Is it time for Rural-First eCommerce?

Are we trying to sell English-Language classes through ads printed in English? The funny bit is, if you look around you'll find a lot of language institutes trying to do just that. It isn't just funny, it's a sad waste as well. And that brings us to our burning question. Is it time for rural-first eCommerce?

A lot of critical determinants of an eCommerce model vary between urban and rural markets. Customer evolution, internet speeds, language proficiency, retail expectations, buyer-seller-distance, supply-chain infrastructure - to name a few - vary between urban and rural areas. Hence the obvious fact that rural and urban eCommerce may need different approaches.

I'm not speaking of inventory itself - that's relatively simpler. We already know rural customers may have a stronger preference for battery life and ruggedness with respect to heat, humidity, dust and power-quality. We also know regional brands and designs may have a higher acceptance. I'm also not talking of translation or even of the different expectations (and realities) on delivery time, customer-care etc. I'm speaking of stuff that's tougher to pin down.

There is the complexity around color, font, language, dialect, idioms, syntax, imagery and visual design. If you ask typical rural populations in India, you might find they prefer the orange-colored Micromax phone with the loudest ringtone to the Vertu, and the Su-Kam inverter print-ad to the understated Apple ad. If you want to know what works for rural, look at the posters political parties make. They may not be the most elegant works of art for you and me, but they work for the rural masses- and much better than a Benetton hoarding.
And then it gets more interesting.

Rural isn't 'one' market. Urban, interestingly, may well be - most large cities turn cosmopolitan and while they do retain a bit of local flavor, urban markets tend to be more homogenous than rural markets. Each rural market may have its own unique idiosyncrasies. There is some media commonality so one may expect similar demand-trends, but the regional influences could be stronger than global cosmo ones. In the colorful south of India, people may prefer pristine whites while in the bleak Thar or Rann of Kutch, the preference may be for mirror work and applique in rich colors. Spending could me more linked to the 'actual ' harvest than the harvest festival as per the calendar. The differences by religion, caste and occupation could be more pronounced. Matriarchal and patriarchal societies could respond to different communication.

Now imagine one business that starts of by adapting its global platform and processes, and another that starts from a region, say the North-East of India - the more local business could well be better-suited for local success. Its challenge would be scale. The global business may have better scale, but if it doesn't resonate with the customer, it'll have a tough time succeeding. The business is not about - crudely put - discounting mobile-phones, wrapping them in miles of bubble-wrap and Fed-Exing them. The challenges could include the following:

• The translation challenge: from today, when everything from the website name to search-experiences and item-details are in English, how do we go to being easily understood by populations who may understand English less or differently - the answer may either lie in language adaption or in language-independence (visual / audio web etc)
• The custom-experience challenge: from uniform all-India prices, promises and T&Cs, how do we vary our promise of the best-possible for each taluk or tehsil, and how do we deliver, say, local language customer-support from a centralized location, how we get the items there and the cash back; also the business may need different measurement-norms on COD%, return-rates and so on
• The inventory challenge: how do we get to the portfolio that is closer to actual consumption
• The hand-holding challenge: how do we get people comfortable with the idea of digital commerce, where the initial levels of exposure, DIY and comfort with change vary from urban populace

The long-term game is about creating local or language-independent experiences, generating custom prices, delivery times and T&Cs on the fly, selling sattu, gamchas, lanterns and fertilizers, building financing, supply-chains and reverse supply-chains, getting customer-care to talk in the dialect and so on - while still aiming for economies of scale. A lot has become easier with soft keypads on touch-phones, transliteration and translation tools etc, but a lot more needs to be done. The big promise is that once these engines are built, they may well end-up being applied to urban niches as well.

A lot of this will remind you of the mass-customization paradigm. It is simple, but not easy.

The way ahead may be complex, but is certainly interesting. More than economic potential, it has the promise of separating the innovators from the me-too's, the talkers from the doers, the wheat from chaff - much more than the comparatively-less-complex urban eCommerce.


