Monday, December 23, 2013

The Perfect Ecommerce Customer


We are a very customer oriented company and try to provide the absolute best service possible. Companies that have ECommerce as their primary channel cannot afford not to give their customers the very best service. It is well accepted that Ecommerce can bring great benefits to customers be it discounted or competitive prices, convenience of shopping from home, options like returns and refunds which are usually unavailable in traditional retail or commerce. As a small company with sustainability dependent on timely cash flows, we also have a perfect customer in our mind.

The perfect customer for us exhibits the two traits below :

1)  Responsible : As Customers, many a times after we buy, we tend to think about a few questions after we buy it - do we really need it ? Will it fit my sense of style etc. Since Ecommerce is not touch and feel as traditional retail, it is important to look at product details, the size, shape etc and how it fits ones needs. This can minimize any chance of returns. A return is not a happy outcome for both the customer and the retailer, especially for the retailer, because there are multiple costs related to a product - marketing cost, operational costs, logistic cost, cost of capital etc. An ecommerce transaction is based on mutual trust and shared responsibility between a customer and the retailer. Here's where a responsible customer helps the whole ecosystem to be cost efficient and provide benefits both the customer and retailer.

2) Reasonable : There are multiple parts in processing an order e.g Payment, packaging, labeling, delivery, receipt etc. Though some of the bigger Ecommerce companies can sometimes provide all of this in a single day in some cities, most deliveries require a lead time between 2-5 days. The perfect customer understands this and provides the right information (e.g availability for receipt of goods to Courier person) to facilitate this. She also understands that everyone in every industry be the manufacturing industry or the logistic industry have holidays (e.g Sunday) and is respectful that business is conducted on business days. As a owner of a business that employs bottom of the pyramid artisans and painters, I consider it extremely important that my employees have reasonable work timings and work days.

As a company, we focus immensely on not just finding customers for our products but also the perfect customers. Thats why we have had great customers, some of whom have become great friends as well. We get to hear a lot from them, especially via Ebay and Mouthshut.

Ebay
http://feedback.ebay.in/ws/eBayISAPI.dll?ViewFeedback2&userid=kraftinn&ftab=AllFeedback&myworld=true

Mouthshut
http://www.mouthshut.com/product-reviews/Kraftinn-com-reviews-925660773

I know it is kind of difficult and maybe controversial to be picky about your customers but I need to make sure that we run a sustainable business so that I can pay my employees on time and that's the only way. Thank you to all KraftInn customers. You have been perfect. 

Friday, December 6, 2013

Startup Funding India

Startup Funding India

When I decided to become an entrepreneur, I had zero capital - absolute zero, in fact I had quite a few bills to pay - Credit Card Bills, small loans from friends etc. I had already exhausted my limited amount of savings on traveling around a bit and looking for the right ideas. So, I did what most people would do - I reached out to friends and family and got the very initial funds to kick start my business. The place I would start my business at,  had to have the absolute minimum cost for me in terms of personal expenses - what better than staying with Dad and Mom and So, I started at my home town in Assam.

India is a land of entrepreneurs if you look at the countless number of small businesses - the neighbourhood grocery stores and the thelas, but for reasons perhaps related to western influences or maybe demographic, the word 'startup' is often spoken in conjunction to a few select businesses - these are usually related to Electronic commerce, tech products, education and somewhat lately, with sectors like healthcare. Traditional Manufacturing and Services companies typically don't come to mind when you talk of startups. This being the case with KraftInn - because we started out basically with the idea of making ecofriendly home decor items that we could hopefully sell to the bigger retailers in bulk made us somewhat of an business rather than a startup. However, a year later, when we decided that we would primarily focus on selling online - we also started getting some attention as a small ECommence brand. This is when we figured out that it may not be such a bad idea to try approach for some angel or institutional funding. I reached out to a few angels and venture capitalists. I really had no idea how much money I exactly wanted but then, I gave it a shot and managed to meet a few.

Here are a few things that I found out (experienced) :

There are various types of investors available, two of the important ones include :

a) Angel Investors - They usually invest at an early stage and provide seed capital and usually is a high net worth individual or a group of them. They seem to invest primarily based on the strength of the business idea or the pedigree of the team

b) Venture Capitalists -  They usually manage a fund which is pretty big (hundreds of millions) and invest in somewhat mature businesses (compared to angels - maybe some initial success story or prototype)

There are numerous other ways to get funded, but usually that is based on debt or more attuned to established businesses. Funding from Angel investors and VCs make a lot of sense because they are equity based instruments.

Based on my interactions, I have noticed a few things :

1) Team/Pedigree - This is something that matters a lot. Different people have different methods to gauge this - but good degrees from Ivy league colleges seem to help, previous startup experience seem to help, family background etc.

2) Scale - At this moment, In India, investors dont seem to care much about profits - a lot of the conversation usually is around revenue scaling - A business that can show the potential of growing by 500 percent a year in a large market is likely to get funded as opposed to a niche profitable business with more modest growth targets. VCs are probably looking at a business that can scale to 80-100 Million dollars in 4-5 years. This is probably the right thing to do from a investor standpoint because a business that goes from 0 to say 2 Million USD in 4-5 years is still very small from a investor return standpoint

3) Exit - Currently there are two possible exits for indian startups - first is an acquisition and the second is a IPO. For an angel investor, probably there is a third option - which is offloading stake to a bigger investor. So a business that looks likely to provide more exit options is likely to get funded - hence it is difficult for certain niche businesses like say a technology product company to get easily funded - because the exit is not clear or there isn't much precedence.

4) Market Size - Investors seem to love the idea that the addressable market is big - it is somewhat of a strange argument in itself - because every business can always expand with the right capital and success metrics and address a larger market - I mean a successful tea stall can probably become a restaurant and then a chain or restaurants and potentially the biggest chain of restaurants in the world. However, if at the outset the initial market looks very small, investors seem to lose interest.

From the above funding kind of scenario, our business is not really a favourite for such kind of investment probably at this point - our location is too remote, our business focus is too narrow and our addressable market is somewhat small. Maybe once I reach the first significant economic milestone that I have set for myself, I will give it a wider canvas.

Have you spoken to any investors or got funded ? What has been your experiences ?



