Shalmoli Sarkar – Dutch Uncles

B2B Aggregators Disrupting the FMCG Distribution

Shalmoli Sarkar — Thu, 21 Apr 2022 09:42:15 +0000

The independent grocery store colloquially known as the Kirana store is a vital channel for FMCG companies also forming the bedrock for the economy, and supporting the livelihood of millions of households. Our lives now intertwined with technology have simplified tasks that earlier were cumbersome. Right from ordering food, clothes, and medicines within a click to fintech apps disbursing loans with the least paperwork, it is evident that technology has made our lives comfortable. But, sadly the influence of technology on the B2B FMCG distribution is less. According to a report by Nielsen, over the past decade, India’s 6.6 million network of small grocery stores is growing at a slower pace than the overall consumer market.

A supply chain full of bottlenecks, inefficiency, and inconsistency

The slower pace of the small grocery stores can be blamed for its fragmented market system. About 90 percent of India’s FMCG operates in unorganised channels, which comprises a million individual distributors, and wholesalers who reach over 15 million mom and pop Kirana stores serving millions of Indian consumers. With the rapid growth of e-commerce and modern retail formats, it is likely, that the fragmented or unorganised channels made of small grocery stores and independent distributors, and wholesalers will lose ground. There are several inefficiencies and bottlenecks in the supply chain process originating from small and multiple intermediaries that service the same routes and same retailers, frequently with partially loaded trucks. The distribution system is riddled with manual processes which are slow, inefficient, and inconsistent.

Besides this, there lies a challenge for credit. Small stores are cash strapped leaving them dependent on purchasing goods on credit and eventually keeping a limited range of products as compared to modern retail stores resulting in a shift of shoppers. The increasing channel conflict on pricing general trade, e-commerce, and modern trade lowers the price of products in turn benefiting the end consumer but the pressure on margins on small retailers continues to build up.

In addition to this, the distribution is mired in an inflexible supply chain where the sales plans to delivery routes alter dynamically once or twice a year. This provides no room for growth for agile reallocation of resources and with the growth of modern retail stores, the small grocery stores become burdened with higher costs to serve.

Witnessing the challenges in the supply chain the FMCG companies will attract a digital disruption that will help these companies to track, analyse and improve sales and distribution at these small outlets. They need data for outlet-level information and real-time insights on market trends that can help build their strategy.

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According to a report by Nielsen, over the past decade, India’s 6.6 million network of small grocery stores is growing at a slower pace than the overall consumer market.

B2B aggregators are bringing in disruption

A majority of the B2B aggregators witnessed that the FMCG distribution space is highly unorganised and a wide gap exists between the company and the channel partners. Aggregator platforms like Udaan, Xpand, and Creando are disrupting the FMCG distribution and changing how Kiranas operated in the past. These new-age ventures are a one-stop solution for providing an entire basket of products within a click and are empowering them through sales training and technology.

Below are how they are disrupting the conventional FMCG distribution:

Direct connectivity: These platforms help connect brands with retailers, and empower them through technology. It provides consulting to kiranas, smaller brands, and FMCG brands in the area of business strategies, sales, and marketing.
Better inventory control: The platforms act as replenishment apps based on sales trends that auto-generate the order for a retailer, and reduce salesmen’s interaction with a retailer. It also provides information on inventory, products, and input on sales and management.

Providing credit: Aware of the fact that small retailers are cash strapped, the platforms can provide credit for buyers and sellers and also offer the facility for doing hassle-free transactions online. They have partnerships with other financial institutions to extend credit facilities on its platform.
Predicting perishables: Perishable items like vegetables or fruits, have a short shelf life but using predictive analytics these platforms can accurately predict the demand for various categories of food and non-food items and source the right supplier.

Fair price: The emergence of e-commerce and most FMCG brands going D2C are attracting consumers with deep-cut discounts and slashed prices, thereby creating channel conflict. The buyers in an offline wholesale market are unsure if the products are sold at the right price. B2B aggregators ensure fair prices, reliability, predictability, and quality. The price is fair for everybody since the retailers are not under the clutches of middlemen making the entire transaction reliable.

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How Mattress Brands should Market Themselves?

Shalmoli Sarkar — Fri, 01 Apr 2022 12:32:02 +0000

Rewinding the time machine to the early and mid-2000s Kurl-On, India’s then sole player in the mattress industry made a commercial that threw a question about having a good night’s sleep to its audience. The commercial portrayed individuals belonging to all age groups yawning at the odd hours of the day.

