Business

Incredibly Inept India

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Last month I had the chance to visit the Bandhavgarh National Park in Madhya Pradesh (MP) for a tiger safari and it was quite amazing. Bandhavgarh is a 1,500+ square kilometer park known for its large population of royal Bengal tigers and other animals like monkeys, leopards and deer. Some of the pictures taken were stunning:

I could go on and tell you how fantastic the safari was but this is not a travel blog post.

My wife and I went to Bandhavgarh with several friends and we all came back with the same conclusion that the state could do much more to generate additional tourism revenue. Tourism is a big part of the revenue for the state of MP but like so many other things in India, they get to 80% of something and feel that’s good enough.

A very simple example involves the check-in process for every safari drive. You have to go to the safari park office to get a tour guide and show your ID. This facility as you can imagine is run down and a typical Indian government office which means its crap. While our driver entered the office we sat in the the open air Maruti Gypsy (think Jeep) and on average waited 10-15 minutes. This Park office was usually 20 minutes away from the safari park gates.

Why not turn this safari park office into an amazing tourist visitor center with a coffee shop. Sell trinkets like books, t-shirts and stuffed animals for the kids. The people waiting are a captive audience who have nothing else to-do and will most likely spend money since they are excited to begin their safari journey.

Another similar opportunity to monetize is at the actual safari park gates. Many of the vehicles would line-up 30 minutes before the gates open so they can be one of the first vehicles to enter the national park. Of course, we just sat in the vehicle but again they could have built a tourist center here and bring in more revenue.

Spell check anyone? Check out the spelling for Madhya Pradesh on the back of the bus.

When I saw the above vehicle in the park with the misspelling of the state, I just chalked it up to the mantra of “hey, at least we got 80% right.” Actually, they got 12 out of the 13 letters right, which is 92% but sometimes that’s just not good enough.

  • That sign says “Zero Compromise Towards Safety”

In another attempt at getting 80% right. The sign says “Zero Compromise Towards Safety” and the ceiling above the sign is literally a clusterfuck waiting to happen. This was at the Jabalpur Airport, JLR is the airport code. And yes, another missed opportunity for monetization…JLR…as in Jaguar Land Rover (JLR). JLR is an Indian-owned company and their Land Rovers are known for their amazing off-roading capabilities and ruggedness. Yet, over the 5 days I was in Bandhavgarh I saw only one Land Rover Discovery…I mean, how is that possible???

I get it, governments move slowly but when it comes to creating more jobs and adding additional revenue to the state coffers they should move quicker to capitalize on the opportunity.

The WhatsApp Ecosystem

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Earlier this month Facebook held it’s annual developers conference and announced a couple of interesting developments for WhatsApp. Wait, what? What does Facebook and WhatsApp have to do with each other?

First let’s clear the air, Facebook has been getting raked over the coals this past year for a wide variety of issues. Then a couple of weeks ago, one of Facebooks co-founders, Chris Hughes, had an op-ed piece in the NY Times about breaking up Facebook. How many internet properties does Facebook actually have?

Surprisingly many people don’t realize that Instagram and WhatsApp are both owned by Facebook and the 3 properties together: Facebook, Instagram and WhatsApp are a social media 800 pound gorilla.

Back to WhatsApp and those interesting features they mentioned at the Facebook Developers conference. One of the biggest features is WhatsApp Product Catalogs, where users can see what products are available from a brand. This has an immense impact on SMEs that want to sell directly without going through an e-commerce platform like Amazon or Flipkart.

When I first heard about the upcoming feature I didn’t think much of it till a week ago when my wife purchased some products on Amazon.in from a brand she discovered called Pure Elements. Pure Elements is based in Mahabaleshwar, Maharashtra and uses Amazon’s Fulfillment by Amazon (FBA) service. Which means Pure Elements sends their products to Amazon’s warehouse and Amazon takes care of the warehousing, picking, packing and shipping of the product.

We received the order from Amazon and immediately realized there was an error in the shipment. Surprisingly, there was no easy way to tell Amazon that the wrong size of the product was sent. So instead, I sent an email directly to Pure Elements and they promptly fixed the issue and said that next time I should order directly. In the future with WhatsApp Product Catalogs and in-app payments via WhatsApp Payment, I could see myself contacting them directly and getting the products. And if there are any issues I can chat with them directly on the WhatsApp platform.

