Connecting an online process to an offline purchase

I had mentioned sometime back in a post that one of the best digital designs are those that link a digital technology to an analog-type interaction. I however, left out the linkages of the same within a commercial aspects or more specifically deployment of digital technology to generate offline/analog transactions. Nevertheless, Techcrunch has covered that in these brilliant posts: Why Online2Offline Commerce Is A Trillion Dollar Opportunity and Offline/Online Convergence, Mobile Commerce, and Life After Check-ins.

I think this is even more relevant in a country like India where there is a long tail of retail stores that cannot scale, hence don’t have the wherewithal to reduce costs, don’t have any kind of marketing or advertising budget, with not more than 4% having a square foot area of more than 500 square feet but together constitute 98% of the total retail market of as per India FDI Watch. Somehow, I believe that getting into an unorganized sector with scale need not necessarily be the best business opportunity in this area. In my opinion, the best opportunity in this area (frankly, any unorganized sector) is building a platform to help the players achieve that scale, not individually but together.More specifically, moving the business model of many of the business operations (advertising, electronic payment acceptances,etc.) from a upfront, investment kind of model to cost-per-transaction model with very very minimal capital expenditure. Maybe even rentals can work on this model if land owners can take the risk.

Take the example of advertising: Retailers can’t spend on national TV, radio and newspapers. Besides, the huge budget required, the cost per acquisition is incredibly high given the number of irrelevant people it will reach. Even city based newspapers are redundant given the expected geographic area that the retailer would prefer to reach. In  Chennai, there was an even more micro-level newspaper called the Mambalam Times which listed news only in and around a specific area of the city. That might be more relevant. This model that I’m talking about helps retailers spend on advertising on a per transaction basis rather than a per month basis or on annual basis (Ever heard of an AOP for your kirana store? ) . It’s about helping them advertise maybe on a location-specific area rather than across India or even across the city.

It’s also about helping them pay on a per transaction basis without any excess spending on the capital expenditure for POS and installation.I love Square‘s product for this….to implement a credit card based POS, the only additional hardware you require is a small card reader that jacks in to the headphone jack of your phone. That  + the software app on your phone is all you need to set up an account and start processing credit card payments. Unfortunately, they are present only in  USA and currently only on the iPhone. This thing would skyrocket if they had a Symbian app which could be used on a Nokia phone. See the working below:

The point is these kind of services scale beyond a single retailer and give them a platform on which to stand and work. It’s the same way how Meru and the other premium cabs built their model from a supply-side perspective. Besides, giving the drivers a brand to work with, they also reduced the upfront capex cost by not expecting the driver to buy the cab but by  charging him Rs. 600/- to Rs. 700/- per day for the cab. I can only imagine the revenue they get this way is far more than expecting poor drivers to actually buy the cars and register them with Meru.

I think what will happen is that the unorganized sector will continue to thrive. People are too smart, too hungry and will exploit every advantage that they have due to the absence of any rigid processes that are required in a larger organized competitor. The business opportunity lies in breaking up their investment requirements into smaller operational expenses and building a larger platform that scales to sustain and grow the business the vendor/partner.  Micropayments is the key to adopting new strategies and technology in any unorganized sector and in my opinion, that is the way forward.

Personalized Tweets

Well I’ve been leaping up the technology curve (read: wandering around like a lost puppy) ! First I stopped getting newspapers at home. That was actually cos’ I was seldom at home and mom never read the newspapers anyways. And it would be a hiccup period between my returning home, when we would ask the newspaper guy to start delivering the newspaper, and then stop after 4 days when I left for my next client location. Then I started getting most of my news through RSS feeds. Those were brilliant. Specific news around content I loved. Then without realizing it, I moved onto Twitter and Facebook for my daily news; Twitter for business feeds and Facebook for news of near and far family and friends. So when Bloglines announced that they were shutting down their service, I was more than a little miserable. Not just exporting my feeds now to a new feed reader but more importantly, I would have to manually move all my clippings and news snippets that I had bookmarked by manually copying them on to Word documents. Ugh !

But however, I realized that even after exporting my feeds, I’ve actually been using RSS less and less to consume information. The launch of the new Twitter makes it even more addictive to use, resulting in me spending less time on blog feeds.

A parallel thought process was around a project I was working on regarding Location-based services. More specifically, I was focusing on what would be the best mode to deliver an alert to a specific user based on his location…whether through an SMS, USSD or build an app and stuff. However, putting these two thoughts together (extensive use of Twitter +  service delivery of alerts) , I came across an even more elegant method. Tweets ! The thought process is simple: Twitter allows you to broadcast your location whenever you tweet through your mobile, PC, etc. It also allows you to consolidate specific people you follow into various lists. However, this is for each user (in my service, they would be a subscriber) The method I’m suggesting tends to turn this inside-out i.e. with your permission, your (subscriber) twitter account would, in a sense, “private-tweet” your location to another specific twitter account (service provider- account). Based on the service that you have configured to receive alerts on, and based on this location, you would receive tweets from that particular account on your twitter stream based on your location and your services configuration. To make it even simpler, you could even configure the services you would like to receive alerts to by simply “following” that particular service’s Twitter account. So basically, I could build an funnel-like API over Twitter wherein I could dump a million alerts into each account (not subscriber accounts but the specific service accounts) and the API/ application could automatically filter them based on the location and tweet those alerts to follower accounts.