Cut, to 2022 today’s mattress is more than about a good night’s sleep and yawning during the daytime. The mattress industry largely dominated by the unorganised players, which use cotton material as a filler is witnessing the entry of organised players and is poised to grow at a CAGR of 10 percent to become a market worth $2.5 billion as per a Redseer report. As disposable incomes rise, and people become more considerate about health they are focussing more on the comfort and functionality of the product.

Pandemic has led to sleeping disorders

With the corporate rat race becoming fierce, the sleep cycle of Indians already went disturbed which further aggravated the outbreak of the virus. The anxieties surrounding health, finances, a slump in business, and reduced incomes topped with abrupt lifestyle changes like going to bed late brought irregularities in people’s sleeping patterns. Many complained of having insomnia, sleeping hours getting reduced, and difficulty in falling asleep. The mattress brands in line with the changing times should include innovative marketing strategies to gain traction. Mattresses are no longer considered consumer durables but they indicate the quality of life. Here is how they can do it.

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The mattress industry largely dominated by the unorganised players, which use cotton material as a filler is witnessing the entry of organised players and is poised to grow at a CAGR of 10 percent to become a market worth $2.5 billion as per a Redseer report.

Marketing strategies for mattress brands

An easy buying experience: Purchasing a mattress online will not be welcomed by Indian consumers, since buying one requires a measurement of the bed that is to be matched with the mattress size. But, mattress company Casper solved this hassle by easing the process of buying a mattress online without worrying about the quality and measurements. It developed several unboxing videos and made easy guides, manuals, and graphics that helped buyers easily place orders on the website. An easy buying experience becomes the topic of positive word of mouth for the customers. It also offered a 100-night free return policy — no questions asked.

Sell comfort and sound sleep: Few people are aware or unconcerned that insufficient sleep deteriorates health. Most people are unaware of the number of hours required for a sound sleep. Therefore, the marketing campaign should contain educative content that strikes the correct pain points of their consumers by educating people about a night of sound sleep. It should look like your business has the solution to the problem of sleep.
Expanding the product line: For a mattress brand, the lifetime customer value is low since the mattress is a product that people will buy once in several years. There are no repeat and multiple orders from the same customer. To increase the order value, the company must develop products other than mattresses that will help sleep better. Products such as flight cushion pillows, aroma candles for sleep, sleep oils, and sleep yoga should be added to the product range directing people to people to sleep better.

Social media: Mattress brands can effectively leverage the social media user base to promote their offerings by engaging the audience in a two- way communication through quizzes, contests, and memes. Advertising on social media platforms will widen its reach as the outbreak of the pandemic has increased the screen time of Indians on social media.

B2B Market- a territory untapped for mattress brands

Apart from going B2C, the new age mattress brands should consider targeting the B2B customers as the demand for construction in both residential and institutions is on a steep growth curve in India. It should target more hotels, strike deals with builders, educational institute hostels, dormitories, etc.

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UPI 123 Pay : Democratising Retail Payments for Small Merchants

Shalmoli Sarkar — Thu, 31 Mar 2022 12:39:28 +0000

For financial inclusion of the feature phone users in India, RBI has recently launched UPI for the non-smartphone users in India to further deepen and democratise the digital payment network, especially in rural areas. Although India is on the cusp of the smartphone revolution but has a sizeable number of people who use feature phones. According to Statista’s reports, out of a total of 118 crore mobile users in India, around 44 crore people yet use feature phones and 74 crores have a smartphone with them in the country. The UPI 123 Pay will enable users of the lower economic strata of our society to effectively use digital payment who cannot afford smartphones to access UPI.

People from rural India are aware of UPI payments but want to stick to feature phones, also if they own a smartphone as a second device they do not want to keep it solely for making digital payments.

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According to Statista’s reports, out of a total of 118 crore mobile users in India, around 44 crore people yet use feature phones and 74 crores have a smartphone with them in the country.

How does UPI 123 Pay work?

UPI 123 Pay differs from standard UPI which allows users to integrate their feature phones with bank accounts to pay digitally without internet connectivity. This payment system does not require any QR scan code to pay.