Wednesday, December 4, 2013

Offer Your Home the Natural Look with Bamboo Home Decor

Offer Your Home the Natural Look with Bamboo Home Decor

Guest Post by James Patrick

Thank You James for the wonderful Article

People usually look for innovative home decorating ideas. But, at the same time, they feel the urge of being a little closer to nature. With the pollution around us gradually increasing, it is obviously a better idea to stay as close to nature as possible. It is quite impossible to stay anywhere near a forest and attend your workplace. Therefore, you need to think smart in order to avail yourself a natural way of living.
How about customizing your home while giving it a natural look? Doesn’t it sound great? Bamboo can help you accomplish this task. With time, the demand for bamboo decor along with bamboo accessories is increasing rapidly. So, if you are interested in home renovation or add a fresh new look to the rooms, bamboo can be of great help to you.
The first thing that comes in mind after hearing the term bamboo home decoration is the traditional Asian houses with various accents of bamboo around it. Many people would think of it as an absurd idea but, with the rising rate in people craving for a piece of nature within their house, bamboo home decoration can add a great amount of elegance to your house.
Recently, the market has experienced a great demand for the traditional materials when it comes to the purpose of home decoration. Many people are opting for bamboo in order to create furniture, garnishes, window applications, flooring, and even curtains from it. There are many effective ways in which one can use bamboo to decorate their home for a natural yet elegant look.

Bamboo as a Wall Garnishing Option

Wall decoration will be nothing like before if you add bamboo to it. The wall sides can be easily covered with various kinds of bamboo applications that are available in the market. This is one of the smartest ideas to save a lot of your money without wasting them on various paints. Moreover, the guests will definitely have a reason to appreciate your rooms.

But, the room should have the appropriate size and accessories if you are planning for bamboo wall sides. Therefore, if you think that the walls would look better with paints on them, remove the idea of bamboo from your mind. Instead, go for various handicrafts manufactured from bamboo like wall hangings, curtains, photo frames – a few to be named.




                             Bamboo Lamp Covers – An Innovative yet Elegant Accessory


Bamboo Furniture

This is a very popular option in most of the tropical as well as sub-tropical areas. Furniture made of bamboo is available in various designs and can probably meet the taste of almost any individual. Moreover, they can increase the beauty of your room like never before.

Bamboo Accessories
If you make a quick search online, you can find a local market filled with a wide range of bamboo accessories that go well with almost any kind of environment. From vases to show pieces, curtains to bowls, you can find almost anything to enhance your home beauty.
Therefore, choose bamboo as the main component of your home decor accessories and live as close to nature as possible.

Conclusion:
Decorating your home can be fun if you add some innovative ideas to the accessories. Bamboo has emerged as one of the greatest components for home decoration that can also provide your home with a natural look.

Author’s Bio: James Patrick is an absolutely proficient author. He loves to write on various Home Decoration topics and contributes them to Finelineconstruction.net in Charlotte, NC.

Summary: Many people want their room to have a natural and fresh look. At the same time, they want their room to be elegant. All these purposes can be served if bamboo home d├ęcor accessories are used.

For more do visit  Finelineconstruction.net

Monday, November 25, 2013

End Violence Against Women

Today is International day for Elimination of Violence Against Women

We at KraftInn try to imbibe the sense of gender equality in our artisans and help them understand the need for complete elimination of violence against women. A significant amount of violence against women in the working class can be attributed to alcohol addiction and we try to positively influence our male employees towards alcohol de-addiction and the need for gender equality.





Monday, November 18, 2013

A Message to our Customers

At KraftInn, our endeavour is to create great new products using ecofriendly material like Bamboo and Water Hyacinth. Each product we make is made by our employees at our factory and this is why we are able to provide factory prices directly to our customers leveraging the power of ecommerce. This means we are able to eliminate distribution costs, warehousing costs and real estate costs and are able to pass these benefits to the customers. Every sale that is made in KraftInn is able to provide for sustainable income for KraftInn artisans and makes a bottom of the pyramid social impact. We currently employ 7 full time artisans and hope to be 20 by the end of the year. Thank you for your support. We appreciate it.



Best regards,
Parikshit
Promoter, KraftInn




Sunday, November 3, 2013

Ecommerce Packages




Packaging is an important part of our job. 
Anjan, our Packaging expert is among other things, 25 years old, father of three, has the toothiest smile in the world, a painter, collects water hyacinth leaves during the weekend, lives by the highway, chews betel nut all the time and has been integral to the KraftInn journey



Wednesday, October 2, 2013

Top Advice for First Time Business Owners


When I started a few years ago, things looked quite disappointing. I was 30 years old, I had no savings and the company I worked for was about to close down. No one in my family had ever done any business and I had no idea how to go about it. One thing I did was I solicited a lot of advice from anyone who was willing to give it - friends, family, small business men, naysayers etc. A lot of the advice, I didn't end up taking but some of it was golden. Here are a few that were pretty simple in hindsight but helped me a lot.

1) Give it 5 years : I met a 50 year old man who had been in business for two decades. I have almost no idea about the kind of business he did, but he told me - 'It will take at least five years before you will know whether your business is successful or whether you should try something else'. In the beginning, I was a bit sceptical because five years seems a long time but I guess though there are outliers, most businesses are not instant successes and the first couple of years are tough.

2) Create a Brand - The first year, I concentrated on creating a lot of products but at the same time, we took a lot of orders where we basically served a lot of architects and designers. It was pretty good but we hardly had any visibility into orders and had no pricing power at all. One of my good friends suggested that it was important to create a brand and make it stand for something that people could identify with. That's when I seriously started building our brand which has been a great thing.

3) Experiment - A friend of ours told us to do something outrageous - it didnt have to make a lot of sense but it will help push you to do things that you wont otherwise try. That's when we created the Wisdom tree using bamboo strips - it took us more than a month to create and it was exquisite and beautiful. It never sold because the price became prohibitive and was too big to ship but it re-inforced in us what we could do - everything after that became easy

4) If it breaks, fix it again and again - We sent a item to a customer and it got slightly damaged. We replaced it but the second time around, it got bent a little. The customer, being a perfectionist, advised us to send it again - we could have refunded the money and practically it was a small item with no real profits. However, the customer was adamant and didn't want a refund. In the end, we sent the same item for the third time and finally got it right. It was not a very pleasant thing to do, but in the end, it helped us be extremely quality conscious and made our packaging foolproof.

