Category Archives: eCommerce

Social Commerce is Simple

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Social Commerce is Simple. Here is how you solve it in 24 hours!

The Context of this post: Have been hearing & participating in some awesome conversations lately about Social Commerce. Someone explained me this – Transactional eCommerce is Big. Social media is where all users are today, it is already very Big.

So, Social + eCommerce = Social Commerce = Very very big!

Hence there is lot of interest today in products and platforms that are trying to bridge the gap. Analysts are predicting that its the next big thing and stating it is reaching its inflection point.

Completely agree with all that. But Social Commerce is simple, here is how you solve it.

Social commerce is Simple

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Oooops, btw did I tell you that more than $50 Million has been invested till date to solve this Social Commerce problem that merchants can do it themselves in less than 24 hours!

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The following text is not included in above presentation.

Some key insights for players in Social Commerce:

Existing ecosystem of eCommerce and Social Media is sufficient for building a Social Commerce without intermediation of players who do not add any value.

It will be difficult for a:

  • Existing social player to exploit potential of social commerce by introducing a new ecommerce service
    (Facebook or Twitter trying to build a Amazon)
  • Existing ecommerce player to exploit potential of social commerce by introducing a new social service.
    (Amazon trying to build a Facebook or Twitter)

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Most current players who are trying to build solutions are concentrating on building their own ecosystem of users & products – which is not impossible but extremely challenging. Reason being – such players do not own the products or the users (users that have more tight social connections as on Facebook & Twitter)

Unless a third situation happens – someone builds a valuable middle layer that provides affinity to both – social & commerce. As an platform in this case you need to provide enough value to users (either users from Social Media or users from eCommerce).

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One such promising player is FourSquare. They add a new value of – “checking in” to its users that are socially connected. Their current efforts are concentrated on getting these Social Connections to checkin to venues – which is demonstrated by its 6Mn+ users.

For purpose of this presentation I have kept other Social Models out –

  • Foursquare: Because its reach is still 1% compared to Facebook’s 600 Million users.
  • Groupon: It is a commerce player, but not social player. Groupon is not user engagement – view Fred Wilson’s comments here: http://t.co/p78buu0

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Drop me a mail, Available for Coffee and endless Product Management Conversations on weekends 🙂

Predictions – Biggest Exits in Indian Internet Space in coming years

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There would be multiple Consolidations, Mergers, Change of Strategies by lot of VC-invested companies by 2015.
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Product based eCommerce companies:
Lot of interest seen in recent times by VCs. LetsBuy, Snapdeal, FashionAndYou, Flipkart, and so on, Infibeam as well (though still not part of any portfolio yet). Future of eCommerce companies will depend completely on two factors:

– Internet penetration in India > 200 Mn by that time
– Improvement in eCommerce transactions (Infrastructure + User Comfort)

The rate at which investments are made are much higher than rate of growth of both the factors mentioned above – which in a way may be good – as all invested companies will act as catalyst in growth and get new set consumers on-board.

If we see an IPO exit for atleast one of product based eCommerce companies that will be awesome;  One or Two VCs in India (without naming any here) have been actively investing in eCommerce space. There may be a very high possibility that they may merge two or more portfolio companies to form an large entity, which may be just a good acquisition target for Amazon or an IPO exit.
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Group Buying companies:
Was surprised (like many others?) with GroupOn‘s decision of acquiring SoSasta. There are established players in Group Buying space, I’m sure GroupOn has seen some merit and synergies. For existing leading players like SnapDeal, Deals and You and Taggle – they will continue to grow and have to.

Possible exit for them will be Google (since they are starting with Google Offers) or an acquisition by eBay; or maybe GroupOn India may now want to expand presence with one more acquisition. Not to forget that LivingSocial will also come knocking. Now that eBay has ventured into Group Buying space – it has much higher accountability as deals are now served by eBay and not marketplace. eBay India may acquire someone if they decide to have an experienced them to execute this business vertical.