Digital payments through UPI 123 Pay is a three-step process of the call, choose and pay. Through its voice-based system or IVR, users need to call 080 4516 3666 a number provided by NPCI, select their preferred language, tap the ‘1’ key on the phone to transfer money, confirm the bank name through voice-based command, again tap the ‘1’ key to transfer the amount, enter recipient’s mobile number and the amount followed by the UPI PIN to authorise the transfer. The UPI PIN can be set up on the call through debit card details before transferring the amount.

There are three more ways to transfer payment:

The second mode of payment is through an app-based channel where app functionality is offered in a feature phone.
The third mode of payment is through sound proximity where the technology is based on sound waves to enable contact and networking to make contactless payments.
The fourth mode of payment can happen through a missed call where users can send a missed call and will get back a call to authenticate by inputting a UPI pin and carrying out the payments.

The central bank has also launched a 24*7 helpline for digital payments – DigiSaathi

How will UPI 123 Pay benefit small businesses?

For small merchants in India, the launch of UPI 123 Pay is poised to become a gamechanger, since the payment settlement time through cheques takes up to 48 hours, and if there are bank holidays, festival holidays, or weekends the settlement period might extend up to 6 days. Hence, managing cash becomes cumbersome.

Also, this feature in non-smartphones will allow the SME business to flourish, explore more new markets, channels that took a backseat for not using digital payments. The UPI 123 Pay makes the facilities under UPI now accessible to the lower rungs of the society which were so far excluded from the digital payment landscape.

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Zomato’s 10 Min Delivery Model : Is it Far-Stretched?

Shalmoli Sarkar — Wed, 30 Mar 2022 08:35:12 +0000

As Zomato’s Deepinder Goyal announced his ambitious aim of achieving ultra-fast delivery within 10 min delivery on Twitter, it drew immense flak from netizens. Most stand-up comedians took to their social media handles to make hilarious and sarcastic digs by showing ordering a dish on Zomato’s app but the delivery guy knocks on the door within 10 min to only deliver the ingredients such as vegetables, oil, and spices of that particular dish.

Besides, social media, Zomato’s 10 min food delivery feature has invited criticism from delivery personnel, the restaurant community, and the industry leaders in the ultra-fast delivery space. Delivery partners find that delivering in 10 min is impossible since even delivery within a 1 km radius takes 15-min, in addition to this the skyrocketing of fuel prices and food consumes a significant Rs 300-350 of their meagre daily earnings and will leave them with a net income of Rs 550-600.

Hotel owners who serve momos and biriyani found the 10-min delivery to be far-stretched since proper packaging and preparation of dishes alone takes a good 4-5 minutes leaving only 5 min for the delivery guy to deliver, which also raises safety, rash driving concerns, and undue stress to achieve the same.

Pros and Cons of Zomato’s 10 min ultra fast delivery

Pros

Quick deliveries do not mean equal rash or fast driving

To many, the 10 min delivery promise seems to be a marketing gimmick. When we hear about faster deliveries we perceive an Indian road to be full of traffic jams. But, Zomato is exploring several models where it will utilise warehouses of its B2B supplies or rent out new facilities. It is exploring possibilities where restaurants can supply and select menu items directly by partnering with multiple restaurant partners and cloud kitchen companies located near the locality. This reduces the time to deliver.

Data will help in faster deliveries

Data will help Zomato realise its dream of faster deliveries. The data set from the restaurants and locality will help Zomato accurately predict the kind of food dishes that might get sold where and when in the future. The acquisition of Blinkit (formerly Grofers) will help the food aggregator effectively capitalise on the customer data generated from buying groceries through the app. Moreover, the ambitious plan can be brought to fruition if Zomato has the required technical expertise and back-end tools for effectively capitalising on the pool of logistics which already exists and delivering food within 10 minutes.

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According to NewVoiceMedia’s report, poor customer service in a business costs losses worth $75 billion annually.

Cons

Deterioration in food quality

The concept of faster deliveries is a foreign one that more appropriately suits the American audience. The American culinary consists of salads that require minimum usage of heating and cooking.

In addition to this, there is a high probability that in a hurry to reduce the food preparation time the food might not be freshly prepared but stored in a half-cooked state until the order comes in. Pre-cooked or pre-stored food is repeatedly heated loses its nutritive value and aroma thereby compromising the food quality.

Putting Zomato in a bad light

The visible cons of this quick delivery are the concern for road safety and human life. Post pandemic people appreciate businesses that are socially and environmentally conscious than ventures reckless and indifferent about their employees. Consumers want to remain loyal to companies that are honestly doing the legwork of giving back to society and putting people first. Moments after Zomato gave this announcement, Twitter caught fire with Zomato’s criticism that positioned it as being insensitive, and devoid of compassion.

