In this post I am sharing a talk that i gave sometime back at a event in november 2013. So let me start up with a brief introduction of what I will talking through this session, so far we have been familiar with terms like B2B, B2C & C2C i.e. nothing but Business to Business, Business to Client and Client to Client. But now the Internet storm has hit these traditional ways and has introduced a whole new dimension called E-Commerce. I call this “T2B” i.e. Technology to Business. The effect of this whole new sector has taken competition, efficiency, transparency, to a whole new level. Gone are those days when, if I had to buy a phone I would have to go around the marketing hunting for the best price, though the product & the manufacturer remained the same the prices always varied sharply. Today all you need to do is one simple click and everything is just before you! This has benefited the buyers in a great way but also has negatively hit the retail sector. During this session I would like to take you through this new ways of business.
To start up with, how many of you are familiar with this company called Alma meter..? This company was started by 2 young boys, Varun Aggarwal & Rohn Malhotra it was a simple idea to make merchandise of schools & college, No big deal but things took a big turn when they thought of having an E-Commerce website in place which helped people to order merchandise from different parts of the country valuation after the first year ₹5 crores. You can read the book – “How I braved Anu aunty and co-founded a million dollar company”, a book written by Varun Aggarwal to know his entrepreneurial journey more closely.
One thing that you guys need to know is that when chose to put up a shop on the internet their shop was accessible not to a certain locality or a city but to a country which is densely populated, so the audience was not 100 but 100 crore! That’s the magic what Internet can do to the business. Sites like Google, Facebook, twitter, YouTube have become a part of everybody’s life and these websites offer some very reasonable price to promote your website.
Do you know that flipkart was started in 2007 and the initial idea was to sell only books? The founders, Sachin & Binny Bansal had invested ₹4 lacs into it and today it is valued to almost ₹1 lac crores, making a revenue of ₹5,000 crores as off date.
Phanindra Sama a alumni of BITS Pilani started this website called Redbus in 2006, just because he couldn’t get back home for Diwali and then he started red bus fhir saare bus booking agents ki lagadi and this he ended the story of redbus by selling it off for ₹800 crores at a point when their market was getting diluted. And guess what it was bought by Ibibo group which happens to a property of an Indian called Ashish Kashyap, it was basically a joint venture of Nasper’s & Tencent.
I won’t be wrong if i say that the valuation of these companies grew exponential only they used right platform and the right marketing medium.
In the first case of alma mater they never promoted themselves in that way like flipkart and redbus did. Alma mater restricted itself to merchandise, the marketing strategy was to get into minds of the people so one of the founder came up with this book called “How I braved anu aunty and co-founded a million dollar company”, the book did expectantly well and also did the marketing of Alma mater. One idea to market your company and get paid for it!
In the second second case i.e. the Flipkart they expanded into other commodities and started throwing ads across the internet using Google Adds. Just try this go on to Flipkart.com just select a product look at its details and close the website, after that
whichever websites you login to most them will carry adds by flipkart projecting the same product that u looked into!
Redbus altogether did the regular online marketing but they also came on with television ads, which was later followed by almost all these online portals.
Chumbak happens to another such merchandise website which presents Indian culture in a funky way they used Google ads to go big. It was an online hit and eventually they got into Retail sector by putting up shops in the Malls across the metro cities.
Now I would like to take you inside these sector and try to show what it takes to create one successful E-commerce portal.
To start all it takes is a one simple idea which you need to trust, the onlineprasad.com one such portal where in u can get prasads from trupathi, kashi, shirdi, etc. so in this particular b-plan it was the idea.
Let us say we will build a website to ship kunda & kardata which are world famous sweet that origin from Belgaum. Firstly we need to find vendors who make the best kunda in town say a shop A does it. The second aspect would be the building the website & the online transaction i.e payment gateway, do not keep the option for payment on delivery. The third and most important aspect is the packing & shipment of the product.
Kunda is available in 3 types packing, one is the fresh which is wrapped in the plastic and put in a box, second is the retort pack (preservative food packs likes Knorr soups packets, tomato ketchup) which lasts for 6 months, third is the canned packs which again lasts 6 months. Canned packs has a advantage and a disadvantage, advantage is you can ship it abroad and its disadvantage the can adds to weight of the package i.e 500gm kunda, 400gm can near comes upto 1kg, this adds to the shipment costs.
What we can do is we can ship the retort packs within the country & canned packs for aboard. A 500gm retort pack of kunda costs you ₹180 and the canned kunda costs around ₹250. So before you buy the kunda from your vendors remember the 10% rule of business i.e. 10% of every product you buy from your vendors is your commission. So the cost your kinda will be brought down to ₹162 & ₹225 respectively. If u you can sell the retort packs online for ₹250 & the canned kunda for say ₹350 and simply add a sentence further saying shipment extra, you make some good money. You can also mention we take Gift pack orders in which you pack it nicely with a cover which talks about the city, I expect this particular strategy would do wonders on the international market then the domestic.