Expect one very large player to enter Group Buying space in next 1-2 months, if well executed – in all probability it may give tough challenge to current market leaders.

Unfortunately many small players will hit the dead pool (few of them have already) due to execution challenges, expansion costs, and lack of operating revenues to keep going as the model is very easy to replicate, but not easy to scale with thin-margins and high acquisition cost.
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Online Travel Companies:
Clear IPOs for Yatra & Cleartrip. Will be great exit for all invested players. GoIbibo and ezeego1 are also leading players in travel domain – Goibibo’s exit may depend on ibibo’s overall plans, ezeego1 may raise capital through markets directly bypassing VC route.

Redbus is promising, they are very high on number of transactions – ticket size may be lower compared to Airline tickets, but % margins will be definitely higher. In all probabilities – Redbus may too hit an IPO or will be an acquisition target for Yatra or Cleartrip (listed travel companies by then as MakeMyTrip has acquired Ticketvala)

I hope someone in Indian Government thinks of the opportunity of listing IRCTC on stock markets.
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Ticketing eCommerce:
BookMyShow will expand to more geographies – they have presence in Malaysia & New Zealand. To get to more such markets, they will require more capital – further investment and definite IPO candidate. Reliance ADAG is trying to make it big in entertainment through BIG – they might knock doors.
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Technology Companies:
Pubmatic (industry’s first yield optimization player) may get acquired in few years. It faces good competition from AdMeld & Rubicon Project, however none of these yield companies are focusing on small publishers (the long tail) which may be the key to larger success.

iYogi by all speculation is IPO bound. Slideshare is leading in its segment and may be a great exit story. Fusion Charts is another one that may be acquired for technology and customers; and so is Martjack.
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Advertising Networks:
Existing players – Tyroo, Komli, Ozone Media, AdMagnet and others. Do not forecast a immediate exit for these players – the number of players in this segment has been same for long time (no new entrants) – and otherwise too existing players seem to looking outside of India, are they hinting saturation of market? The frequency of acquisitions of pure advt-networks has decreased outside India (no big news in so many months?).

There is no distinct advantage over each other and offerings (if Vizisense is treated as product outside of Advt-Network). Would have been great to see an situation like AdMax Network (owns up majority market share in countries they operate – very tough competition to Google as they have leveraged on local language audience which is majority).

Google has played a flattener by opening up its unlimited inventory on Doubleclick exchange through Google Certified AdNetworks program. Post which the publisher development story may have taken some hit, but wondering why have not the Indian Advt Networks integrated on Google’s Doubleclick exchange yet – expand you publisher network!

InMobi which is now the largest mobile advt network (outside of Google/AdMob) – maybe one of the biggest exits through Nasdaq IPO. There is no immediate need for Google to buy another mobile advt network – that leaves IPO as only logical exit unless AOL, Yahoo or Microsoft realize that they haven’t looked at the mobile monetization business seriously.
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Matrimony Portals:
BharatMatrimony (Consim Group) would be going for IPO in coming times. Not aware of any investors in Shaadi.com (although there are in Mauj & Fropper), if business is profitable and there are no investor pressures – unlikely to see an IPO from them (at least before BharatMatrimony).

Read somewhere that Jeevansathi has abandoned markets in South India (not sure of this), however its already a part of listed InfoEdge group, spin-off very unlikely as numbers are reported as part of InfoEdge.
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No Clear Exits:
SMS GupShup, Guruji, mCommerce companies (PayMate, mChek and others) are few companies I am not convinced of having an clear exit strategy. (Someone do throw light on this)
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Promising Startups:
The next wave of promising startups in India will be product-driven companies. Although the eco-system to fast acceptance of technology products is not so strong right now – it will be in coming years. Emergence of interesting start-ups like Practo, Zaakpay, Grexit, emo2, Workasaur are first steps in that direction.
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Hoping to see many success in next 5 years! Best Wishes
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This opinion was posted originally as an answer on Quora at: http://www.quora.com/Which-Indian-internet-company-will-have-the-biggest-exit-by-2015

How Reserve Bank of India (RBI) can facilitate eCommerce and Online Transactions in India

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Online Payments & Transactions – one of my favorite topics. Are the volumes of Internet or Mobile Transactions important – YES!