In the quick delivery space, Zomato is not the only company wanting to enter. Dunzo, Swiggy Instamart, and Zepto do deliver within 10 -20 minutes for most items. However, for Zomato what is to be observed is the ticket size per delivery since a small ticket size would make the model difficult to sustain. Although companies claim that they do not incentivise faster deliveries but the fact remains unchanged since most delivery people would like to rush to achieve maximum deliveries a day. Such platforms should increase the minimum income of delivery personnel. Also, the model seems to be burning investor’s money unless a premium is charged. With the emerging fast-paced lifestyle, the 10 min model will stay, but the question raises about the model’s profitability and its ability to sustain itself.

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Delhivery: Balance of Technology and Human Touch Both are Essential in Logistics

Shalmoli Sarkar — Mon, 28 Mar 2022 12:39:12 +0000

Musician Dave Caroll along with his band Sons of Maxwell came up with a trio of hilarious protest songs under the name United Breaks Guitars after he received a broken guitar after flying with United Airlines in 2008. His guitar while in United Airlines’ custody was roughly handled by the baggage handlers who threw his guitar on the ramp at Chicago O’Hare International Aiport during a layover on his flight. He arrived at the destination only to find that his $3500 Taylor guitar was brutally damaged. He had applied for compensation from the aviation company but was ineligible since he failed to claim within the 24-hour timeframe. He also underwent fruitless negotiation for about nine months. In his song, he sang how the employees of United Airlines turned a deaf ear to the manhandling. The song became an immediate hit on YouTube and iTunes upon its release in July 2009 and a public-relations embarrassment for the airline. And soon a sarcastic dig on United Airlines became synonymous with an aviation company that breaks guitars.

When people pay for expensive flight tickets they expect their belongings to be handled with care and in return, if they do not deliver as expected tends to erode their reputation. Similarly, in any logistics business, the smooth handling of shipments and parcels is integral to its success. But, for Delhivery- an Indian delivery and e-commerce logistics company rough handling of the goods seems to have resulted in harsh customer reviews. According to Trustpilot- an online customer review platform, it found 93 percent of the customer reviews are negative about the rough handling of goods. On other customer review platforms Mouthshut.com and TrackingMore, customers have expressed their harsh reviews about receiving no response and updates from the company regarding the shipment and delayed deliveries. Some people have complained about its WhatsApp chatbot that does not solve issues with its automated replies. According to NewVoiceMedia’s report, poor customer service in a business costs losses worth $75 billion annually. In addition to this, a survey from Voxware finds that 69 percent of consumers are unlikely to shop from e-commerce retailers again if an item they purchased is not delivered within two days of the date promised. This speaks of huge losses and high consumer acquisition costs for e-commerce and D2C retailers which will be about 5 to 25 times more than retaining an existing customer.

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According to NewVoiceMedia’s report, poor customer service in a business costs losses worth $75 billion annually.

How can Delhivery improve its operations?

Implement Cargo Trackers and monitoring: Logistics business is an execution game. If a significant percentage of the cargo or shipment gets damaged due to rough handling one cannot know since, the managers and business owners are not on the field to monitor and review the handling and have no information in case someone has mishandled it, which is a challenge. Therefore, the challenge can be overcome by employing an advanced, real-time cargo tracking and monitoring service.
Minimise Delays: Delivery delays in the logistics business are an existing problem that further worsened with restrictions in the pandemic. To minimise late deliveries the business must have diversified supply bases and alternate shipping routes as contingency plans for when troubles arise. To minimise delivery delays, businesses should look forward to adopting micro-fulfillment centres, and cross-docking. Let us peek a little deeper into what do the above ones mean-

a. Microfulfillment centres: Micro-fulfillment refers to small-scale distribution centers positioned closer to the end-consumer.

b. Cross-docking: in a cross-docking facility, the main function of the distribution center is as a place where goods quickly move through to the next stage of the shipping process. Storage space is minimal, and everything must be carefully organised according to inbound and outbound shipments.

