Gautam Sinha heads eCommerce & Technology in Times Group. In his capacity, he leads and drives the technology strategy, vision and execution for all the internet, mobile and telecommunication properties of the group. He has over 24 years of rich experience in technology innovation and execution. He is a global executive with rich international experience. Earlier he has worked with CashEdge and DRDO and holds US patents for his work in telecommunication and financial service. Iamwire interacted with Gautam to know more about belief, action and vision of the Group for Internet & Ecommerce. Here are the excerpts of the interaction.
How do you position indiatimes shopping currently in the industry, and its role in current online retail industry.
Indiatimes shopping is an 11 year old brand. Very recently which is just about last year, we have moved actively from a marketplace model to an etailer model. We are not into quick money; we don’t have pressure of valuations and this has given us room to do things right. So we are not jumping to drive our top line until our processes are right. Until we make money of every unit transaction we don’t get into that category. It gives us a basic hygiene which allows us to build a sustainable profitable business for the long run.
Our positioning is very broad that allows one to be able to make sure that we want to become a destination for consumers to come, irrespective they buy or not. So it’s a very horizontal positioning, that’s what we are aiming to. The second positioning is about to be truthful to the customer, so each of my employees needs to be worried about every transaction , every customer contact that happen with the business, that’s the culture we are trying to drive over the last year. That is to be honest to the customer, if they expect certain product; we make sure that THE product is delivered. If they expect a certain timeline, make sure that certain timeline is hit, through our internal process and systems that we have built. So overall positioning is about getting a very holistic experience to the customer in terms of ecommerce place. We certainly want to be in the horizontal space, but we have continued to develop deeper relationships with certain verticals.
What factors do you feel differentiate you from other leading players?
I think to some extent is the brand that’s backing us gives a lot of comfort to the customers that they are buying from Times of India. We are very proactively focusing on the customer experience, and we see a lot of repeat buying behavior that is coming to our site. Because of the power of the brand we have fairly deep sourcing relationships. For which we move huge volumes, we get a better margin on the product where margins can be moved to your customers. So the pricing we are able to offer is quite attractive in most of the categories we are dealing in.
What categories you deal in are most profitable for you?
Today we are at certain categories and we are planning to go into certain categories with a slightly profitable unit metrics. We are mostly in what we call it CCME i.e. Cameras, Computers, Mobiles and Electronics. These are the things which an early adaptor comes on a site and tries to buy it. So this is one category which is in terms of average sales price (ASP) is pretty high, typically at INR 3500 in terms of ASP. If you compare that in contrast to a book which is at INR 300 ASP, so 30% margin on a book gives to 90 rupees, and beneath that 90 rupees you have to figure out all other costs. However for INR 3500 ASP you make around 220 rupees, at an around 7% margin. Now most of your cost in the unit metrics is not a function of your selling price, so 30% being higher than 7-8%, 7-8% is a better margin for you. So that is our focus area, and we are trying to drive those transactions with deeper relationships.
Do you view indiatimes being one of the early player in ecommerce is lagging behind, with new retailers entering the market?
We have some catching up to do. But it mostly because of change in model from market place to ecommerce model. In terms of ‘Fixing the Basics’ we have now done that, we have filled in the basics of the business to make that SKU level, we have fixed the technology, we have just launched a mobile app. Talking more about the app we have treated it very differently what another vendor would treat in terms of the way it behave. We have approached the mobile app in three dimensions, so you can scan the codes, you can compare the prices from multiple vendors, where we are not shying away to put the prices of other vendors, and if one think we are the right vendor to buy, it can be bought there itself. So we want our mobile app to be THE destinations for anyone. So you can go offline and can scan the products and get prices from multiple vendors.
So you are talking about a shift or change that has happened. Can you tell me the timeframe in which it has happened, when you started thinking about these change and what exactly are the key things that you have evolved in this new race of ecommerce.
It is about 14-15 months ago, that we took a conscious decision to make sure we have to own the customer experience if we want to continue in this game. As sub rules of the business, we went extremely strong on technology; the idea was we scale the technology which will allow us to scale further. So we built a fairly powerful team in house and built an end-to-end platform which integrates the suppliers, the CRM and the logistics partner from the frontend so everyone has the same view of the transaction right from the customer coming to the site till the product that is been delivered. And if any point in time we felt that there is a customer issue over a product we have the entire history and the timing of the product. The entire platform is now built, that’s what we are using from last 4-5 months in terms of the integrated experience.
Can you share your growth numbers, did it go down during the transition period due to more competition, how is the year on year growth?
Actually we have seen continue to grow; the last year growth in terms of shear transaction has been of over 100,000 transactions, so the change in model has already helped us. We looked at a very important metric and the approach we have taken clear leads to automation and technology which basically means the number of people we will have will always be less than most of the competitors in this. A metric that we use internally is revenue per employee of the business and that we want to hold up to INR 1 Crore per employee, which is the metric we are driving towards. So last year we were 200 employees and this year we will scale it to 350 employees. This will give you the scale of what we are trying to do.
What is the importance of right Product (Website & Technology) for a startup, and what experience should it deliver?
