The frenemy question for Google, Facebook and others

The internet is rife with talks of Facebook and Google entering eCommerce. While they have both dabbled with the idea of doing stuff on their own through Google-Shopping or Facebook Virtual-Goods, they seem to be going the 'buy-button' route. What this means is that they, and their advertiser-eCommerce businesses, will need to face the Frenemy Question.

Both these companies learn and earn a lot from eCommerce, where they're risking a change of position from partner to competition by going deeper into the purchasing funnel. eCom businesses on the other hand depend a lot on Google and Facebook for their traffic and app-downloads. Once the app is installed, these two aren't that important, but just given the existing eCom penetrations (let's say sub-1% in India to a maximum of 6-7% in large developed markets and just-maybe a couple of exception-markets at 10%), the task of bringing new people online will remain important for a long time. That means Google and Facebook have a huge role to play even in the app-only world that some eCom businesses are trying to morph to.

Now Google and Facebook are just the biggest examples, but we know every other business from Pinterest to Twitter to WeChat is in some way considering getting into the eCommerce play if they aren't already in. Last year in India saw everyone from Gati and HDFC and Airtel and PayTm all announce plans to get into eCommerce. Unconfirmed reports surfaced about anyone and everyone - from payment companies to wallets to logistics to large retailers to brands to distributors all trying to create their own eCommerce destinations.

The moot question is why - is it just for the valuation multiples? Or is it a genuine belief in being able to make a positive difference in the way it's done today?

And the other question is if the role that these companies are trying to play as end-to-end eCommerce providers creating more value than the role they play today?

Let's consider this, a typical company here is a platform

• that multiple eCommerce businesses plug into,
• that everyone's customers share data with,
• that sits in the "revenue-positive" (read 'money-making') part of the value chain,
• that has its risks spread wider than the success of any one business it services

And now it's moving to a situation

• that is far away from making money today (apologies for the generalization, but I'm sure you get the point)
• that is a task of creating unfamiliar competencies
• that is a high-risk grow-big-or-go-home space today,
• has irrational hyper-competition

...and so on.

To make it worse, it's an either / or decision. It is difficult to be a service provider in an industry one competes in oneself. And this may be a big difference between a Google and a logistics provider. Most eCommerce sites, which have money to spend, may not have an alternative but to spend money on Google - they might just get a bit cagey about what they share, but they'll have a choice of moving completely away from a logistics player who they perceive as a threat. And that's a big aspect to consider.

In the end, the point is that this decision to encroach on your customers should be led by more than the prevailing multiples. It should be a function of your bargaining power, your eCommerce skills and insights, and most importantly, your ability to forsake the part of your existing revenue and trust that may go away - forever.

Published in ET Retail on October 8, 2015

Does every business need a Mobile App?

As we all know, the news is full of terms like ‘mobile-first’, ’mobile-only’, ’app-only’ and so on. Most websites one lands on are either recommending you download their app, or in some cases pushing the app. If players like Myntra and Flipkart are going app-only, if PayTM wants to do mobile-only Commerce, and if everyone else from Amazon to Ola to Uber are offering you app-only offers and discounts apart from a big incentive to download the app. Every other advertisement on the television, from Freecharge to Foodpanda, just talks of the app. It clearly looks like big-business. But is the app the only way to go?

If we can shut out the marketing noise, there’s another way to look at this - which is probably the best way to look at it. That is to put ourselves in the shoes of the consumer. Here are a few questions we should ask ourselves before jumping into the mosh pit.

• Are most of your buyers new or old to the category and your site, its promise and experience? If you’re expecting new users to download an app just to try your experience, you are expecting a lot. Once the user finds consistent repeat value in your offering, then and only then would an app be considered. I’m not talking of the case when you are paying the user a huge amount in coupons or free-rides to install an app - that’s a different discussion for later.

• Trivial point, but do most of your present and potential users have access to enough data bandwidth to download and upgrade the app as required?

• Are most of your present and future consumers use the smartphone to purchase your product or service?(note I’m not saying have a smartphone because, broadly speaking, everyone will) If the user is looking to compare tech-specs of four speaker-systems, or insurance products, is he likely to do that on the mobile screen? If your service is a research-led choice, is the mobile screen even big enough for that decision to be made? Do remember mobile customers are fickle and disturbed by calls, SMSes and chats, are frequently on the move, have varying bandwidth, and so on. So do some data analysis on existing users, and some research on potential ones.

• Does your category have the repeat-rate that demands an app? If you are a taxi provider, yes. If you’re an insurance provider, no. If you’re into real-estate, then prepare to be spend a lot to convince people the app is a better choice than web, and prepare to be uninstalled the moment the decision is made. Please don’t expect the consumer to install and maintain and not delete an app that is used once a year, or once in a lifetime - like a wedding-planner-app.

• Is your category search dependent? If all journeys start with a Google search, it may be more important to have updated web-pages for Google to index.

• Sad-but true - real-estate or screen space on the phone is quite limited. It does not allow for too many apps - apps of lesser relevance will be deleted. So do ask yourself if your app could be in the top-10 engaging and relevant apps for your target-group across all the other apps he may have installed. If you’re an mCommerce player and you feel you have the most engaging app, it may not still be enough. Do ask if you can compete with Whatsapp and Facebook for real-estate.  

