Moving to Social Entrepreneurship Site

This blog is soon moving to my social entrepreneurship site.

Essentials of taking your Offline Catalog to the Web

You currently have an online catalog. Great. Now you need to enable a shopping channel for shoppers. Here are the few options you have, which can kick-start and boost your online sales:

Online Store:
1. Just use an external shopping cart:
Your own e-Commerce Store and it’s hosting. You just take external help to enable a shopping cart on your own online store. There are 3 major options:
1.1. Amazon Payments:
The shopper just uses his amazon.com username/password to checkout on your website. Amazon takes care of credit card and other fees. The shopper simply sees a “Checkout with Amazon” button on your site. You need to take care of hosting, marketing of your site, site optimization, search engine optimization etc. This is a pay per use solution. You pay 2-3% of the sales to Amazon (mainly to cover credit card fees and fraud protection).
1.2. Paypal: https://www.paypal.com/
Similar to what I mentioned above, but this time, the checkout is powered by Paypal (an ebay company). Paypal is being less preferred these days, because of poor fraud protection. E.g. The American Eagle Store (did you notice the paypal option on the page?)
1.3. Google Checkout: https://checkout.google.com/
The same experience, but with Google. This is a fine solution, but you do not have a customer base as big as Amazon or Paypal.
e.g. www.buy.com has Google Checkout Enabled.

By the way, you do not have to choose one of the above, you can choose ALL. Allow your customers to choose whatever pipeline is comfortable for them.

2. Fully hosted solution for your online store:
This is a fully hosted solution. You don’t worry about the infrastructure. The service provider takes care of everything including hosting, maintenance, search engine optimization etc. But it is obviously a bit more expensive than the earlier mentioned, since it is an all-in-one solution.

2.1 WebStore by Amazon:
Integrated with Amazon shopping cart. Hosts on the same infrastructure that hosts Amazon.com.

2.2 Yahoo Stores: http://stores.yahoo.com
One of the older solutions out there. I believe customers can use their yahoo user name password on your store if you host it with Yahoo.

2.3 Ebay ProStores: http://www.prostores.com
Same solution, from Ebay.

3. Other Online marketing channels:
Sell with Amazon: http://www.amazonservices.com/promerchant/.
My favorite. Just send your feeds to Amazon. They sell your goods for you and you pay them a commission.

4. Fulfillment:
Once you have the first order, how are you going to fulfill it? Packing and shipping from home is an option. But if you want to scale it up, search for some good drop shippers who can help you. Amazon has a fine offering in this area: Fulfillment by amazon http://fba.amazon.com

Amazon.com: Leveraging the power at the Bottom of the Pyramid

Recently I walked into a small book-store in Chandler AZ. While we were browsing some books and reading the interesting flyers on the notice boards, the owners of the store, an aged couple, stuck a conversation with us. We were impressed by their passion for books and trading crafts and collectibles from across the world. They had displayed very unique handicrafts and artwork that they had collected from Ethiopia, Kenya and a few other African countries, in addition to some pottery from South America and Vietnam. Each art-piece had its unique story which they could indulge you with for hours. After an invigorating information exchange over a coffee regarding cultures around the world, I mentioned I was a manager at Amazon.com.

“Amazon.com?”, the owner almost got out of his seat yelling. “You guys have put all of us out of business”, he lowered his tone just for the fact that we just had a friendly 30 minute discussion. I could clearly how I had upset him. Sensing the cold air, I softly signaled to my wife that we should get going. We soon left the place after some quick pleasantries.

I spent the rest of the few hours debating with my wife and introspecting. Is Amazon just another American “retail chain” type of a company that puts small timers out of business? Clearly that’s not the motto of the company. Has the company mastered the art of providing the lowest prices and the widest selection? — Sure. Does that mean we are putting the small timers out of business? No.

Amazon has an interesting business model. More than 80% of Amazon’s selection comes from big and small sellers that power their businesses through sales on Amazon.com. Amazon has the best prices because it allows for people to compete for the “buy box” (a term used for being the default merchant of record for an item on the web site), on it’s own web site. In the interest of the company motto “take the customer’s side, no matter what” has turned Amazon.com into a free and fair marketplace for any kind of business. Take a closer look at Amazon’s balance sheet, and you will find that more than 60% of the gross margin sales of Amazon is through sales outside of Amazon’s own inventory. This includes sales of inventory from retail giants like Target to small and medium businesses at the bottom of the economic pyramid like a merchant on the corner of your street.

A great example of the success of Amazon’s marketplace model is a seller on Amazon.com called ‘Novica’: a social entrepreneurship promoter that sells artifacts from small and big artists in underdeveloped and developing countries.

An orthogonal example of how online business mobilizes the bottom of the pyramid: Could you have imagined competing for a TV ad with Wal-mart to sell the interior decoration that you sourced from Peru? Now you can; you can buy Google Adwords and spend more than Wal-mart in a smart fashion competing with the biggest of giants by reaching out to the most customized manner.

Internet business has many differences from brick-and-motor ones. Humanizing the business by mobilizing the bottom of the pyramid is one of them.

I strongly believe that the concept of Profitability from social entrepreneurship is the best thing that has happened this decade. The following anecdote captures the need for an entrepreneurial model in the socially backward and downtrodden:

The real Africa needs increased trade from the West more than it needs more aid handouts. A respected Ugandan journalist, Andrew Mwenda, made this point at a recent African conference despite the fact that the world’s most famous celebrity activist — Bono — was attempting to shout him down. Mwenda was suffering from too much reality for Bono’s taste: “What man or nation has ever become rich by holding out a begging bowl?” asked Mwenda.”

