Nestlé India Executive Board accepting the CRII Most Trusted Brand recognition

At a special session, the Executive Board at Nestlé India Ltd, led by CMD Suresh Narayanan (centre), received the CRII Most Trusted Brand Award from CRII Guild Members, including Abhilash Misra (Director, India and South Asia Outreach, Chicago Booth) and Anupam Kaul (Head, Institute of Quality, Confederation of Indian Industries); Nestlé India India was assessed as being amongst the top-three most-trusted consumer brands on quality in the FMCG industry in the CRII Annual National Consumer Survey; during the ceremony, Nestlé India was also inducted into the esteemed CRII Guild

Dabur India Ltd accepting the CRII Most Trusted Brand recognition

Sunil Duggal, Dabur CEO (second from right) and Byas Anand, Head Communications, Dabur India, accepting the CRII Most Trusted Brand Award, after Dabur India was assessed as being amongst the top-three most-trusted consumer brands on quality in the FMCG industry in the CRII Annual National Consumer Survey; during the ceremony, Dabur India was also inducted into the esteemed CRII Guild

Hindustan Unilever Ltd awarded and inducted into the CRII Guild

After the incorporation of HUL into the CRII Guild, Rajeev Batra, Group Head, Corporate Affairs, HUL, addressing the CRII board on behalf of HUL Chairman and Managing Director, Sanjiv Mehta, while accepting the CRII Most Trusted Brand Award; HUL was assessed as being amongst the top-three most-trusted consumer brands on quality in the FMCG industry in the CRII Annual National Consumer Survey

CRII and University of Chicago Booth School of Business sign a wide ranging MoU

After the momentous signing of the Memorandum of Understanding between CRII and the University of Chicago Booth School of Business, William Kooser (Associate Dean, University of Chicago Booth School of Business) accepts the Confederation Guild testimonial on behalf of Chicago Booth

Union Ministry of MSME, Government of India, being inducted into the Confederation Guild

Honourable Union MSME Minister Sh. Kalraj Mishra (second from right) accepting the CRII Guild testimonial in the presence of (extreme right) Bharath Visweswariah, Executive Director, UChicago Center, New Delhi, India, (extreme left) Kartik Narayan, Executive Director, CRII, and Param Khanna, Executive Director, CRII

Union Ministry of HRD, Government of India, being inducted into the Confederation Guild

(Centre to right) Honourable Union HRD Minister Dr. Ram Shankar Katheria, William Kooser (Associate Dean, University of Chicago Booth School of Business) and Abhilash Misra (Director, India & South Asia Outreach, University of Chicago Booth School of Business)

Foodpanda being inducted into the Confederation Guild

Foodpanda, represented by the Foodpanda India CEO Saurabh Kochhar (center), accepting the CRII Guild testimonial, in the presence of Kartik Narayan (left), Executive Director, Confederation of Retail Industries of India

PolicyBazaar being inducted into the Confederation Guild

PolicyBazaar.com, represented by co-Founder, CFO & COO Alok Bansal (right), accepting the CRII Guild testimonial, in the presence of Rushil Khanna, Executive Director, Confederation of Retail Industries of India

FabFurnish being inducted into the Confederation Guild

Ashish Garg, co-Founder FabFurnish.com, accepting the Confederation Guild testimonial on behalf of FabFurnish.com, in the presence of Param Khanna (left), Executive Director, Confederation of Retail Industries of India

 

R&B Exclusive: Chicago Booth’s P. K. Chintagunta Discusses India’s E-commerce Industry With CRII’s Retail & Business

Joseph T. and Bernice S. Lewis Distinguished Service Professor of Marketing at University of Chicago Booth School of Business
Pradeep K. Chintagunta
Joseph T. and Bernice S. Lewis Distinguished Service Professor of Marketing at University of Chicago Booth School of Business

Professor Pradeep K. Chintagunta is the Joseph T. and Bernice S. Lewis Distinguished Service Professor of Marketing at University of Chicago Booth School of Business.

He is currently an advisory editorial board member of Marketing Science, apart from being the Editor of Quantitative Marketing and Economics. Named as Chicago Booth’s topmost professors by BusinessWeek, Professor Chintagunta is considered amongst the world’s leading experts in his field. He is the recipient of the Hillel J. Einhorn Award for Excellence in Teaching.

Professor Chintagunta fielded multiple queries from CRII’s Retail & Business recently and provided compelling responses on India’s e-commerce industry and the path it may follow in the coming future. Some excerpts of the insightful interview are provided below:

RETAIL & BUSINESS (R&B): The online space in India is growing at a rapid pace. India had around 300 million Internet users at the end of 2014, a figure which grew to close to 350 million by June end 2015, the fastest growth ever recorded (Internet and Mobile Associate Data). Yet, a massive majority of e-commerce companies do not have operational profits. What is the reason you would attribute for this? Is the issue because of lack of consumer response or are there issues with the way online companies are marketing their portfolio to consumers?