• Do ask if you’re going app-only because it’s cool. If you think push-notifications will change your life, or geolocation will, or just that the consumer can refresh the page by shaking his phone - do ask consumers first how much they value these features. Do remember the Segway was cool, so was the Concorde. Both can’t be called successful by any shot. Of-course, your slick site navigation is best experienced on a native app, but does the customer make his purchase decision based on site navigation? Or is it something else, like better supply or prices? Wouldn’t you rather invest in the key drivers of his decision?

• Finally, do check with industry experts if your reasoning is on the app business is correct. The app is not simply permanent freedom from having to pay Google. It takes money to build and maintain, more money to market your way to install, app-store-rankings, feedbacks and so on. Discoverability of new unmarketed apps is limited to truly unique and extremely useful apps. If you pay for an install, to complete the loop in the first point, you could just be offering a free-ride before an uninstall happens.

Do remember the PC-web could be boring, but it’ll stay as long as laptops are selling, as long as offices are operating, as long as smartphones have small screens and tedious ways of typing long text, including 16-digit credit card numbers. If you think you can circumvent Google by an app, do remember it’s the Android app-store rankings that’ll make the app sell. You’ll still need to spend on installs and usage, so it’s just replacing a problem with another. Nothing in life, including an app-install, is permanent. The battle is never over.

So what should you do in the meantime? The best thing to do could be to gather usage and preference data from your present and potential consumers. If the mobile looks like a promising area of investment, check if a mobile site, or a responsive site serves the purpose. Then if the answers to the questions above convincingly point towards an app, the subsequent step would be to seed an app, but not go off web or mobile web.

To sum it up, do remember good Strategy is sometimes about saying no to obvious choices when they don’t make sense for you. It is also about not following the crowd and sometimes about choosing the non-fancy traditional option. If you choose to build an app, it has to fit your users and your category. If you choose not to concentrate on the web or the mobile web, then it’s more dangerous. If you choose to forego avenues of growth where most of your users are today, you’d do that at your own peril, and to the benefit of all your competitors.

Ps: The internet has long-arrived, and the TV still isn't dead. Neither is print, by-the-way.

Initially published in ET Retail on April 29, 2015
Related post: Is it Wise to go Mobile-Only?, March 8, 2015

The Mobile Conundrum - Part 2 of 2

Continued from The Mobile Conundrum - Part 1 of 2...

Let me throw in the last bit of complexity to this one. Is it really bad if we can’t solve the entire problem today? There are people, we know, who research online (“this one has cool reviews”) and buy offline (“I know the guy”). There are others who research offline (“I like the feel of the phone”) and buy online (“better price online”). And of-course there are people who do both online, or both offline. Think for a moment about a similar framework around mobile. There would be people who research on the mobile (e.g. quick-price-check) and buy on the PC. Why not build out something for them? There’s more to this.

Lots of us were brought up on plain-jane information-only websites - text and a few images. Now the mobile adds multiple dimensions to this.

a) Now almost all mobiles have GPS. Users will share geographic information when there’s a proposition (e.g. the now much touted local-deals thing). Does our website leverage this information? Have we thought about propositions here?
b) Now many phones have inputs like the accelerometer. Have we thought about how we could leverage that? If I could shake my phone to navigate, it could be cool. It could even be, like the Wii, ground-breaking.
c) We all know the app real-estate is limited, we still expect the consumer to install one app per retailer. Maybe we can start thinking about platform plays, where the front-end is built by whoever knows the user-segment best.
d) It could be time to move on from what my facebook friends like to what my phone contacts like - most of us have our closer people there, and at least some junk contacts on facebook.

Are we thinking hard on this? Or we’re opening up the field for a new breed of mobile-first operators to walk in and cash in? We should start thinking about pure-engagement providers on the mobile who may move into eCommerce and for all we know, provide a better experience than us eCommerce guys.

The Mobile Conundrum - Part 1 of 2

What, really, is your mobile strategy?

What does mobile mean to your business? I believe the answer is unsurprising in most cases. It’s like an answer to the World Peace question. It’s great, it’s awesome, it’s the future. Women, children, youth, engagement, 3G, 4G, tablets, blah and more blah.

So, what really is your mobile strategy?

I think most businesses are in denial. I believe one could get interesting results by hooking CEOs to polygraphs and asking them questions like, “is mobile happening?”, “has it already happened?”, “will it happen?”, “will it not happen”, “what is mobile?” etc, one might get interesting results, if there are any responses at all.

We guys believe in mobile and World Peace. We believe the world will be 5 or 7 inches across (sorry, did I miss out on 11”?). We believe there will be tons of mobile-first consumers. We still ask users to register. We ask them to block a userid, then we ask for an email id. Our registration page is 20 fields long. We forget all these screen-holders have a Facebook id (well, almost all, unless someone’s really trying to make a statement), all the android guys at least, if not all, have a gmail id. We forget that it is really easy for a person to have 500 email ids, but difficult (/ expensive) to have more than 3 mobile numbers. All the junk we have in our user-bases, all the waste of coupons can become so much lesser if we start using the mobile number as our identifier.

We forget the 7 inches when we give him 247,000 results for his query, images unoptimised for the mobile screen, one-time-password-flows for checkout (i.e. the user exits the app / browser, goes to SMSes, picks up / memorises / copies the OTP, exits SMS, re-opens the browser / app and feeds in the password) and so on forth. What, really is our mobile strategy? We want the user to use drop-downs, buttons close-together, images in PC-screen resolution, and browse through our jungle of tiny text and million pages with tiny arrows to click, and still feel like paying at the end? And if he does, go through the payment flow described above?

Hmm... tough one, this one, anyone?

...to be continued