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Rethinking Distribution in India within the Web Age


Whereas shopping in the present day I stumbled upon the web site. I bear in mind signing up for his or her service in Mumbai the very second I purchased my first LCD TV and residential theater system again in 2008. They supplied a really environment friendly service for DVD leases and had an providing of big selection of Hindi / English motion pictures. My weekday after workplace hours have been just about occupied watching rented film DVDs from them in an effort to maximise my return for the month-to-month membership charge (20 motion pictures a month for 300 rupees wasn’t a foul deal in any respect ). To my shock has turned itself to an e-commerce website now. Yet another e-commerce web site as if we did not have sufficient. I did not even really feel like determining what they’re providing, closed the tab inside seconds.

However then it bought me considering why such a seemingly promising enterprise, which was then one of many largest invested start-up ventures in India with a capital funding of INR 90Crs from the likes of Matrix Accomplice and NEA-Indo US Ventures, died inside few years. Why none of those VCs may foresee the way forward for content material digitization and distribution by way of web. India is at the least 5-7 years behind in adoption of web and entry infrastructure. It ought to have been simple to foretell the longer term then by simply seeing developments in developed nations. By 2008/09 I feel even Netflix had an even bigger streaming enterprise than the DVD leases.

The crux of the story is if you’re in a enterprise of any good or providers, then it’s best to fully re-think your distribution technique as some level of time the web will redefine the entire worth chain. Immediately in India, the web is primarily used for communication, info or leisure. However could also be in one other 3-Four years it’s going to turn into the first medium of transaction. After I say major medium of transaction, it does not essentially imply purchases or funds on internet. A transaction is a ultimate enterprise deal or a closed negotiation for purchasing/promoting items and providers. The how and the place of the transaction will all the time contain interactions past the online. Web is certainly decreasing the necessity of a center man by bridging the knowledge hole between the customer and vendor however it’s going to by no means remove a center man fully. In a rustic like India the place we spend 13-14% of our GDP in logistics due to infrastructural points (which isn’t going to go off for subsequent Three many years at the least) cracking a value environment friendly direct to client supply mannequin would wish a genius like Professor Charles Eppes (a fictional character of in style collection “Numbers”). Until that occurs e-commerce gamers will proceed to be below large strain for profitability and success for them might be a matter of having the ability to get extra VC cash to blow. So as a substitute of fretting an excessive amount of over “e-commerce” what corporations ought to give attention to is constructing a sturdy “e-distribution” mannequin. As a substitute of reinventing the entire distribution chain why not faucet into the distribution chain which is already there and possibly carries lot extra credibility and join with the local people. What bigbazaar is attempting to do is definitely unbelievable. They may convert the present kirana retailers to their franchisee and handle a worldwide portal for ordering whereas guaranteeing the supply and money assortment by way of the native kirana store. Some level of time they may consider creating a neighborhood procurement hub for giant franchisee clusters and cut back the price of logistics of sending items from a centralized warehouse. This fashion they may decrease each their inbound and outbound logistics price therefore rising their revenue margin.

The web is already large in India with 150M customers and can principally double by 2015. Cell web utilization is rising like wild fireplace with the rising smartphone penetration and decreasing information price. Given these developments web would be the largest medium of attain to Indian customers (at present the TV viewer universe in India is estimated to be ~230M) and can diminish the worth added by many intermediaries. So if you’re a enterprise of middleman or distribute by way of intermediaries, it is excessive time to re-think and re-design your corporation mannequin.

Supply by Swagata Sarangi

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