Tag Archives: sku rationalisation

Size Matters? How Does App-Only Fit In?

17 Jul

Appified

Last week, my Facebook newsfeed was filled with posts like these:

– As an inveterate online shopper, (can’t remember the last time I bought at a physical store/grocer/mall) I am appalled to read Flipkart will soon go mobile-only. I don’t care what their analytics team says. To browse/drool/look/re-look on a teeny 3*5 screen….yikes! How terrible the experience is likely to be!

And a sample of some comments:
– …did you order that from the cell phone? I did try ordering from the cell phone and gave up half way.

– …Agree totally. Refuse to shop on the mobile:)

– …Totally agree – no matter how good the mobile app is, I can’t imagine peering at stuff on my phone screen and trying to figure what to buy

– …Interesting . ..have they done their research right with the correct tg?

– …The experience is beat when I use all my senses to see, hear, touch, feel, taste and smell the physical product. Even with books, I love to browse through every chapter before buying. Perhaps you may call me old-fashioned and not abreast with the times.

Here’s another one:

First Myntra, now flipkart! I am not ‘appy

With its comments:
– …I think they are moving way too early. It will be a while before the phone replaces the desktop in terms of Internet surfing. Myntra already recorded drop in sales after they moved. Not sure how it will end up for Flipkart.

– …Agreed …while I use the phone for a bunch of apps, I still like the exp of sitting on my desktop / laptop to shop.

– …Ha,, ha They are making sure that users land up with nice neck, shoulder, hand pain… they should soon start another division for treating their loyal users!! why is it that human factors are not considered with technology advancement?

Then my husband, who was tracking a gift order I had placed on Amazon, told me – It’s been despatched. When I said – where from? Bangalore or Delhi? He said, just a minute – lemme check on my laptop 🙂

Not only normal people, but “experts” are debating this – HuffPost carried an article on why this move could be a potential disaster for Flipkart; while of course other folks are hailing this move as a harbinger of an app-only economy in the fastest growing app market in the world!

myntraflipkartapponly

This move should make folks like my friend Debjani, whose company zineone has bet completely on a mobile ready world, and who makes very cool app support software for enterprises, happy and vindicated.

But clearly, many many people (users) are not.

The big reason really seems to boil down to size! Tablets/ Phablets notwithstanding, it IS so much better to see a 14 or even 11 inch screen than a smaller one. The whole experience changes significantly! Scale, in all its manifestations, we all know the benefits of – economies; distribution synergies; skill specialization enablement; technology consolidation; etc etc…infact, even in the new digital/ e-comm & m-comm economy, we are seeing actions and transactions that reflect the desirability of scale and size – you see companies consolidating, take overs and buy outs – which will eventually I’m sure result in a shakedown.

Other Side of the Coin?: You know, it’s interesting, that I actually started writing this post (with the same first part of the headline) a few weeks ago – and at that time, it was going to be an “anti-size” post!

What prompted it was I guess the time of the year – it’s back to school time, and most people my age have kids leaving home to go to college for the first time – parents thus facing shrunk households. This always, but always, leaves my tummy churning, with a dreadful sinking feeling – I just vicariously go through the whole empty nest thing, and badly so (I still thankfully hv a few years before this hits me – one of the few advantages of a late marriage). And the thought came to me – looking at all these large 5000 sq ft houses, what are two old people (and in some cases, a dog) going to do, rattling away in these houses? Maybe they should de-size/ de-clutter/ scale down!

Achu

It also struck me, when after visiting a friend’s lovely spanking new, set in a 1 acre plot house, built in the beautiful traditional Kerala style, with a drool worthy Prof Higgins like library, my husband told me – hey, let’s buy a plot there. And it struck me, there’s really no end to this – bigger house, bigger car, bigger salary, bigger bank balance, (and bigger tummy to go with it!); and, actually, rather than buy a plot there – I did kind of anti-action – convinced my husband to sell off one of our (bigger) cars. So, we learn to survive with just the one (we’re managing fine btw, the Ubers and Olas have made life so much easier)

See, one gets faced with it actually even in business – after expanding the no. of items on offer, a retailer almost always goes through a phase of SKU rationalizing; large companies, after many M&As, get down to downsizing; many larger size packages of consumables start getting sold in smaller and smaller “trial packages” (sachets being of course the Indian success story to aid purchase in a low Per Capita Income society.) It is no secret that none of the Big Pharma actually now have a super cool pipeline, it’s the smaller boutique Biotech and Pharma companies that are doing all the meaningful research to bring potentially blockbuster drugs to market.

Incidentally, even downsizing is not easy. Read this interesting POV on retail store resizing problems.

Dino Extinction

It is said that Dinosaurs went extinct because their bodies scaled up disproportionately as compared to their brains; (and it is said that human beings will become extinct because our brains will become too big as compared to our bodies!)

So maybe it is a circle of life thing. One is small, then wants to become bigger, so expands. When one is too big, one has to reverse direction and cut down. Anti Size! ….One is single, then gets married, then has kids, then the kids fly the nest and you hunker down…anti size! 😦 ….Company gets many quarters of growth, starts becoming bigger, acquires diverse competencies, then…realizes is becoming inefficient, so, downsizes…anti size!

