LEADING THROUGH INFLUENCE

A lot has been written about leadership and grooming leadership qualities for corporate citizens. But what is the most powerful way to demonstrate leadership. The answer is simple: Influence.  All of us whether we work with small organizations or large organizations,product or service companies, multinational or start up companies need to influence people on a daily basis. We need to influence people who are working in our team or in different team; who work with us on the same initiative or on whose collaboration we are dependent to move forward; who owns the resources that we need or whom we need to inspire to do something outside their comfort zone; who will benefit directly by partnering with us or who will not be impacted by what we ask of them. The situations and circumstances may vary but we are constantly perceived and evaluated by our level of influence. In fact leaders of today are identified not by the authority they have on people but by their amount influence on people. Given that influence is such a critical cornerstone of leadership how can one start projecting influence and thereby leadership in their workplace. Here are some practical tips that have worked for me in the past:

Opportunity Selection

Leadership and influence cannot be demonstrated in all the tasks that we on a day to day basis. Careful attention must be paid to select the right opportunity which will fetch you the desired visibility. The stage is half set once you identify the right opportunity to pursue aggressively. A right opportunity is something that solves a real world business problem and affects the bottom-line of someone who owns a business or a product line and can influence. This individual will then become your sponsor for the idea. The right opportunity should also create an organization level impact that is beyond financial impact like process improvement, innovation, creating a new product line, improving customer experience etc, which would of interest to people at executive level. The executive who is interested in the impact from your idea can then become the champion for your initiative. While the sponsors will help you fund the resources for the program the champion will help secure the all important cross team support. Identifying the sponsors and champions are very essential steps for moving forward on an opportunity. At the same time it is also imperative to ensure that the opportunity is not already being worked upon or is not the charter of someone else. In fact it often pays well to select an opportunity that is very nebulous to begin with and hence not owned by anyone. 

Building A Case

Once you have identified the right opportunity it is very important to collect credible data to validate the impact created by the opportunity. This means you may have to dive deep into the sales records, financial record or other process related metrics that are tracked and monitored within your organization. It is essential that the assessment of impact is backed by an authentic source. So it may be necessary to identify partners within your group or outside who are bonafide owner of such data or subject matter experts. It may be worthwhile to take inputs from your sponsors and champions to help identify the right partners for building a case.

Sometimes this could be little tricky as the data may not often readily available; you may need to create a future projection or estimation without any historical basis; or there may not be any precedent available as it would be a new product or new market. Depending on the situation you may need to choose the appropriate strategy. For example, if it is a future projection without historical basis there may be research done by others in your  industry which points to emerging trends that you can leverage. Similarly, if it is a new product without any precedent you may plan for building a quick prototype without much investment which will help you get the data that you can use for building final solution

Solution Framing

Most business opportunities are business challenges or problems in search of a solution. So while building the case it is equally important that you frame the solution. It is advisable to start with most ideal and comprehensive solution rather than a partial or a quick fix that may be easily attainable. Think meticulously on as many as aspects of the problem as possible. Also focus on what is feasible and avoid ideas which are still under research. Explicitly call out the deliverables along with resource requirements and risk and dependencies. This will help avoid the perception that the solution is not thought through in detail.

For large and complex problems it will make sense to break down the solution into smaller phases with explicit call out to deliverables, resourcing, dependencies, impact and timelines of each of the phases. Structure the phases in such a manner that components which are modular and already clear goes in the early phases. Components which are ambiguous and unclear gets pushed out to later phases to get enough breathing time for refinement. This will help build the credibility that even if the solution is still ambiguous you have a solid plan to achieve it.

Socialize

Once you have build the case for the opportunity and also framed the solution it is important to socialize your approach. At the beginning you have already identified the sponsors and champions. Now go back to them with a structured presentation. Plan for the meeting well in advance. If there are other stakeholders whose support is required to make the program successful then invite them to the meeting as well. But make sure you have reached out to them individually in advance and run your idea so that there are no surprises during meeting.

While preparing your presentation stick to high level approach and keep the details in the appendix to be brought out only if some one asks.To be more specific focus on opportunity associated with the program, broad level strategy and approach, high level organization impact, resourcing asks, deliverables, timelines, risks & dependencies. The next level of details of the programs are pushed out to appendix.

During the presentation be open and sensitive to the feedback that you receive. In case you receive feedback on your approach don't be defensive. Often it is counter productive. Instead it makes sense to show flexibility by having multiple options with pros and cons and asking the champion or sponsor to pick the best approach

Adapt Where Necessary

While socializing the opportunity or during execution it may be possible that you will encounter individuals or groups whose support is critical for the program and who are reluctant to extend support for some valid reason. In such cases it is essential that you make an effort to understand the real cause of objection and then adapt accordingly by reframing the solution. Pivot the discussion by repositioning your asks so as to enable you to first crawl, then walk and then run. But all the while being consistent in driving across the original objectives and impact of the program. If you still encounter resistance then don't hesitate to have a crucial conversation of a win-win strategy that will benefit them directly. If even this doesn't help then it is best to up level the discussion to the next in chain of command. At this stage it is best to seek the help of your sponsor and champion to push for your case

Be Creative 

Sometimes regardless of how hard you influence and socialize there are no resources available to support the program. At those times it is advisable to think creatively about solving the resourcing puzzle. What have worked for me here in the past is a beg, borrow and steal approach. Dividing the project into smaller modular tasks which will benefit some other group and hence they will be motivated to pick it up. Another approach that has worked in the past is having some interns who can work under the supervision of the subject matter experts. Yet another approach that may work is hiring some outside consultants who can come in temporarily and complete some of tasks. Thinking creatively about solving the resourcing problem always wins you a brownie point and impresses upon your leadership capabilities.

