WinIT LooseIT of e-Tailing

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)

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.

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.

What Retail Quotes

Walmart and Target are the pioneer of the retailaing industry , both are so different in thier management and expansion styles yet very same when it comes to following business ethics and treating customer well. Both organizations show that it was the strong foundation pillars laid by founder members and then management by some of the best brains that took them to peak of Retailing and to the depth of consumer's heart

Sam Walton was a firm believer in the potential of small towns , because of his philosophy Walmart served small town customers very well and created a strong entry barrier for others.

Following statements shows the priority for Mr Walton was providing better services in the existing stores before expansions.
I always wanted to be the best retailer in the world but not necessary the biggetst : Sam Walton ( The walmart decade)

Sam's style was Management by walking around was the
I have always had soul of an operator, somebody who wants to make things work well , then better and then the best they possibly can : sam Walton

Stock it , price it right , Show the value , Take the money : Tom Coughlin , VP, COO Walmart ( Walmart decade)

Drapper put the foundation stone for target , he was initially into banking , mortgage and lending business where he always made sure to lend money to people who are strong in character , sending interests to investors much before time and doing business with complete integrity and honesty.
Buiness integrity is doing things as you agreed to do them. doing things when you agreed to do them. doing things you ought to do. George drapper dayton , Target ( from on Target).

Character is a matter of slower growth but the reward is certain : George Drapper
Target has always been particular in store decoration and putting stylish merchandising arrangements.
Capture the customers imagintion with array of goods and earn loyalty with generous merchandising policy : George Nelson

The concet of integrity and honesty in these houses is so strong that it keeps going on at the same pace with new management , always.

In retail there are lots of ways to be marginally crooked and we decided we weren't going to do that : Norman McMillan , VP, Strategic planning Target
Here is how target proposes building up talent for business
You want a good manager , put him under a good manager and let him run the business : Flyod Hall, Target CEO Retailing is detailing : On target

Similarly both corpoarte houses are extremely careful on customers services .

It does not matter whether customer is right or not what matters whethe she thinks she is right - Dayton , On Target

Taking the Path to BPR

A company which has started couple of years back and growing at very fast pace would not need any business process re-engineering. The focus here will be entirely on growth , the volume handled by various processes should be farely low. So rather thn thinking about BPR such organization should directly adopt the best practices available in the industry since very beginning.
In other case BPR is very relevant for an organization which has been functioning for a decade , it has a matured stable growth rate, data handled by processes are of reasonable volume and outer business environment has changed significantly to advocate and support BPR. Many times processes for older organizations are not updated regularly which means after significant time these processes will be very good candidate for re-engineering as they would have various redundancies and the technology to support them would have enhanced multifold.

1) Have processes codified : Every organization does have a standard operating procedure for the entire range of processes carried out , these SOPs are formed at the very early stages of organization and supposed to be updated frequently but their are two main problems 1) People find out thier own way of doing things by passing the standard procedures given to them , this is true specially in cases where lateral hiring happens.

A person coming from different organization will be comfortable in doing the same work in different way , he may have used altogether a different technology so he will be building his own way of executing tasks which can be contagious after some time and spread across the team.

2) SOPs are not updated periodically : With time various changes happen in oraganization structure , technologies used and the way business is performed but all of these updates don't go to SOP as frequently as they should be going , so after some time SOP itself becomes obsolete.
So it is manadtory to know " As Is" Process for the organization and document them for refernce and benchmarking during BPR.

3) Management Support: Head of only one department or any manager alone will never be able to complete BPR ,there are many people & management
issues then we can ever imagine. Departments don't want to share thier data and decision making factors , people think it is yet another way to waste
time , People do not see any value add in contributing to this process , the information given may be a top level view and the list goes on.
This all can be eliminated if and only if we have a buy out from top management so that smooth communication can happen across all the departments
and they are forced to cooperate.

4) Conduct POC: The best way to get buy in from departments and management is to pick up a much smaller function in any of the department and conduct POC of BPR . If this POC could successfully bring some of the pain points showing the scope of improvement which can be braught in the processes then your task will be much easier

An opportunity lost:

Recent Global turmoil seen more then half of top financial institutions falling down , they either filed for bankrupcy or sold themselves at a price which was half or third of thier valuations few months back. These financial organizations were center for best talent across the world , global banks and HNIs used to swear on thier name and expertise . Totally unmatchable human intellect and growth potential. It was a bargain time on streets when some of the best money makers were on the sale . Several banks like BOFA , CITI utilise this opportunity to the fullest by acquiring these organizations completly or in partial units.For Asia which is still thanking its stars for not getting into this mess , it was an opportunity lost. There are very few institutions in the history of Asia which have raised to the level of these western Investment banks . This time they had an opportunity to simply grab what has already been created at a price which is almost unbelievable but none of Asian oganizations were prepared for such opportunity. The only bank from Asia to venture into it is Japanese Namura which acquired Lehman brothers assets in middle east.Indian banks which were still in much better condition but financially as their exposure to subprime crisis was almost non existent , Couldn't leverage on these opportunities. This was a golden chance which comes almost in a dacade , one timely decision could have set any moderate financial organization to the top of the world. Quality assets and worldclass talent could have been acquired at very low cost and also retained for long time at very competitive operating expenses.
Anyways now most of it has already gone to kitty of US banks ( Yet again ) but still there are chances to learn a lot from this and grab some of the best talent in respective fields.

New Temples of Consumerism

Although it has been said again and again that only 3 % of retail in India is organizaed whereas rest is highly unorganized mom n pop store format but when I travel from Andheri to Mindspace , I feel exactly opposite . To name just a few mega malls which cross my way in are Fame Adlab , In orbit , Infinity , Megamall , Hypercity , Shoppers stop , Evershine , Shubhichha and what not ( My batchmate Ganesh informed me that currently 7.5% of retail market in India is organized and it is expected to go upto 20% by 2010, So it has increased for sure). half of these are located in very close vicinity to each other. A grand addition to the list is newly opened Star bazaar where you get every thing of daily need , probably the model was to repeat wallmart's mantra of big volume in low price , so most of SKUs are packed in relatively bigger chunks, I will not say the discounts are as bigger as smaller stores will offer .

One of the other innovation of Indian retail is having food joints within these stores , Big bazaar , shoppers stop already had it , same is done by Marks and spencer as well as star bazaar . These food joints are growing bigger day by day adding almost everything from Veg biryani to street food in thier menu. They do fetch some additional revenue speciall if people are coming just to do some window shopping , gourmet food can still make them spend some extra bucks without feeling guilty.

The recent realization by retailers is simple , no matter what happens people will spend money on food , vegetables and daily grocery items . Now a very large portion of entire mat is devoted to it which include green vegetables , fruits and even grains !

The challenge in front of consumer remains selecting the best and cheapest option , all of the retailers making branded goods available to thier consumers which leave them with selecting best price and the difference is not small . I planned to purchase Noka Music express 5310 which is priced over 10K in hypercity , 9600 in Nokia Service stores and around 9300 in Spencers , isn't it amazing that one of the retail format is able to sell cheaper then original manufacturer.

Whatever the case is options are many , these modern temples of consumerism are definetly attracting many ( and mind you with family and freinds) and leaving no stone unturn to pull some money out of thier pocket . I call them temples because these are the places where people go when they want to shop and also when they don't want to , when they are happy and also when they are stressed , also an obvious rush in festive seasons . Overall outcome will be a push to econmoy , to inflation and to some numerical predictions ( which are most of the time any way baseless) .
So Are you contributing to countries economy?