Previously published in ET Retail on July 29, 2015

The Dangers of Extrapolating Early Adoption

From Everett M. Rogers' Diffusion of Innovations (1962) we got this terminology around Early Adopters, and then for some reason it got even more popular than the term Innovators. Here's the classic adoption curve we all would have seen.

So what does that mean for our business? It means that the innovators and the early adopters really bring in the early majority, the bulk of our business. They give us signs on what's our likely scale, what we should get right, what we should do less of, and so on. They've taken the leap of faith with our products, so we also love them more, and rightfully so.

Everett M. Rogers' Diffusion of Innovations 1962

There are two dangers of this focus on early adoption that were called out in this article I came across recently by a gentleman called Peter de Jager, namely:

a) People do not fall into one Change Adoption Category; they drift from category to category depending on the specific change/innovation. There are no people who are always early adopters in every category, and

b) The statement "13.5% of the general population are Early Adopters" makes two related and dangerous assumptions.
        a.     complete Adoption Curve will exist for any change..
        b. It assumes 13.5% of us will embrace any change,

Evidence of the incorrectness of this statement is found in two casual observations, he says;
      a) At the height of the Hula Hoop craze, not everyone was hula-hooping
      b) Not even 2.5% of the population have bought a Segway

The adoption terms are accurate only in hindsight; they tell you nothing about how a population might respond to a change/innovation.

I found it very insightful and enlightening. In addition, I wanted to highlight something I've been trying to convince various companies on for a while. It may not be just useless to listen too literally to your early adopters, it could also be dangerous. It's like entering the weld-shop without the safety goggles and here's why.

The early adopters are called out as a separate segment in all these studies because they are different. How different? Sufficiently different to be called out separately from the majority. They think and act differently and look for different things in products or services. What may be really cool and worth paying for, for this community, may still be cool, but not worth paying for by the early majority. Concorde stands out as an example, but that probably deserves a separate dedicated post.

Peter's examples on the Hula Hoop and Segway are appropriate to think about here. One of our current struggles in eCommerce now is the same. Less than 1% of the opportunity has happened in India, there is temptation but not logic to extrapolate our learning to the entire potential community. It could be okay to do in Durables or Telecom where more than half the potential population has been onboarded. But in nascent industries, there is really no reason to believe that the other 99% will behave like this 1%.

Innovation and Attrition

They say men are known by the company they keep. I believe a company is also known by the men it keeps.

Who invented the iPhone? Most people might just say Apple, while we understand it must have been someone within Apple. A company is a set of people. Most of the intellectual property owned by a company comes from its people. This bit is clear.

If the link of innovation to attrition is unclear, let's just first establish IP = people, and then the link of people to attrition. For all companies in the world, attrition is a reality of varying proportions. Again for all companies, innovation and creation of intellectual capital is a clear part of purpose, and a strong lever of competitive advantage and sustainability. This IP, despite all the talk of DR/BCP, effectively resides in the minds of a company's employees, we know that. When we lose people, we lose IP.

I daresay it is impossible for a company to have a innovation strategy without having a strategy to retain key people responsible for innovation and other guardians of such IP. We all understand it is not very difficult to replicate innovations people see in one company in the next company they join. It is in more cases than some, easy to tweak designs to escape patent litigation. A lot of IP, especially around business innovation, as against technology, is implicit and never patented. A lot of other IP is not patented since patenting is a time-consuming process and requires you to declare and define the innovation, which is seen as making it easier for competition to access, copy and tweak the same.

Next level - it may not be real attrition, but maybe even pre-attrition loss of engagement that might prevent people from opening up their ideas for the good of the organization (or, let’s say, to further their own growth in the organization for the more self-centered ones) instead of saving up their ideas for the day they either start something on their own, or another environment that makes them feel it’s for the longer term there. Or simply provides for more respect for their ideas.

We hire people who bring knowledge with them. We value employees for their prior experience at respected organizations. We expect them to deliver results leveraging their knowledge and experience. The competition expects exactly this from our employees.

It’s high time we take a hard cross-functional look - are we really investing on ideas for our own company’s future or are we in danger of becoming a breeding ground for talent and ideas for our competition to benefit from?