Internet Businesses will be sustainable in India only when the volumes of online transactions in India go up, which in turn happens only when Internet Banking, Debit Card usage and proliferation of Credit Cards happen.

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Why it is must?

Not just direct eCommerce websites, but Internet Industry will grow along with that. Why I say this  because the cycle goes like:

  • Take two of the biggest spenders amongst Internet Industry – Online Travel & Matrimony Services
  • To be in business – they need Transactions (Online Bookings & Paid Accounts)
  • If consumers don’t transact online, they will not have any revenues
  • No revenues – No or lower advertising spends
  • They don’t spend – Online Advertising Networks suffer, hence publishers, and hence it affects the complete ecosystem.

In happy happy scenario – when volumes of Online Transactions are higher – you see more Online Travel Bookings, Movie Tickets, eCommerce websites sell products, Consumers opt for Paid accounts on Matrimony Services, Paid Classifieds… and everyone is smiling.

The volume of online transactions will determine how mature the Internet user base in country is. And the fate of Internet Industry lies in hands of Reserve Bank of India by ensuring facilitation of usage credit /debit cards & internet banking facilities by all scheduled banks in India.

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Some Unrelated Linkage:

Major banking websites in India (HDFC, ICICI, Citibank, SBI, Axis Bank) attract over 16.25 Million Unique visitors each month (Source: Vizisense) . That probably will be a small percentage of total bank’s user base, but going by that number means:

  • If India has 35 Million Internet users in country- a whopping 46% of internet users frequent bank websites
  • It would be still 27% if Internet user base is considered to be 60 Million and yet it is a significant number.
  • Every 4th user of Internet is a someway related to bank. This is just considering the top banks in India.

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The Scenario Today:

Unfortunately the credit card subscriber base in India is not so promising at less than 25 Million Cards issued in market and of which estimated 50% are active users.

Positives – Debit Cards growth seem to be promising for as many banks couple the same as Debit-cum-ATM card and have started distributing it to all new accounts. NetBanking user base quoted above could indicate user logins to netbanking (mostly to check balance) and not necessarily online transactions.

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RBI’s Plan of Action should be:

So what is required to be done to create an environment to boost Online Transactions in India:

Curb the loss of opportunity –

  • Many banks in India issue Maestro Debit Cards – unfortunately they are not accepted on many payment gateways
  • All debit cards are ATM Cards; but all ATM Cards are not Debit Cards.
  • There are many Scheduled and Cooperative Banks in India offering Internet Banking facilities, however most of them only for purpose of checking account balance. They need to be enabled for Online Transactions as well.

Mandates to improve Credit / Debit Card Penetration –

  • Many Scheduled and Co-operative banks operate in India., not all of them issue Credit Cards or Debit Cards or ATM Cards.
  • There are at least 300+ Scheduled Banks in India, the government should enforce up all the banks to issue Credit Cards & Debit Cards cum ATM Cards within an stipulated time frame.
  • All Non-Scheduled banks in India with 300,000+ savings accounts operating at any level – City, Taluka, District or State need to compulsorily tie-up with a National Bank of its choice to offer Credit / Debit Cards to its customer base. (Similarly to Bancassurance Models)

ATM Network Connectivity –

  • Ever wondered how you can use any Bank’s ATM card on any other? It is due to their inter-connectivity on the BANCS ATM Network. Unfortunately not all Banks/ ATMs are hooked up on this network – So no question here to guess on the recommendation.
  • How is it linked to Online Transactions? – These consumers are most likely to use ATM cum Debit Cards and are more likely to mature and move to Online Transactions

Internet Banking –

  • Scheduled Banks in India need to compulsorily offer Internet Banking facilities to its users and also ensure training terminals for same in its branches. If implemented and executed well, this might be a first hand experience for many Indians to Internet, for that matter even to Computers.
  • There are many Scheduled and Cooperative Banks in India offering Internet Banking facilities, however most of them only for purpose of checking account balance. They need to be enabled for Online Transactions as well.

