March 13, 2016

Indian Startups - When Business Ideas are imitable...

Hi Guys,

There was a nice little pamphlet in today’s newspaper that was an advertisement for a new intra-city logistics service started in Chennai. I was wondering how many similar services have been launched in the past one year. I can remember seeing advertisements of at least two similar players.

Almost all the new start-ups in India have been facing the same issue – Imitations. During my MBA, 0ne of my professors concluded his Strategy course saying,

‘Strategy is something that will differentiate your business from competitors providing superior Value Proposition to Customers over a sustainable period of time’

In short, if a Competitor can imitate your strategy, then it is not a strategy in itself.

For starting a business, Ideation is important. You have a good idea which can get customers and make money – Investors will pump in money. But today, I guess it is enough if you can take someone’s existing idea and pitch in quoting less competition in the field and enter into a direct cost war with your competitor.

Eternally, the companies says that acquiring a customer is important. It is all about deals, cashbacks, acquisitions and sales at any cost. But, I am not finding any of the companies providing superior service to the customer, creating relationship and making efforts to retain the customer.

If you look at any of the newer business areas that has emerged, you can find a minimum of at least two players or sometimes as big as ten players trying to catch the pie. You have Ola-Uber fiercely competing and providing deep discounts to customers and big incentives to drivers. If you consider any of the aggregator services – let it be Food Aggregators (FoodPanda, Zomato, Swiggy, etc), Grocery Aggregators (Big Basket, Grofers, PepperTap, etc), Hotel Aggregators (Oyo, Zo, GoIbibo, etc), the strategies have been more or less similar. One players enters the business. A few imitations are born. The discount war begins. Cash burns and you end up in a Catch-22 situation.

One of the key lessons taught in Strategy is that reducing your price is that last thing you need to do and that too when all other cards are exhausted. Most of these players seem to have only one card with them and that is the Pricing. Sometimes, I do wonder if these players are too myopic and are not thinking out of the box to attract and retain customers.

It remains pretty much the same with the big Daddys out there – Flipkart, Amazon and Snapdeal. But, one significant thing I find in ecommerce business is that these players are trying something to retain the customers. From my personal experience, Amazon has been trying to provide a great customer service and by treating customer as the king, they are making significant improvement in the market share.

Ultimately, I do wonder if many of the founders really have the passion to become the next big thing. Most of the Investor’s money goes into filling the pockets of founders (as remuneration) and to Customers as cashbacks and discounts (You know, it has been ages since I paid my Phone bill fully – Thanks to PayTm and Freecharge).


Happy Reading!

2 comments:

  1. well written Karthick. :) I am just waiting for the next bubble to burst.

    ReplyDelete

  2. Thanks for the information... I really love your blog posts... specially those onSame day delivery in Chennai,Parcel Services in Chennai

    ReplyDelete

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