These are some of the approaches that has worked for me in the past. I am happy to learn from you if there is something else that you have tried to project influence and leadership.

PLANNING FOR NEW PRODUCTS IN EXISTING MARKETS

Devising an effective product strategy requires a deeper understanding of the market situation. The Ansoff's business strategy grid provides a good framework in this regards. Per Ansoff's matrix there are 4 different business growth strategies:

• Existing Product Existing Market - Market Penetration
• Existing Product New Market - Market Development
• New Product Existing Market - Product Development
• New Product New Market - Diversification

Even if the above framework focuses explicitly on business growth the same can be extended to develop a detailed product blueprint pertinent to each of the product market situation. In this blog I will cover in detail the product strategy for shipping out New Products In Existing Market. In an existing market the organization has available product offerings for identified target customer segments. Thus the game plan germane to this situation is to stay focussed on improving product offering by addition of new features, enhancing quality and ushering in new technology. All these requires additional investments in R&D, product modifications or product extensions and is exposed to medium risk for success. Illustrated below is the outline of a model to develop new products in existing market with built in stratagem to transcend the risks involved. The entire product development process is organized into 5 distinct stages:

Opportunity/Problem Identification 

The first and foremost step is to pick out a sizable opportunity to pursue. A vital source of information is product feedbacks from existing customers. Another source of insight is understanding pattern of issues from customers who drop out from renewals. A third reference point is understanding market perception of product through root cause analysis of all lost sales(during business development process). It is quiet possible that the product may not have any lapses per se but instead the target segment is saturated and ergo the need to penetrate into new customer segments. In such cases it is necessary to explore new opportunities that may manifest in two ways: adding new features to the existing product, morphing it and making it lucrative for new user segments; a new product being added to the product line focussing on the needs of a new user segment.

For new opportunities exploration it is imperative to gain understanding of competitor penetration into the different customer segments. Continuos market and industry research will help spot latest trends in customer needs and behavior. Also comparing the lacunas in self offering with various organization initiatives will unfold need gaps that can be translated into new opportunities. 


Opportunity Assessment 

An opportunity/problem once identified needs to be sized for potential impact. This will require both secondary and primary research. First based on secondary research and assumptions a high level estimate can be forecasted.  The forecast can be used to evangelize the idea in various internal forums. This process will help identify stakeholders willing to fund the idea and also improvise the idea based on inputs from stakeholders. The impact estimates based on secondary research can be further validated with primary research methods: focussed group, user experience research  or a working prototype (with minimum effort) exposed to a sample set of customer. Based on customer feedback from focussed group/user experience research or empirical data from the prototype the high level estimate can be refined to make way for a more realistic opportunity assessment. At this stage it is also essential to identify all partnerships required (if any) to make the product successful. 

Product Conceptualization 

This is the heavy lifting stage of the product development process with varied tasks initiated and accomplished before graduating to the next stage. Firstly the baseline features of all competitor products need to be benchmarked and compared against self product features to identify any gaps. Secondly the product goals need to be fine tuned based on stakeholder inputs closely followed by defining and finalizing the measurement methodology for the product success. If any third party vendor is involved in product development than the relationship with these partners are deepened at this stage. Also the product design is iterated with stakeholders to ensure that all the multiple view points are taken into consideration. The detail level requirements of the product is defined and based on it the high level scope of the product is estimated.

Project Management 

At this stage the detailed product plan is developed. Also resources are secured for the project both from within the organization and also outside the organization and the project is started. The bulk of activity in this stage focuses on tracking and monitoring the project progress. All product or project related risks need to be identified and managed at this stage. The product needs to go through thorough testing before certified as launch ready.


Launch and Test

A product is rarely launched to the entire population in one shot. Sometimes the product goes through an experiment with one or few customer segments before being opened slowly to all the other customers segments. In other cases the product is launched to different customer segments in a certain predetermined order. Regardless of the approach all products are tested with a sample test population, and their feedback reviewed before deemed ready for nationwide launch.This is to contain any issues (if exists) within a smaller segment of population rather than leading to a nationwide catastrophe. Thus a launch strategy has to be formulated which will cover in detail the order in which different segment of customer will have access to the product, the duration the product would be tested with one segment before being opened to other segments, the criteria for opening up to each of these segments, mechanism for receiving feedback, and the metrics to be evaluated. Post launch the product metrics and customer feedback need to be tracked and monitored to review the performance of the product. If any negative inputs exist then it needs to be collated to created the product enhancement/modification plan as the next phase.


The above model is a high level framework which help significantly minimise the failure rates of a new product launch in existing market.

LOCAL STRATEGY FOR INDIAN ECOMMERCE COMPANIES

In my previous post I mentioned the fact that Indian ecommerce companies need to cross the chasm and start attracting early majority users to build a sustainable growth path. For attracting this user base Indian ecommerce company need to devise a strategy which is an amalgamation of 3 different strategies - mobile, social, and local. In this post we will focus on formulating an effective local strategy for Indian ecommerce companies.

Before delving further it is worthwhile to define local strategy and understand why it is important. Local strategy for an ecommerce company is building successful and effective partnership with traditional small and medium retailers and integrating their inventory into the site and in the process creating a win-win situation for both parties. Long before ecommerce, small and medium sized retailers have built successful offline business catering to the need of customers in their locality. The advent of ecommerce companies have brought better pricing and discounts  and convenience of shopping thus driving more people to buy online. But to sustain a hyper growth pace ecommerce companies need to develop a more scalable model. Traditional retailers on the other hand need to build their presence online or face the threat of perishing. There is lot of synergy between traditional retailers and ecommerce companies and instead of competing both can compliment each other through a meaningful union. The benefits to ecommerce companies will be better product selection, attractive pricing (owing to increased competition and discounts), and better services (by connecting buyers to nearest retailer). Traditional retailers will gain access to the online channel thus increasing their reach beyond the boundaries of their own locality.