Prevent tampering of goods: while goods are in transit they change several hands and pass through several different partners, employees, therefore one cannot figure out if the package has been tampered with. Tracking tampered packages or parcels becomes a challenge, where blockchain integration comes to the rescue. Blockchain integration is backed with real-time sensor data that ensures the integrity of the supply chain and prevents any unauthorized manipulation of cargo.
Chatbots are not enough: Several consumers have complained about Delhivery’s WhatsApp chatbot giving out replies for solutions for predictable problems. In chatbots the solutions offered to the problems are mechanised, and when there is an occurrence of complex or technical questions, consumers would like to speak with a live agent. As per NewVoiceMedia’s survey, 86 percent of customers feel that an emotional connection with a customer service agent is likely that customers will continue to do business.

Seamless warehouse management: Seamless warehouse management is the need of the hour for every logistic business. There have been common instances where customers are found complaining that the goods have reached a wrong destination, no updates, incomplete orders, etc., these are errors which if not regulated can be costly. These can be avoided with the help of effective and updated warehouse management systems. Implementing new warehouse technologies such as mobile apps for picking, automated picking and packing systems, voice picking, develops a system of checks throughout the process that can reduce errors and streamline processes. Assuring that warehouse staff is well-trained and that policies clearly state where and how the product is to be handled reduces the risk of error.

Therefore, the key takeaways are that the logistics business should not lose sight of human connection. There should be a balance of both technology and human interaction. Nonetheless, technology will certainly aid the business to simplify, speed up and enhance customer services but people will never forget how in their time of need you made them feel. The art of regularly communicating and sending updates to the consumers will further increase their loyalty to the business.

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Razorpay’s Fifth Acquisition with IZealiant – A Gamechanger for the Banking Industry

Shalmoli Sarkar — Fri, 25 Mar 2022 12:37:16 +0000

Digital payment in India has witnessed a steep growth curve in the past few years where 48 billion digital transactions alone were recorded in the calendar year (CY) 2020 despite the COVID-19 pandemic and its effect on the economy, according to PwC. Indian banks and financial institutions are leaving no stone unturned to adopt advanced, flexible, and secure solutions to fulfill the expectations of an evolving customer. Realising a demand for this, recently fintech major Razorpay announced its acquisition for an undisclosed amount to I -Zealiant Technologies, a leading fintech startup that provides mobile-first, API-enabled, and cloud-ready payment processing products for banks and financial institutions.

Failed digital payments with Indian banks

The steep rise of digital payments in India can be owed to the increasing number of mobile device users. According to PwC, digital transactions in 2019-2020 amounted to Rs 3434 Crores and grew at an annual growth rate of 44.1 percent. The months of November and December 2020, alone witnessed more than 2.2 billion UPI transactions. However, with daily high volume digital transactions taking place, there are several incidents of failed digital payment due to technical issues arising from infrastructure, network outages, and server downtimes that affect customer confidence and satisfaction. In 2020, five of the top ten banks had a technical decline rate of 1.8 percent 2020. An RBI report necessitated the improvement of system design, monitoring, and architectural changes to address the issues of technical decline.

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According to PwC, digital transactions in 2019-2020 amounted to Rs 3434 Crores and grew at an annual growth rate of 44.1 percent.

How will Razorpay’s acquisition help?

This acquisition of Razorpay will help pursue state-of-the-art payment banking technologies that can not only meet evolving business needs but also tackle some of the financial industry’s most complex challenges. Izealiant will deploy its ‘ZealPro’ product suite in Indian banks through Razorpay. In addition to this, The ZealPro product suite has been deployed in over 50 banks across 18 countries, processing millions of transactions. It consists of five digital products such as :

Zeal TX3: Transaction acquiring, Authorization, and Switching to interchanges and core banking.
ZealCim: Consumer onboarding, Debit, and Prepaid card production and managing programs for consumer spending patterns and manage card insurance.
ZealWay: Offers payment aggregation with payment Gateway, QR Payments, MPOS, Mobile Payments, and Merchant Integration.
ZealMux: Defines, configures, onboard retail and online merchants to accept transactions and settle merchant payments seamlessly.
ZealMac2: Offers Multi-factor authentication with 3DS ACS, 3DS Server, and 3DS SDK that is certified for Verified by Visa, Master-card Secure code, and American express Safe key programs. & Mobile Token. It supports the authentication methods like OTP, Password, PIN, 3D secure, challenge-response, and a Mobile token that can be configured as per the customer’s requirements.

