Car Sharing Start-ups Utilize Second-Mover Advantage in India

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The early bird may get the proverbial worm… but at what cost? When it comes to retail sales, the first movers may not always benefit from being first, especially due to high research and development costs and substantial marketing costs associated with educating target market segments about a good or service. In some cases it is the second-movers that benefit most from a first-mover firm’s penetration of a market. The second-moving firm can focus its time and capital on manufacturing a superior product or leveraging its resources to better market itself. The result: the second firm builds a better mousetrap and is able to capture more of the market share.

Residents of large metropolitan areas, including Madrid, Berlin, London, are moving away from traditional public transportation systems and car ownership to get to their next destinations. In fact, car ownership alternatives are growing in popularity worldwide and can thank technology for connecting their products with customers. Reservations for these alternatives can be made with mobile devices (i.e.: smartphones and tablets) and paid with a credit card – no customer service interaction required.

United States’ Zipcar and Germany’s Stadtmobil may be global leaders for car clubs, but that is not stopping clones from launching using their business models. Emerging markets, especially BRIC nations, are key targets as these global leaders and clone start-ups seek to meet the growing demand for ownership alternatives. In fact, three car club companies have already launched in India in the last two years and provide services starting at $.73 USD per hour.

Zoomcar is the most recent entry into India and looking to appeal to the rising younger generation of workers to drive sales. And the interesting part? It’s an Indian start-up with non-Indian founders! With increased traffic congestion and car ownership costs, car-sharing services provide the benefits of personal transportation without the annoyance associated with car maintenance. In fact, the car-sharing cost is about a third of traditional rental car costs, due to nearly 95% of these cars coming with a chauffeur.

In just 18-months, Zoomcar’s business has hit the fast lane by expanding its fleet of Ford Motor’s Figo hatchbacks from seven cars to more than 300, with expectations of adding another 200 hatchbacks before the end of 2014. And how many bookings are reserved per month? More than 5,000 according to Zoomcar.

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Zoomcars are bookable through the company Web site using a mobile device, smartphone, or computer. No need to speak with customer service – just reserve online and pick a vehicle.

It may be too early to declare second-mover advantage success for Zoomcar. Myles, another car club in India, recently partnered with India’s Tata Motors to promote more affordable solutions and wider selection of models to choose from. For a similar price of Zoomcar’s Ford hatchback rental, Myles patrons can rent Tata’s Nano Twist, a city car that resembles a Smart ForTwo.

With India boasting a population of 1.2 billion, there will be many opportunities for these car club start-ups to make an impact with customers. As technology grows and is adopted by India, these start-ups can adapt their strategies to hit their target markets and see which one emerges as a market leader.

What are your thoughts on car sharing clubs? Will this concept work in India or are there too many alternatives available? Let us know in the comments!

UK Retailers Embrace American Black Friday Tradition

black-friday-macysAmerican shoppers are familiar with Black Friday, a phrase synonymous with the day after Thanksgiving that initiates the holiday shopping season.  Financial experts dub this day “Black Friday” because it is the first day that retailers see profit when sales move from the ‘red’ to the ‘black’.  In 2013, American shoppers spent nearly $12.5 billion on Black Friday. So it comes as no surprise that retailers in the UK are cashing in on this American shopping tradition to see their sales increase as well.

A video released by The Telegraph puts Black Friday into perspective by running scenarios based on numbers.

So what does this mean for UK retailers? As more UK shoppers embrace this imported holiday, retailers should adapt their sales strategy and institute a program that follows along with the American tradition. Visa Europe anticipates that UK online transactions will increase more than 20% for Black Friday 2014 when compared to the same time in 2013. Shoppers  in the UK are estimated to spend more than £6,000 ($9400 USD) per second.

Amazon UK’s division has embraced this holiday five years ago and just last year, the company sold nearly 4 million items sold on Black Friday 2013. To anticipate an increased demand, Amazon UK plans on offering even more deals and savings for the entire Black Friday week for 2014. But Amazon UK is not alone in embracing this imported tradition. Last year UK retailer Asda, which is owned and operated by Wal-Mart, ran flash promotions in stores as customers rushed to pick up deeply discounted 32-inch LED televisions, tablet computers, and Black & Decker drills.