Currently, the alternative is that an SME needs their own company website with some dodgy payment gateway which invariably is a pain for an SME. Which is the reason why many SMEs in India prefer to use WhatsApp today for commerce even though it’s not as streamlined as it can be. These new WhatsApp features would work well for an SME such as a home baker who sells cookies and cakes.

This brings me to the ecosystem part, imagine if that SME is only going to sell via WhatsApp, then they would only need a CRM (customer relationship management) and a shipping partner. If they made it simple enough for an SME to connect to these external providers it could change the landscape. Yes, WhatsApp does have something called Business API but that’s for larger companies that have a tech team in-house.

I’m thinking something along the lines of WordPress and their entire plug-in community where users can add features to their WordPress website very fast and more importantly without any deep technical skills. A WhatsApp Plugin ecosystem could grow WhatsApp commerce transactions exponentially and spawn many new startups helping SMEs sell more through the WhatsApp platform.

Making it For India

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A couple of months ago the streaming music service Spotify was launched in India with great fanfare. I had tried Spotify about 7 or 8 years back but then they started to block IP addresses from India so I quit using the app. At first I wasn’t planning to try it again but I did and I’m so glad I did, their recommendations are spot on…no pun intended.

What really caught my attention during the launch was their pricing matrix. Yes, the monthly price is cheaper in India Rs. 119 (USD$1.70) vs the US at Rs. 693 (USD$9.99). But they also offered daily packs at Rs. 13 (USD$0.18) and weekly packs at Rs. 39 (USD$0.56) as well, almost like the FMCGs offer sachet packs of their products. Sachets – a single-use, a simple flat pouch or stick pack for powders and other runny liquids and gels.

Spotify took that concept and turned it into a digital sachet. It’s a great way to get people to try the product. This is a great example of localization of a product.

When building an app or platform and going to other markets, there is always talk about internationalization (i18n) and localization (l10n) within the technology team. 7 or 8 years ago foreign companies would sell their products in India and only focus on internationalization. For example, if an app requires a login via a phone number then they enable +91 for Indian mobile numbers.

But the trend is to go one step further and localize the app or platform for the Indian market. And that is where Spotify just nailed it with it’s very Indian pricing matrix. I’m seeing more and more companies localize for the Indian markets because that’s where the growth is as other markets are mature and growth has slowed or stalled.

UPDATE: I’ve received many emails about the confusion about internationalization and localization. For me and the teams I work with, I break it down as:

internationalization – the backend technology to enable the use of the app or platform in another country. For example: language, phone numbers, etc…

localization – the frontend that the consumer will see and you. For example: pricing, localized content, specific features for a country, etc…

The Consumer Rating Conundrum

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Remember the first time you were able to rate your Uber driver, you felt empowered. It was the coolest damn thing and for the first 30 or so trips, I would sit there and spend a couple of minutes debating what rating I should give the driver as if I was handing out a fucking Academy Award. Did the driver deserve a 5? No not really, he was speeding like Lewis Hamilton in Monaco but than his braking skills were on point. Okay, so I’ll give him a 4 star rating. Good luck next time buddy!

Now, I have a simple rule. If I get to my destination in one piece, the driver gets a 5 star rating. However, if I feel they didn’t do a good job they get a 1 start rating. I don’t have the time to split hairs between a 2, 3 or 4 star rating. In fact, it got me thinking that Uber needs to ditch the 5 star rating and just have a thumbs up or thumbs down. If you see an Uber driver with a 3.8 or 4.5 rating, do you really give a damn? I can’t really tell the difference nor do I want to spend that time analyzing his driving habits. I took an Uber so I can get some work done or take a nap before I get to my next destination. Thank you Uber, for making it my job to improve your platform!

I started to think about this entire consumer ratings system when I recently ordered a single cafe latte from Swiggy. Half the latte split and I went on Twitter to complain. After the incident, I was presented with 2 ratings, 1 for the Swiggy service and 1 for the restaurant. Again, for the delivery either you are happy or your are not. Why make the consumer rate that on a 5 star scale.

There are a host of rating systems but the grand daddy of them all is the Net Promotor Score (NPS) which is based on a scale of 0 to 10. Leave it to a consulting company like Bain & Company to come up with this beast of a system. About a year ago I got a call from a car manufacture to rate their service experience on a 10 point scale, that experience was so painful I would have rather gotten a root canal then listen to the person explain the difference between a 5 or 6 rating. I hear people always talking about their NPS score when in reality a simple thumbs up or thumbs down would be sufficient.

