India Needs Its Own Business Model
Rather than blindly copying business models, the key to success lies in adapting and reconfiguring them to fit the country’s environment and the consumers’ needs
“Neither the American, nor the Chinese approach towards consumers will work in India
Businesses are always built keeping in mind the consumer pain points and the country’s social fabric and ethos. Retail businesses are no different. Even though technology is transforming the way we discover, transact and own products, there are some deep-rooted consumer behaviours that would take eons to change.
Amazon is in the US because the supporting infrastructure and retail geography lend themselves very well to an inventory-led ecommerce model. Retail landscape in the US is primarily organised accounting for 90 per cent of the total retail trade. Ecommerce is a meager 9 per cent and unorganised retailers drive the remaining 1 per cent.
On the other hand, China is a manufacturing powerhouse. Most of the ecommerce companies in China started as B2B platforms — providing traders across the world access to China’s manufactured goods. Alibaba group started Taobao — a C2C marketplace — after it started making profits from its B2B platform. Idea was to provide Chinese consumers access to the goods manufactured in China. However, lack of trust amongst the Chinese was a detriment that prompted Alibaba to act as a mediator. Payment was kept in an escrow account until successful delivery of the product and the buyer was satisfied with her purchase. Alibaba would then remit the payment to the seller. Ebay never understood this deep-rooted trust deficit and hence failed miserably in China.
Even the cookie cutter of Amazon failed to weave its magic. Alibaba succeeded because it took a B2B approach first and then built layers of consumer facing businesses and all this while built features or tweaked its business model keeping in mind the consumers of China. India is different from both these countries and hence a model that would work in India would be different from both Amazon and Alibaba. India is neither like the US nor is it a factory like China. We have a fragmented yet deeply penetrated retail landscape: 90 per cent unorganised, 2 per cent ecommerce and 8 per cent organised.
As the supporting infrastructure of ecommerce is poor, embracing the unorganised retailers is the only way to provide great customer experience and make economic profits for all stakeholders. Both types of commerce — traditional ecommerce and physical retail — have inherent inefficiencies. An omni-channel model like Zopper that marries the trust and ubiquity of deeply penetrated physical retail with the convenience and selection of ecommerce will emerge as the ONLY successful model of commerce in this country. Not only would it drive the fence sitters to transact online but also empower the retailers to establish their digital presence.
Rather than blindly copying business models, the key to success lies in adapting and reconfiguring them to fit the country’s environment and the consumers’ needs.
To that end, Zopper’s model is a ‘Made in India’ model, handcrafted for this country.
This article was published in BW Businessworld issue dated 'Aug. 8, 2016' with cover story titled 'Desi Vs Foreign'
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
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