Category Archives: india

Junglee and how it impacts Indian Ecommerce

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Junglee has once again got us to debate on our current favorite topic – Ecommerce. Many of us doubting that if current Ecommerce models did it right because Amazon chose an completely diagonal approach to enter Indian market with Junglee.com.

Facts first – Junglee.com has not invented product discovery and price comparison. Pricegrabber.com is one of the best products in this space for US. Shopping.com is owned by Ebay, and many other players in India as well.

There are already lot of posts talking about how Junglee has got it right and it will be the door or gateway to drive traffic and enable transactions on Indian Ecommerce sites. Well that may be true, but honestly I find this really weird, just because Junglee is backed by Amazon – does not mean it will be success or that it is the correct approach. Herd mentality thinking! I guess it is too early, driven by speculation without valid reasoning.

Google Buzz went wrong; Google+ is a disaster; Google Search plus your world is a messed up product. Facebook withdrew from daily deals, Twitter launched activity tab (silently withdrew that in new roll-out) or Netflix tried Qwikster. Point is – big companies make big mistakes.

On the other hand – Amazon has a thing of entering market at very early stage by introducing new products/verticals like AWS, eBooks, Kindle or making an very thoughtful late entry like Kindle Fire (Tablet) or by acquiring category creator or owners like Audible, Diapers or Zappos.

 

Here are some points I would want to specifically highlight about Junglee –

Competition –

  • Junglee is not competing against Flipkart or Letsbuy or any other Ecommerce player in this market at this stage. Product discovery & product transactions are distinctly different verticals., but what Junglee is attempt affects these players.
  • Junglee is not competing even against Google. With 1.2 crore products, it means Junglee will contribute more pages to Google’s search index than any other Ecommerce site in India. Most consumers will discover Junglee through Google.
  • Amazon.com has unmatched resources/experience in Search Engine (paid & natural) expertise; it clearly highlights it as one of the reasons for partners to list on Junglee. (Read point 3 here: http://services.amazon.in/services/product-ads/how-it-works/#/services/product-ads/faq/)

 

How Junglee might change the rules through discovery –

Ecommerce services have limited options of online marketing – Direct Traffic, SEO, SEM, Display Advts, Affiliate Marketing, Email & Social Media. (The funded ones get to do – TV, Radio & Outdoors). Compared to the cost associated with other formats of marketing – SEO guarantees long term and sustainable traffic acquisition mode. Overall high cost of acquisition in other formats of marketing is leveled down only through Direct traffic or SEO. Yes, Social is free but cost of acquisition is still a big proportion as users are acquired through discounting coupons.

Taking previous point ahead, SEO is pure content play and Amazon is master at that. With 1.2 crore products – Junglee will add approximately 3Mn+ pages to Google index, index size is typically 3X-4X for factors like review pages/ recommendations pages / category pages and so on. Due to this sheer size of index and high quality content placement, Junglee will quickly start rising in its natural search rankings. This will affect both – partners who has listed on Junglee and others like Flipkart who have chosen not to.

Here is why –

All products listed on Junglee (or any Ecommerce site) can be classified as two

  • Standardized catalog products (Books, Digital Cameras, Laptops, DVDs, etc)
  • Non standard products (Jewellery, Toys, Clothing, etc)
  • For standardized product like say this Canon Digital Camera – the content includes product description which is standard on every site; but will be enhanced on Junglee with recommendations, reviews and more.
  • For non-standard products like this Mayur Pendant Sapphire offered by CaratLane, despite content being exactly the same, even without reviews or recommendations – Junglee will quickly be listed above CaratLane for multiple factors, key being vastness of catalog for Pendants & Jewellery.

And this is one of the key reasons why natural search traffic on both websites listed or not listed with Junglee will be affected big time. Over time, a high proportion of natural search traffic will be taken by Junglee and will be distributed by it.

This also provides a very large opportunity for small players (including unfunded) or offline retailers (who are lost at times on online marketing) to acquire qualified users.

For those who have not listed, it makes some perfect sense to get their products listed on Junglee as they will witness a gradual decline in natural search traffic. And to get traffic & acquire those customers from Junglee – they will require to be competitive on pricing.

 

Product listings are Free.

Really? and you believed that.

Amazon is selling Kindle Fire below its cost, because it is confident that it will recover revenues of the device through content consumption. If you are thinking that Amazon will not make anything out of Junglee.com – you are wrong. When it comes to churning out online user behavior data and consumption patterns, no other Ecommerce service can do it better than Amazon.

Junglee has the entire product catalog required for Ecommerce. Soon Amazon will have all the insights it wants to know about Indian consumers – Products consumer are searching for, Product-Price ratios or even Demand / Supply for all products categories.