M for Capitalism

M for Capitalism: McDonalds – A true tribute to Capitalism
If Capitalism were a castle, Any Rand tried opening the window for people to peep in. But, McDonalds is that giant wide open door for people to experience capitalism.

McDonalds is probably the best tribute ever to Capitalism. I was recently on a roadtrip in south and eastern europe with my wife. We realized the impact of the McDonalds phenomenon, when we crossed over into the post Berlin-wall eastern block. While people were still talking about the iron curtain, the tanks that rolled 15 years back and the after-math of communism, there stood a tattered McDonalds M on the first exit as we entered Hungary.

Capitalism knows no ego, fears no indifference. It just knows how to capitalize the market and mint green: a dollar is a dollar whether it comes from a McNugget sold on exit#729 in Plano TX, or the McBurger sold on Kijarat#1 in Hungary or a Maharaja McBurger sold in Bandra, Mumbai.
I was amazed at the proliferation of McDonalds in the country, less than 2 decades since 1989. M truly stands for CapitalisM.

Beef up your site before you beef up the traffic

I was in the Internet retailer conference at Miami
(http://www.internetretailer.com/IRWD08/venue.asp) a week back. 300 out of the top 500 top internet retailer merchants attended the conference. The most common concern I heard from merchants was: I have all the traffic I need, but my site-conversion sucks.

 

Why do you increase traffic on your site before you have some idea how to convert the traffic? Treat your site as your own shop in a mall. Would you put a huge board on the mall entrance before you have organized your shelves, or employed a sales person or are yet to buy a credit card machine? You are precluding your chances of the customer coming again, even 2 months down the lane when you have a perfectly setup store.

 

Consider..

1. A  usability analysis of your site
2. Conducting frequent A-B tests on your site to study what your customers like what they don’t
3. Placing high-conversion widgets like Best Seller widgets, recently viewed items, customer reviews on your site
4. Doing frequent delta changes to your site to decrease bounce rate and optimize the highest viewed pages on your site
5. Optimizing your site for the biggest customer base: E.g. Do not layout your site to be viewed on a 600×800 resolution. The maximum user base today views sites on a 1200×1024.
6. Providing a clear call-to-action. If you have a real estate site and you want your customers to fill up a contact-us form, make sure you drive your customers to do that. Put the link on every page of the site, but make it non-intrusive. E.g. highlight it in the header or a footer

 

Amortization of your existing resources is the best and most cost effective way to generate leads or sales. If you have monthly page views of 200k visitors, and you increase your conversion by 1%, you are getting 2000 more leads a month.

E-Commerce @ India

Average American Shopping experience

After having lived in the USA for the past 7 years, I am, like any other average American, addicted to online shopping. Buying a home theater system? Read online reviews, “how to” guides, if I am too tired sitting in my lazy recliner, do a field-trip to Circuit City or Best Buy and eventually in a week buy the product. In the past 6 months, I have bought a home theater projection system, a 72 inch screen, a treadmill, a jewelry set for my wife, numerous books, a vacuum cleaner to just name a few that I can think of without doing the hard-work of looking into my email for order-confirmation emails. I am sure an average American has the same story to tell. Why would I pay 20% extra for a product in circuit city just because there is a blue-uniform teenager trying to make me feel good about the purchase or sometimes tries to show off his half-baked knowledge? I have always tried to appreciate the feel factor before buying something off the shelf. My wife drills that to me every time we are in a mall and she insists to walk into the barnes and nobles or border’s store. Some day, she hopes, I will understand. But I am happy to remain an online shopping addict.

 

Indian E-commerce: Sluggish as moth

If I had taken up a job in the Indian software industry after my B.Tech, would I have been an online shopping addict? I was shocked to find out the answer: NO. I recently interviewed a candidate in India for my company’s offshore operations. B.Tech from a great school, MBA from one of the IIMs. The guy has never bought anything online except for a few railway and airline tickets. He explained to me it was not too common. I thought I was getting a biased (and resistant to change) views from my retired parents. But, I guess not. I talked to my peer manager in India, and he said it was normal not to have much e-commerce shopping experience in India.

So why is e-commerce growth sluggish in India? Let me brainstorm on this in the following dimensions:

Cultural Effects

You just call the nearby pharmaceutical store. He greets you by your name and takes your order. Regardless of the order value, he sends a guy to your home in 2 hours with your orders. My mom goes one step further, and asks the delivery guy, “Can you drop by the rental office, and drop my rental check?” This is definitely a resistance the e-commerce industry will have a tough time getting over. But why should an IIM grad buy his ipod from a shopping mall?

Economical Strength of Shoppers

I doubt that. I am considering moving back to India, because I think I can make the same money there.

Technical Savvyness of Shoppers

Hell no! Most of the American ecommerce sites are developed and maintained in India. Is an average Indian not apt enough to buy from the same site he developed?

Political Roadblocks

To some extent, I think this is the prime de-accelerating agent. As much as I hear political statements supporting the advancement of the “IT industry”, most of them are about the outsourcing industry. I am yet to see a direction being set by Indian politics that will help the society step out of it’s “We are the best country to support USA and Europe” mode and get into, “How can we take technology and use that to propel our society?” mode. Lets not get swayed by the so called “Cyber laws”. We need a more committed change agent. My next dimension is an example for the lack of progress.

Credit Protection (or the lack of)

Big enough to make a dimension. A credit rating needs to be enforced not only by the industry (through merchant ratings) but more importantly by the Government. Apart from long term business goals and ethical reasons, one strong driver for a merchant to not fraud his customer online, is because his website or online presence is usually tied to a merchant account and thus his credit rating. I don’t know how this problem can be solved for a population of 1B. But there should be a way out. Let’s put our ‘Special investigation committee’s to better use.