Surrender to e-commerce; OR, the Power of Disintermediation in Retail

I did the unthinkable! I did it! I ordered clothes – yes, CLOTHES – online! This, after having laughed at my young nephews and cousins, who ONLY buy online (we swear that the flipkart/ myntra/ jabong delivery guys ALL know our address better than their own! because of young nephew Dhruv, who ONLY seems to shop online – some of those exciting looking brown paper packages don’t even get opened! ) My point always was, OK, I understand buying books and music online (though even there, why would you deprive yourself of the pleasure of the lovely lovely smell of books…and, if you really want bargains PLUS better olfactory sensation – go to second hand book shops! I think I know ALL of these in ALL cities I have ever lived in, and am on first name terms with the proprietors!). But, like I said, I still get it – standard items, MRP the only basis for comparison shopping, the great deals, very often a larger inventory available than at store, sometimes the hunt for that rare book that you aren’t getting anywhere else (I’ve bought many of my Chalet School editions online on ebay and amazon), the convenience of sitting at home and ofcourse, anyway you are ever connected, so you may as well order stuff. I also ofcourse get electronics – after all, where else would you get them cheaper! Thats why after all, Best Buy is supposed to be the store front for amazon!

But clothes – that touchy/ feely/ trial-ly/ dithery-over-colour and fabric thing??? When the malls as well as old mom and pop shops are, like, right next door? Not to think of the fact that a shopping trip gives me a reason to go out and grab a cup of coffee? NEVER!

Well, famous last words – I did order some (for my daughter Riddhi’s 13th birthday). Reasons?

a) I needed to buy a dress – this is a prospective teenager! – and, I don’t know where to buy them from physically (don’t wear them myself!), so, the web is easier
b) I keep ON getting offers/ suggestions for all these online stores on Facebook/ youtube/ email – see, advertising WORKS (I have to confess, this is probably the first time online advertising has worked for me – but, who knows, maybe I have unleashed a frankenstein within me who will now become the second shopaholic Becky (of Kinsella’s famous series)).
c) My cousin – yes the one who buys everything online – and then returns many of those (which piece of logistics very often I have had to get involved in) – showed Riddhi many really nice dresses recently on which she got fab discounts 🙂
d) Given that Riddhi’s social schedule gives her no time with parents, and I am desperately looking for avenues to bond with her, we had a great fun time shopping online!
e) I got ADDITIONAL 35% DISCOUNTS on all of them! (thats the interested-in-deals-but-normally-can’t-find-time-middle-class-me speaking!)

If you look at disintermediation, it first started with the big format organised retailers who bought directly from manufacturers, creating efficiencies in the supply chain. Despite the low penetration of organised retail in India (between 5 – 10%), specially grocery stores have become quite popular in urban India, with fairly large Indian players participating in the arena. (As most folks know, FDI in retail is allowed only to the extent of 51% in multi-brand formats).

(For an older POV on retail in India, pls click here, here and here). As I wrote here, in many cases, folks still patronize mom and pop stores for reasons of relationships/ convenience etc. I used to do the same – buy green leafy vegetables from street vendors sitting right outside my house. This was because a) I felt a little bad for them, and b) because I did think they were probably supplying me with fresher/ more “natural”/ organic veges that they were growing somewhere. Imagine my horror when, one morning, I went to the supermarket – also next door – to buy bread, and saw all these street vendors lining up at the supermarket cash counters – yes, you guessed it – to BUY BUNDLES OF GREEN LEAFY VEGETABLES!!!!

I see Amazonfresh launched in San Francisco recently, good luck to them! We have our own version of direct delivery of grocery with Big Basket – lets see how that pans out. By the same promoter/ investor, we also have Blue Stone, an online jewelry outfit.

Finally, if e-commerce can also enable some good, why not? Click on this link to read more..

So, here’s to more online clothes shopping for me and the family…and less vegetables from the streetside vendor!