 

Challenges for Junglee –

A product discovery catalog with 1.2 Crore products is not easy thing and Amazon is doing this more efficiently than anyone else with its own core product – amazon.com. Challenges for updating inventory, prices, reviews or recommendations exist, but are not big for Amazon. Junglee can really force upon real-time price and inventory updates to its partners and get them to standardize it.

What would be more interesting is Amazon could localize the product – showcasing partners who can ship in least amount of time to say – Panaji or Kolhapur; deep integrate with offline retailers and help making purchase decisions – like a Apple iPad 2 is available now in Croma (2 Kms away from your location) at Rs.500 discount than buying at an online store.

From what I know – Croma maintains a list of products available for sale in every store on its central inventory management (I was once asked to visit another Croma store to pick up an mobile phone, the staff kept the last piece off shelf). Currently Junglee.com is a minimum viable product, but can Amazon get to this?

 

Where does this all lead to for Amazon – 

Two options ahead for Amazon –

  • Amazon Market Place
    If Amazon is keen – this can happen tomorrow. Junglee has the product catalog, simply enable an payment gateway and instead of redirecting traffic to partner sites, start sending customer transaction orders which its partners can fulfill.
  • Amazon Store
    Keep it slow, learn more about users / markets. And when the time is right launch a full fledge Ecommerce service.

And its very likely that Amazon will take the route two. Feel like investing in Amazon now? Ouch.

Lets Blame It on Rio (and not the Ecosystem!)

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Having read so much on blogs, forums, one on one interactions with entrepreneurs, VCs – I conclude that “Blame It on Ecosystem” is the favorite game for people in Indian startup space (both included – entrepreneurs & the investors). And the blame game continues – Entrepreneur complaining that this VC just “does not get it” when their pitch does not make it; Investors complaining that they are “yet to find a Bn dollar company” from India.

There is a lot of rant already over this topic without much reasoning. Unlike my other posts on this blog – I will not try to express any personal opinion about a business domain here; but just highlight why the Indian Startup scene is about 10 years behind Silicon Valley.

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Indian VCs don’t take risks –
Entrepreneurs have higher appetite for risk than investors. Every investment in any investor portfolio is a risk. There is a calculated risk that every VC takes, be it Indian or US investor. Indian VCs don’t take risk is a incorrect statement, the right way to put this is – risk appetite of Indian VCs is more inclined towards proven business models of west. After all a entrepreneur takes a risk with belief in his idea, VC with his money in entrepreneur’s belief to execute.

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Only Validated Business Ideas get VC invested –
OTAs, Daily Coupon Sites, eCommerce, Finance Lead Generation & similar., these are proven business models with metrics that are well defined.
– X visits result on Y transactions at average value of Z
– X spends result in Y leads and Z conversions from it

This is a low risk appetite investment, where it is not a rocket science to determine how to scale up the business and predict profitability & revenue projections. Knowing these metrics and a good team – the VC is more comfortable & confident with such investments in India.

Compare the same for an Facebook, Foursquare, Quora, Twitter, Dropbox or Evernote. If such businesses are pitched at early stage to VCs here, most of them would have no clue on what metrics to use for basis of their investment. All such platforms raised a angel round or small VC round before the metrics were clear.

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Lack of 2nd/3rd Generation Entrepreneurs –
Now why did I mention initially in this post that India is ten years behind Silicon Valley? – because Silicon Valley today has entrepreneurs & investors who have done 2X/3X exits. Living up a 2X or 3X full company life cycle till exit gives an incomparable experience, the next company they build is ‘better product & platform’ than the earlier and so on.

In India, with notables of Naukri, MakeMyTrip and few others we have started seeing first generation exits now, both Sanjeev Bikhchandani & Deep Kalra are doing the right things with spotting new investments for the next mile. To have more entrepreneurs going 1X, 2X or 3X exits, is anywhere between a 5-10 year game plan.

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Pre-Revenue Investments –
There is a big misconception that in Silicon Valley companies get funded in pre-revenue stage. Yes, they do – but not all; not the ones without strong user engagement, not the ones without a solid team behind the product or platform. And for B2B products, not the ones who have initial set of customers who swear by the product!

This might not be false for India as well. If Sanjeev or Deep Kalra want to start their next entrepreneurial journey – who will not invest?

Pre-Revenue Startups like Facebook, Foursquare and many others did not raise large investments or achieve high valuations in their first round. These companies themselves raised either an angel investment or a very low value Series A investment to start, validate their product, get users/customers and then went for a big round of investment/valuation.

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There are no Early Adopters –
Unless an entrepreneur agrees that his product is bad or not a market-fit or has not tried enough, in my opinion this is the biggest excuse. How can one justify the same in a country of 1 Billion people. In a country which easily figures among the top 10 countries by users for any successful web product in valley – from Orkut, Facebook, LinkedIn, Twitter, Foursquare, Quora and many others!