For marketing you can picks what flipkart or chumbak did for their promotions, i.e Google Adds and other online marketing ways. Have targets for yourselves, as in you have to sell in x numbers of packets every month. Don’t just stick in promoting it only online try and penetrate into the Market, go to the metros, tie up with the sweet shops sell your products & the website give them the option of placing the order online. You can make a living out of the whole thing.
So what’s the moral of the story?? The moral is to earn money you don’t have to know how to make kunda, or have a shop just have a good website and you are good to go.
Over my past few years as a Digital Marketing & Business Development consultant has thought me a lot of things, let me try and take you inside this sector as per my understanding.
First lets me give you some brief idea of the website.
The first and the most important aspect of any website is the domain name and space to host it. I suggest you sastadomains.com & sastaservers.com the reason for this is sasta domains offers u free e-mail id when you buy it from them none of the others do that like the bigrock & godaddy guys. So when you book the domain u can print your business cards with the email id and start your work you don’t have to wait to buy the space for hosting. A .com domain costs around ₹650 and an .in costs around ₹250 for a year.
Second aspect after having a domain is the space. To run a basic ecommerce website without it crashing it’s advised to pick up the professional hosting which usually costs 2500 for year this will also come with a lot of add ons.
Third and the most important aspect of the website is the construction of the website. Since I am not a too technical person I will give you the basic idea, the website needs to be a dynamic website which can be built on any platform like the wordpress, custom php, magento, etc
Another important aspect of this part is the having Payment Gateway onto your website, this can be done by whoever is building the website or you can it up with help of the website called www.ccavenue.com. Normally a free user of a payment gateway has to pay 5.5% of ever transaction whereas a premium user pays 3.3%. To be a premium user you need to pay round around ₹30,000.
Second aspect is the marketing.
For marketing you get yourself connected to Google adds that’s the best means that can be suggested. The costing is quite reasonable and this is based on what all you pick like the target audience of for a particular xyz city, number of reaches, etc.
It’s also necessary to show your strength and presence on the social media, like facebook, twitter, instagram youtube, based on the products. Have a page on facebook it is quite necessary, first promote it among your fixed client base then opt for the adds which range from ₹320 – ₹1500 per day see your budget be clear with which city audience you are targeting and that would be good.
Have a good and a concrete plan for marketing because that’s the mean soul of an e-commerce website.
Third aspect is handling your finances and you’re Staff.
When you start up a company please make it a point to consult a CA before you start. Understand the Taxation structures & the types of taxes you need to pay to run the whole show. Gone are those days when I thought do doing a business and sat down with a friend made a logo and visiting cards and go on doing monkey business. Times have changed and time has tightened up all the rules and regulations. You overlook this point and trust me you will reach up a point when you will be screwed up the Tax dept. in such a way that whatever u have earned is gone plus you have to take loans to clear your dues!
For an e-commerce website you just need to have a good technical team to keep a track of your website & online marketing, you would need a set of people to do miscellaneous works this should be good enough for a start-up company. As and how you grow you can hire people based on the requirements. Always remember a good team can take you on top and the bad team can just throw you down in a second, so always choose your staff after evaluating them in and out and hire them only if they are required.
Like Radhakrishnan Pillai puts it across, starting up your own business and running it is no easy task, especially when you have no previous business experience. But that’s how an entrepreneurs are born. They start with an idea and dream to success. Most of them do not know the path they need to take, but the confidence they have taken them through all the ups & downs till the final destination where their idea is finally converted to financial success.
The most critical period in an entrepreneur’s life is when he has already experimented with his idea a little, and struggled the most, but money has not filled his pockets. Now, he sits down & wondered what went wrong. All his near and dear ones are taking every opportunity to prove that he was wrong to have taken this path.
Your final big financial leap in business maybe just around the corner. But getting frustrated after such a long period of failure, it is natural for one to wonders if fate and luck has really been on one’s side. That is the time when you start consulting fortune tellers, you will start depending on your zodiac, your sun stars and what not!
Always Remember Wealth alone is star of wealth. You have already put in a lot of efforts, time & money into the “idea” you truly believe in. Just continue doing this.
Capable men will finally convert the whole idea into an “amazing balance sheet”. The final Leap may come in any manner – big order, a turnaround client or a big investor, but one needs to keep undergoing these trails a hundred times.
Like my school teacher Father Mathew says Aim the Sky..! So that you land on the coconut tree. There will be your set of disappointments, Frustrations, Unfairness that you will have to face in various parts of life, and also you will be given with the options to flow into depression or to fight back, the choices will be made by you so choose wisely.