Sales Promotion vs. Trade Marketing; Paying vs. Incentivizing; and the Power of Relationship in Sales

As I entered my grocery shop yesterday, I saw what used to be bread and butter (pun intended) for me a couple decade ago – but a sight I hadn’t seen in a while. It was a “merchandiser”/ “sales rep” clicking away at a very nice end cap shelf display – the brand in question was Kelloggs. Clearly this was either a display contest – designed to have participating retailers give up some of their precious shelf space up to a brand in a bid to enhance impulse purchase – the payoff being, like a lottery, the possibility that they win a prize and therefore money and more importantly prestige; or was “bought shelf space”, more the norm, but a fair drag on the brands’ trade marketing/ sales promo expenses.

But that’s not the story – the story was the action of the retailer personnel immediately after the merchandiser type finished clicking – they immediately got down to restoring the end cap to its usual position – this time with some nuts/ dry fruits (depending on where you are reading this ☺ – english is a funny language isn’t it? or maybe american is… )

So, either the Nuts guy had payed more money, but the retailer wanted to participate in the contest; or the retailer was scamming both companies – greedy pig (but hey, he’s not running a business for charity ☺ ); or the nuts guy had payed more money, and the sales rep/ merchandiser had prevailed upon the retailer to “just put up the display so I can show my bosses” (remember, depending on the company’s scheme – he either gets money or prestige too!) . All scenarios are likely, but for a low margin branded product that relies more on the “pull” created by advertising/ branding than the “push” created by the retailer actively promoting its brand, it is probably the last one that is applicable.

Reminded me of my years in trade sales years ago – with Leo Mattel – a joint venture company that sold toys – more a “semi durable” category. So while there was an “impulse” element to purchase sometimes, it was also equally pre meditated sales (say for gifts); and certainly purchase occasions were not too frequent/ replacement cycles were large. I used to tour the Delhi market with a young “sales rep” on my scooter – this guy was BIG – 6 feetish, heavy – and hence my arms and shoulders always ached whenever I took him around. He was also, and I hate to sound prejudiced, but its true, blessed with one of the ugliest faces I’ve ever had the fortune to see. But every retailer that he took me to – had ONLY nice things to say about young Chakrapani – “Ma’am, please do not remove this guy from our sales beat” – basically the guy was SO good at customer service, and the retailers – an admittedly tough breed in new Delhi – found him so endearing in his mannerisms, that as one guy told me – Ma’am, I have to only look at Chakrapani’s face, and I can NOT say no to him ☺. So, Chakrapani would have done what my Kellogg’s sales rep in M.K Ahmed was doing – but he would have prevailed upon the retailer to keep the display on for longer. Sorely on the basis of his relationship!

Having said that, in an impulse purchase item, its not really a bad thing to have a front display for even a few minutes – atleast for those few minutes, the brand has grabbed eye balls! Its like when a regional sales manager in the then Gillette told the then CEO as he complimented the sales team on an excellent field visit, “but you do know that these have all been window dressed for your arrival, right?” Pradeep gave a hearty guffaw and said – yes of course, but for the 2 – 3 days that this window dressing is up, more people will tend to buy our products than they would have otherwise! And true enough, even in the less than half hour that I saw action on the Kellogg’s display, 3 ladies were fingering the K for Kelloggs boxes, and I saw atleast 2 sales being made right in front of me at the checkout!

So, yes, the relationship is very important in sales, the money tradeoff while important will not ensure action necessarily – after all, the next brand may come in and offer more money! A sales guy needs to be building those relationships at all points. This is true whether you are selling Kelloggs and Razors, or Engineering services and tech products –

As Vrinda, one of our sales people in EmPower told me, the true test of my rolodex is if when I leave this company and go to another, I can call every name here and ask them to try my new product/ services, and they will say yes! (the equivalent in the FMCG world is Balbir, a rambunctious sales guy telling me – you are truly a powerful sales manager if every retailer on your field trip greets you with cashews ☺ – nuts anyone?

For a POV on the “other side” of the coin – the dealer salesman, read this old article of mine here