The 5 star rating is pretty standard across most apps, but again what really differentiates between a 3 and 4.

I recently went to a restaurant and they had a 3 star rating, which was better but then imagine getting a 2. What does that mean as a restaurant owner…people would rather eat newspapers then come to your restaurant?

In this age of liking things and attention deficit disorder (ADD), I personally think the thumbs up or thumbs down is the best system. It’s quick and easy. If you are a business owner, you can tout the number of thumbs up (or likes) you get and if you get a thumbs down you can put a process flow in place to investigate what went wrong – easy peasy.

Getting a score of 1 or 2 is just meaningless on a scale of 1 to 10, clearly the customer is not happy. Why ask them, to rate you on a scale of 1 to 10 for services:
1 = I’m so angry I want to kill you and everyone
or
2 = I’m so angry I want to kill you only

Seems illogical to me. I wish more and more companies would simplify their ratings process and make the consumers life that much easier.

Is Cable TV Dead?

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In a nutshell, yes. The reason is plain and simple – Jio and our addiction to video content. Over the past 6 months when friends get together and discuss what shows to watch, I hardly hear anyone mention the shows that appear on cable TV. Instead, it’s about the latest series on Netflix, Amazon Prime, ALT Balaji, Hotstar or other streaming providers which are collectively known as over-the-top (OTT) providers. The name stems from the fact you can bypass your local cable TV provider and stream the content directly from the internet.

And don’t even get me started on YouTube. This past week there was an article in the Wall Street Journal which talked about the rise of YouTube in India as a search engine. Want to learn how to make a cake? YouTube it. Want to learn the best way to sleep? YouTube it. YouTube voice search is perfect for India where illiteracy is high. Users can speak what information they want and then the search results are videos, where they can see and hear the content.

In fact, I’m finding the quality and content getting better and better even with more and more content creators on the YouTube platform. Just like a Google search you need to know the right keywords for YouTube. But, where YouTube really shines and keeps you on their platform are their algorithms to show you more content that you will like.

A recent example was when I was searching on YouTube for a good vlogging camera. Yes, there were hundreds of thousands of videos but after watching 4 or 5 I was able to decide what camera I needed. And in the process, I came across the YouTube channel called Camera Conspiracies. The guy is a mix of camera reviews and comedy. I’m no longer looking for a camera but I still watch his YouTube channel because the content is addictive.

So where does that leave the existing players? It will be very tough for the direct to home (DTH) providers like DishTV, TataSky and Airtel DTH because they have no real strategy to add more customers. Most of the people I know don’t even turn on their DTH box and are planning to cancel the service when their subscription comes up for renewal.

The cable operators like Hathway are also in a similiar situation but since they own the physical connection to the consumer they have the ability to implement newer technologies such as gigabit fiber to the home. In fact, Reliance backed Jio recently completed the acquisition of Hathway not because of all the users of its cable TV platform but because of the physical access they have to the consumers home. I live in a building which has both Hathway and Jio GigaFiber and I can tell you first hand, we have not even turned on the set-top box (STB) for Hathway in 2-3 months. And all that viewing time has switched to the OTT providers and YouTube.

Taxes, Tariffs, and Testarossas

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Ferrari Testarossa

A couple of days ago there was an article in the DNA newspaper, an Indian daily, discussing how the high import tariffs/duties on luxury vehicles are killing the growth of high-end car sales. Well, I can’t argue with that!

But, that’s not the point of this blog post, it’s to review why there are tariffs/duties on certain products/markets and the thinking behind it. The basic idea of a tariff on imported goods is to protect the local market and give them an edge. Some may call this protectionist or nationalist but, pretty much every country does this to protect certain industries in that country. India is no different in that regard.

India has import duties on mobile phones so that local brands like Micromax have a price competitive edge over Chinese brands like Oppo and Vivo. To be price competitive, the next logical step would be for a foreign company like Oppo or Vivo to set up a manufacturing facility on the ground in India and avoid the import duties on fully assembled phones. The premise is that even if Oppo or Vivo send a large chunk of their profits back to their mother country of China, at least Indian workers have jobs. Not only are jobs created but all the other ancillary businesses would benefit from a manufacturing facility such as retail stores, restaurants, logistics companies, construction companies, etc.