The user experience the product has to deliver is to make customer comfortable that they are dealing with a trusted source, the basic feature it should have. In my opinion it doesn’t need to be extremely sexy but it has to be very functional and very efficient. So if you have to browse and navigate to a particular product or search a particular product those functionalities need to be there right from the start. (I am) not a big fan of high design but high usability or utility from the website. The customer should get the confidence that every point in time they are dealing with something that is trusted and I am talking about the startups. So there must be someone who has put enough thought on your product for competence and to be able to induce the first introduction.
Do you think Indian Entrepreneurs have right amount of focus to build the right product?
Some of them do, but I think most of the startups are underestimating the kind of long race it is, as lot of them are building for valuation, lot of them are building for quick downline. But until and unless you create long term value, you will get into trouble. You must have loyal customer base and loyalty has to build by something other than prices. It is a capital intensive business. People have to be aware of it, to be prepared of it and to look at efficiencies in each of the category they are playing in. The startup should focus on product experience, should focus on the demand side aggregation. But today if they don’t have the basic hygiene of the backend i.e. logistics and delivery, they will cease to exist. So the customer expectations are extremely high. In my view if you look at the top 5 players in this space, they will practically deliver the same level customer experience by the end of this year because if they don’t they will cease to exist. Customers are not going to go to one who is not having the basic hygiene.
How is technology making the difference? And do you think it is all about technology?
So technology is the focus area, and the reason it is the focus area is it keeps my headcount cost low. As the more I automate, the more results, the more exceptions I am able to manage. So if you have the workflow that works around the SOP where exceptions are highlighted by the system and people can react to that. I look at five pillars in ecommerce 1) Logistics 2) Sourcing 3) Technology 4) Brand & Experience 5) Exceptions. While you have to be strong in all five but to quantify what I am saying, if you want to be in a leadership position, you have to be 3 or above in all of them. What technology allows is to keep your costs in all others low. So technology becomes the focus area. It has a significant play across all these categories to make them efficient and effective. It allows you to scale.
Now if you are below 3 in technology then also you have a problem. So it has to be effective in helping in other part of business. For example if you are not integrating it to your couriers, you will have no idea whether the product is being delivered or not. Technology can unify integration. If you are doing 10 orders than probably you may not require much tech, but the moment you cross the threshold of 100 orders, you will need a fairly integrated environment, though technology can be really expensive in itself.
Please Suggest us some of the key technology products and platforms businesses to keep a watch on?
Most of the online players have chosen to build it up themselves. A lot of offline players use established platforms as technology for e.g. Future Group which has an existing retail but probably will like to buy IBM Websphere to build their entire suite around that. Beneath the platforms itself there are various functionalities which are driven by technologies. For e.g. for analytics there are certain trends in the market right now, while people are continuing to use a platform like SAS, there are other new age technology like pantaho which are part of the bouquet. Hadoop, Mongo are some technologies we use in terms of managing the data that’s get generated.
Is there a need of ‘Big Data’ in your organization?
Ecommerce depends on lot of data and to be competitive at any point of time you have to be able to understand your consumers really well. Now technologies which support Big Data are something which is part of the infrastructure. You have to have Business Analytics and Intelligence but you need to continuously compel your merchandizers and category managers to take the right decision. So, absolutely yes, I don’t think anyone can do without business intelligence and analysis. And we are very heavily focused even today on business analytics. To meet our Big Data requirements we are using Hadoop, Mongo DB and others.
What is the vision behind tlabs? What role would it play in the ecosystem?
Tlabs is our vision to become the center of innovation and incubation for the country. Today if you see the value chain of investors, very few people would risk on a very early stage startup. Tlabs actually has chosen the space where risk is extremely high, and do micro-seeding to that. It not just the micro-funding but it also mentors startups for a 12 week period so be able to understand how to build a business. Our interest in that is very simple, we have hired a lot of good people, but we have not hired all the good people in the country. So we wanted to create an ecosystem where people can come and develop their business and later get loosely connected with us. It’s a long term, 5-10 year’s vision which will help us to take the leadership position in terms of the Internet Businesses in India. The model is very similar to ycombinator, 500Startups, mentorship driven accelerator and it is at a very early stage.
So clearly there is lot of scope for startups in India, tell us how can we create a silicon valley in India?
See I think Silicon Valley is something, creating which is a very non-trivial exercise; otherwise New York would have built a Silicon Valley. In India I think everything has started to come in place, but there is one last hurdle, that India still doesn’t have enough exit options. So any startup is fueled if there is a prominent exit as Silicon Valley gives a lot of exit. Now companies like us which are larger in nature have an important role to play, by being more tech focused we hope to acquire a lot of companies, hope to invest in lot of companies to give innovation in our little way some meaning.
So where are we heading to in ecommerce?
I expect a lot of consolidation. I think building an ecommerce business is very capital intensive, that so a business to be good in 5 areas it will need a lot of capital to be able to sustain. Ecommerce as an industry is on a massive way to grow, it is as exciting as it can be. So consolidation will happen for the hygiene of the industry but will not slowdown the ecommerce from number of consumers, number of transactions which happen on the ecommerce sites will continue to grow and today online commerce is just less than 1% of the total retail in India, in US I believe it has also just started to hit over 6% of online to offline commerce. So the opportunity this country has is even massive. It’s just that you have to be patient; you have to create long term value and get into categories which make sense.