For B2C products – you have not tried enough!
For B2B or Enterprise SaaS products – did you guys not hear of Wingify or Fusion Charts or InMobi. This is digitally connected world – no one has bounded a company by geographical limits. These are proven models of product driven startups from India.

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Disconnect with Valley –
The kind of companies that are funded in India today are the ones that were funded in US about ten years back. I have no disrespect for the Indian companies – infact they are building the base for the next wave of Internet boom – exactly the same that happened with US.

With a whole lot of first generation entrepreneurs in India – we expect at least the VCs to bring an perspective on whats happening in US & other parts of the world, not the obvious answers that everyone knows. The learning from valley does not come or has not reached to many investors in India.

My point of disconnect with valley here is that many in investment community today are still unaware of Quora, Spotify, Dropbox, Evernote, Airbnb, Rovio, and so many others. In one of my meetings I had to tell a investment analyst about 500startups, Angellist and in another one that Ashton Kutcher is also a technology investor! And in one more, someone explained if a American company like Lenovo can be big in China, others too can (? – OK)! And that people in investor circles are still unaware of Yuri Milner & DST.

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No Product Focus –
There is a buzz within investor circles that the next Google, Facebook, Amazon of the world will come from India. With comfortable investment decisions in validated business models like eCommerce – post my above experiences I sincerely doubt if Indian investors will be able to spot such opportunities when it knocks your doors?

The current series of investments about eCommerce in India are a hunt to find the next Amazon. But, Amazon itself has ceased being an eCommerce company long time back, it is a product/ a platform and much more beyond all that – view Amazon’s Hidden Empire .

In US, investors invest in products & platforms; in India – they invest in companies. Huge Difference! When did you last hear of an eCommerce (leaving aside daily deals and private shopping, though a format of eCommerce itself) or Online Travel company getting funded in Silicon Valley?. If you are building a B2B or B2C product/platform company in India, all investors will be to help you with money & connections, but only handful of investors in India will be help you with product or platform – choose wisely!

Disclosure: Experience – I reached out to two venture capitalists at some point of time for role as investment analyst with experience in diverse products & platforms – was rejected outright for lack of ‘relevant experience’. No sour grapes, but I could have saved some millions for them 🙂

I am of a strong opinion that there is a huge need of in-house product & platform management advisory in many Indian venture capitalists. All ecosystem changes are driven by improvement & innovations in products & platforms, not by revenues. Lastly, it is only the consumer products that will scale up and be a billion dollar company!

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Everyone wants to invest Early Stage / Series A
Everyone wants to invest at early stage, but no one wants to take risk. So investments will happen early – but validated business models only. Some good examples for early stage investments in India are redBus, InMobi – while some good early stage misses are Infibeam (which has grown significantly larger without any outside investment).

Angels and Seed stage funds are well positioned to spot early opportunities than institutional investors.

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Premature Incubation Model
Going for a incubation model – make sure you choose the right one among the ones you are joining. Reason to say this – incubation models in US have mentors who have great experience in building products & platforms at scale. Y Combinator – has Paul Buchheit (creator of Gmail & Google Adsense), 500startups has Dave McClure (PayPal, FBfund, Simply Hired and more) and mentors from hottest companies and startups in valley; and so many others.

I have simple belief – Internet & Mobile startups are as good or as bad as the products you build. If you are choosing a incubation model – make sure it compliments your actual requirements. Last reason an entrepreneur should choose a incubation mode is money!

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The Know-It-All Attitude
This goes to Entrepreneurs – if you have, please shed away this attitude and get in a mode to learn, to take advice and asking right questions. Relationship status between an Entrepreneur and Investor is complicated – you can’t live with them or you can’t live without them, so you might as well accept them the way they are.

While closing your meetings / pitch with prospective investors – take feedback on the product, business model and the pitch. They will advice you based on their best strengths and experience, but only if you ask! In my personal experience – I managed to get some key improvements & suggestions on the product I am building.

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Please learn to say No
Entrepreneurs learn to say no to investors who do not see and agree with the vision you hold for the product.
Investors learn to say no, and fast. Entrepreneur’s time is equally important as yours! If the product does not match your investment interest – communicate it as fast as possible. Saying no immediately may not so bad; but keep a hope alive may be frustrating for the entrepreneur.

PS: Please respond faster to emails! I exchanged few notes with some of ‘the investors’ in Silicon Valley – always found a reply within 12 hours in all cases, some of them in less than 30 minutes.

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Quality of Press Releases & Coverage
The state of ecosystem is also reflected by the type of news coverage & press releases one reads on Indian Blogs. People movements – in most cases of those names who we have never heard of before, New sales office in Middle East, Forward looking statements on revenues & projections, Surveys that say the obvious in press releases, Claims & unacceptable figures, and so much more! Damn – we would like to know more about your products & platforms, everything else is just crap!