Another market that India puts heavy import duties on is the automotive industry. Again the idea is to have the local companies like Maruti Suzuki, Tata Motors and other local players benefit. My issue is that I don’t see Maruti Suzuki competing in the same space as Mercedes, Ferrari or a Lamborghini.

This is where the Indian government’s logic is flawed. Imagine you bring down the import duty to 50% then the sales of these high-end cars will increase. Again, consumers that are buying a Mercedes-AMG G63 are definitely NOT looking at a Maruti Vitara Brezza as a viable option. So there is no chance of Mercedes cannibalizing the sales of Maruti. In fact, you will be creating a larger ecosystem for these brands which will mean more salespeople, more mechanics, more spare parts, more locations, etc.

car-import

The import duties are around 240% of the cost of the car. As you can see from the above example, if the cost of the car is imported at $100,000 then you will pay $240,400 in duties. For a total of $340,400 not including registration, transportation, insurance costs and the customary flower garland that is put on new cars! And of course, don’t forget about the manufacturer and dealer margin as well.

According to the article, Lamborghini sold 26 new cars last year across India…that is pathetic for a country with a population of 1.3 billion people. I’m guessing if the duties were cut to 50%, they would sell 10x more cars and would need more infrastructure to handle it. Which would generate more jobs and taxes for the Indian government. Looking at the raw revenue numbers from the import duties is misleading since you miss out on the entire ecosystem that is created in the process.

A big thanks to Gautam Madnani of Lamborghini Mumbai who patiently answered my 754 questions on pricing! He also was the first guest on the Performalux Podcast.

Subscriptions as a Service (SaaS)

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216702_new_volvo_xc40_exteriorFor many years we have been hearing the term Software as a Service (SaaS), where software is licensed on a subscription basis and charged on a monthly or yearly cycle. Companies like Salesforce and Dropbox have built their companies on this pricing model.

In 2012, Adobe which is known for products like Photoshop and Creative Suite took a chance and decided to move from a traditional pay once license model and move to a SaaS model. The first year was a disaster for revenues and their stock price took a hit. Today, in retrospect that move was brilliant – revenues are up, more people are using their products since the price points are reasonable and software piracy has come down. With the success that Adobe showed many other large companies are moving to a SaaS model, most notably is Microsoft.

Over the past couple of months, Porsche and Volvo have announced their subscription programs for cars. The two programs are very different, Porsche charges $2000 a month and gives you access to a fleet of vehicles such as 718 Boxster, Cayman S, Macan S and Cayenne which you can pick and choose each month. The plan includes vehicle tax, registration, insurance, maintenance and detailing. This is not a lease, where you typically have a large upfront deposit and still have to pay for your own vehicle tax, registration, insurance and maintenance. The Volvo plan is for $600/month and gives you access to an XC40 SUV.

For many people the above model for cars is super. You get a new car every couple of years and the biggest issue of maintenance is solved. It’s in the best interest of the car company to make sure their cars are trouble free since in the end they will be footing the bill if something happens. Of course, what will happen to the car dealers with their showrooms?

Software and cars are not the only businesses I see where this subscription business model can be implemented, what I’m calling Subscriptions as a Service (SaaS). I envision many physical products moving to this model of essentially renting something and all the costs are covered in the monthly/yearly fee. In your home white goods like TVs, refrigerators, washing machines, a dryer or an air-conditioning unit would be a perfect fit. Yes, there are places where you can rent or rent-to-own these devices but those companies are notorious for renting at insane markups and usually do not cover the maintenance or service costs. I’m talking about the manufacturer offering these products directly on a subscription model to the end consumer under their existing brand or a new private label.

Suppose you put your property on Airbnb. You rent it out and something happens to the TV or refrigerator you will most likely have to coordinate with some local person to get those issues resolved. With a subscription service all the issues and headaches are handled by someone else.

Also, you can space out your payments and if you don’t want to rent the property for a year, you can cancel the TV, washing machine, dryer, etc. This model for white goods works brilliantly. This again ensures that the manufacturers make great products because if not, they will end up eating the cost of fixing any issues. With this shift to a sharing economy model, subscriptions for everything makes sense.

Update:
1. A great article on the history of renting white goods
2. NerdWallet series on Rent-A-Center horror stories