Tuesday, September 24, 2013

Best Practices for Selling on Ebay

When we first started selling online, we didnt start with a online website of our own. This was because it takes a lot if effort to actually build a website from scratch - the hosting, the technology, the SEO, the advertisements, the works. Also, we had very little idea about the challenges of selling online - the supply chain, the logistics, the inventory management, the customer service aspect of it. Ebay as a platform made perfect sense for us to launch our products online - apart from the fact that it was the biggest marketplace in India, the tight feedback system and inherent rewarding of good performance was a big draw. We have had a fairly reasonable experience with Ebay and we learnt quite a few small but important things along the way. Here are some of the important ones in case you are looking to sell on Ebay (especially India)

1) Feedback is Key : Good feedback is extremely important. Take that extra leap to get good feedback. Sometimes you may be at fault and sometimes you may run into an unreasonable customer - whatever the reason, try to get good feedback even if it means you lose money on one or two transactions

2) Ship fast : Ship as early as possible which is usually 1-2 days - the quicker you send it, the better it is. If you cant ship early due to inventory issues, think of de-listing such items

3) Good Photos : This is obvious - put up good, reliable photos. Dont zoom too much or make things seem larger than it is - the customer may buy the item but give you a bad feedback which is worse than not buying at all.

4) Good Description : One liners or very small descriptions are not very helpful. Customers want as much information as possible - about the item, size, material etc, especially since they cant really touch the product.

5) Over Communicate - Ebay sends notifications when an order is placed or shipped. However, if you send an email or call a customer, it is at worst an irritant and at best a customer who is assured and may come back for repeat customers.

6) Dont try to deal outside Ebay - There is an implicit trust that is set in the platform while setting up buyers with sellers. If you or the buyer breaks the trust and does the transaction outside, there is a good chance that one of you may not be happy and there would not be a neutral authority to sort it out.

7) If you make a mistake, admit it and correct it - e.g if the item is broken, talk to the customer and resend or refund the money.

8) Free Shipping - People hate to pay for shipping. Its a psychological thing - somebody needs to pay for the shipping and it has to be part of the cost but dont make it explicit and differentiate customers based on location.

Thats all for today. Do visit our Ebay store : http://stores.ebay.in/kraftinn











Monday, September 23, 2013

Hiring for your startup

I started KraftInn with very little capital and with help from family and friends. It has been an incredible journey and though I still dont have any fixed salary or income for myself, I have been able to hire six incredible people - five of them artisans and one of them a painter, a man of great jugaad and a great smile. Hiring is a great responsibility in itself especially when you are looking for people who have families to take care of, have a limited education and are not as spoilt for choices as graduates or engineers. Regardless of the struggles of the company and with a little help from family and friends, I tried my best and has been successful in paying for their salaries on time and provide for their accommodation - Some of them have never been out of their villages.

Now, we are at a phase, where I have started looking for talent of a different sort - creative people like designers, for accounting and customer service. We are based in a very small town, so it works both ways - its difficult to find talent and at the same time, there are people who find it difficult to find jobs.

I have come up with a few notes to figure out how to hire the right people. Some of them are :

1) Integrity : I would rather prefer an employee with limited talent and exceptional integrity rather than the other way round.

2) Relatives : I am a bit confused on this one. When you are very small as a company, it is incredibly difficult to attract talent so one way is to find people who are relatives and looking for work and work out a mutual benefit thing. I just think it may get a bit complicated so I have skipped on this one.

3) Friends : When you start up, you have a host of friends who encourage you and some of them may just be bored with their jobs and looking for that opportunity. Since you know them for long, you know traits about them and hidden talents which most other companies may not have found. Once I am ready to offer something substantial - a reasonable package or equity, this is definitely something that I look at.

4) Interviewing : I look out for resumes and interview people but this one is time taking and sometimes it takes a while to find the right candidate and that works out for everyone.

Let me know if you faced any of these. It will be cool to know what other startups, especially with low capital and a techno-functional businesses are doing this.







Saturday, September 14, 2013

Five mistakes as an Entrepreneur

I have been an entrepreneur for the last three years. It has been a roller coaster ride and I have made some very common mistakes. I sometimes wish I didnt make them or somebody could have advised me. So just sharing if it is useful for you.

Mistake No 1: Getting into something I had no clue about

It is difficult to know about a business without doing it. However starting something without any groundwork without any expertise is a mistake. My first shot at entrepreneurship was a HR Consultancy. It is a business built on reputation and though I and my partners were able to arrange meetings with top HR managers, they didn't really trust us due to our lack of experience or the right qualifications for the business

Mistake No 2 : Not starting earlier

I had an inclination and opportunity to become an entrepreneur but I didn't start till I lost my job after the company I worked in closed down. I probably should have started 5-6 years earlier

Mistake No 3: Doing it for money

This is a bit counter intuitive but I believe one must be passionate about the business and when I tried my first business, I just wanted to make money and was not really passionate about the idea - that does not really work. It starts making sense when you really do what you like to do - there are low margin businesses and high margin businesses but what drives you day after day is the passion behind the idea

Mistake No 4: Thinking that marketing is free

For a long time, I believed that if I made something good, it will market itself for free. It does not work like that - no matter how small the budget, it is important to take your business to the right audience and that costs money

Mistake No 5 : Doing everything

No matter how smart you are, you will always need to pass some of the things to others. You cant do all by yourself. It is important to understand your core competence and let other people do things that they are good at - it may be a colleague or outsourced or maybe it can just wait.

Monday, September 9, 2013

Comparison of Courier Companies in India

As a company with an ecommerce front end, we work with various partners and one important partner is the courier company. We have worked with various courier companies and just wanted to share some findings. Obviously, which courier company is the best is a subject of debate and may vary based on location, price flexibility, quality of service requirements and so on.

A quick snapshot based on our experience :


We send a lot of things to remote parts of the country and India Post has by far the best reach. The price is also reasonable. However, unlike other courier companies, they dont really do doorstep delivery - this may be because Postmen in India have cycles and the traditional idea was probably to delivery letters not packages. Whatever be the reason, this is kind of non-negotiable in Ecommerce. You cannot expect customers to come to the Post office to collect their packages, unless they are in really far flung areas.