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Concluding Remarks –

Startup ecosystem is built with entrepreneurs, their companies, their early customers and then the investors. You control 75% of the ecosystem already, investors will follow. In the same context I remember one of Sameer Guglani’s tweet – “Founders r creators / accelerators, angels, VCs r service providers. our business runs because founders start companies & not other way arnd.”

The point I am trying to convey here is that if you think or perceive that ecosystem is not evolved in Indian start up scenario, stop complaining and don’t be an entrepreneur. There is no point in waiting for a right time to build your startup, the time to start is now. Get started!

Ecosystem or no Ecosystem – it did not stop a redBus, Naukri, MakeMyTrip, Flipkart, InMobi or SlideShare* to be what they are from India. Why should it stop you!

The term ecosystem means lot of other components as well. Feel free to add more to the comments based on your experiences.

 

What problems are the Mobile Payment Services trying to solve?

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When I heard of Twitter founder Jack Dorsey’s announcement of mobile payment startup – Square, I loved the simplicity of the service. Few months Jack Dorsey tweeted that Square is processing transactions worth $1Mn per day – that is a cool revenue run rate of $10Mn per year for a two year startup (Square charges 2.75% charge per transaction when paid through credit card)

With very little knowledge of how offline transactions work in US, but it is definitely a card driven economy. Coming to Indian scenario – unsure if any Mobile Payment Services company in India will declare the value of transactions it processes per day. For a country like India, although the opportunity for mobile commerce looks huge – unable to relate if existing mobile payment services are trying to solve any consumer problem.

Back in 2006, when penetration of mobile phones in India was growing at an exponential pace – with falling talk times, it was predicted that India will be one of the largest telecom markets in the world. Well, that has surely come true. In internet world – there was another wave of prediction. Analysts & Enthusiasts found another buzz world – mCommerce which was supposed to be a multi-billion dollar industry by 2010.

With time, the definition of Mobile Commerce is itself a cliche’d.

  • Is it mobile commerce when a consumer books a airline ticket online, gets a confirmation and PNR number on to his mobile number . Displays the PNR ar airport counter and gets ticket?
  • Is it mobile banking when consumer receives confirmation of debit/credit transaction on his mobile
  • Or is it when the discovery, intent & transaction for a product/service starts and ends on mobile phone?

The definition is now debatable – but with mobile communication included, online transactions and services have scored a big mile.

The proposition of Mobile Payment Systems is (or was) very simple:

  • Offline Merchants – Allow consumers to walk-in to any shop with his mobile phone, buy stuff and make payments
  • Online Merchants – Tie-Up with multiple online eCommerce/Travel portals – allow them to purchase products through their payment service
  • Own Marketplaces – Create own marketplace on mobile that combine eCommerce, travel, utility services etc and enable payments for such transactions through their own system

Honestly, this would have sounded amazing to everyone back then. Undoubtedly very huge potential – Offline retail transactions are worth billions of dollars everyday, Online Merchants wanting to reach out to very high percentage of consumers who have not come online due to lack of internet connectivity and mobile device seemed very logical, & of course with own marketplace strategy they too wanted to own a sizable chunk of users/revenue and be a destination for commerce.

The mobile boom did happen. It is very difficult to find someone these days without a mobile phone. But then why is it so rare that we don’t get to find people using mobile payment services as it was predicted earlier.

Trying to analyze why did this zillion dollar plan on paper did not translate to even millions of dollars in reality. Here are few thoughts, there may be many other reasons as well that contributed to this –

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Limited size of Market –
With 95% mobile subscription in country on prepaid, and average ARPU of less than 200 INR (& steadily declining with time) – mobile payments or transactions is definitely the last thing on such user’s mind. Addressable market for this service is considerably very small and will be a subset of eCommerce market.

Active Credit Cards in India are declining –
According to recent numbers published in this TOI report – number of active credit users in India has tumbled down from 20.7 Million (in March 2008) to 10.8 Million (in November 2010).

eCommerce Services discovered Cash on Delivery –
India is a cash driven economy and most eCommerce services have realized this by today. COD accounts for anywhere between 30% to 60% of transaction for players who have enabled it. IVR payment mechanism also has widespread acceptance for ordering directly through call center.

Banks play their own Game –
In fact they already have started playing their own game. Banks are launching their own mobile banking applications and promoting it aggressively. That leaves mobile payment services out of their own play-field.

The 3G Magic may not happen –
The 3G magic shall happen to other services, but in my opinion nothing dramatic will happen for mobile payment services companies. There is simply no connection between acceptance of 3G by consumers and why ‘new consumers’ will subscribe to credit cards or link up their bank accounts to a mobile payment service company. They will fight for existing consumers between competition and the banks.

