Revisiting Product Innovation in India

Reduced down to the core basics, a successful business involves building a product (anything of value) and selling it. Both building and selling are core to most businesses.  However, typically one of these areas is the main differentiator, which makes a company the leader in its space, while the company ‘checks the box’ in the other area.

Amazon, Facebook, Google, Apple and most other global consumer Internet leaders today are product driven companies. Product is their core strength. They are (usually) good at sales too, but that’s not where they differentiate. They are  simply outstanding at building products, and consumers self-discover their products/services and stick with them.

The Indian tech landscape has looked different historically. The first wave of IT and Internet leaders in India excelled at sales and execution, while (often barely) meeting the baseline on product. Market leaders emerged from innovative use of offline sales forces, larger marketing spends, offline presence, stronger sales teams, partnerships and better distribution. Product development was secondary. And rightfully so, given the market dynamics that existed.

There have been both demand and supply side reasons for this. On the demand side, the online consumer base was small, non-so-discerning and spread-out. Good self-discovery mechanisms didn’t exist. So market leadership was established primarily through sales, distribution and reach. On the supply side, there wasn’t enough availability of product talent or venture money. I blogged a few years back about this.

I think we are starting to see an inflexion point in this dynamic now. As customers get more savvy and approach a critical mass, they figure out ways to beat down a path to the product that works best for them. In the era of social, this is easier than ever. The game is changing quickly from constant paid acquisition and re-acquisition of customers to virality and retention. On the supply side, the number of ‘product’ persons (engineers, architects, UX designers, visionaries) is slowly building up, propelled in part by global osmosis. Venture money is abundant now, even for product plays. Consequently there is an increasing number of Indian offerings now with great products and user interfaces.

This momentum will only accelerate, as the above is a virtuous cycle – Consumers become more discerning after using better products.  We’ll see an era of intensely product focused businesses disrupting the Indian online space. Some of these products will also go global. Those companies that don’t pay sufficient attention to product and continue to play by the old rules would do so at their own peril.

Agree/Disagree?

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The future of (online) retail?

The digital and traditional commerce worlds have been colliding.  Look no further than Amazon’s recent offer to award retail shoppers with small discounts for walking into and out of retail stores. There has been an inherent tension between traditional retail players and eCommerce players, as eCommerce  disrupted retail and traditional retailers largely took to eCommerce as a defensive measure. Moreover the DNA of the two industries has been vastly different.

There is tremendous innovation possible at the intersection of online and offline commerce if it were driven by an innovator in alliance with B&M retailers. However, since traditional retailers perceivedly have more to lose from this in the short term and have large stores to run, this innovation is currently driven outside-in by eCommerce companies and startups.

What if we were to design commerce from the grounds up, ignoring the above market pressures, and design instead for optimal economics and consumer experience? Today’s technologies could enable a very different and much more efficient system than the one we have today. Consider this scenario: Large traditional stores in expensive locations get replaced by smaller ‘showrooms’ that display sample merchandise or their holograms using the latest technology. You browse through lots of merchandise without having to hike through a maze of aisles. You scan  merchandise you like with your smartphone, compare product features and read online reviews. Perhaps you even ask a few friends on social networks and chat with them. You decide on a product you like. Finally after selecting everything you need,  you ‘checkout’ at the spot by just tapping your phone at a counter and head back home. Just after you reach home, the products you ordered are delivered at your doorstep from a nearby warehouse.

For many consumers, this solution is a better experience than traditional retail (don’t have to hunt through aisles or carry back large bags; better product information) or eCommerce (can see/touch/try products, shorter lag to product delivery). It is also economically more efficient than traditional retail since it requires lesser use of expensive commerce space. The cost base for such an offering should be more comparable to that of eCommerce. This would imply lower prices for consumers than traditional retail.

The exciting part is that all the technologies for this setup are available today, and we are seeking some early steps in this direction. Walmart and Amazon are clearly fighting towards a piece of this opportunity. So when do we actually see the world move towards a showroom and warehouse model?

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