Razorpay’s acquisition will be a game-changer for the banking sector and its 8 million customer base that includes names such as Facebook, Ola, Zomato, Swiggy, and Cred. Combining payment abilities with IZealiant’s high-performing digital payment solutions, Razorpay can expand its business by developing advanced, flexible, and secure solutions payments experience for its banking customers. Before this acquisition, Razorpay had acquired Malaysia-based fintech firm Curlec, TERA Finlabs, (AI-based risk tech SaaS platform) in 2021, Opfin (payroll and HR management solution) in 2019, and Thirdwatch (fraud analytics AI-platform) in 2018.

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India’s Tech Industry Keen to Set Foot in the Global Markets

Shalmoli Sarkar — Thu, 24 Mar 2022 12:39:12 +0000

2022 has been a watershed year for India’s tech industry that according to Nasscom’s recent strategic review report has registered a revenue growth of 18.7 percent to $13 billion. Tech industry’s revenue growth in 2022 has been by far the highest y-o-y in a decade at 30 percent. In addition to this, the domestic consumption of the tech industry alone clocked a growth multiple of 1.2x over pre-pandemic levels to reach about $50 billion and not to forget the exports that contributed 17.2 percent growth year-on-year with a revenue of $178 billion. The digital transformation in Indian businesses was supposed to happen within 9-10 years but has been catapulted by the pandemic that forced the majority of Indian enterprises to pivot their business models to online mode, adapt products and services to emerging markets and customer needs and collaborate efficiently in remote work culture.

Factors behind the growth of India’s tech industry

Increase in the adoption of cloud: Platformisation and XaaS in 2022 have been instrumental in accelerating tech adoption As per a report by research and consulting company Gartner, Indian companies will spend an estimated $105.2 billion on IT in 2022 which is 5.5 percent more than the amount spent in 2021. A majority of large organisations and Indian CIOs will depend on external consultants to develop their cloud strategy. Therefore, one can expect increased spending on IT services by 9 percent from 2021. As Gartner’s report cloud-based software consumption alone will be one of the biggest contributors towards the 15% growth in the software segment in India, while the demand for data centre technologies will reach up to 4% in 2022. Several tech startups will enter into a scale-up mode where mainly the e-commerce space will invest more in tech to achieve operational excellence. E-commerce recorded a growth of 39 percent to reach $79 billion in 2021-22.
Upping the hiring game: India’s tech industry witnessed the biggest hiring of 4.5 lakh in 2022 out of which women were along 2 lakh thereby taking the total workforce upto 51 lakh. The industry’s people-first employee-centric” approach saw tech firms quickly adapt to hybrid work models to scale up the industry’s digital capacity/capability building program. The share of digital to total revenue currently stands at 30-32% with 1 in 3 employees being digitally skilled stamping India’s position as the Global Digital Talent Nation.
Investment in deep tech startups has grown: The deep tech startups have attracted the investor’s attention. According to Venture Intelligence, the investment in deep tech startups has grown from $5 million in 2020 to around $11 million in 2021. The range of India’s deep tech startups is wide that is focused to solve challenges that the world is currently dealing with in space, biotech, EV s, and quantum tech. Data has become the pulse of any business and is valued more in B2C startups.

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Tech industry’s revenue growth in 2022 has been by far the highest y-o-y in a decade at 30 percent.

India’s tech industry to gain a foothold in global markets

The pandemic has birthed six major global megatrends that will remain relevant for the coming 5-8 years and beyond. The trends include:

Global Talent Pool Transformation
Global Supply Chain Replanning
Global Big Tech Regulation
ESG-Led Business Models
Formalization of Circular Economy
Technology for Good @Pace and Scale
North America, Europe, and Asia are potential markets for India’s tech startups as these markets are large. But, the challenge lies in market access. Nasscom along with the government will help Indian tech companies to find customers globally, for which they are setting a target of enabling 1000 deep-tech startups out of India by 2025. There will be more than 80 mentors from the world, who will empower these startups through their great experience and connections in global markets.

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Digital Transformation: What are the Challenges for MSMEs

Shalmoli Sarkar — Wed, 23 Mar 2022 12:25:41 +0000

Known as the backbone of the Indian economy, SMEs contribute more than 30 percent of the GDP and 45 percent of all manufacturing. The malaise brought in by the virus left a spell of uncertainty to the MSMEs that forced them to innovate and adapt. The businesses had to keep aside the conventional mode and experiment with digital methods to run their businesses. The MSMEs are a thriving section where several businesses work at the grassroots or rural level where they apart from assistance in capital loans and skill development largely require technical skill development and upgradation. MSMEs are not shying away from digital transformation but now they need to take a more long-term approach to bring the transformation. A report from Mckinsey, says that the success rate of digital transformation has been less than 30 percent. Also, as per their findings, only 16 percent say that their organisation’s performance has improved from digital transformations and also equipped them to sustain changes in the long term. The MSMEs face specific social and perception challenges when it comes to the digitisation of their businesses. What are they?