We have had a good relationship with First Flight. They are extremely competitive in two areas - Accessible and ready to get your business. Every Ecommerce business is a customer who will give them consistent revenue - They seem to understand that. The price is pretty good too. However, the deliveries are not as consistent as we expected them to be- Even 5% non-deliveries or late deliveries can kill your ecommerce business and this is one area that needs to be improved.

Bluedart in our experience has been extremely consistent-yes, consistent is the word. When you do a ecommerce business, it is important for you to guarantee delivery at a particular date - it may be 3 days it may 7 days, but you should be able to set expectations to the customer and Blue dart is fairly consistent. If it has to go to location x, it will take Y days and most of the time, it works like that. Price is slightly on the higher side but then sometimes you are ready to pay a premium for a service well done.

We also worked a bit with Fedex. Though service quality is excellent, they still have a lot of differential pricing which is difficult to understand - Too much variable pricing or location based variables results it practical difficulties for ecommerce companies. You want to predict with good accuracy your logistics cost - it should not be a surprise.

Conclusion : Regardless of the type of business, I guess it makes sense to choose more than one and negotiate for price and flexibility over a period of time. Also, it will be great if the courier companies start thinking of Ecommerce companies as customers :) - Its a great revenue stream and we are ready to give consistent revenue to the ones who give us good value for our money. Help us when we are small and we will be loyal as we grow bigger, I guess. Afterall, Courier companies will probably be the biggest winners in Ecommerce

Friday, September 6, 2013

Packaging of Lamps

Packaging is an important part of our job.
Anjan, our Packaging expert is among other things, 25 years old, father of three, has the toothiest smile in the world, a painter, collects water hyacinth leaves during the weekend, lives by the highway, chews betel nut all the time and has been integral to the KraftInn journey


Saturday, August 31, 2013

Places to buy great lamps and handicrafts in Bangalore

We are an online brand but have a keen eye on exquisite stuff that is available across various retail stores. 

Here are a few in Bangalore that are very interesting :

1) The Purple Turtles
    This is located in Domlur second stage and has some really high end stuff with exquisite colours.

2) The Ant Store
    This is a crafts store showcasing North Eastern Handicraft. It also has a cafe on top. Located in Indiranagar, it is sometimes difficult to find it but once you are there, you dont want to leave.

3) IndyaKaleidoscope
    This place in Koramangala has great things from all over India, like pottery from Manipur and exquisite art work from Rajasthan

Wednesday, August 14, 2013

KraftInn Showcase at NEDFI Guwahati

We recently attended the NEDFI exhibiition in Guwahati and showcased some of our products. Here are some pictures :




Fig 1: Contemporary Floor Lamp (Large) : http://www.kraftinn.com/contemporary-floor-lamp



Fig 2: Hofura Yellow Lamp : http://www.kraftinn.com/lamps/table-lamps/hofura-yellow-table-lamp


Fig 3: Zeng Lamp : http://www.kraftinn.com/lamps/table-lamps/zeng-lamp

Monday, August 12, 2013

Top Ecommerce Websites in India

A quick reckoner for top Ecommerce Websites in India (not in any particular order)

General

Flipkart.com
Yebhi.com
Myntra.com
Jabong.com
HomeShop18.com
Indiatimes.com
Rediff.com
FutureBazaar.com
FashionAndYou.com
Fetise.com

MarketPlaces

Ebay.in
Snapdeal.com
Amazon.in
ShopClues.com
CraftsVilla.com

Aggregators

Naaptol.com
Junglee.com

Apparel/Fashion

Zovi.com
Freecultr.com
DonebyNone.com
Yepme.com
Zivame.com
Cilory.com
BagsKart.com
StiffCollar.com
BasicsLife.in
Bewakoof.com
Bluegape.com

Jewellery

juvalia.in
Caratlane.com
Bluestone.com
JewelsKart.com

Accessories

Lenskart.com
WatchKart.com

Health

HealthKart.com
Goodlife.com
NaturalMantra.com

Grocery

Bigbasket.com
Zopnow.com

Sports Goods

Playgroundonline.com
Sports365.in


HomeDecor

Zansaar.com
Fabfurnish.com
Urbanladder.com
KraftInn.com
HeavenandHome.com
BedBathandMore.com

Niche

Engrave.in

Baby Products

FirstCry.com
Babyone.com
Hushbabies.com

Ecommerce/Payments

Zepo.in
Martjack.com
Ebs.in
CCAvenue.com
BuildaBazaar.com
PayU.in

Thursday, August 1, 2013


Facebook Marketing : Creating a Good Facebook Post

As a small ecommerce based business, one of our key marketing tools is Facebook. I am not privy to the spend of others or the reach, but based on the Facebook insights, there are a few things we have learnt.

Take a look at our last 5 posts in our Facebook page  (from Facebook Insights view. We have 12k odd fans). The * indicates the posts that are much more engaging than other posts
 
Post # 5 - A long image with lot of text with funny anecdotes and a link to our website. No of likes -7, No of shares - 1

Post #4 - Image of one of our Products and link to product. No of likes -30,No of shares-2

Post #3 - A wonderful image of many of our products arranged with a link to our website. No of likes -76, No of Shares -2

Post #2 - A funny timely image with a reference to a recent political event. No of likes -13, No of Shares-1

Post #1  - A simple image with one our products, an engaging quote and a link. No of likes - 25 likes, No of Shares  - 1 (this is only 2 hours old as of now)



In Summary Post #3 and Post #1 seem to work very well.

I also looked at older Text only Posts, Video Posts and so on.
Here are my top (although fairly generic findings)

1) Images are the most engaging of all posts. They are the quick wins

2) Text messages seem to reach to a large audience very fast but engagement is usually poor.

3) Videos especially ones that are about your brand dont seem to do well. Maybe Youtube is still the right place to go when it comes to Video. Its too much hardwork and low ROI at facebook. Though a good viral video may do wonders, creating such a video requires lot of hardwork, luck, skill etc

4) People like simple images. A great image needs to be focused. Too much text or highly intellectual content finds limited takers. Funny is good, clever is good as long as it is easy to get.

5) Users tend to share images where the brand message is not the main focus. An excellent brand focused message that is clever, interesting or funny gets a lot of likes but not necessarily a lot of shares.

