Digital Archives – Disruptive.FYI

Over the past few weeks, I’ve been thinking about what to research (and write), a shift that would be both – relevant and comforting.

And then, instead of hitting me, I ate it. I speak (fondly) of food. Which is today, becoming a flavourful space through the increasing involvement of technology.

In the midst of the seismic changes in dependencies. When the internet trumps the chef – how does the average Joe (or Rohan) react? How do they mark their territory? Tap the ample digital-first solutions instead of being overwhelmed by them.

In reality, everyone is keen on taking a bite. One of the latest (and arguably most illustrious) entrants is Mr. Travis Kalanick (yes, the charming erstwhile co-founder and face of Uber).

His latest initiative, aptly christened CloudKitchens (aka, City Storage Systems) is in many ways the WeWork (pre-IPO debacle) of the Virtual Kitchens / Ghost Kitchens / Dark Kitchens etc., world. Of the many striking similarities – ambition and an almost limitless pool of funding (~ $700 million), are in equal parts a significant validation AND worrisome. With that being said, the venture may deserve to be embraced with open arms. Why you may ask. Let’s find out…

It’s no mystery that akin to almost everything under the sun – F&B consumption too is rapidly digitising. To an extent that analytics and app market data company, App Annie estimates that in 2018 – India saw a staggering 900% jump in F&B app downloads. With numbers like those, it’s no surprise that the food ordering market is operating at a CAGR of 16%, expected to touch a mouth-watering $17 billion by 2023.

In the midst of the above – India (according to NRAI) has 100,000 restaurants for a population of ~ 1.3 billion. Which equals a mere 0.007% penetration. Compare that against the percentage of the dragon next door – where the figure is a far more respectable/reasonable 5%.

At this point – I’ll take a cop-out and invoke the millennial. Which to say that until recently, the aforementioned gap was perfectly understandable considering the cultural and per capita income disparity. But, can that confidently be claimed to be the scenario we/we’ll find ourselves in today – tomorrow?

Yes, there is a significant gap here – between a dramatic rise in demand and an unimpressive supply.

Now, layer that with the fact that a market in its formative stages – has already seen a pre-mature consolidation. An often overlooked/forgotten side-effect of hyper-funding. Leading to a, for all practical purposes, duopoly – in the form of Zomato and Swiggy (even more so now, after Zomato gobbled up UberEats).

A case of too much power in the hands of a privileged few (or two)? Well, it doesn’t end there – much to the dismay of a few visionary restaurant owners. For, the ambition is to evolve from mere distribution to becoming enablers of production – and even producers themselves.

A study by LimeTray (a restaurant software and marketing solutions company) highlights the role of platforms in influencing choices. Such that, strangely, the road/conduit has become the brand.

In that context, the aggregators seem to believe that they are strategically positioned to take on the industry’s broader challenges. And, why not?

The trouble is, rather than adapting to the world we live in – restaurants operate in a near-constant state of conflict with the platforms. With, ~ 34% of those surveyed (LimeTray study) boldly declaring that reaching the customer directly is their BIGGEST challenge. But, it isn’t. Sorry. Limiting the platform’s involvement as mere logistics partners – is.

For, in the quest to avoid going quietly into the night (aka, becoming indistinguishable names on a catalogue) – independence/autonomy is the key. And that is only doable through a thought through perspective on three fronts:

– Brand development and data ownership

– Experimentative new business models

– Enhanced operational efficiencies

A near-perfect example of a company that has successfully pivoted its business after acknowledging/appreciating market realities is – Rebel Foods (the evolved form of Faasos). Launching 10 new brands in quick succession – building them in a manner akin to how Unilever tackles soaps. I.e., multiple brands, ONE kitchen. Becoming (in their words) the Xiaomi (sought after, non-commoditized entity) on Amazon or Flipkart (the aggregators).

The secret? A fair slice of the pie is reserved only for those who truly align with the need to expand the meaning of innovation in the kitchen. Be it by leveraging Capillary’s Loyalty Program to enhance customer stickiness, CloudKitchen’s product to rise above the Zomato-Swiggy exclusivity tug-of-war or, Pet Pooja’s ecosystem led approach to restaurant management.

We at SIMC(UG) or it is SCMC(?), aren’t huge believers of ‘vacations’ and therefore at the end of every Semester we ship ourselves to the respective Organizations assigned – anxiously hoping for success, satisfied by mere survival.

To me such excursions symbolize an opportunity far greater than what is generally assigned to an Intern, the prospect of understanding a Company’s ‘work’ environment, ‘work’ culture and those who ‘work’ around you; is in my humble opinion just as important as your actual ‘work’.

This May, I find myself a Management Trainee with SC Johnson (makers of brands/products like All Out, Kiwi, Mr. Muscle and Glade) in their structured Summers of Goodwill initiative. My project is to strategize how a traditional FMCG Company can leverage the Indian eCommerce boom.

While eCommerce remains a subject I’m passionate about, bringing elements of Marketing and Public Relations into the mix was/is important, nay essential – internet is today, without doubt the single most powerful medium for projecting your voice.

Over the past two weeks, my research of Online Grocery stores has been thorough to say the least. According to retail consultancy Technopak, the online grocery retail market is growing at a CAGR (Compounded Annual Growth Rate) of 25 to 30 percent in the top ten metros of the country. With over 116 players, yes 116, the competition is fierce with the current market leaders being BigBasket.com, Localbanya.com, Zopnow.com, Greencart.in etc.

Moving on, after a little analysis a few key findings emerged:

80% of the Company’s Geographical Reach is limited to the location of their Headquarters. So, this is a ‘Local’ business.
Delivery speed is where the real battle lies, with the fastest promising fulfilment in 1.5 hours and the slowest in over 72. So, our generations ever diminishing patience and attention spans are under the spotlight – eagerly awaiting an opportunity to be tapped.
Approximately less than 10 percent have developed iOS and Android Apps, yet 90 percent of the leaders found it necessary to invest resources in doing so. So, considering that the Boston Consulting Group expects India’s internet population to reach 580 million by 2018, with 70 to 80 percent accessing the web from a handheld devices – it is critical to if not be Mobile-only, at a minimum be Mobile friendly.

Put the above three together and you’ll have the latest ‘IN’ thing (fad) of the Indian/Worldwide Startup ecosystem. I speak of, obviously, the emergence of Hyperlocal Apps such as Grofers, Paytm, Wooplr, and Quikli etc – a result of the rise of hyper-local marketing or local commerce.

Trying to be (for a change) an early adopter of this phenomenon as well as for the sake of experimentation, I had the opportunity to twice use Grofer’s services – both times walking away reasonably satisfied.

The process is elementary,

Download App -> Choose Category (Grocery, Bakery etc.) -> Choose Shop -> Choose Product(s) -> Checkout -> Payment (CC/DC/Netbanking or CoD) -> Delivery (90 Minutes)

Interesting observations:

Your privacy is maintained; even your Phone Number is shared with the ‘Boy’ only if he is not able to find your address.
Ordering Gatorade, I enjoyed a free Mango.
Ordering a Pastry, I realized they’re trained thoroughly enough to practically insist on ensuring that the order reaches only the person it is intended for.

A unique service, unsurprising enough, investors don’t hand you a $45.5 million (Rs. 270 crore) cheque for nothing!

Seemingly random, I feel a brainwave coming.

To be continued..