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A report from Mckinsey, says that the success rate of digital transformation has been less than 30 percent.

Digital transformation: Challenges that every business owner faces

Peer pressure: Adapting to technology is sometimes a social challenge that leads several businesses to digitalisation without even knowing if it is needed. The competition around them is so fierce that it forces them to go for it. Before a business decides to digitally transform, they should ask questions such as what and how can your offerings be delivered digitally? Is the target audience tech-savvy enough to buy products through the digital medium? For instance, say a small handmade pickle business uses organically grown spices, condiments, and ingredients to make a bottle of pickle, with its target audience mainly the Indian housewives. Do you think that the business should invest heavily in an omnichannel customer experience platform to understand how a single range of products such as pickle will engage conversations among people?

Invest in big: What makes the MSMEs shy about investing in technologies that bring in digital transformation is that one should invest big. This makes the MSME owners afraid because of the magnitude of work and investment. Few businesses invest too much but fail to reap any benefits. Digitally transforming the business is a trial and error process where one needs to try out several small things before adopting a specific strategy. Experimentation with several digital ideas, collection of data, and then charting out the best plans to keep and invest.
How to begin: Most MSMEs are not aware of where to begin the transformation. Though the business owners are convinced about adopting, there is no such framework to guide them about where to begin the digital transformation and how to start. A digital strategy involves three stages, where the first stage is to digitalise the sales team, the second stage is about increasing efficiency and reducing wastage and the third stage is about using digital tools to create new business models or new products/services. e.g., a subscription service or an e-commerce platform. Therefore the SMEs must assess the stage in which their business is at and find out the appropriate digital transformation needed.

Digital transformation in MSMEs is filled with hurdles such as lack of skills, tech apprehension, and lack of knowledge of business-specific solutions. This creates the demand for technologies that are simple to understand, manage and scale. To aid in harnessing the potential of digital transformation in MSMEs, several startup and technology companies are mushrooming focused on providing new-age technology solutions such as providing, data insights, artificial intelligence (AI), augmented reality (AR), Machine learning (ML), and Internet of Things (IoT).

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Sustainable Products: How Companies Should Market It ?

Shalmoli Sarkar — Mon, 21 Mar 2022 12:43:18 +0000

At the COP26 summit, India’s Prime Minister took an ambitious pledge to reduce the country’s net-zero emissions by 2070. By taking this pledge, the government has shown its willingness to support innovation around sustainability to curb carbon emissions.
Several brands from fashion, beauty and cosmetics, food, and furniture have jumped on the sustainability bandwagon. The products of the sustainable range are highly-priced since they are difficult and expensive to create and most importantly the sourcing of raw materials makes it expensive. Natural fibres, no chemicals, cruelty-free compounds, and scientific advancement requires both investment and time making the product fall heavy on wallets. Are Indians ready to buy such an expensive product range? Well, the numbers say otherwise.

Sustainability and sustainable products are just fads?

The statistics from Capgemini Research Institute found that sustainability is on top of the customer’s agenda, around 79 percent of consumers are changing their purchases based on social responsibility, inclusiveness, or environmental impact. In addition to this, covid-19 is driving the demand for quality eco-friendly products and sustainable purchases for a better lifestyle.

However, the numbers from Statista reports, present a different story. Around 30 percent of Indian consumers think that sustainability is a buzzword and will lose importance in the future. Consumers lack trust in companies that claim to be sustainable. Around 40 percent state that the term eco-friendliness is used loosely by the brands to sell over-priced products and generate revenues by selling a small volume. According to Capgemini’s report, 49 percent of consumers said do not have any information to verify the sustainability claims made by the products. Does an Indian consumer really care about being sustainable or purchasing eco-friendly? What are brands doing to erase the consumers’ perception regarding their sustainable range of products being highly overpriced?

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Around 30 percent of Indian consumers think that sustainability is a buzzword and will lose importance in the future.