Let us analyze how the traditional retailers in India fare with regard to their online presence. There are roughly 47 mn small and medium businesses in India. 95% of these are in unorganized sector and 5% in organized sector. Dividing these businesses by category: 60% - Food & Grocery; 10% - Clothing and Apparel; 6.5% - Electronics; 3.5% - Furniture; 4% - Beauty and Wellness; 16% - Others. Of these businesses only 1 % is online. Also only 5% of top 1000 retail businesses in India are online compared to 85% in US. This indicates that there is tremendous opportunity to increase the penetration of ecommerce in the small and medium business segment in India where the Indian ecommerce companies can play a very vital role.

Retailers Dilemma

Increasingly more and more Indians are researching product online before buying them in store. A report by Boston Consulting Group (Titled: Capitalizing on India's "Digitally Influenced" Consumers from Buzz to Bucks) says that about 40% of Indian online users research product online before buying them in store. This report also says that 37% of online Indian prefer to buy online owing to convenience and 30% prefer to buy online owing to discounts. The behavior of the Indian consumers, especially the ones who are online (11% of population) is changing rapidly - they search about product online through multiple devices; seek advice and get influenced about purchase decisions by their social network; provide real time feedback about product and companies in social networking and product review sites. All these have serious implication for traditional retailers who now are forced to: build their visibility online, and manage their reputation online. The traditional retailers suddenly need to evolve to cope with this changing consumer behavior but they don't have the know how or wherewithal. This is where ecommerce companies can step up to their rescue.


Online Marketplace - A Scalabale Ecommerce Model

There are 4 factors that drive the success of an ecommerce company and help build a loyal and engaged customer base - Convenience, Trust, Selection, and Value. Convenience is all about researching, comparing, finalizing and purchasing from buyer's desktop. Trust is receiving the item timely, undamaged and as described in the site. Trust is also about the ease of getting the refunds in case the purchase goes off track. Selection is the number and range of choices that a buyer can have while considering a product. Value is about attractive pricing and discounts when buying online.


An ecommerce sites can follow one of the two primary business models to build a successful business - Retailer Model , Marketplace model. In an retailer model the ecommerce company is behaving like a online retailers and essentially competing with the retailers. By adopting this model the ecommerce site builds a great buyer experience, convenience, and trust. But they take a beating in terms of selection and also scaling up the business. In a market place the ecommerce companies are essentially facilitating the traditional retailers to build their online presence. In turn they benefit by getting a wider range of products from these retailers at competitive price and not have to worry about managing the inventory. An online marketplace is a scalable ecommerce model but has some inherent challenges that needs to be comprehended before going down this path. While a marketplace model helps in building selection and value it creates a large debt in terms of convenience and trust primarily because post transaction the shipment of the product and also the quality of the product is owned by the seller and not the company itself. 

The advantages and disadvantages of both the ecommerce models and the essentials of managing the challenges of online marketplace is captured in the blog "Dissection of Ecommerce Business Models"



Ecommerce Synergy with Retailers

Ecommerce companies spend huge amount of money and effort to build inorganic and organic traffic. Many of them are also working on improving the mobile experience of their sites along with integration to social media sites. Thus the ecommerce companies are best suited to provide a platform for retailers to manage their online presence. Enumerated below are ways by which ecommerce sites can help traditional retailers:

• Inventory Management - Most retailers use some point of sale system (e.g go frugal, breakaway vision, pace, showman etc) to mange their sales and inventory process. Ecommerce companies can build simple and easy to interface with these POS and help on board their inventory with minimal friction. The simplicity of the on boarding process and the pricing structure plays a significant role in adoption of ecommerce by small retailers.
• Transaction Platform - Retailers can build their own website and start selling online. In that case they have to build a payment and checkout mechanism online. This is an overkill for small retailers who now have to manage this transaction platform. Integrating their inventory with a ecommerce site provides them with a transactional platform without additional effort.
• Shipping Service - Most retailers who wish to sell online will need a shipping and courier service. ecommerce companies can help negotiate a pricing discounts with courier companies based on the volume of sales clocked by them. This partnership built at an ecommerce site level can now be leveraged by all small retailers for their individual sales.
• Buyer Traffic - Retailers don't have the expertise to manage a website and attract traffic to their online store. ecommerce companies spend huge amount of money and effort to build traffic inorganically and organically. They can surface the retailers inventory to this traffic they are building. In turn having more retailer inventory helps ecommerce companies build their product selection and competitive pricing and thus attract more traffic.
• Online Identity - ecommerce companies can help small and medium retailers in building their online stores and micro sites. This will provide them with an online identity using which they can differentiate themselves from competitors. Creating this online brand and building on it will help manage retailers manage their USP and reputation online.
• Customer Support - Anyone who is selling online will need to provide some form of customer support to address the concern and issues of buyers. Small retailers cannot afford to build the customer support infrastructure. ecommerce companies, by virtue of their scale, can build a customer support team which can cover all the myriad number of sellers on the site.

Ecommerce - Retailer Engagement Model

One of the approach that ecommerce companies can adopt to build a scalable and successful business is by adopting an online marketplace model. Having chosen this path they still need to define the partnership model with the retailers. There are four ways by which ecommerce companies can start engaging with the retailers:

• Online Storefront plus local search - This is the classified model in which the ecommerce sites help retailers open an online storefront and help surface their inventory in search. This is a model where ecommerce site help retailers attract footfalls into their store through the online channels. This kind of model is very suitable for high value products (Automobiles or Real estate) or services
• Buy online pick up in store - This is a transactional model suitable for large chain retailers. The buyer finds the product online and pays for it online and then goes on to pick it from the nearest store of the seller thus saving time on shipping.
• Local Delivery - This is a transactional model where the ecommerce site takes the responsibility for collecting the items from the seller and shipping it to the buyer. The way this works is the seller ships the item to designated warehouse after listing the item. If the item gets sold then the ecommerce company takes care of parcel and shipment to the buyer.
• Fullfillment by Local Retailers - This is a transactional model where the seller takes care of shipping the item in a timely manner to the buyer. The site merely monitors for any anomaly in time of delivery or quality of delivery.

