazon?

Amazon has announced its entry into Indian e-tailing market and has forayed with categories that are mainstay of Flipkart - books and electronics. So, should Flipkart be worried about Amazon?

Yes - a lot. Here's why.

1. Amazon understands online behavior better than anyone else

So far, no Indian e-tailer was big on analytics and understanding buying behavior. With Amazon, that has to change. Amazon has incredible depth in understanding buying behavior and decision cycle and consequently converting prospects.

Amazon - 1 : Flipkart  - 0

2. Amazon serves the information need much better

Before Amazon had launched, lot of buyers who buy books online used to make their buying decision after surfing Amazon. Why? Because Amazon serves the information need far better than any other player - in the world. Personally, I have never ever bought from Flipkart or Snapdeal or any other Indain e-tailer without having to read about the product on some other site.

Next time, when I am browsing Amazon for deciding whether to buy the book or not, guess who would be waiting to sell me one?

Amazon - 2 : Flipkart - 0

3. Amazon has a stronger hold on engagement

This is enabled by 1 and 2 but is vastly more significant. Being able to engage an online customer is non-trivial. It is confluence of great UI, great UX, having relevant SKUs, relevant information, credible social interaction, great technology (such as recommendation engine) and possibly more that I missed out. Given a company that understands the customer well, serves their other needs apart from just purchasing and is great at keeping them engaged - should a competitor worry about them - absolutely!

Amazon - 3 :  Flipkart - 0

There is however, one significant advantage that flipkart has
4. Amazon does not understand Indian business environment as well as Flipkart does

Flipkart has been in the market for several years now and understands the business environment and its nuances much better than Amazon does. This is not a trivial advantage to have. What I am not sure about is, is it sustainable advantage - may be not.
Amazon will have to go through its learning curve on logistics, delivery, CoD, procurement, high rentals etc. and they may take some time to establish their foot hold. They have the second mover advantage. They can learn from their competitors. It is much harder to experiment and figure out what works rather than learn from a competitor who has gone through the cycle and made those mistakes.

As an example, while flipkart has just started to launch marketplace, Amazon entered with marketplace. Amazon knew delivery and customer satisfaction is a challenge (see Rediff Shopping as an extreme example) and chose to pick up that battle.

Amazon - 3 :  Flipkart -1

Some people might argue that Flipkart has acquired a huge customer base but I think that advantage is temporary. Primarily because Amazon has better engagement with strong social angle and hence will have higher retention and lower acquisition cost. Moreover, Indians do have an implicit mindset that foreign vendor is better.

To an extent it seems that best hope for Flipkart is that Amazon fails to adapt to Indian environment.
But, if Amazon is able to learn nuances of operating in India, there is very little that Flipkart has today that will help it maintain a competitive edge.

Saturday, June 29, 2013

Value of Good Education

More than an year ago, I and Pankaj Garg - my batchmate from Sunstone Business School, had worked on a strategy project to answer if RIL should enter e-tailing and if yes, what is the right way to enter e-tailing.

An year later, Amazon has entered the Indian e-tailing business and is starting with same categories that we had recommended.

Not bad for a couple of people from IT background to be able to analyze an entirely different business and understand its dynamics.

What made it possible?

I think this is where problem based pedagogy used by Sunstone proved really helpful. Solving problems like this one ingrained real business skills in me. This was not a trivial problem and neither was it answered in a day or a week or a month. We worked for several weeks - running it through various frameworks, seeking help from faculty, meeting industry people, collecting thoughts from anyone who wanted to share. All these activities added some real value in our real life. They set us up to take on problems like these - something that reading a book or two would have never achieved.

It is hard to overemphasize value of good education. :)





Wednesday, June 5, 2013

Infosys is in Big Trouble

Narayana Murthy's return and Rohan Murthy's appointment to the company are clear indicators that Infy is in much bigger trouble than they would let us believe.

Biggest question to ask is:
Why does Infy need Murthy to return?
Because current leadership has failed them. In last 2 years since Murthy left, a company of 1.5 lac people could not find single leader among themselves that could run the company at even the industry average rate.

It would be naive to assume that current leadership did not have access to Murthy's wisdom or guidance. They could not deliver despite Murty being available for consultation.

Would Murthy be able to put Infy back on track?
Who knows? May be, may be not. But that's not the point. The point is, what happens after Murthy's exit in not so distant future? Even if Murthy is able to reverse some damage, who will take it further on the right path?

Would it be Rohan? Would current leadership be able to step up to the plate next time? Would they be able to groom another leader while Murthy is at helm? Would they bring in someone from the outside?

All of these options are fraught with grave risks. Their safest bet of proper succession planning, by their own admission, has failed.