The concept of e-tailing is as old as 1990’s since those days there have been pioneer in this business model and there are organizations who have also burnt fingers by entering into the e-tailing without ground work. This work is an effort to trace journey of two popular e-tailers of the history where one has come as winner all the way but another could hardly survive for couple of years.
Tesco:
In a quest to find new avenues in business, the leading retailer of UK decided to start supporting its brick & mortar business with online model. Lets see what were some of the key strength of this retail giant
1) A well established and Profitable brick and mortar business: A retail chain started by selling grocery from 1919, Tesco grew organically and inorganically over the time. Like its counterpart Walmart and Target , it started transferring the savings gained by volume purchase to its customer and gained instant popularity.
2) Amazing ground work: It was a very obvious observation for Tesco that to go online it customers should have access to net. Tesco decided to provide broadband services and soon become well known ISP. With this it became first retailer who was also an ISP. Tesco also did intensive analysis on the profitability of the business model.
3) Running pilot model first: Tesco started pilot model in one of the London store , a very basic website was designed and the model was a combination of telephone, fax and internet. After successful broadband business and encouraging results from its pilot project, Tesco started providing online shopping in many of its London based stores.
4) Efficient Operation: Once customer has ordered the merchandising, Items would be picked up from store by employees and delivered to the customer.
5) High focus on technology: Tesco was very clear that its technology has to be the best to provide amazing customer experience not only in terms of website navigation but also in terms speed .It went on to the extent to produce updated CD’s and supply to its customers so that they can add items to their basket and then connect to internet by dial up connection to just place the order.
6) Geographic expansion of e-Tailing : Tesco made sure that it sticks to the basic for expanding its e-tailing. It targeted places like South Korea, where Internet use is high and where high-speed Web connections abound, enabling the grocer's jam-packed pages to download quickly.
7) Going that extra step: Tesco went one step beyond when it enabled Tesco.net for visually challenged people. Blinds could now purchase online with the help of speech recognition systems. The system, which the company developed along with the Royal National Institute for the Blind (RNIB), uses technology that converts text to speech, describing products on the company's Tesco Direct Web site and guiding consumers through the buying process.
WebVan.com
Unlike Tesco , webvan is started as only an online retailer without having a support of brick and mortar stores. Louis Border started it with the help of several VCs in 1999. WebVan pioneered technology to serve its customer sand went on creating a huge infrastructure to the extent that after some time the expense of running business was much more then the cash inflow.
1) No Support : WebVan did not have any brick and mortar business to support, instead it developed its distribution centre from where it supplied to the custmomers.
2) Ambitious plans without any groundwork: WebVan went on an expansion ride without even looking at the feasibility of the business model. The plans were really ambitious involving expense of multibillion dollars in setting up infrastructure.
3) Ignorance to availability of internet : Even though webvan made a point setup its business in town with higher broadband penetration but still it over estimated the potential of online shopping in those days.
3)Huge Investment in automation : WebVan spent a fortune in automating its distribution centers. They were equipped with conveyor belts on which merchandising used to travel to reach to the picker trucks. It used refrigerator trucks to keep vegetables fresh. Webvan missed on the fact that for sustaining such kind of investment it would need huge customer base since very beginning
4) Misfit collaboration : In less then one year webvan decided to takeover one of its archrival HomeGrocer. HomeGrocer & Webvans business were running on entirely different business strategies. Webvans distribution centres were very high tech and automated whereas in HomeGrocer DC operations were manual.
5) Every thing can not be automated : Automation in webvans distribution centre was common for all the items and their was no way it can be customized for separate merchandising , specially for food items which were soft and come in delicate packaging.
Webvan was bankrupt by july 2001, Over ambition and high reliability on a niche segment caused closing down of webvan
Learning’s :
Looking over Tesco and WebVans ( and some other etailing ventures) we can have some key points about this business
Brick & Mortar Support: It is very difficult for an online grocer to continue without support of a brick & mortar business. Tesco , Walmart, Fabmart used online as a strategy for market development and became successful. Like WebVan Peapod also tried to be an onlibe grocer by simply collaborating with various superstores but after running into losses for long time it decided to build its own warehouses.
Internet Penetration : Tesco’s plan to become ISP was simply visionary and shows how serious they were about e-tailing. WebVan missed the actual numbers of internet penetration as well as prospective clients who would be using website for grocery shopping. IF we look the numbers for 8.5 lac customers Tesco was generating 2.5 Lac orders a week but WebVan was generating merely 15K orders for 7.5 lac customers.
Phased Investment in Hi tech infrastructure : Where Tesco kept it simple, Webvan went on building state of the art automation technology for its distribution centre. It would have been wiser to test the feasibility of business before getting into such a huge capital investment. Especially in the days when labour was much cheaper then such kind of high end technology. The investment made by Tesco was mostly for making customer experience better, which was the need of the hour.