MOBILE STRATEGY FOR INDIAN ECOMMERCE COMPANIES

In my previous post I emphasized that Indian ecommerce companies need to cross the chasm and start attracting early majority users to build a sustainable growth path. For attracting this user base Indian ecommerce companies need to devise a strategy that is amalgamation of 3 different strategies - mobile, social, and local. In this post we will focus on formulating an effective mobile strategy for Indian ecommerce companies.

A cohesive and focused mobile strategy is important for ecommerce companies across the world but very critical for Indian ecommerce companies since majority of Indians access the internet (and thus ecommerce sites) through a mobile device. The mobile usage scenario in India is underscored by heterogeneous trends and patterns which are very different from other developed economies. It is also worthwhile to note that most of the ecommerce companies in India, while building a mobile experience, would have to deal with concept selling of "online purchase". Hence a single straight-line strategy may not be efficacious but may require superimposition of multiple diverse strategies. Some of the foundation pillars on which a great mobile commerce experience can be built are:

Prioritize Mobile Web over App 

About 49% of phones in India are internet enabled phone of which about 33% doesn't have an internet connection, 13% have internet connection but on a feature phone and 3% have internet connection on a smart phone. Also while the smart phone internet connections are on 3G and wifi, the feature phone internet connections are mostly on 2G/GPRS connection. So most of the new customers of the ecommerce site are likely to access the site on a feature phone running on a GPRS connection. Ergo it makes sense to start with the mobile web experience rather than a mobile app. 

An even better strategy is to have a layered waterfall approach, with SMS based experience at top, targeted to the broad mass and first time users, and aiming to drive traffic to mobile web (for featured enable phone). The SMS based experience can focus on supporting search, basic product information, checkout and ultimately leading people to the mobile website. The mobile web experience can focus on creating simplified first time and repeat usage and should aim at driving up the app download (if the phone supports it). The app experience is for an highly engaged user and should be consistent with the mobile web experience and aim at driving up revenue for users.

Mobile Site Optimization

This is a very broad area but here are 3 aspects that ecommerce sites can focus on :

• Extending Web feature - All critical web features viz. registration, home page, search, product view page, cart, check out, ownership (my account) page should be available to an user on mobile web. Some of these flows need to be reevaluated E2E to optimize steps for mobile. All these pages also need to have mobile responsive design to cater to different mobile screen resolutions. Whenever the user hits the site URL from a mobile device they should be automatically redirected to the mobile web site. In case of the apps the the interaction designs of the platform (iOS, Android) also needs to be taken into account while building the experience.  
• Leveraging mobile phone features - There are many mobile specific features like 'click to call', 'click to message', 'click to map', 'location based service', and 'QR code linking to their URL' that can be exploited by ecommerce sites to increase traffic, engagement, and conversion
• Building new capabilities - In case of building a mobile app some new capabilities can be built to increase engagement and conversion. Some examples of these are: One touch call; Facilitating viral of product and services via email, Facebook, SMS and twitter; Inclusion of key business events inside the app and keeping customers informed on the go; Allowing customers multiple ways to contact site through phone, website, email, and direction to the location; Creating a fan wall for customers to leave feedback; Sending messages (push notifications) to customer using a content management system; Creating mobile coupons for customers by "Checking in" at the site; Creating QR enabled coupon for the customers to redeem at the site by scanning a specified QR code; Connecting customers to sites Facebook and Twitter page.

Traffic Acquisition 

Multiple research across the world show that people treat their mobile devices as an extension of self. This means any content rendered on mobile can have a very high conversion rate, if relevant, and be perceived intrusive and annoying, if irrelevant. "The Mobile Internet India Consumer India 2013" report produced by Mobile Marketing Association and Vserv.mobi say that Mobile internet users enjoy getting content and deals through mobile ads. According to this report user love mobile ads that help them - download mobile content (59%); Find a good deal on something (41%); Learn about a brand(35%); Locate something nearby (26%). Ecommerce sites leveraging this consumption behavior will drive higher engagement and recall of their brand. Ecommerce sites can also consider location based advertising for mobile users although this is still in a very nascent stage. There are 3 mobile ad network that ecommerce sites can consider for mobile advertising - Google, In mobi and Vserv. While Google and In mobi focuses on smart phone population and developed ecommerce markets, Vserv focuses on feature phones and emerging markets. A word of caution for Ecommerce sites planning to leverage mobile advertisements is to effectively plan and manage the post click experience of their advertisements. 

Mobile Payments

A key ingredient of a successful mobile strategy is solving the payment puzzle and integrating an effective mobile payment solution into the checkout flow. Since credit card/debit card penetration is very low in India the mobile payment solution should include a cash based solution in addition to credit card/debit card. There are many start up companies, banks and operators who are collaborating to build mobile payment solution that doesn't require user to enter credit card/debit card details at checkout and will also work on a low speed mobile connection. All this has led to increase in excitement about mobile payments and today roughly about 7 million transactions happen on mobile today with a value of USD 190mn roughly amounting to 3% of total electronic transactions. Indian ecommerce sites can partner with these players to increase adoption of online purchases and in return help deepen the penetration of these mobile payments solution. There are two categories of players active in the mobile payment space: 