Brands and their sustainable range of products

Marketers are facing the heat of consumer scrutiny about their products being sustainable. Apparel brands and FMCG brands have been attempting to do the same. However, the awareness of sustainability is yet limited to a few customer groups. What should businesses do to drive people’s awareness in buying sustainable products?

Sustainability behaviour among Indians was seeded when there was scarcity. But as disposable incomes increased it paved the way for use and throw products. The concept of recycling and reusability got lost in the race of newer and upgraded products that accelerated the use of plastics. No matter how much we hold summits and awareness about saving the environment or take pledges about reducing plastic usage, the usage of plastic in routine life is a matter of convenience and marketers continue to attract consumers to embrace unsustainable products.

What should businesses do to promote sustainable products?

Sustainable marketing requires businesses to first admit the damage that they have caused through their unsustainable practices. They should realign their brand purpose by researching more about better business practices, reallocating resources, and developing fair treatment practices for stakeholders. The production, sale, use, and recycling should be aligned to sustainability. In addition to this, NEPA Nepa, a leading Consumer Research and Analytics company found that the meaning of sustainability to Indian consumers is not about going green but also includes aspects of equality, inclusiveness, and wellbeing. Therefore, marketers through its communication should build a system for motivating customers to participate actively in their sustainability projects. According to NEPA’s consumer survey, one in two Indian consumers understand Sustainability and are likely to continue using the top sustainable brands. As the awareness picks up, the brands first to capitalize on this theme are sure to benefit in the long term.

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PropTech, Attracting Homebuyers in the Pandemic

Shalmoli Sarkar — Thu, 17 Mar 2022 12:32:16 +0000

In general, what do we do to buy a house? We reach the site’s location and visit the sample flat, we checkout the sq. ft area, imagine the interiors to be, and then reach at a buying decision. What if we say, that information technology can now be used to facilitate the research, purchase, sale, and management of real estate transactions. Technology in real estate is something unheard of generally.

Property technology shortened to PropTech is playing a significant role in attracting millennial homebuyers to buy homes in the post-covid era. During the pandemic, the social distancing norms imposed, the businesses, education, hobby classes, and shopping quickly pivoted to virtual technologies with the real estate sector too following the suit. To remain ahead of the curve and relevant in the digital era, real estate players are transforming conventional real estate buying with digitalised methods that deliver results-driven data about their clients in real-time thereby enhancing customer experience.

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Property technology shortened to PropTech is playing a significant role in attracting millennial homebuyers to buy homes in the post-covid era.

PropTech: Technologies transforming the real estate

Here are some PropTech currently being implemented in the real estate industry.

Use of Big Data: Big data in real estate can help in cost savings and increased margins. Its predictive analysis algorithm can determine the rates of the property. In this way, the buyers can also predict the value of properties in case they want to sell in the future, compare property risks and evaluate future risks.
Virtual Reality and Augmented Reality: VR and AR technologies are enabling real estate players to boost revenues and gain more clients by providing an immersive customer experience. Integrating these technologies with the company’s website or app can send notifications to the prospective buyers to offer a customised 3D walkthrough to view a property online, resembling the real space. Such solutions also save the time of prospective homebuyers in visiting properties not present in their consideration list. Also, not just homebuyers but it saves time for people who want to rent a flat but due to lack of time are not able to visit the property locations.
Managing paperwork with blockchain: Real estate has a cumbersome paperwork trail where the agents would require all documentation between both buyer and seller or landlord and tenant. But, through blockchain, most of the documents can be digitally signed by all the stakeholders, and the records can be kept in a decentralised manner enabling transparency and efficiency.
Use of iCRM in real estate: iCRM is software that is heavily used by the real estate industry to keep track of prospective buyers. It is a good tool for the sales representatives in the real estate industry where the employee can trace back customer records in a short period and understand previous interactions with customers instantly. Keeping track of your client’s needs will develop strong relationships between them, and your company will develop strong relationships between them and your company. A better service to your customers would mean higher closing rates and improved profitability for your business.

What lies ahead for the real estate players in adopting PropTech?

According to EY, the real estate firms are realising that they need to shift to the changing technology landscape to stay relevant and gain an edge on their competitiveness. In addition to this, most millennials are now potential homebuyers who are firm believers in technology and need instant gratification, therefore adoption of technology in real estate will disrupt it to become more user-friendly, convenient, and reliable and the market more competitive in the coming years.

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