 "Praveen Sinha")
Saving costs and improving consumer experience will materialise only when the industry learns to share resources, Praveen Sinha tells Rohit Nautiyal
A lot has happened in the e-commerce space in the last one year - there have been acquisitions, there has been new money... How has Jabong, a late mover in the business, finetuned its growth strategy?
Historically, the first mover slows down after a point creating a gap for the second mover or other late movers to fill in the space. Research has also established that late movers have a 60 per cent success rate over first movers whose success rate is 30 to 40 per cent. As a late mover we had an advantage - Jabong did not have to go through the entire learning curve.
We have focused on a couple of things as part of our strategy. Jabong chose to stay away from selling books and electronics. With the objective of strengthening our positioning as a fashion destination, we added a number of national and international brands through the year. We have also paid extra attention to building our shop-in-shops (SIS).
While all major portals know what's selling on a minute-by-minute basis, not enough data is generated. Sharing relevant consumer insights can help e-commerce companies monetise their SISes far better than it is done today. Overall SISes have turned to be a win-win for us and our clients. While largely brands get to control the shopping experience, we are able to monetise SISes by entering into agreements with higher margins and exclusive product lines. Then, as a fashion destination, we have put together our own design team in London to mix Indian fashion and seasonal requirements with what's happening in fashion world.
Post the Diwali sale fiasco, how have you integrated your logistics and backend to be better prepared for occasions like the GOSF (Google Online Shopping Festival), and end of season sales?
Today consumers are shopping online with gusto, redefining 'peak' for us every time the industry announces a sale. Outages at leading e-commerce companies during Diwali showed how unprepared all of us were to deal with the rising consumer needs. One of the major lessons we learnt was that you cannot build temporary capacity to address temporary spurt in demand, even when it is five times the volumes your website does on a regular day. As opposed to this, all e-commerce players must understand that it makes sense to share common logistics partners to meet orders during peak seasons.
While I don't see leading e-commerce players initiating such talks with one another, it will be useful if logistics companies, temporary staff providers, warehousing companies, courier and cargo booking companies among others could join hands to establish a framework wherein e-commerce companies can share resources. For instance, company A could have X requirement on Day One and 2x on Day Two. If all the concerned partners coordinate, we can ensure that demand is met during peak seasons.
If you look at history, this is no different from how things worked out in telecom when tower usage was consolidated. While service providers benefited in terms of costs and user experience, with their expertise, the tower companies improved their managing capabilities further. Soon we will start seeing similar changes in the e-commerce space.
Last year almost every brand - from Xiaomi to Motorola - with staggering sales online had a similar story to tell. None of them could assess the high demand which eventually resulted in stock-outs. What are the areas in which Jabong needs to focus on here on?
It is still very difficult to predict demand for leading consumer products just like it is difficult to predict demand for new and established e-commerce companies. Having said that, a couple of e-commerce companies have been in the business long enough to understand how demand will spiral. There is a lot e-commerce companies can do to build that intelligence by understanding the factors that affect demand. Forecasting is one. For example, if your forecast for the peak season is 200 units and you end up doing 250 or 300 units I would consider it a good forecast. At the same time, the variation should not be double of what one has predicted. I believe Jabong has been in the business long enough to grasp this.
According to Jumio's 2013 mobile commerce analysis, payment friction, coupled with poor user experience, cost retailers close to $16 billion dollars in mobile cart abandonment in the 2013 holiday season. How serious is the cart abandonment issue in India?
Let us look at two set of shoppers when one talks about abandoned carts. One could be shoppers who are planning to buy something and as part of one of their many online window shopping sprees, decide to put items in a cart. The other set of abandoned cart creators include shoppers who are not able to complete transactions due to technical glitches. Currently algorithms are not advanced enough to segregate serious shoppers from window shoppers. One way of dealing with this challenge is to show reminder pop-ups to shoppers. Unfortunately it has been a Catch-22 situation for us. Every time we increase the number of steps in consumer interaction, the drop rate on our website goes up. In future we will continue experimenting with more ways to understand consumer behaviour.
THE ONLINE STYLIST
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At Jabong, Sinha's role encompasses looking after the entire operations capability along with supply chain management, assisted sales, finance, human resources and administration
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Before starting Jabong, Sinha worked with Microsoft, Maruti Suzuki and McKinsey. Sinha is also a founding member of Aquabrim, a start-up that provides water management solutions
- He is regarded as an expert in energy efficiency. He has worked on transformation projects across sectors like mines and steel