PRADEEP CHINTAGUNTA (PC): There are several reasons for this. First, everyone is looking at this numbers and feels that there is a golden opportunity awaiting. So you see a lot of entry happening. When this happens there is the need to stand out. So firms need to invest in infrastructure and fulfillment services to make sure that consumers have a good experience. Next, there is a rush to acquire customers and to make their experiences “sticky.” That way they can convert transactions into long term loyalty that will yield dividends in the long run. But to acquire consumers, firms have to invest in marketing and acquisition costs – advertising, special deals and promotions, etc. All these add to large expenses for the companies. A related point, following firms like Amazon, is that the stickiness can come from having a wide assortment of products. This then feeds back into the need for a well-oiled fulfillment machinery. Since Amazon is the poster child for ecommerce players, the fact that they have not put together a consistent stream of profitable quarters, choosing to invest in a variety of avenues, might also embolden firms to postpone the need to be profitable.

R&B: For companies like Foodpanda.in, tapping into a growing pool of customers is imperative to maximize revenue opportunities. Empirical and factual evidence confirm that there is a huge pool of e-customers who register on Indian e-commerce sites, but do not end up making significant purchases, and sometimes do not make even one purchase.  Is this scenario common globally? What are the reasons this behaviour occurs? Are there any quick-fix solutions/frameworks that can be tapped into to correct the same?

PC: This phenomenon was certainly true in the early days of e-commerce in the west as well. First, consumers are not used to shopping online due to issues such as the inability to touch and feel, shipping costs, privacy concerns, providing financial information, etc. This takes a while to overcome. Next, moving to purchasing online requires a change in behavior – this takes time. So it is important for firms to recognize these impediments that consumers face and to then try to lower these barriers for them. This requires a combination of things to happen – initially focus on products that are standardized so there is no concern about ordering online. Next, to lower the psychological and other costs that consumers experience when new to the online shopping medium, firms should provide some appropriate incentive – not on specific products (as that will encourage a “shopping for discounts” culture) but on the entire basket – free shipping, basket-based discounts etc. Finally, they need to ensure that consumers have a great experience with the online merchant. This will motivate them to return to the site for future purchases.

For engines like Foodpanda there are two other key issues – the website should be simple and easily navigable and consumers need to have a good experience with the restaurants that they find on the site. In addition “social rewards” to reward consumers who suggest the restaurants they order from using the site to their friends when these friends also order from that restaurant is something worth considering especially because the restaurant will likely be interested in subsidizing such an activity and both Foodpanda and the restaurant will get more information about the consumer and his / her social network.

R&B: The life cycle of an innovation is considered considerably short on the online space, with competitors ready to copy anything worth copying. This scenario has become endemic in the Indian online space too, with multiple companies offering similar services. Then how does one create a unique differentiator? Or is there no such thing in the online space? Then what works?

PC: There are always means to differentiate ones offerings from those of competitors. Two things to keep in mind – the differentiator should be meaningful for the customer and cannot be differentiation for the sake of differentiation. So relevance is important. At the same time the company cannot focus on differentiation and forget the fundamental needs of the consumer. Without being on par for fulfilling the customer’s core needs, a firm cannot prosper by differentiating on a non-core need. So for example having social rewards when the selection of restaurants is poor will not help a site like Foodpanda because fundamentally, consumers come to the site for food and restaurants.

R&B: Out of the 3Cs and the 4Ps, what should be the priority list for an online e-marketer in the food service space, like Foodpanda? Which might be most important, and which least?

PC: The customer has to be at the core of the experience. This is true for online marketers as it is for offline ones. But to deliver the experience the company has to have a laser focus on what is important for consumers and to then invest resources in making that available. With such a focus, and the appropriate resources, competition should take care of itself because it will be scrambling to catch up.

In terms of the 4Ps, at the end of the day Foodpanda is a platform business. For it to succeed it need to attract a large set of good restaurants to bring in customers and a large set of customers to bring in new and better restaurants. In order to bring in customers, it need promotions. It also needs some type of “promotion” to attract the restaurants. One possibility for doing this is to provide data and analytics services to the restaurants as incentive for signing up to the platform. While Foodpanda can ultimately make money from the transactions, providing analytics services may be useful for restaurants that do not have the infrastructure or bandwidth available.

R&B: While one would have expected consolidations to occur at the maturity stage of an industry, the Indian online space has seen increasing instances of mergers and acquisitions during the growth stage. For example, Foodpanda itself has acquired JustEat and TastyKhana, two competing portals, in the past one year. Similar is the scenario with other e-commerce companies. What would be your views on such a movement within the industry? Are these acquisitions purely seat-of-the-pants moves to gain more customers in quick time, or do these signify the coming of age of the Indian e-commerce space?

PC: All industries go through this and the online business is no exception. There is a lot of entry, not everyone can make it. Those that survive then acquire the ones that are struggling. Shakeouts occur and consolidation takes place. So this is the natural process of growth and eventual maturity of the business.

(Copyright, President and Fellows of Confederation of Retail Industries of India; Retail & Business is India’s leading retail industry publication)

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