Strategic collaboration: WebVans collaboration was also a misfit with its business model. It is necessary to have collaboration which can compliment the business model especially in the days of start up. Within 1 years of starting business was not a good time to merge with a business where one would need to spend money for major restructuring of business itself.
I would say one major takeway will be "Put technology and investment where it makes things easire for customer"
Also posted on Cool Avenues (http://www.coolavenues.com/know/system/saurabhs-it-1.php)
Wednesday, December 24, 2008
Wednesday, December 17, 2008
Sales Call : Making it through
Sitting through a sales call is never an easy task , It makes people sweat even in AC rooms lets see what can be a logical sequence of talking your way
through to a sales call
1) Formal greeting : Start your call with a formal greeting , just saying a casual "Hi" , "Hello" is definitely not a good idea , something on the line of
"Good morning sir, I am Saurabh Shukla from SPJIMR" is always safe
2) Introducing yourself, team members & Company : First of all introduce your self and any acquaintance of you have, give a moment to your prospect so that he can get your names and designations. Having introduced people present in the meeting room , give a brief introduction about your company . You may be from one of the largest organization on earth but please keep introduction of your organization very crisp , a small background , some of the recent & significant achievments and some work on the line of business of your client. This much should be enough .
3) Don't be too desperate : Now we definitely understand that you are on a mission and for you the conference room is a war front where you have to come out as a winner but remember the ice has not broken after introduction. There are always so much environmental factors in business scenario to discuss. May be you can discuss something about the clients business ( ofcourse how good it is doing).
4) State the purpose ( Not giving away everything): State the purpose of your meeting , this will depend whether you have had some communication with the client already, if you can state the purpose in terms of gain to client that will be really great.
5)Now listen: Having said so much how about giving the person on the other side give a chance to speak and when he speaks you better be listening
6) Understand the requirment: Every organization has some core competency of flagship product but customer is least interested in what all you can provide, his interest lies in solving the problem in hand so you better understand his requirment well and talk in terms of a solution which fits customer well ( rather then pushing your products).
7) Involve : In a meeting where more then one person is present from customers side , please make sure that both are involved in the discussion. That will not only lead to better discussion but also help you in getting more information and expectation.
8) Take next appointment : I am sure you never thought the dealwould be over in one call , so make sure you have an appointment for the next time before you leave the room. Also list down any deliverables which are being discussed.
through to a sales call
1) Formal greeting : Start your call with a formal greeting , just saying a casual "Hi" , "Hello" is definitely not a good idea , something on the line of
"Good morning sir, I am Saurabh Shukla from SPJIMR" is always safe
2) Introducing yourself, team members & Company : First of all introduce your self and any acquaintance of you have, give a moment to your prospect so that he can get your names and designations. Having introduced people present in the meeting room , give a brief introduction about your company . You may be from one of the largest organization on earth but please keep introduction of your organization very crisp , a small background , some of the recent & significant achievments and some work on the line of business of your client. This much should be enough .
3) Don't be too desperate : Now we definitely understand that you are on a mission and for you the conference room is a war front where you have to come out as a winner but remember the ice has not broken after introduction. There are always so much environmental factors in business scenario to discuss. May be you can discuss something about the clients business ( ofcourse how good it is doing).
4) State the purpose ( Not giving away everything): State the purpose of your meeting , this will depend whether you have had some communication with the client already, if you can state the purpose in terms of gain to client that will be really great.
5)Now listen: Having said so much how about giving the person on the other side give a chance to speak and when he speaks you better be listening
6) Understand the requirment: Every organization has some core competency of flagship product but customer is least interested in what all you can provide, his interest lies in solving the problem in hand so you better understand his requirment well and talk in terms of a solution which fits customer well ( rather then pushing your products).
7) Involve : In a meeting where more then one person is present from customers side , please make sure that both are involved in the discussion. That will not only lead to better discussion but also help you in getting more information and expectation.
8) Take next appointment : I am sure you never thought the dealwould be over in one call , so make sure you have an appointment for the next time before you leave the room. Also list down any deliverables which are being discussed.
Friday, December 12, 2008
Doing ordinary in EXTraordinary way
"There are no superstars in Wal*Mart we are an organization of ordinary people , overachieving"
David Glass, CEO, Wal*mart
Recently I was watching a story on discovery about kuchipudi dance, the performer who dresses like demon need to have red eyes and continuously blinks them during the performance. This is something which can be achieved by makeup and conscious effort (blinking eyes) but the performers have an extra ordinary way to perform it , they put a small mustard seed inside both eyes for entire performance , this seed is painful enough to turn eyes
into dark red ( and of course continuos pain does causes blinking). What an extraordinary way to achieve an ordinary goal.