Radical shift to app-economy –
Smart Mobiles & Tablets devices are making a huge difference to the way consumers are accessing services on handheld or portable computing devices. With advent of app-stores and in-app payment systems – the mobile ecosystem has grown more radically than any of these players would have thought about.

Money was always Mobile –
If the pain point that mobile payment systems were (or are) trying to solve was allowing consumers to do transactions wherever & whenever they want – then this consumer pain never existed. Money in whatever format – cash or card was always mobile.

 
I see and hear of Mobile Payment systems usage in India only in the context on prepaid recharges & utility bill payments. But that was not what they aimed for, correct?

To sum up the article –

  • Money was always mobile; the consumer pain point mobile service providers were trying to solve never existed!
  • These businesses were way ahead of time; and in most scenarios got investments before validation.
  • mCommerce model evolved differently and in a way that kept such players outside the ecosystem.
  • mCommerce will evolve along with eCommerce; will go hand in hand – but definitely not before.

In my opinion this vertical is classic case of ‘ahead of time’, ‘investment without validation’, and ‘dynamic changing ecosystem’. Lesson for entrepreneurs and investment managers – make sure your companies are a part of “validated ecosystem” and solves a “valid consumer pain.”

 

Search Engine Optimization or Traffic Hijacking

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Search Engine Optimization or Traffic Hijacking – What really goes on Page 2, Page 3 and beyond…
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With online advertising getting more and more driven towards performance based metrics – the ways to channelize affiliate marketing for performance have taken some interesting turns – and no one is taking a notice of this. Online marketers seem to be so focussed on just numbers through its media partners and not really on how they are achieved.
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So putting ahead here a case with its example which I discovered today. Right or wrong – I will leave it for someone else to judge! – but this might be true for many brands in India.
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But for the fact – delivery of some performance based marketing is getting blurry. It looks more like attempts of good SEO techniques exploring more than what they should have since Online Marketers are have not yet noticed it. This might be controversial – but eCommerce services and mostly travel (OTAs and Airlines) companies may be paying up some performance marketers for just no reason.
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Example – Jet Airways
There are significant number of searches for “Jet Airways” and related searches everyday on Google and other search engines. The most valid websites that user would expect are – of course www.jetairways.com or www.jetlite.com – and then there are list of websites which are without any doubt not owned by Jet Airways – that appear on Page 2, Page3, and beyond.
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Here are few of them are listed below, each one of them uniquely optimized for related search terms consumers will use while they are searching for “Jet Airways” –
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The above listed web sites are just few of the many – I did not explore much. One look at most of them – and you will realize that are built to get free extra revenue through display advertising and affiliate marketing.
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So why should a brand like Jet Airways (or your brand) worry about –
  1. Loss of Traffic
    The above websites are SEO optimized for search queries related to Jet Airways. No doubt they are ranked well, hence receive significantly higher traffic – which originally should have been received by Jet Airways website by default (in event this websites were absent).

    These websites are so well optimized that they might be taking about around 20%-30% (or more) of traffic that was meant for Jet Airways itself.

  2. Loss of Revenue
    Loss of traffic also means loss of revenue! No further explanation here.
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  3. Paying from its Pocket!
    Many of these websites are running affiliate tracking codes (mostly for Jet Airways itself) – which means indirectly Jet Airways is paying affiliate commissions for this diverted traffic originally meant for them. Are such affiliate cookies kept live for a longer period (say 30 days)? Imagine the loss of revenue.
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  4. Loss of Brand Value
    Frequent internet users directly reach destination websites, unsure how a normal internet consumer will react to this or if loss of brand value can be attributed. I landed on one of such websites today – first reaction – “What happened to Jet Airways website today?”
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So whats the big deal…
Instances mentioned above can be termed as traffic-hijacking through SEO – originally meant for the brand; but routed through another destination and then asking the brand to pay for it!
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SEO is all about playing with Google rankings – Google’s job is done when they show first 1-2 results accurately, the next results are optimized to rank better. Building such optimized landing pages by product companies like – Ixigo, Cleartrip, MakeMyTrip, Yatra, ezeeGo1, goIbibo etc should be fine – as in any case these websites clearly have a business model and have a service to offer directly to consumers.
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Disclosure –
Jet Airways is not singled out here in this post. I am a frequent flyer with Jet Airways (part of JetPrivilege for about last 5 years) and personally very satisfied till date with its services. The above example stands true for many leading Airlines and OTAs as well.
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Takeaway…
Are you a consumer facing brand in India – Google search your brand name and view each and every search result of your first 100 rankings!

