Month: January 2015

Big Data – Big Competitive Advantage

So how big is big data? Really big! Would I be exaggerating if I say the concept of Big Data is akin to that of Big Brother from George Orwell’s 1984? Not at all. Every move of ours which involves use of anything related to technology immediately falls in the preview of Big Data. That also includes the use of maps on your smart phone! Earlier it was only about tracking the shoppers buying patterns with the use of  a loyalty card but the game has got much much bigger. And like how! Big Data literally can help you with creating models of trends for the future. The tools used here include various things like customers buying patterns, social media trends, the movies that would be released the time frame we are taking into consideration etc. Big Data can be used and successfully so to personalize marketing campaigns and boost results. This is the trend we are witnessing in online retail today but there is a wider scope before them as well if intelligently used.

For those who have just joined in, to explain big data in layman’s language; Big Data is decoding the information we have with us. It is breaking and understanding the sentence – Information is everywhere but where is the knowledge? I quote from  www.sap.comBig Data is the ocean of information we swim in everyday – vast zetabytes of data flowing from our computers, mobile devices and machine sensors. With the right solutions organizations can divide into all data and gain valuable insights that were previously unimaginable.

A McKinsey study stated that, by using Big Data to the fullest, retailers stood to increase their operating margins by up to 60%. In a recent Wikibon.com article, big data expert Jeff Kelly explained that the retail industry is among the early adopters and innovative users of Big Data.

While researching more on the big data, I came across a white paper by IDC which revealed that the data creation is occurring at a record rate. In 2010, the world generated over 1ZB of data; and by the end of 2014, we shall be generating 7ZB! All of the data that is created and accumulated creates unimaginable opportunities across industries and sectors like – healthcare, security, travel, hospitality and of course – retail! Along with IDC, I  strongly believe that organizations that are best able to make real-time business decisions using Big Data will thrive, while those that are unable to embrace and make use of this shift will increasingly find themselves at a competitive disadvantage in the market and unfortunately sooner or later shall face potential failure.

Putting it in Context
To draw an example on how Big Data has helped a retail giant reach out to millions, the story of Walmart fits in perfect. In fact, it is believed that Walmart pioneered the use of Big Data to improve operational efficiency in the retail industry and this was when the concept of Big Data was not even officially introduced. Sam Walton’s retail entity was early to understand that by putting to use the data it had of the customers, they could go ahead and streamline their supply chain thus taking care of inventory problem – overstocking as well as understocking it. The money thus saved and made was passed on to customers in form of discounts.

In the online space, Amazon was the earliest mover which in the mid 2000 began using what it know about it customers’ buying patterns and behavior to recommend similar and related items to customers at the point of check-out.

The use of Big Data in its various avatar can be used across – from planning store layout (video identifiers) to merchandize mix to even narrowing down on the right location. Big Data can bring before you dynamics of the population in a particular area, the number of times they shop in the vicinity, go out for coffee, the newspapers they read etc.

Big Data and the Four ‘V’s’
Just as the four ‘P’s’ (product, promotion, place ad price) define the principles of marketing; Big Data is defined by the effectiveness of four big V’s – Volume, Velocity, Variety and Veracity.

The IBM Big Data Hub Explains these 4 V’s beautifully

UntitledAll the above four V’s put together can empower you with knowing your customer better. Afterall, once that information is in place, all the other decisions apt for your business shall fall in place.

I would strongly recommend that if applicable to your business, ensure that you do take in professional help and encash on the data mine you have with you. Remember – Big Data today equals BIG COMPETITIVE ADVANTAGE.

eCommerce and India

As being pointed out by Ashis Jhalani from etailing India, this year, investments in the e-commerce sector have been about Rs 20,000 crore, four times as much as 2013. The e-commerce sector’s share in total organised retail is much less than 1% of total retail at present.

Now this was to set the context of online retail in India. Is it really that big as it is being projected and when I say ‘big’, I mean is it really making money?

During one of my recent meetings, I had someone telling me how they have been successfully selling toothbrushes worth Rs. 750 (for a single toothbrush) online through their channel partners like Flipkart. That did amuse me a bit and I thought that may be the current frenzy over online retail is indeed substantial. For a moment I wanted to believe that eCommerce in India has definitely taken the country by storm and the shopping bags at retail stores must be gathering dust on them with people shopping online. Just as I was about to convince myself, I thought of doing a bit of my own research to stamp my newly found belief. The first thing I did was to check on with this gentleman on the repeat orders for the toothbrushes. That would throw light on whether online shopping is just all about impulse buying and getting carried away by the frenzy or is it serious buying for things that are needed on a daily basis. The reason I wanted to know this was to ascertain the predictions that online shopping is going to replace traditional shopping channels / mediums. The gentleman couldn’t “confirm for sure”. Well, I got my answer!

Just as the hype around organized retail in India seems to have come on track after the initial predictions way back in 2002 that modern / organized retail in India was on its way to having the local kirana store down your road shut its shutters, we shall also witness industry experts toning down their super expectations from eCommerce in India. It shall be interesting to find out if the recent numbers as revealed by a research undertaken by Google will actually meet with reality. What the research has predicted is that the Indian online shopping market is all set to touch $15 billion by 2016. Back in 2012, the size of this market was $8 million and is currently $ 35 million.

As predicted by the retail gurus and kartadhartas in 2002, modern retail in India was slated to have a pie of about 30 per cent in 10 years from then, but still, it has not even crossed 4 per cent! Ouch! Did I hear you say so? So now, if modern retail in India has not managed to live up to its prediction, I am not too sure if it is wise to expect eCommerce to rule the game of retail in India. Even in the U.S., eCommerce contributes towards less than 5 per cent of the overall retail sales.

For online retail in India, to grow to the predicted figure of USD70 billion by 2020, the size of retail in India will have to stand at USD 1.4 trillion. But even if these figures are achieved, online retail in India is not expected to have a share anything larger than 5 per cent. Venture Capitalists and Investment Firms are pumping in big monies – be it for established players like Flipkart of the recent players seen joining the bandwagon of online retail. What though remains to be understood is the fact that are these online retail players making money even as much as the newsprint that is being dedicated towards writing about them? Marked with huge inventories, innumerable returns that are not considered during the accounting stage and of course money towards the manpower being sourced and a sizeable chunk towards larger than life advertising campaigns; online retail in India is playing a challenging and difficult game.

With due respect, I do accept that this festive season, the online retailers managed to pull in a lot many customers to the disappointment of the brick and mortar retailers. As reported by the Confederation of All India Traders (CAIT), in 2014, 30% of watches, 30% of eyewear, 18% of books, 25% of imported cosmetics and 10% of mobiles were sold online.

But if we take a rational look, the online retailers managed to offer huge discounts. In the electronics category, the margin was almost wafer thin. It would be interesting to see if incase the discounts and offers are stripped off when would the medium still have shoppers glued to e-shopping?

So all in all, I have put my doubts to rest on the super success of online retail in India. We have a long way to go and especially so because there are too many loose ends to tie.