One small story comes from BestBuy, It was expanding big time in 90's to the extent that same day it had opennings of many stores. One day it had openning of a store in Chicago and just few hours before stripes were painted in parking area , there was no way they can be dried by the time of openning . But if there is no way then make one by yourself, BestBuy store team got a helicopter flying few feet up from ground , just to dry the paint in parking area !!! and ofcourse it worked extraordinarily well!
Same is true specially for knowledge workers . Imagine today knowledge economy is run by millions of people , can every one get a chance to have something very challenging or work on simply outstanding extraordinary projects, I guess no ( plus every one does not have calibre to perform extra ordinary tasks).Above that ordinary works are also
need to be carried out for running the show. These ordinary works can be carried out very simply in a routine way but at the same time their is huge opportunity to go to that extra step which will create the difference.
When we took over a large project from European bank for managing their middleware infrastructure services , there were 12 servers to be managed. Every day by 10 AM we will get mail alerts from all 12 servers , each mail need to be openned and checked for any error before our taking lover all of the senior executives used to open all the mails and verify status by themselves . Our team decided that one person on shift would check all the mails
and club all the status in one other mail having subject " MMS Server Status" , effectively this meant now checking only one mail for every one else.
All senior executives now waited for this status mail which gave them snapshot . One day my senior was on the shift , after 3 months with the system he must have realised these are production servers and it is very rare that something goes wrong with them , most of the time they will be ok so from that day he changed the subject line of the mail " MMS Server Status - All OK " , so whenever every thing was OK a mail with this subject used to come and bingo , just looking at the subject line everyone knew they need not bother to open the mail for today's status , its going to be a sunny day ahead with lesser critical issues. I was in a meeting with client manager when he got this mail for the first time on his black berry and he shouted with
sheer joy , showing me he asked why didn't we think this before. While he couldn't stop grinning on this idea , I was also asking the same question to me what a brilliant way to perform a simple task. Someone not only identified the criticalness of the system but also identified the level of ease which can be provided to business users , what an extraordinary way to do a very ordinary task.
Many of Such small operational innovations gradually take their place in industry best practices and standard operating procedures , improving the entire chain of activities.
All one has to do is remember few things while at work
No task is small task.
Drill down deep on whatever you do.
Never stop improving and innovating.
David Glass, CEO, Wal*mart
Recently I was watching a story on discovery about kuchipudi dance, the performer who dresses like demon need to have red eyes and continuously blinks them during the performance. This is something which can be achieved by makeup and conscious effort (blinking eyes) but the performers have an extra ordinary way to perform it , they put a small mustard seed inside both eyes for entire performance , this seed is painful enough to turn eyes
into dark red ( and of course continuos pain does causes blinking). What an extraordinary way to achieve an ordinary goal.
One small story comes from BestBuy, It was expanding big time in 90's to the extent that same day it had opennings of many stores. One day it had openning of a store in Chicago and just few hours before stripes were painted in parking area , there was no way they can be dried by the time of openning . But if there is no way then make one by yourself, BestBuy store team got a helicopter flying few feet up from ground , just to dry the paint in parking area !!! and ofcourse it worked extraordinarily well!
Same is true specially for knowledge workers . Imagine today knowledge economy is run by millions of people , can every one get a chance to have something very challenging or work on simply outstanding extraordinary projects, I guess no ( plus every one does not have calibre to perform extra ordinary tasks).Above that ordinary works are also
need to be carried out for running the show. These ordinary works can be carried out very simply in a routine way but at the same time their is huge opportunity to go to that extra step which will create the difference.
When we took over a large project from European bank for managing their middleware infrastructure services , there were 12 servers to be managed. Every day by 10 AM we will get mail alerts from all 12 servers , each mail need to be openned and checked for any error before our taking lover all of the senior executives used to open all the mails and verify status by themselves . Our team decided that one person on shift would check all the mails
and club all the status in one other mail having subject " MMS Server Status" , effectively this meant now checking only one mail for every one else.
All senior executives now waited for this status mail which gave them snapshot . One day my senior was on the shift , after 3 months with the system he must have realised these are production servers and it is very rare that something goes wrong with them , most of the time they will be ok so from that day he changed the subject line of the mail " MMS Server Status - All OK " , so whenever every thing was OK a mail with this subject used to come and bingo , just looking at the subject line everyone knew they need not bother to open the mail for today's status , its going to be a sunny day ahead with lesser critical issues. I was in a meeting with client manager when he got this mail for the first time on his black berry and he shouted with
sheer joy , showing me he asked why didn't we think this before. While he couldn't stop grinning on this idea , I was also asking the same question to me what a brilliant way to perform a simple task. Someone not only identified the criticalness of the system but also identified the level of ease which can be provided to business users , what an extraordinary way to do a very ordinary task.
Many of Such small operational innovations gradually take their place in industry best practices and standard operating procedures , improving the entire chain of activities.
All one has to do is remember few things while at work
No task is small task.
Drill down deep on whatever you do.
Never stop improving and innovating.
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