Payment Gateway Infrastructure –

  • The payment gateway infrastructure in country needs to be improved – by which it means even the payment gateways need to have mandates on accepting all credit cards, debit cards and internet banking facility of all banks currently offering them
  • There has to be also a mandate to integrate such services of any new bank within 180 days of it going live.

Connectivity –

No comments on the state of Internet & Broadband connectivity in India. But that is not the point here.  Imagine you doing a transaction in a small town like Mahabaleshwar on a Dial-Up Internet Service provided by a local ISP.

Now enjoy the view:

  • From the merchant site you are directed to your Payment Gateway.
  • You enter your details on Payment Gateway and click Submit.
  • Through Visa or Mastercard switches that are located internationally of course – the same is routed to issuing bank for authorization and back to the Payment Gateway.
  • Phew., that’s not enough – Credit Cards are now 3D secured, you need also authenticate yourself again by the issuing bank and later again routed through Visa / Mastercard to record the authentication.
  • Post this you are routed back to the payment gateway and again back to the Merchant website.

Wow! And this is a world tour of some sort in 30 seconds, since by this time your transactions was routed through multiple ISPs, multiple Datacenters and multiple countries as well and all this multiple times.  So now imagine with state of (poor) internet connectivity in India, how many chances you have for connection dropouts.

One last point to be added here – even after going through all this, note that authorization of a transaction is completely left to the issuing bank and not Payment Gateway, Visa or Mastercard.

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Indian Electronic Payment Network (India Card) – Needs to be reality!

The last suggestion – RBI should possibly ensure facilitation and make roadmap for creation of an Indian Electronic Payment Network (owned and managed by Indian Government).

It is not confirmed if it will be named India Card, but RBI has plans to set up own payment processing system , as reported many times in news like this one last in Indian Express.  This is in line with China introducing its own payment network – Union Pay through its central bank – People’s Bank of China (PBC or PBOC).

There are benefits of having an Indian Electronic Payment and Processing Network only if one understands how costly it is for the banks to be a part of existing ones:

  • When a bank issues you a Credit Card or Debit Card that is endorsed by either VISA or Mastercard, the issuing bank pays some amount to either of them.
  • This issuing fees is irrespective of the fact if that card is ever used for any transaction or not. Issuing fees are higher for premium cards like Gold, Platinum, Titanium (or any undiscovered metal).
  • The issuing banks probably also pay an annual fee to VISA or Mastercard to use its payment processing network.
  • And of course, VISA and Mastercard do charge a small percentage (<1%) per transaction to the payment gateway.
  • Plus, remember some one also pays for the bandwidth consumed while completing and online transaction too

So what are the benefits India Card comes to reality:

  • The costs involved will definitely be on a lower side for issuing of cards, transactional percentage charged and annual fees for the issuing banks.
  • Government could possibly waive off all fixed costs to banks for issuing cards (that is being very positive) and earn more with transactional percentage and taxes.
  • The whole chain of connectivity issues while making an online transaction will be reduced since it can be safely assumed that all processing servers will be in India itself and would have adequate connectivity with banks and payment gateways.
  • Currently different payment gateways charge merchants between 1.5% to 4%; when this lowers it significantly, directly & positively impacts profitability of all online transaction based services.

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Sounds kewl isn’t it? But to bring that to reality is different game all together.

India Card will need complex systems for fraud detections, authorizations, authentications, refunds and many others developed by VISA and Mastercard over years. Most importantly acceptance of India Card in all countries and on all payment gateways globally.., for which India Card would also require affiliation with VISA and Mastercard.

That’s all for now. Till then – Happy Transacting! 🙂

Increasing eCommerce & Online Transactions in India

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