P.S.: I do get that Twitter was not really built around a concept like this, it was for the expression of individual users, but given Twitter’s recent comments on making the product more focused on consumption compared to what it was previously, I feel this could be another direction in the product development process

Updated: Added a basic flowchart to describe the idea:

For a larger view, click on the image

Check-ins as an attendance monitoring mechanism

Well, the concept of check-ins is not new. Simply put, you use a check-in in an LBS service (Location based services) to announce the location where you’re at. For example, you can “check-in” at a movie theatre and the status is updated on your Facebook and Twitter streams that you are currently at the theatre. A lot of interesting stuff is possible around check-ins but the best I think would be in the future in rural India where the attendance of kids would be marked by checking in into the school. Checking-in cannot be done unless you are at that location. Hence, using check-ins at schools  to track the progress of the children at school would be the best way to ensure attendance. Obviously, the frequency of the check-in can be determined previously (after every class, twice a day, once a day, etc.) Make the data public and you can really track which schools are working and which ones are not

Telecom as infrastructure/ real estate

The previous post, I mentioned the customization of service. The impact of this can be explained when you consider telecom as an infrastructural component. Not the one that gives you tax breaks but as real estate.

First a small intro on infrastructure just to set the post in context.

First we had only grassy areas. Parts of the grassy paths were converted to roads and toll was collected to offset the cost. In some cases, the governments invested in it. This business grew and grew until roads spanned the length and breadth of the country. From point A to point B, there were multiple roads to choose from. Hence, from a business point of view, roads were commoditized. The commoditization allowed electric companies to set up poles on these roads and string their own wires over them. Revenue was generated on a per unit on consumption. Using the roads as a commoditized infrastructure, electricity spread across the nation. With the exceptions of countries where generation and distribution utilities, the business attracted several companies and with the absence of a real significant business differentiator, even that got commoditized (I say “business” because there are still monopolies of the SEBs). The price of per unit power came crashing down. This created the second layer of commoditized infrastructure. Cheap (though unfortunately, not always dependable) power catalyzed the spread of PCs, cheap PCs of dial-ups, cheap Internet of broadband. This is where we stand today. Hence, there are three significant aspects to this:

1. All these services had high upfront costs with low operating costs
2. All these services invariable raced to the bottom of the per unit rates on increased competition and non-differentiation
3. All these services acted as a platform for the next layer of services. If the existing layer did not price cheap, the next level would never take off.

Sounds familiar? Except for (3), they can all pretty much describe the telecom sector. So what about (3)? What is the next layer? Frankly, it’s anything you can do with it. Take the analogy of real estate. The current telecom infrastructure is like a flat piece of land in the middle of the city. Except that this flat piece of land lies across the entire country over a infrastructure of commoditized towers and transmission equipment. So what would you prefer to build? An elegant high-class township for 20 people with swimming pools, child care, two car parking, a gym, hell, a convention centre, what have you or a shanty town for 20,000 people with only the basic amenities such as running water, power, etc. The beauty of telecom services is that the cost required for setting up either is the same. You could even set up 10 bungalows over the same land and the costs would hardly differ. Even better, you build one home, the incremental costs of building the same home is near zero. Costs are mapped to a particular type of structure rather than the number of structures of the same type. Same as software. Further, the land available is near infinite. It’s limited only by the man/ brain power of your company. This is the context of new services that can be provided over the telecom network. So when I say personalization, it isn’t based on a particular demographic but a certain psychographic ( or more specifically, a personality-graphic). Personalities are not demographically oriented hence neither are the services. Secondly, two aspects of mobile services that I dont believe has been completely exploited are location and one-person ownership. Hence, the service has to be able to not just copy a service off the Internet but make it more location based and address the fact that only one person (unless it’s a PCO) will be using it. e.g. friends in the near vicinity where you are, entrepreneurs in an area looking for VCs and vice versa are informed of the other’s presence, etc. On a one-person ownership basis, services can be customized to the mobile number instead of insisting for logins for customization (I’m not referring to the security aspect). So you switch on your phone and get the info you need without the hassle of logging in.  Similarly, mapping mobile numbers to specific locations / areas in the country can reap huge dividends. We already talk about localization as becoming the next big thing. Mobiles can combine the location with the personalization aspects to deliver some incredibly relevant stuff without having to query stuff each time. Kinda Google news without having to go to Google news’s site. This always-on, always-connected scenario delivers to us info that is required, needed rather than deletable whether it’s market prices to the farmer or discounts on Levi’s stores to a teen who just happens to be walking on a road about 20 ft from there. The teen isnt going to query google every 10 seconds on whether there is a discount or not in a nearby area. This is kind of service that’s gonna make it big.

Further, services that were previously fixed can now be made mobile. We are already transacting as much as possible on the net. But with mobile penetration taking off much much faster, with a awning gap especially in the rural areas, I can only imagine that services which addresses both social and business needs of 65% of the country’s people can only be a money spinner, both for the content provider and the people at large.

Currently, atleast in India, a significant amount of services are being “firewalled” by the telecom service providers. But with the advent of the Apple Store and Nokia’s Ovi, that hold on the vendors will loosen too. Just makes me wonder of the immense possibilities in terms  of content and content providers who will jump on to the bandwagon now that  the pipe is democratized in this way (where the content is independent of provider). It’s already apparent in the Apple store statistics (85,000 apps, 125, 000 developers). The long tail is longer than ever and it cant but be good. The problem now is that the gatekeepers have just changed from the telecom service providers to the mobile handset manufacturers. But this too shall pass. Or atleast be democratized to the extent that the handset provider cannot be too strict on the type of content sold or the commercial agreements of the sale. I really have my eyes on mobile money. It has to pick up much faster than what people expect it to grow.