Username or Email Id – Just figure it out

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Naukri & Monster, I respect both – as a service and as a product.

They both must have (and continue to) contributed to careers of many people in India. Awesome products – though I always wished their search worked better. This post is not about search – but how even big and highly used products overlook simple usability and product management basics.

Have noticed this repeatedly and wondered – why do both (Naukri & Monster) provide option to users for selecting login credentials between username & email address? Isn’t it really simple to decipher on-the-fly if the details entered by user is/is-not a email address – a email address will always contain “@” sign or a “.com” or some domain suffix?

Other critical mistakes –

  • Naukri – Homepage just missed out in labeling and pointing out the Password text-box completely. Although, it is a web standard that after Login text-box the next logical text-box is for Password; Don’t recollect seeing any other website which has taken this assumption for granted.
  • Monster – Why not provide users options to login from its homepage itself rather than taking them to different page to login. It is consumer service, or is Monster not expecting frequent repeat usage.
Takeaways – Don’t over look the basics.
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Daily Deal Aggregators – what is your business model?

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Deal Aggregators – what is your business model?
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Movie 300 – One of the most inspiring scenes, when King Leonidas asks his army – Spartans, what is your profession?
watch it here – http://bit.ly/4csyEj
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Post the series of daily deal sites that have come up in India (or across the world) – there are many deal aggregation services that have been launched. There are on going debates – is there a business model for deal aggregation services?
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While daily deals and coupon services are growing in India and else where – many users/customers of daily deals services as well as critiques of this business models have complained that people usually end up buying things that they do not want or would not have purchased otherwise. Which is little illogical because you buy it for the deep discount – and you buy it by your choice.
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My example – I am a regular eCommerce transactor – at least 10-12 product/books (non-travel) transactions per year. However I am yet to buy a deal/coupon as most services are offering deals that are not relevant to me or not close to my location. As a consumer, here is my take – I will not be interested in a coupon that gives me Rs 200 off at a restaurant in Andheri (Mumbai). The economics does not work for me, total travel time of 4 hours, commuting cost between Rs. 100 to 500 depending on mode of travel and accessibility of the service provider.
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There are two primary needs of consumers in this space that are not yet solved completely:
– Relevance of the Deals
– Location of the Deal
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While this is the problem that most daily deals and coupon services are themselves trying to address – the aggregators can do a better job at this for following reasons:
  • Most deal sites are limited to anywhere between 1 to 5 deals at any given time. That limits their reach to about 5-10 suburbs in a city like Mumbai (Mumbai + Navi Mumbai + Thane) or Delhi (Delhi + Gurgaon + Noida)
  • A deal aggregator can get such 5 deals from 5 different websites – and will have 25 deals to showcase and in most cases the span of reach will be wider – about 20-30 suburbs (which covers 40-50% of Mumbai)
The above statement is very logical, however deal aggregators now have to think beyond just aggregation and focus on distribution of such deals to relevant audience – relevancy by deals and location. At least in India, it may not be the daily deal websites that can take this business hyper-local but definitely the deal aggregators can if they wish to.
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If deal websites are focusing on – Deals in Mumbai; aggregators should focus on Deals in Andheri, Bandra, Chembur, Colaba, Ghatkopar and more!
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My two cents – Business model for Deal Aggregators should not be aggregation of deals. That is a simple job and that is minimum expected out of them. Your business model should be Distribution – distribution of deals, thats where they start testing their capabilities and adding value to the ecosystem!

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.
..

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.
.

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.
..

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

Why Indian Languages Failed to make a mark Online!

8 Replies

Why Indian Languages have failed so far to create much desired impact on Internet?

With due respect to companies & entrepreneurs working in Indian /Indic languages – let me put practical thoughts on Indian Languages proliferation in Indian Online industry. Technology is nice, great infact – we love it when we type in English and the text gets converted to an Indic language. Technology does makes us say – WOW!, but it is not enough to assume that millions of Indians will adopt it and it would bring about an revolution in Indian Internet Industry.

Revolution in Indian Internet Industry will be when about 100Mn Internet users in India grows to 500Mn (not in next 20 years, but in next 3 years) & about 1XX Mn Mobile Internet users grow to 500 Mn (not in next 10 years, but in next 2 years). Hope the revolution of this sort does happen – but will acceptance of Indic languages lead to it – answer is definitely NO! The ecology for this change is simply non-existent in India today; and is far from created.

Having worked in the Internet domain – we have repeatedly heard that Indian languages to be the next thing. These predictions actually looked more like “me-too” product offerings – thats worked-in-US will work-here-too. Because China has Baidu does not mean we need one!

