One of the more interesting discussions I have had around Strategy is around Pilots. We all know that in general, and specifically in emerging or nascent markets, is that there isn't enough past data to base decisions on or to make business plans on. What you do in such cases is not research but pilots? Bet small amounts on multiple horses, see which horses win their first races, bet more on them and less on the others and so on till you have a winner.
Talking of Pilots, it is possible in eCommerce, more so in eCommerce than in offline commerce, to pilot out hypotheses. If you have a great packaging solution, try and see how the product does without the fancy packaging but discounted to that effect, check how the same listing does with or without CoD, or with or without no-questions-asked returns. If website / platform flexibility is an issue, one could try out the demand pilots purely on mailers. If one wants to know what's the sweet spot on prices or discounts, or the tradeoff between, say, faster delivery and price, it is possible to have two listings at different prices and different delivery timelines to check which one takes off faster in sales. It is then possible to dynamically alter the discount and the delivery timeline to check what's the point at which decreasing returns set in. And this brings us to the crux of this discussion.
How does one pilot faster deliveries - or any other offering we don't have and that takes sunk investments to build-out? We already operate on optimal delivery schedules. Won't we have to set up a separate infrastructure to create faster deliveries? And if we have to invest in setting up stuff, then doesn't it defeat the purpose of piloting the concept? We can't create a warehousing and pre-shipment infra and then conclude that faster delivery doesn't create value in the eyes of the consumer i.e. the consumer is not willing to pay more to get the goods faster. Then we can't roll back our investments to go back to what we had earlier.
Or maybe we can.
We could partner with a third party to create this experience for the pilot, but then the costs of doing this won't be representative. But there's something simpler we could do - which is not exactly the same thing, but quite useful for pilot results.
We can pilot slower delivery!
Now we'll put up two listings side by side, one with our standard price and delivery-time, and the other with a lower price but slower delivery, and check which one appeals to consumers. Versus a listing with an elevated price and faster delivery, this simulation will also give us results on what is the sensitivity on between delivery-time and price.
You see? There's always a way. When the ideal option is not possible to pick, pick the best possible option.
What are your thoughts?