• Mobile Banking (Interbank Mobile Payment Service) - There are lot of banks in India today who support a mobile payment transactions. These transactions are powered by the Interbank Mobile Payment Service created by National Payment Corporation of India. Currently this platform hosts about 59 banks and have so far issued 53.5 mn Mobile Money Identifier (MMID). In order to leverage this service the customer needs to have a bank account with a bank that supports this platform and have her bank account linked to the mobile number through registration for mobile banking service. 
• Mobile Wallet - While the Mobile Banking solutions caters only to the population with bank accounts, the Mobile wallet solutions addresses the need of the population with and without banking account. Users can load money into their wallet from the credit/debit card or by cash through select outlets. These solutions are offered by both operators and non operators. Some examples of operator based solution are: M-pesa, Airtel Money, Aircel. Some examples of non operators based solutions are: ngpay,OxiCash,ZipCash,ZakPay

NEXT WAVE OF GROWTH FOR ECOMMERCE IN INDIA

The ecommerce market in India pegged at USD 9.5 bn in 2012 is likely to touch USD 12.6 bn in 2013. Of this about 71% is travel ticketing while e-tailing comprises only 10% of the pie. Secondly, the Indian ecommerce industry has been growing at a CAGR of 34% when global ecommerce industry has been growing only at a CAGR of 13%. Thirdly, India boasts of having the 3rd largest internet population in the world only after US and China. Despite all this Indian ecommerce sales is only a fraction (0.1%) of the global ecommerce sales(about USD 1.2 tn in 2013). It may be worthwhile to understand the biggest hurdles and challenges faced by the ecommerce industry in India and what can be done to engender a higher growth and adoption of online buying among the Indian internet users.

Challenges

Despite increased government and media focus and availability of adequate investment in this sector the ecommerce players so far have not succeeded in stirring enough enthusiasm for online buying in India. Some primary reason for such lackluster performance of ecommerce in India are:

Low Penetration
Internet in India has penetrated to only 11% of population while the global average of internet reach is 34%. The total internet  active user base in India is about 74 mn of which about 38% of users are from Top 8 metros (Delhi, Mumbai,Chennai,Kolkata,Bangalore, Hyderabad,Ahmedabad & Pune) 12% from small metros (Patna, Cochin, Baroda, Lucknow, Ludhiana, Coimbatore, Jaipur, Indore, Surat, Nagpur, Vishakapatnam, Faridabad), and 29% from Non-metros (Guhwati, Bhubaneswar, Raipur, Chandigarh), 15% from small towns and about 6% from rural India. 

When these figures are read against the fact that 30 percent of indian population is urban and 70 percent is rural it becomes very evident that the greatest growth opportunity for ecommerce in India is from the 2nd and 3rd tier cities. Ecommerce players so far have not done a great job in understanding the needs and challenges of the population in these cities. There is also very low awareness and understanding of online purchase in these cities. 

Access  

There are about 164 mn internet connections in India of which about 143 mn are mobile based internet connections and 21 mn are non mobile internet connection. More than 50% of internet users access the internet through a mobile devices owing to slow penetration of fixed line internet connections in India. This means a vast majority of internet users in India will experience the internet first time from a mobile device rather than a PC. Currently most of the Indian ecommerce sites doesn't have a focussed mobile strategy to woo and engage with this growing user base.

 

Motivation
 

Indian internet users primarily access internet for social networking (25%), services (email, IM) (23%) and entertainment (11%) with very less motivation to buy online. It is important to study some of the growth drivers in other big ecommerce economies and understand which of them can be replicated in the indian context. In US, the number 1 internet and eccomerce economy, growth is driven by online deals, aggressive merchandising and discounting from flash sales, more online loyalty programs, increasing time spent online owing smartphones and tablets, and large online presence of traditional retailers. In China, the second largest internet population and ecommerce population, growth is driven by growing internet population, burgeoning middle class with growing trust on online shopping, government driven campaigns to promote consumerism, improved infrastructure, product selection and services offered by online sellers and retailers. In Japan, the third largest ecommerce economy, growth is driven by "stay at home" culture, value shopping and an efficient home delivery network. In western Europe, the fourth largest ecommerce economy, growth is driven by better logistics, trust on online buying, deeper penetration of smartphones and tablets, convenience, large online presence of retailers and competitive pricing. Thus higher online presence of traditional retailer, good online deals, deeper penetration of smartphone and tablets and higher degree of trust for online purchase seems to be the common theme driving ecommerce growth in most parts of the globe.

In India only 1 percent of the 47mn small businesses are present online which means there is very less competitive pricing and selection and convenience in the online channel. This combined with low awareness about online buying makes the online channel less attractive compared to the offline channel for large part of population.  Also the trust factor for online purchase is very low among Indian Internet Users. In order to achieve scale the ecommerce companies would have to focus getting more and more retailers online and also build more trust for online purchases.

Ecosystem
A big factor hindering growth of ecommerce in India is lack of proper ecosystem to facilitate online purchase. Data proves that ecommerce growth is spurred by higher adoption of electronic payments. India is predominantly a cash driven economy. The number of credit cards in India is 19 mn (with 7 mn active card users) and the number of debit cards is 350 mn. Indians use debit cards primarily for utility bills and credit cards for online purchases. With such low penetration of credit card and absence of popular payment gateway like PayPal most online buyers prefer Cash on Delivery. About 60% of online transaction are Cash on Delivery. Cash on Delivery is not a scalable and sustainable model from a ecommerce company point of view as it increases the collection effort and the risk borne by the seller significantly.


So far ecommerce players have not been able to solve this payment puzzle of including the vast majority of non banking Indian population and yet bringing down the overall risk exposure of sellers.





 
Infrastructure
There are roughly 154000 pin codes in India. DTDC the largest courier company in India can deliver only to 10000 of the pin codes. People in small towns and rural india (where approximately 70% of population reside) doesn't have access to buy online.  As growth of ecommerce is driven by efficiency of the delivery network this is a major opportunity for growth. Average delivery time for ecommerce companies in India is 2- 4 business days for non-metros and about 1-2 business days for Metros. 