So, which is it to be? Big or Small? Website or App Only? Scale or Anti Size? Laptop or Phablet?

While you ponder this, I think that the defining “default” answer on “size matters” can be found in the Friends episode below. Enjoy 🙂

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Multi Channel Marketing – Distribution Expansion or Cannibalisation

25 Aug

Bricks and Mortar Retail

My young nephew Dhruv came home very agitated the other night. He is planner and brand manager in charge of the store experience of a leading lifestyle brand. They were running a promo and he had spent many hours planning for the activation – he is a geek, so has devised simple but interesting models for inventory optimization, repricing etc.

Problem – in classical copybook style, he had planned that all “unique”, limited stock, special merchandise would be sold at their own retail showrooms during their heavily advertised promo. Makes sense, right? This is where you plan your retail experience, where you keep your best trained storefront people, where you spend megabucks on displays and merchandising.

What happened — yes, you all know it! 2 days before the activation was to hit the market, he figured that the dealer network had already booked all of it, and before he could say “activate….”, that inventory had all vanished!

Gives rise to classical undercutting!

This is a common problem in all dealer network sales systems, specially in India. Long ago, when I was leading area sales for Mattel toys in one of the toughest markets in the North of India, we kinda had the same problem. There was a dominant “wholesale” market in the center of town, and one fat cat distributor who supplied to those guys. Because the wholesalers bought in bulk, they got higher slab discounts – infact, all the the distributor kept for himself was a small margin. The rest of the city got supplied by other distributors, and since the retailers were smaller, they got no/ lesser trade discounts. Prime ground for channel conflict. Many retailers, who anyway visited the wholesale market for purchases of other/ less well distributed products would then get our merchandise cheaper at the wholesalers, leaving their distributors high and dry. This ugliness climaxed one fine day, when we had invited all distributors over for a meet and greet, and many of them almost came to blows!

Barbie Wall of Pink

(We did resolve this – and fairly innovatively too! But it took great guts and a strong belief in the power of our brand’s consumer pull to implement the strategy! We essentially cut down the slab discount mandates to retailers – and made the distributors accountable and penalizable for any contraventions! Would this have meant a reduction in revenues? Yes, a temporary dip – but our theory was that given the fact that we were selling a branded product in a largely unbranded products’ market, anyway, our retailers stocked our products only as the “hook”. Also, kind of following a not-price-led-but-brand-led version of the bait and switch tactic, they always attempted to switch the customer to a non branded – higher margin product that relied on trade push and therefore incentivized trade heavily to execute! Which meant, that all sales that we were seeing of our products were actually happening DESPITE the retailers, and not BECAUSE of them! That was the strength of our brand! Hence, crossing our fingers, we took the HUGE trade discount rationalisation step, which almost made history in trade sales!)

Coming back to channel conflict – my husband was ranting about this recently in another context. Attempting to invest some of our money in some bonds (or whatever), he asked the relationship manager of the bank what percentage interest we would get. (remember, we are so called ‘HNI’ so we merit a relationship manager who, btw, calls me everyday to give annoying snippets like – NIFTY has crashed/ the blasted ruppe is at 65 blah blah…). Imagine his disgust when the RM quoted him a rate that was – hold your breath – LOWER than that quoted on the bank’s website!!!!! (That poor RM i think didn’t get sleep that night since he was probably nursing a wounded ear – post the blasting that Manoj gave him!)

This online sales or “own store” sales vs dealer/ brick and mortar sales is a true conundrum.

Kind of rubs off on marketing as well maybe. The biggest thing that brands and companies nowadays are trying to achieve, is Multi Channel Marketing. ( we saw many RFPs on precisely this task last year). This is particularly relevant in the digital world – so, your offline presence needs to be synched to each of your digital avatars – your website/ blog/ forum presences/ social networking pages or channels. Since this is still fairly new, most brands are at the entry level of figuring this out – which largely means making sure that the visual identity in each channel is more or less similar (not as easy as it sounds – since most of these channels evolved at different times, and were probably executed by different departments within the company).

But, the true test of, and resolution to this is when you can remember the main reason behind having different channels – just greater/ higher reach. You know your customer now doesn’t have the will, or the need to – try too hard to get what she wants. So, you have to go where your customer is! This is true of the offline/ bricks and mortar space and of course online. And of course, different segments on your customers will go to different places – that is after all, the raison d-etre of distribution! So, you expand/ diversify/ have multiple avatars. Then the real way to avoid conflict is – differentiate your offering! Have merchandise as well as communication specific to each channel/ that suits the channel’s peculiarities and also that segment of your consumer that visits that channel. So, LinkedIn needs to have a more professional orientation, while Facebook can be/ is gimmicky/ polls and freebies…Dhruv’s own store needed the one off/ special merchandise because consumers come there expecting the widest range, NOT the most common!

The dichotomy though – how do you standardize visual identities/ simplify SKU hierarchies/ rationalize pricing while at the same time customizing offerings for every channel??? The answer – you do a bit of both! Have visual identities that cue the same stuff, but adapt to the channel – but DO differentiate the offerings for different channels – respect your channel – there is a reason why it is different – recognize that difference! Only then will your channel give you love back!

conflict resolution