6) Too much text does not work too well unless it is like a short story

7) Specific Links for Specific Images : If the image of a product that has a low chance of getting shared as it is something specific to your offering, it is better to provide a specific link than the generic website link.

8) Website Link for Generic Images - In case of a generic image(example funny image) that will probably get shared, it may help to put the generic website link that you want to promote as it will probably reach a complete new audience who will click on the link for curiosity

We have just about 12k fans and these are just generic observations that may be helpful. Hence sharing. Do let us know what works for you.


Friday, July 19, 2013

Payment Gateways in India

One of the key parts of an Ecommerce store is a Payment Gateway. In the west, payment solutions have made it very simple for vendors to integrate a gateway to their stores - for e.g integrating with a paypal is a breeze. However, it is extremely painful to onboard a payment gateway especially if you are a small player. This is primarily because of two reasons :

1) Paperwork - For enabling payments, each bank has its own set of procedures and it takes upwards of two months to get your netbanking, debit and credit card payments approved by the leading banks. The usual reason is regulation and RBI guidelines but the moot point is it all takes quite a bit of time.

2) Charges based on size - Typically Indian payment gateways charge an initial fee and annual maintenance fee. If you pay a higher amount, you get a lower commission charge and so on - typically if you a very small vendor, the charges are very high - mostly 5% and annual AMC separately. The question is why cant they take a one time charge for the paperwork and have a 2% commission for all transactions ?

We have had a good experience with our payment gateways so far but the charges are still extremely high. Flipkart has recently started its own service called Payzippy and they seem to have gotten rid of all the strange charges and made it more democratic - Hopefully this will shake the market a bit and things will become a bit more reasonable. Fingers crossed.

Sunday, June 30, 2013

Inventory vs MarketPlace

'Inventory or Marketplace ?', this is one of the pertinent questions of our times in the context of ecommerce. While the inventory model means that the ecommerce site has to carry inventory of all products it sells, the marketplace model requires the ecommerce site to act as a exchange platform between buyers and sellers and it charges a commission. The upside of a inventory model is faster delivery times and a consistent customer experience while this also means higher inventory and supply chain costs. The marketplace model shift most of the inventory risks and costs to the sellers but it becomes a continuous challenge to manage seller and buyer expectation in a consistent and fair manner.

Though both models look like chalk and cheese, it is important to remember that that the basics are the same from a business model perspective :

1) Efficient Inventory Management - For a great customer experience, having just the right amount of inventory is very important. Nothing is as annoying as telling a customer after two weeks that his or her order cannot be serviced. For websites that carry inventory, this means 'sell what you have' while for marketplaces, it is manage sellers to create a structure where sellers who manage their inventory well are incentivised (this can be done using feedback systems)

2) Efficient Delivery - Getting orders delivered in reasonable time is important for ecommerce. While for inventory based models, this is about managing inventory efficiently, for marketplaces, this is about not overdoing checkpoints and reducing unnecessary logistics costs.

3) Customer Management - Though customer service is paramount, it is worthwhile to remember that there are segments of customers that are still not ready for Ecommerce. 

At KraftInn, we have had some experience in both models - We use the inventory model for our website -www.kraftinn.com while we participate in the marketplace model in marketplaces like Ebay as a seller.

As a seller, we feel it is important to get the right balance between seller satisfaction and customer satisfaction and there are certain things that marketplaces should not do. Here is a small list :




  There are three key stakeholders in a marketplace model and it is important to get the right balance between the three.





 No matter whether its the inventory model or the marketplace model, the ecommerce space is hyper competitive and the ones which get the right mix are the ones that will work. We are a very small player and this is just the beginning of an exciting journey :) 

Friday, June 21, 2013

Will the internet kill all large traditional businesses ?

The other day, I dropped by Coffee Day(indian coffee chain - startbucks equivalent). Adjacent to it was the well loved Crossword store and I clearly remember that there was a connecting glass door somewhere which let people who had come for coffee to stroll by and look up books and dvds and vice versa. I could see some books lying about but the place looked empty and the glass door seem to have vanished. So, I casually asked the Coffee day guy and he told me something to the effect that the place was shutting down. It was kind of a gentle shock for me and though I could hardly remember buying a book from Crossword, hanging about in bookshops has been one of the idle pleasures of urban life.Then it struck me, that though I dont read a lot these days, there was a time I spent a couple of thousand rupees on books every month and most of it was at Crosswords. In the last six months, that spend had got diverted to online stores like flipkart and in many cases I could just read for free - flipboard etc. I have no idea whether the store actually closed down due to business reasons or whether it was just a phase of temporary shutdown due to renovation etc but like in the US, book businesses everywhere seem to be facing major challenges and most if not all is due to the internet.

The internet is quite puzzling. Consider this :

1) Email is free - only a decade or so ago, people used to send telegrams and pay per word. Its weird that a service that is many many times faster and reliable is actually cheaper - well not just cheaper, free.

2) There was a time only 15 years ago, when we used to attend book festivals to buy editions of Enclyclopedia for thousands of rupees. Now you just get a million times of that content for free. Also, searching this mammoth knowledge base again is free.

3) Music is basically free. If you are a music lover with generic tastes like most of us, gaana.com gives you almost everything you need - For free.

In short, the internet has turned most industries on its head :

1) Book industry - Why would you buy a book if you can download it ? Traditional booksellers are just looking one way and that is down.

2) Music industry - It was only ten years ago that you could just walk along Planet M at Brigade Road, Bangalore and sample out music before buying. Now, its difficult to imagine people buying CDs

3) Post Office - The Indian Post office just stopped the telegraph service.

Which ones will be next ? The movie industry, the retail industry , enterprise software products.

All this obviously means that if someone is losing out, someone must be winning. So who should be the winners, obviously the internet companies - but if you look a bit closer at the internet companies, if you leave out the leaders, most are struggling to make money...Giving things free actually costs money, giving discounts actually cost money. The internet can be a democratic force giving the small guy a chance to compete but it has probably made the race so competitive that its a race towards the bottom and may kill a lot of industries in its run and maybe hurt itself on its way. The good part is you dont need a license to join the race.



Thursday, June 20, 2013

Customer Segmentation


It's always interesting to analyse your customers. Though there is direct relation between a website's traffic and actual customers, it often throws up results that are quite different from web traffic analysis.