This longer delivery time reduces the desirability to buy online. Also the lack of coverage excludes a vast majority of population from trying the online purchase model.


Crossing the Chasm

Ecommerce industry is at inflection point in India today. So far the growth is driven by the innovators and early adopters who have started using the online buying channel. However to maintain a sustainable growth, ecommerce companies need to cross the chasm and start attracting the early majority users. In order to do this they need to focus increasingly on the following three dimensions:

Mobile: As majority of Indian internet users are being added through mobile it is essential that Indian ecommerce site support all the critical web features on mobile and simplify and improve the mobile site experience significantly. Most mobile phones in India are feature phones with a 2G/GPRS connection and ergo it is imperative to have a Mobile Web led strategy  rather than Mobile App driven strategy. Also there has to be an increased emphasis on innovating on mobile payment solution as low penetration of online payment is the primary hindering factor for scaling online transactions. Additionaly, Indian ecommerce sites should seek new ways of converting the on deck users to off deck users.

Social: Indian internet users spends a disproportionately large amount of time on social networking. Indian internet users who spend time on the networking site are mostly youngsters who have a strong influence on the purchase decision of the family. It is imperative for Indian ecommerce sites to engage with these people through product offerings on social networking sites. Indian ecommerce sites can also use the social networking channel to listen to the opinions and needs of customers. Yet another way by which Indian ecommerce sites can leverage social media to increase adoption of online transactions, is by building features and mechanism to allow customers to engage their social network in the purchase decision.

Local: A primary reason for growth of ecommerce across the world is increase of online presence of traditional retailers. This leads to increased pricing competition and also more convenience for users. In India approximately 1 percent of the 47mn businesses are online which leaves a lot of opportunity for growth for Indian ecommerce sites. Most local retailers, who have built successful brick and mortar business, fundamentally lacks the understanding and capability to build a successful online business. The ecommerce sites can play a pivotal role in building online presence for these retailers - provide a platform to build the online identity of retailers and also on boarding their inventory online; help in branding of the retailers to online consumers; drive traffic to the online stores of retailers. 

I will focus on a more detailed approach for each of the above mentioned dimensions in subsequent posts.

UNRAVELING THE MATRIX

Globalization creates new opportunities and markets for business. Today many large and medium corporations operate in multiple countries, have multiple business units, cater to different customer segments, leverage diverse distribution channel and offer multiple products. This implies that corporations need to manage multiple dimensions of growth and challenge simultaneously such as: preserve the integrity of a global brand while tailoring the product and services to local taste; orchestrate between the often conflicting departments that grows up to cope with environment complexity; maximize the financial and operational productivity through standardized process and practices while promoting the specialized skill and competencies of local teams; manage product lifecycle - introduce older products into newer markets - while ensuring the product is aptly priced and popular in the new market. Managing all these dimensions and finding an optimal balance is walking a tightrope and global organizations are slowly discovering that the answer is to build a matrix organization structure. While matrix structure helps improve quality of collaboration across the highly differentiated and specialized organizational units they also create a high degree of complexity, unclear decision paths, and non transparent responsibilities. Matrix organizations often suffers from fear of making mistakes and slow decision making. 


All these exerts tremendous stress on individuals who operate in a matrix structures, particularly in remote centers.Individuals in matrix structure often are forced to manage at the intersections between local and remote team where reporting lines, information access, incentives and decision making are blurred. On one hand it poses a serious challenge to independent thinking through its conundrum of protocols and nuances. On the other hand it creates an unique opportunity for individuals to compete at a global scale and become part of an international workforce. People who have dealt and survived the matrix structure would explain how it has helped them evolve into stronger professionals.Enumerated below are some thoughts on how people operating in remote centers of a global matrix organization can be effective and successful :

 

Being organization savvy

In order to be effective and influential an individual need to develop a deeper understanding of the organization structure and culture. This means making conscious efforts in understanding the organization goals and strategy, the top initiatives, different product and business groups, interaction among the groups, decision making process, capabilities and competencies that exist within the organization, mechanisms by which information can be sought and found.

Another facet of organization understanding is identifying the key stakeholders, sponsors and champions and establishing a relationship with them. The key stakeholders are gatekeepers who can influence the decision making process but typically don't own the decisions. They can exist within the same business group and also in partner groups. Sponsors  are the owners of the business goal and often set the tone for the group. The sponsors are short term focused. Champions take a more long term outlook. They typically operate at an executive level and mindful and sensitive to futuristic ideas. Developing strong relationship with each of these group helps traversing through the complex decision making process. 

Yet another facet is to segregate important forums and meetings from the non important ones. In any organization there are myriad types of forums and meetings and by participating in the right forums and meetings individuals can influence decisions and also build the proper line of sight.  

A simple and effective way to ramp on organization understanding and navigation is by finding a right mentor. A good mentor is someone who has spent enough time in the organization, has risen through the ladder, has a good reputation, and is willing to invest time and effort to guide people. It is advisable to choose a mentor from a peer business group rather than ones own team. Individual should engage with the mentor continuously to review and  chart their course in the organization.