Coming back to Indic languages, in my opinion – the languages space has been highly misunderstood. We saw several efforts in this direction over years:

  • Rediffmail introduced feature to send and receive emails in multiple Indian languages many years back. However the usage of this service is not more than 1% of overall service. Ajit Balakrishnan, CEO, Rediff.com said earlier – “Lets not assume that (Indian) users want Indian Languages!”
  • Microsoft started offering its Windows Operating System and MS Office Suite products with Indian language versions since last few years. The adoption rate of same is questionable – to my best positive guess it will be still <0.5% of overall installations.
  • Keyboards / Input devices with multi-lingual keyboards were at one time were hailed as innovations to drive computing to rural India.
  • Indian fonts also saw its own best days when they were introduced to the market.
  • Bi-lingual (English+Hindi) mobile phone keypads were once a rage. Nokia introduced a series of phones and around same time we saw a huge interest in mobile applications working on Indian languages

Most of these services/launches were well received, were thought and perceived to be game changers. Maybe at times even I did think in same way – but while I have studied this space and have interacted with few wise people in Indian & International scene – Can strongly put forward the conclusion that Indian Languages will NOT make a mark in Computing, Mobile or Internet domain. It will not happen very soon – the ecology for such change to happen in India does not exist.

Here are of fews considerations that makes me form such strong opinion and conclude on absence of ecology favoring Indic languages adoption:

Diversity of India:

While this is what makes us proud of India – this is one of the strongest reasons why Indic languages have failed to make a mark.

Consider emerging markets like-

  • Brazil: Over 99% of population speaks in Portuguese
  • Other Central & South American countries like Argentina, Venezuela, Peru, and many other countries have Spanish as the official language with over 90% population in these countries speaking in Spanish.
  • Similar with French – it is widely accepted in many European countries as official language.
  • Consider China – it is as diverse as India, but all most popular versions of Chinese languages are based on standardized version of Mandarin (based on Beijing dialect)

Consider India – while Hindi is leading official language, but no single language has adoption across the country. State governments have endorsed respective regional languages as official, Hindi failed to find the common ground – but English did!

How Innovation starts in Local Language:

Take market like China – The innovators, the early adopters, the influencers, the decision makers, the entrepreneurs – all of them DON’T KNOW English!  So innovators developed softwares, websites, products in Chinese; early adopters used Chinese products and so did the influencers, decision makers, and everyone else in China.

Take India – we know our Mother Tongue (our Mother Tongues are different) + we know English!

English is Aspirational language!

English is an aspirational language. Nothing official about it!

It can be confidently said that the percentage of users who will read/write/speak English language will keep growing for next 50 to 100 years. The same cannot be said about Indic languages.

How new users are learning computers:

For applying to government jobs that involve computer related work, few state governments in India have provided guidelines / benchmarks or minimum criteria based on examinations/programs acknowledged by them. Once such program with examination is MS-CIT for Maharashtra Government.

Had a chance to visit once such center – the communication with students may be in local language – however many users prefer to give examination in English language and during their classes learn computers that have English versions of Windows / Office and other software applications.

Indian languages are complex; Do not follow standard / global script:

One of the most favoring factor for languages like French, Spanish, Portuguese, etc was the fact that they followed alphabets from English language (ABCD…XYZ). No additional fonts, hardware or input devices were required to be created when uses adopted computers usage in these languages – both reading and writing.

In contrast, all languages in India do not follow standard script and are very complex to input and still be grammatically correct. To a small extent, another disadvantage is – like English we cannot drop vowels (AEIOU alphabets) to make shorted and communicable form of any Indic language, an convenient SMS lingo of Indic languages could not be developed.

Even Devanagari script is very complex to be standardized for its multiple languages on a input device like keyboard; even if it were – all languages in India are not based on Devanagari; while in China most Chinese languages have standard Mandarin script.

Internet was built on Content; Indic languages lacked adoption by early movers:

Internet was built over years – the most popular activity till date on Internet has been creation & consumption of content – through content sites, social content, or services & products that communicate through a content (language). While content was created in other global languages based on English alphabets from early days of Internet – it took a long time before content in Indian languages started appearing on Internet. By the time ability to create content in Indian languages was available – English had taken a mighty lead in its adoption as Internet’s mother-tongue for India.

In early days of Internet in India, most early adopters had English as first/second language. It made more sense for these users to adopt English language than create content in Indian languages as content was readily available elsewhere to. Most early and popular Indian websites too focused on creating content in English.

Even if they were to adopt Indic languages – the question will always be – which one to start with?

Indian Languages are great for Consumption; Not for creation!

As users we consume all regional languages through other Media – Television, Radio, Newspapers. Its very easy to consume on traditional media and the ecosystem exists for – content (TV programs, news content, audio content for radio), publishers (multiple TV channels, news papers & radio stations) and advertisers (promoting products in Indian languages). There is huge amount of content produced, audience availability & consumption, and advertiser interest.