Here are some interesting things we found out(based on last 3 months data) :

1)  67% of our customers are male - Our website traffic indicates that the male:female ratio is almost 50:50 so this may mean two things :
      - Men are more likely to purchase things online
      - In many cases where women make a purchase, the men make the payments.

   Not sure which one is true, but I am sure this statistic has also to do with the fact that we dont do cash on delivery.

2) More than 50% of our customers are from Mumbai, Delhi and Bangalore. I guess this means people in large cities are much more comfortable purchasing online (especially if no COD is involved) and if it is a small niche website like ours.

3) Our top 3 products indicate that there is a curious mix of pricing, value, images of products that make certain products much more appealing. We have some excellent products that look great - touch and feel wise but somehow they get lost in the online world. Another observation is though people look at creative items more, it is usually the simpler items that people tend to buy.

Image : kraftinn.com statistics Source : www.kraftinn.com

Wednesday, June 5, 2013

Amazon.in

That it would happen was never in doubt, the question was when and how. With the indian government dilly dallying in whether to allow FDI in retail ecommerce (its another story that most of the investment has been FDI anyway considering most ecommerce websites are founded by foreign VCs), Amazon finally seemed to reconcile to the idea of launching as a marketplace instead of an inventory driven store. Like Junglee, it has been a soft launch without too much brouhaha. They intend to start with books, DVDs and TV shows from what we hear.

As you would imagine, they have got most things right from the very beginning :

1) Selling vs fulfillment - Interesting they do both while most other indian marketplaces tend to stick to one. There are some vendors like us who like to do the fulfillment (cost effective both for us and customer) as our stuff is pretty large compared to others and cost of goods,storage and returns are pretty high. However, I am sure there are lots of vendors who would like to pass on the fulfillment part to Amazon especially in categories like books where the size, cost and logistics form a smaller part of price compared to the content or marketing. Looking at the options, both look pretty simple and easy to understand, exactly the way one would imagine. This seems to be a global best practice for them but nonetheless, bringing it to India is important.

2) Pricing - Pricing is extremely simple or so it seems - No listing fees and interestingly, the closure fee and the commissions) seem reasonable

3) Feedback and Guarantee Program - This is pretty lousy in most marketplaces and only Ebay does this well. Amazon will surely bring best practices here from around the world.

4) Goodies for Sellers - The fulfillment prices seem to be very good and this may be a promotional thing for the time being but many vendors will like this.

Overall, it seems like an amazing platform for Manufacturers and Sellers and we can't wait to get onboarded :)



Friday, May 31, 2013

Shopo.in

If you are a handicraft afficionado, you must have surely come across the delightful website shopo.in. Today it announced that it has been acquired by Snapdeal.com. Its not exactly clear what direction it will take, whether the website will completely shut down or whether sellers goods will be made available at the Snapdeal website.

We were one of the early ones to setup a shop in Shopo.in. Unlike many others, they got a lot of things right from the beginning :

1) Respect for Sellers : There are host of websites that will call you and want you to list your products in their website, but most of them treat sellers as if they are not aware of the internet or plain dumb. There are designers and manufacturers that make great products and Shopo showed respect and tried to create an ecosystem rather than act like traders ready to make a killing

2) 15% Commission : India is a very difficult market and it is important that products are priced right. Another important part it should make sense for the whole ecosystem for products to be sold and customers to be happy - this means designers and manufacturers get to sell at a price that is good for them, marketplaces get a sensible commission and customers get a reasonable deal. Many players dont get that and want to charge 30%-40% which simply breaks the system. Shopo went ahead and fixed it at 15% with no listing fees - which was just great for everyone.

3) From Designer/Manufacturer to Seller - There are a lot of ecommerce stores that neither want to become a pure marketplace nor carry inventory. They get an order, place it to the manufacturer and then  get in their warehouses, package it again and send to customer. This is a bit ridiculous because 1) Higher chances of stock out 2) High delivery times and low customer satisfaction 3) Double the cost of packaging and higher chances of breakage 4) Higher price. However, Shopo did not fall into that trap and instead focused on enabling the seller (pickups from Fedex etc) rather than become an unwanted gateway in between.

4) Great Sense of humour - Shopo has a great sense of humour and it is apparent in their emails to sellers

There are also a few things where we thought Shopo got it wrong :

1) Logistics - If you are a seller, you can either ship it yourself or get Shopo to pick up the order via its courier partners. Though it was great for the seller and customer, I am sure this must be very expensive because it is difficult to estimate the size/volume of each product and probably it is best left for the seller to ship.

2) Marketing - Lately Shopo tried a form or marketing using which Sellers could market their stuff at Shopo's facebook page etc for a price. This is a bit strange for sellers because they are anyway paying 15% as commissions which should include marketing and payment etc.

3) Technology - Though most of what they did in terms of technology - feeds or the iPad app were really cool, the site was a bit slow at times and as a seller, your products kind of got lost as new and new sellers joined - somehow it felt that relevance and popularity lost out a bit to how new your stuff was.

Overall, Shopo was like a breath of fresh air and hopefully, these kind of services/websites dont lose their relevance when acquired by the big boys.

Best of luck to the Shopo team - you guys have been awesome.






Wednesday, May 29, 2013

Ecommerce Trends

There are various trends that are in vogue currently and as a very small company, it becomes very important to us in being extremely picky when it comes to prioritizing what we want to do. Here are some trends we are looking at very closely :

1) Videos : It is widely accepted that videos play an important role when it comes to search engine optimization. They are crawled and indexed easily though we have not been able to determine how it affects the number of queries. Creating a compelling video is hard work - no video is better than a patchy video. Videos also take significant bandwidth which means two things - 1) higher storage costs and 2) requires a good connection for the end user - it is possible that you may have a wonderful video and 90% of your customer base can't get your page to load properly because they have a slow connection. Our experience with video has been very mixed. There is no significant increase or decrease in product conversions due to videos. So we are taking it a bit slow when it comes to video - about 10% of our products have videos.

2) Mobile : Do we need a iPad add ? Do we need a iPhone or Android app? The answer at this moment for us is no. This is basically because there seems to be a lot of reluctance in india to use credit cards online so extending that, we believe that using them on a mobile app will be a bit more complicated - also payment gateway integration may not be seamless. The app strategy may be good in case of COD, but since we dont do COD, it looks like a lot of investment without returns at this point. Also with HTML5 and other things on the horizon, we believe the app thing may be a pasing fancy and a singular web based UI across device will start taking precedence in the future.