Establishing the right rules of engagement

Organizations which operate in  matrix structure follow different types of engagement models. The engagement models may vary from one business groups to another and is often determined by the maturity of group itself. Some of the widely prevalent engagement models are:

• Extension Model --> This is the most primitive form of engagement in which the core product and thought leadership is owned by the global product and business team and the fringe areas are outsourced to the remote and country teams. This model is the easiest one to increase the footprints of a remote teams but eventually degenerates the value of the team. Ergo this model may be adopted initially while setting up the team but should be renounced as the team matures.
• Component Ownership Model --> This is the second level of ownership and engagement in which the core product is owned by the global product team but the remote team takes ownership of one or more components. While this helps in immersing the remote teams into the product and business, this does not bring out the independence in the thinking process and hence limits the value addition coming out from the remote teams. This model is unavoidable in many cases and the team may have to stay at this level for a long period before graduating to the next level.
• Technical Ownership Model --> In this model the product design and conceptualization is done by the global  product team and the technical development of the product is outsourced to the remote team. This is often the case because the products are low impacting and no one in the global team wants to own these products. Like the extension model this is also an entry level in some product areas. Unless the remote team is able to create new value or impact for this products, investments in such models should be minimized as much as possible.
• Complete Ownership Model --> This is the ideal engagement model where the complete ownership of the product and business is transferred to the remote team. There is enough autonomy to identify new ways of adding value to business  and product. Often a remote team graduates from one of the above models into this one .However in certain scenarios the remote teams are  able to identify a new customer need or problem and come up with an innovative product solve . In such cases remote teams start with this model directly. 

While the sweet spot is to be in the 4th model,it is never entirely possible to have all the products and tasks at this level. Remote team often end up having a portfolio of each of these models. 

Building Trust and Credibility

When operating from a remote team building trust and credibility is of paramount importance. This is an uphill task especially from a remote center. Here are some tips to attain this:

• Working within Organization Structure --> While it is preferred to have autonomy and independence this may not always be a good idea from a remote center. There are two primary reasons for this: chances of failure of a product is higher than success; autonomy leads to the global product team being disconnected and unaware of the happenings at a remote center. Both these situations are dangerous spots to be in.Hence it is always wiser to operate within the hierarchy of the global product team when working on an idea.
• Structured communication -->Individuals working in a remote team can build trust and credibility through structured communication in consistent formats such as weekly status reports; weekly business reviews. This is of paramount importance as remote centers lack the advantage of face-to-face meetings. Over communication is always preferable along with a careful selection of target audience. In addition to these few  other mechanisms that can be used are bi-weekly work stream discussions; and quarterly operation reviews which could be conducted using video conference or in person meetings. The objectives of these meetings is to show progress made or improvements in the operation metrics. A powerful mechanism of highlighting the achievements of a product or project is creation of case study or story boarding. Also the best way to communicate new ideas, thoughts is through a power point presentation.
• Importance of Planning --> Often when embarking upon a new product, project or roadmap it is essential to draw a comprehensive plan and share it with the global product and business team. The more meticulous and detailed the plan is the more effective it is in allaying apprehension of people. It helps create the impression that an individual is capable of thinking through all the contingencies. This along with communication of progress on the plan goes a long way in building the trust and credibility of the individual.
• Handling of crisis and failures --> Often product launches or project are fraught with crisis and failures. Impressions are formed based on an  individuals ability to handle such tough situations. Often difficult situations presents an opportunity to also build trust and credibility. One needs to be sensitive about how to communicate the crisis and failures. The recovery plan from crisis and the level of communication can build the credibility of the individual significantly.  Failures celebrated in an elegant manner  often demonstrate the maturity of individuals and teams.
• Selling versus balanced score card --> Often remote team fall into the trap of only selling the highlights of their success. It is very important to note that credibility gets built when success is interspersed with failures and low lights. A balanced score card approach should be adopted in communicating during work stream meetings and business reviews. It is also essential to communicate the challenges being faced along with the impact being created.

Growing the Organization Level

Upping the level is a tough and uphill task for remote center but is achievable when approached in a structured manner. Here is how individual working in a remote centers can grow:

• 70-20-10 Development Model --> This model delineates that an individual learns 70% of the role on the job, 20% by feedback and coaching, 10% through formal training. Understanding this and planning for this is an important step. The first step in this direction is a thorough understanding of the role requirements of the current level and the next level. The second step is identifying the gaps in the role. The third step is formulating a plan to cover the gaps. Since 70% of the learning happens on the job, individuals can focus on harnessing the knowledge repository of the organization. Another important way to learn skills is to partner with other product and business groups to increase their knowledge levels.
• Working with feedback --> Since 20% of the role and performance can be learnt through feedback and inputs from others, feedback forms an important part of equation. Feedback can help serve two purposes: Identify the gaps in performance at current and next levels;aligning with the global product and business team. Utmost care has to be taken in separating actual gaps versus perception of gap. In case there is a perception of a gap then it is very important to understand what behavior is causing these perceptions and figure out a way to address and change these perceptions.
• Impact versus effort --> Often people feel victimized when results are not in commensurate with the efforts. Growing up  the value chain requires that individuals keep their focus on outcomes rather than the effort. Here is a simple approach that can help create impact: start with the desired outcome and work backwards to identify top 2-3 ideas that can help achieve the outcomes; evaluate each idea based on the impact it can cause; validate the ideas with people who use a different lens; understand the constraints and the limitations with which to operate. Achieving the desired impact requires individuals to build a deeper connection with the environment and identifying the problems and opportunities within it. Most insights are gained through meticulous analysis of environment and available data.One may not always have the expertise on all aspects of a business, product and system.So partnering with experts and valuing their inputs can be very effective.

 

DISSECTION OF ECOMMERCE BUSINESS MODELS

Fortunately eCommerce websites doesn't have to grapple with the physical limitations of shelf space or the finding a suitable location for their stores. However, they still need to engage in other facets of retail management viz price control, supply chain, operation cost, inventory management, distribution network, demand forecasting, traffic conversion, smooth checkout etc. The gamut of activities that an commerce website need to concentrate on is dictated by their business model. Two ecommerce models that have come of age and become widely prevalent - "Retailer Model" and "Marketplace Model". Delineated below is the medley of tasks that a website need to specialize (in accordance with their business model) in order to build a successful business.