Indic languages are great for consumption; not for creation! Ask yourself –

  • How many times have you sent an official email in Hindi? No business may deny communication in lndian language if it gets you more business – but did you send?
  • How many times have you sent an email to an friend in any Indian language?
  • How many times have you composed and sent (not forwarded) an SMS in Indian language?
  • You may talk with your friends in any language – like Hindi, Telegu or Bengali – but did you write email to them in that language?

No Rewards for creating Content for Publishers

Even if large publishers now take efforts to create content in local language – the cost & economics associated with this may not justify the efforts. The questions to ask would be –

  • Is there audience that would accept content in Indian language. If there is – are they online today?
  • Are advertisers willing to include these in media buying plans, develop creatives in multiples of Indian languages – would the right advertisements be displayed to correct audience?
  • How will they get traffic? How will they optimize for SEO? If they post an message on their Facebook fan page – will the users reply back in local language or in English?
  • The monetization – how will they?

Monetization for local language content publishers:

Should we charge consumers to access our content in local Indian languages – that will not work. The debate if content should be free or paid has been ongoing since we have known – its best concluded that content should be free as it has been.

Coming to online advertising opportunities, agencies and publishers need to take extra efforts if they have to cater most of the Indian languages – the time and effort required in doing so may not justify the returns on many metrics.

Even current large publishers like Yahoo, BBC, etc having local Indian versions of its service – feature display advertisements in English itself and have comparatively less advt spots than their English versions. Many small and medium publishers will rely on Google Adsense for revenues – but Google does not do any wonders here. No robust technology available to content sense Indian languages – and even if it were available – there are no advertisements available in languages to match up and show them in relevance. Fill rates for advt-spots would been lower and with fewer revenue generation options – small publishers will think twice before putting efforts on creating Indic language content.

Take a look at large portals in Brazil, France, Spain or China – the ecology exists with an huge array of content providers, publishers and advertisers communication through respective local language.

Literacy Rates of India:

While most predictions about Indian languages are made that it will increase penetration of Internet users in India – we forget to acknowledge the fact that there still exist an huge population that is illiterate. Unfortunately, 35% of world’s illiterate population is in India.

As of 2007, India’s youth had literacy rate of 82%, while that of Chinese youth was 98%. Literacy rates are based on an individual’s ability to read and write, not on his ability to understand or use computers! Hence the addressable Internet market in India for any language will be far lower than the entire population.

Our Generation is learning to give up Indian Languages:

Few factors around us might be making us give up our inclination towards Indian Languages. One of the strongest is influence on Cinema / Bollywood – Indian audience is bombarded with promotions of movies close to its release date, most promotions today feature names of Indian Movies in English characters!

Did you notice that – Ghajini, Dabangg, Golmaal, Rajneeti, or many latest blockbusters from Bollywood came out with posters/promotions focusing with name of movie only in English (or Hinglish). And so are television programs and contests .

While sending SMS’s even to our friends – its easier to type a local Indian language in English (Hindi + English = Hinglish), not just for Hindi but for all languages.

We are slowly learning to give up Indian Languages when it comes to usage on Mobile or Internet.

The Litmus Test for Indian Language Usage !

Amitabh Bachchan on KBC (Kaun Banega Crorepati) asks viewers a question for winning 1 Lac, users are expected to send SMS KBCQ followed by options A, B, C or D.

One fine day if he declares that only SMS in local languages will be accepted. How many users you think will send the answer as  (केबीसी क्यू क, ख, ग, घ)  or any other local Indian languages? Will there be a SMS responses go up or fall drastically?

For a simple message like this – there will be multiple variants in multiple languages.  Try composing this on your phone in Hindi or in your own mother-tongue. Now – Did you get my point about Indian Languages?

Concluding Notes:

There is definitely a pain area that has to be addressed here knowing the potential that can be unleashed will be tremendous. The challenge that needs to be addressed is not about creating a tool to translate content to Indian Languages or simplifying the creation in Indian Languages – but it is about creating an ecology that enables creation, consumption and monetization of Indian Languages!

Notes from above article:

  • Indian languages are based on complex scripts – it may be easier to read content, but not to create it.
  • There is no common ground for one Indian language – hence English takes a lead and will continue to.
  • Although there are technology innovations that lets one type in English and then auto-translate in a local language – but the minimum criteria to use the same is knowledge of English!
  • For Indian languages – it would definitely be the Mobile Story! Mobile Penetration in India is already about 50% of entire population – is the rest 50% a addressable market is questionable – even the new mobile operators in India have to prove themselves.

But with Indian youths – 82% literacy rate and high mobile penetration already are key factors. A solution for proliferation of Indian languages usage needs to be out before English becomes the De facto communication medium and an lost opportunity for Indian languages!