3) Google : Though we dont have a lot of insight into how Google works, it seems with the recent updates, Original content is becoming more and more important and the number of links especially bought links are kind of becoming less valuable. So, we have kind of stopped doing too much SEO jugglery and just put up good content when we have a new product. Traffic wise, our strategy hasnt worked very well, but at the moment we dont know of ingenous ways to build links and traffic from emails etc havent been very productive for us.

4) Social : Pinterest is not working for us in India - we get some repins etc from primarily US users, but dont seem people care much about pinterest much. Twitter brings in lot of instant traffic but cant seem to connect any conversions to twitter. We havent done much with linkedIn.Facebook is where we spend most of our social time. Our audience engagement has been pretty good and people usually respond well to smart and funny posts, pictures - e.g animals have good engagement. Our average is one post a day and anything more than two usually causes engagement rates to go down drastically. Social is great for brand building but from conversion perspective, it seems a bit overrated at this point. We may be wrong, but that has been our experience though getting accurate conversion data from facebook is very difficult.

5) Advertisement - We have an absolutely tiny budget for ads. The ROI is pretty poor but what you gotta do you gotta do. We do a little bit of google ads - only search and video, no banners. The conversion cost are very high and then some of them drop off during the payment. Video is primarily for branding - not sure if it is working - difficult to track. In Facebook, we primarily page post ads and spend about Rs 6-7 per like - Its not too bad but again it is more of a branding thing.

Hmm. Well thats all for today. If you have any ideas, do leave us some comments. Thanks for reading



Monday, May 20, 2013

Idli Profitability

In the times of ecommerce layoffs, people have started talking about something called as 'Idli Profitability'. Apparently, it is a take on 'Ramen Profitability' coined by Paul Graham and supposed to be a state where a company is supposed to generate enough money so that it can take care of its basic expenses like employee salaries and sustain the founders. For a layman unaware of the crazy ride that ecommerce in india has become, it may be somewhat puzzling why this is even a question - every business should be do that - able to manage its expenses that is. However, Ecommerce in India is like big investment pot and too tempting for large investors to ignore even if most ecommerce websites even after 3-4 years have not even become 'idli profitable'.

Profitability is a big challenge and here's why :

1) Traffic is seldom created by brand value but often bought by advertisements. This broadly means generating traffic mostly by ads in Google(search, banner) and Facebook(mostly banner). An average  click using an advertisement is roughly 10 Rupees(take a few rupees here and there). 50 clicks generate a sale. Do the math. Typically you end up spending 500 Rs for a sale (say average - 1500 Rupees). So 25% of your revenue will go as ad spend (considering you are able to generate 20% sales without ads). If you are mature ecommerce company, this percentage maybe lower but you may have probably burnt more money on TVads or in getting where you are.

2) If you manage your own inventory, you have to pay logistics - this will be 10%-20%. If you do third party courier companies or manage your own logistics - I guess it doesn't matter much because in one case it is higher operational cost and in the other, it is more capital expenditure but in the end it  a sigificant chunk. If you are a managed marketplace, you probably dont have to worry about
logistics but typically the commission is 15-20%.

Then there are discounts and returns on COD  etc. Even if you ignore them, here is what you end up with:

For every 100 Rs of business,

Inventory model : Money left :=100-40 (conservative estimate of 25 rupees of ads and 15 rupees of logistics) Typically it is difficult to sell an item at double the factory price so lets assume Cost of Goods as 60 Rs (in case of books it is reasonable to sell a 60 Rs book(from publisher) at 100 Rs after 10 percent discount to a customer but in other like electronics it may be a tricky affair). So essentially you are left with Rs 0 to pay for your salaries (100-40-60).


MarketPlace model : Lets assume the comission charges as 15%. This means you end up with 15 Rupees for every 100 Rupees sale. So Money left := 15-25(ads cost). So ou are left with -10 Rs for your salaries.

It is not hard to see why profitablity or even idli profitability is difficult if not impossible in such a scenario. There are obviously going to be exceptions who will reduce these costs either because of brand name or land grab but for majority of ecommerce players, its gonna be a long chase towards profitability.

As a company with an Ecommerce front end, we face the same challenges and we are just about 10 percentage points away from idli profitability - sad but true. However, we have taken some hard decisions and said no to significant percentage of sales by adopting a NO COD and No discounts policy. We dont have a wherewithal to do a lang grab neither do we have a big marketing spend. We are trying to get around these by optimizing our manufacturing process, hoping ad costs go down in the long run and we are able to build a brand slowly. If I had to take a wild guess about who would win the ecommerce race, I would bet my money (theoretically - not that i have any :) ) on courier companies

Friday, May 17, 2013

Discounts and ECommerce

A lady called us yesterday and asked for discounts. We asked her if she was interested in any particular product and she said that she hadn't made up her mind but was wondering if there were any discounts. This is a common happening for us - every other day we get inquiries for discounts. We had toyed with the idea about discounts quite a few times and had done some experimentation around it. Unlike most other ecommerce retailers, we also manufacture or handcraft our own products in house. Following were some of the things that came into our mind.

1) Discount in the Overall Price : Suppose a product has been priced at 100 Rs and we give a discount of 20%, the price becomes 80 Rs. Why not give it at 80 Rs itself ?

2) Standard Price : There are some items that have an MRP : example a book or a phone. When a discount is given, it is valuable for the customer. But for niche items like lamps, there is no way for the customer to know the actual price, So it is possible for some vendors to just hike up the price by 50% and then give a discount of 20%

3) Marketing Ploy : Indians love discounts and it is usually a great marketing ploy. However, consider the high customer acquisition costs, we think it is more important to get the trust of a customer for repeat purchases or referrals than trick him or her for a quick sale.

Based on the above, we have decided on a no discount policy for single purchases. Its been a tough one and once in a while, we may re-look at things like seasonal or inventory based discounts, but we would rather give a very low price than a hiked price with a discount. Lets see how it goes
Moving our E commerce cart to Amazon Web Services

We are a small company with our basic foundations in handicrafts and small scale manufacturing. We launched our eCommerce store a year ago and it has been a learning experience. Though we started our online sales with Ebay and other market places, we realized that having our own store would give us good value in terms of control, branding, pricing, customer acquisition and last but not the least some independence. The online market is quite fluid and its kind of good to spread your eggs in different baskets. Putting up an ecommerce store in India has its own hassles, primary among them is the payment gateway setup with individual banks giving their approval before they appear in our list of payment options.