Retailer Model (e.g Amazon, Flipkart) - Websites with this model stock their own inventory and build their in house logistics department to take care of shipping and delivery. Their primary focus is on lower price, larger selection, and greater convenience. This will attract more customers leading to more distribution channels and larger reach and eventually bringing in more sellers. The challenge with this model is profitability and scalability. These websites can create a valuable offering by being adept at the following:

• Building Product Categories - The supply chain and business nuances of each of the product categories vary significantly. Retailer websites need accurately predict demand patterns, understand consumer behavior and set up an efficient supply chain for the product category . So it is prudent to begin with one or two categories and then add new categories to the offering mix slowly. If there is a need to precipitate the development of a category then instead of creating a half baked solution it is advisable to buy or partner with other players who have synergy in supply chain and distribution of the particular product category. 
• Inventory Management -  A lot of capital is locked in warehouse and inventory management. In order to reduce overall cost it is necessary to segregate the fast moving items from the slow moving ones. Retailer websites can delegate long tail items to the third party sellers while stocking in house all fast moving inventory. Also to better align to changing demands, the inventory can be rotated higher number of times in a year.
• Supply Chain - A world class supply chain and distribution system helps abate the product prices and augment customer convenience. Retailer website should contrive to rally a network of suppliers who can deliver at low price. An effective strategy is to distribute warehouses in strategic locations to optimize delivery cost and time. In similar vein retailer websites can use suppliers to drop ship for low demand locations while using self delivery channels for high demand areas. 
• Cost Management - Customers want to buy online to get good deals. Retailer websites can build a big and loyal customer base by being cost leaders in each of the product category they support. This means in the short run retailer websites should be prepared to absorb price volatility from suppliers at the peril of incurring loss. The business objective should be to gain market share which will lead to high bargaining power with suppliers helping bring down cost. Some other tricks to knocked down cost is juxtaposing warehouses and suppliers and increasing price competition between suppliers.
• Data Mining - Data warehouse and data marts contains gold mine of data with respect to customer needs and behavior. Retailer websites should invest in data mining technology to segregate the fast and slow moving products and identify recurring customer problems. Some other ways by which data mining can be used is to forecast demand accurately and identification of areas to reduce cost
• Customer Service - A dissatisfied customer can imperil the brand image through negative word of mouth. Retailer websites can ameliorate trust by increasing the number of customer communication post transactions and automating it. It should be an easy process for buyers to reach out to customer support in cases of an issue and get replacement or refunds. It is also essential to closely monitor the behavior of suppliers who drop ship to customers directly.

Marketplace Model (e.g eBay,Olx, Quiker) - Websites with this model merely creates an online trading platform which is used by brick and mortar retailers to build their online presence. Inventory management and logistics operations are handled by the retailers themselves. Marketplace websites offer diversity of prices and offering but at the same time need to pay lot of attention to building trust. The challenge with this model is managing the bad buyer experience caused by seller post transactions. In order to succeed marketplace websites need to develop the following capabilities:

• User Verification and Fraud Detection -  The safety of the platform to a great extent is determined by the quality of people who trade on the platform. This means investment in developing  sound verification process and sophisticated fraud detection algorithms. Marketplace websites need to be very strict about verifying users at the time of registration. Post registration user activity should be closely monitor their activity and whoever displays bad behavior on the site should be suspended. It is also essential to block a bad user from returning to the site using another account. For this an account needs to be linked to a real world entity verified at the time of registration. 
• Seller Scoring - The propensity to commit fraud is higher on seller side then on buyer side.In order to maintain sanctity of transactions marketplace websites should treat differentially between good and bad seller behaviors. Sellers behavior is defined by quality of listings, handling time, quality of tracking provided on package, volume of sale made, and number of bad buyer experiences caused which should be periodically evaluated and rated. Better rated sellers can enjoy privileges like higher search ranking and discount on the  listing fee which will create aspirational value amongst sellers to exhibit good behavior on site.
• Shipping - Once the order is placed seller should act efficiently to fulfill the order, package the item and drop at courier. There on it is the efficiency of the courier service to deliver the package timely to the customer address.So the opportunity to reduce shipping time is at two levels -  reduce the handling time of seller,  and reduce the delivery time of courier service.  For the former seller can be closely monitored for their handling time and rated in accordance. For the later marketplace websites can intermediate the shipping service on behalf of the seller with a trusted partner carrier. A deeper integration with courier service will reduce the average delivery time and also improve tracking of the package.
• Payment - Buyer are exposed to significant risks from the period of making the payment to receiving the item. Marketplace websites can reduce this risk significantly by parking the money in an interim escrow account during this period and linking remittance to seller with the order shipping time. If the seller uses the shipping service intermediated by the site and provides a tracking number then money can be remitted to seller as soon as the package delivered notification is received from the carrier's system. In case the seller uses an outside service and doesn't provide a tracking number then is money is held back for a longer period which will cover for both regular shipping delays and also breathing time for buyer to file a complaint. 
• Returns - Since buyers purchases the item without seeing it they should given flexibility to return the item in cases it is not up to their expectations. Marketplace websites should encourage sellers to accept returns by providing higher scores to seller who accept returns as against those who don't. If the seller chooses to not accept a return then in the case of a "item not as described" complaint should be willing refund the amount plus return shipping cost (if item has to be returned). On a related note it is critical to closely monitor buyers who show a recurring pattern of returns and block them from further transacting on the site.
• Customer Support -  Marketplace websites need to arbitrage between buyers and sellers in case of an issue. This means that these websites should invest in a simple and transparent dispute management system and also a communication platform. The website should also strongly push both the parties to interact with each other using the communication platform. When a dispute arises the customer support can go through the communication log to pass the verdict in favor of the victim.