For our DNS and Hosting, we chose Godaddy initially which is a pretty good place to start with in terms of ease and cost. They have different types of hosting options available :

1) Dedicated Hosting : You have your own server and you can put what you want. This is pretty expensive so obviously we could not afford it.

2) VPS : This is primarily shared hosting with a dedicated RAM and CPU reserved.

3) Shared Hosting : This is the cheapest and you share a server with multiple other websites.

Based on our limited resources, we thought it would be wise to use Shared Hosting and see where it goes and upgrade as necessary. It is pretty cheap and for the first few months, it was just amazing value for the money we spent. However, shared hosting has its share of limitations, some of them pretty difficult to get by - for one, you dont know how many websites share your server and what kind of loads they have. Secondly since the CPU and memory is shared, you may get a big chunk of it or none. Then one bad website can bring many others down. All in all, it is a good option to start or experiment with but it does not cut it for good professional websites.

At this point in time, we looked at if we could go towards a larger infrastructure, VPS or maybe dedicated. Our traffic is still pretty low compared to high traffic sites, so putting in a lot o money for traffic we would not  get rightaway seemed a bit excessive. Also, we didnt want to change our infrastructure every six months just to scale based on our traffic.

That's where Amazon Web Services came in. We had heard too many good things about Amazon and since we are very small company with technology enablement being only a part of our overall spend, we were kind of wary about the costs. Amazon has a significantly different model than the others - it provides different types of units for compute, storage, load balancing and other tasks as opposed to a monolithic server infrastructure by other hosts. This was both bad and good - bad because each unit had to estimated for cost separately and math can be a bit difficult to predict ; good because you can just start with the very least and scale as you go up. The key was that Amazon provided the opportunity to scale as we grow with very little change in architecture or infrastructure - which seemed quite difficult earlier.

Doing things in AWS can be a bit daunting if you are used to the tools that Godaddy provides where you can just ftp files and run scripts through a UI and you are pretty much done. However this is what we did :

1) Database : Ours is a mySQL database. Migrating the database was pretty easy. Amazon has a service called RDS. We basically did these steps :

a) start a new RDS mySQL instance with user names, passwords of choice.
b) Godaddy has tool for managing mySQL - myPhpAdmin. Click the export button and you get a dump of the table metadata and data.
c) The next step is to use a tool from your desktop (may something like myPHPAdmin) I think we used mySQLworkbench to connect to the RDS instance and dump our data in the new RDS instance.

Databases as we understand can be vertically scaled to a point - increase the storage in the instance. Horizontally, it is much trickier. Replication may be the way. However, at this point, we dont see our database to be too large - we are a niche store with a small catalog of products. So that's that.

2) PHP Server : Our is a PHP application (which ecommerce cart isn't - alright there are some but you get the drift). For our server, we did the following :

a) We initiated a Amazon EC2 instance. This is like a small empty box somewhere out there in the wild. We had to install two things for our cart to run - 1) apache web server - httpd basically 2) php.
b) Next was to transfer the application files. A good tool to do this is Filezilla
c) Using Filezilla, we transferred the application files to /var/www/html folder.
d) Make appropriate changes to database names, passwords and other configuration items as necessary
e) One handy tool to connect to your EC2 instance is Putty. Using this you can connect and run commands. For our website to start, we had to start our apache instance.
f) The last part is having a load balancer. We created a load balancer using the Amazon ELB service and pointed it our Amazon EC2 instance. This part is really cool as now our application can be easily horizontally scaled. This means we can create a new image of our EC2 instance and create new instances and attach them to our load balancer. One tricky part in this is syncing things like your images folder that needs to be somewhat persistent - you can probably do a NFS mount to share the folder from your master instance or run a job to sync it across servers - a good interesting thing to solve in case of lots of servers but I will leave it at that.


3) DNS : We didnt find any reason to change our DNS. Amazon Route 53 looks to be awesome but we stuck with Godaddy here. Setting up the DNS pointing them to Amazon is a breeze too. All we did was point the DNS records to our load balancer. Our new site was on Amazon.


Everything looks good right now. In short, we just think Amazon may be chose the wrong name - they should have called themselves Amazing.

Wednesday, May 15, 2013

Why we don't do cash on delivery

Cash on Delivery is one of the most common ways for ecommerce delivery and we know customers love it. We would love to have Cash on Delivery as one of our options for payment but we can't unfortunately because of the following reasons :

1) Increase in Prices : Cash on Delivery requires our delivery partners to go collect cash or card during delivery. This requires them to equip their delivery men with swiping machines and additional logistics for collecting cash and transferring back. Also, sometimes multiple trips are required to collect cash. Because of this, they charge 50-200 Rupees extra per package. This will translate into our products becoming costlier to the customer by 10%-20%. Currently we offer free shipping and it wont be possible to do that in case of COD.

2) Delivery rates : We have a proud record of 100% deliveries. In case of COD, based on trial data, delivery rates are sometimes poor which means wrong address and identity issues. This is unfortunately not sustainable for us as we are a small company and anything less than 100% deliveries will mean we wont be able to pay our employees on time.

3) Location availability : Currently a lot of our customers are from small towns in India. Most courier companies support only a limited set of Pin codes when it comes to cash on delivery.

4) Size of items : Our items are very large in size when packaged - typically between 3 - 10 kgs in terms of volume(not weight). This typically means that we plan for quick and reduced delivery times which is always not possible in case of cash on delivery.

5) Sustainability : As a small company, one of our primary goals is to make sure our employees, artisans get their salaries on time. Cash on delivery as a mechanism is a slow cash flow function which is difficult for us to sustain.

We know Cash on Delivery is one thing that our customers ask for all the time and at some point in time, we may reconsider our ability to provide COD. However, till then, we would like our customers to trust us with traditional modes of payment. We also have a store at Ebay which follows a strong customer feedback mechanism : Do check our feedback at http://stores.ebay.in/kraftinn

Thank you for all the love and trust