As more UK retailers embrace Black Friday shopping, shoppers need to be aware of who they are purchasing products from online, especially if they are unfamiliar with digital storefronts. The recent shift in using mobile devices for shopping  leaves many opportunities for phising sites to take advantage of unsuspecting customers.  Some rules for safe shopping include:

  1. Do not use public Wi-Fi to shop. Public networks and hotspots do not encrypt data and most mobile devices are not equipped with anti-virus software. Any information sent through the Internet could be picked up by strangers, including credit card information.
  2. Check credit card statements. Increased shoppers means increased opportunities for information to be stolen. If something does not look right on a statement, contact the credit card company right away to make sure the charges are not as a result of a shopping scam.
  3. Look for https in the site name. Trusted, secure sites use a ‘s’ at the end of the http, meaning that information cannot be stolen.
  4. Do not click on links in emails. Email addresses are often sold on lists to companies and it can be difficult to verify if a link within an email is valid. If a store offer is intriguing, go directly to the site through a Web browser and not through the email link.
  5. Trust your instincts. If a virtual store seems shady then quit the transaction and leave the site. A deal just may be too good to be true.

While Black Friday maybe an American holiday, retailers worldwide recognize its significance in holiday shopping. Shoppers seek bargains and retailers seek profit, which makes this shopping day key for both groups to be successful.  In a truly global environment, Black Friday is an example of just how small the world really is.

How are you shopping for the holiday season? Did you start holiday shopping already or will you wait for Black Friday? Let us know in the comments!

 

Amazon’s India Operation Utilizes Adaptation Strategies to Sell Products

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While strict government regulations in India prohibit e-commerce from companies engaging in foreign investment,  United States-based Amazon.com has managed to adapt its business model  to sell its goods to consumers in this region.  So how did Amazon accomplish this feat? The answer is simple: by adapting its business model to emulate eBay and Alibaba as an online bazaar.

Amazon India’s marketplace model leverages contacts with third-party sellers to reach customers.  This model does not have to comply with the foreign direct investment restriction as Amazon does not actually own any inventory being promoted on the site. In this market, Amazon works as an intermediary to put third-party sellers in contact with prospective buyers.

To test whether the Indian market and third-party model was a feasible solution, Amazon launched Junglee.com in Q1 2012 as a search and comparison site for shoppers to find the best deals on the Internet. The site, which is still in operation as a wholly-owned site by Amazon, curates and search through thousands of online and offline sellers of products including clothes, toys, video games, and electronics. This paved the way for Amazon to research how its target market segments utilize the Internet to do its shopping, culminating in a launch of Amazon.in just 16 months later in Q3 2013 to rival major retailers, such as Walmart.  Today, Amazon.in partners with third-party sellers for books, movies, mobile phones, and other electronic devices to compete with existing retailers and benefit from its Junglee.com’s partnership.

So what is next on the horizon for Amazon in India? The company plans to establish itself as a major e-commerce brand for fashion and lifestyle products. Similar to taking on Walmart for electronics and other goods, Amazon seeks to go head to head with Flipkart-Myntra in online sales of footwear, clothing, and accessories. Through a targeted campaign that will showcase its services, Amazon will go beyond promoting its speedy delivery services and promote the clothing available for sale on its site.  This is key for Amazon if it wants to be seen as an industry leader, as fashion products have higher margins than books or electronics.

While it is too soon to tell if Amazon will be successful, the company’s strategy has raised a few eyebrows as to its operations. A comment made  in a report file with the US Security and Exchange Commission (SEC) in October 2014 states that there is uncertainty if Amazon’s logistic services and marketing tools are truly compatible with existing laws in India. Local Indian laws and regulations may interpret the laws different from Amazon executives, which could lead to operations being shut down.

Watch this short news clip for more information about the issue:

So what can be learned from Amazon’s endeavor? Companies that seek to expand their retail operations into new countries need to have laws and operations fully vetted by those familiar with the country in which they will be doing business. Ample research and operations about the market, conditions, segments, and laws may delay launch up front, but it will prevent any questions about operations once they begin. Amazon’s operations within India appeared to do this when it launched 16 months ago, but it is unclear if their operations are fully compliant with India’s laws as the warehouses and logistic services provided by Amazon for third-party sellers may still be owned by Amazon.  Adaptation strategies are only successful if all rules and laws are followed.

Is Amazon operating within the law and is just being overly cautious with its operations? Did Amazon try to bend the law so it could launch into a new market space where competitors had first-mover advantage? Let us know in the comments!

Uber & Spotify Join Forces for Ultimate Joyride

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Your ride. Your Music. You are in charge.

A new partnership between Sweden’s global streaming superstar Spotify and San Francisco’s Uber car service was announced earlier this week. This new joint venture  provides premium subscriber Spotify enthusiasts the opportunity to be a backseat DJ for the duration of their Uber trips.

The announcement came via the following video:

The collaborative effort will launch in 10 cities on November 21st and customers in London, Los Angeles, Mexico City, Nashville, new York, San Francisco, Singapore, Stockholm, Toronto, and Sydney will be amongst the first to test out the new service.

To create an Uber soundtrack, Spotify paid subscribers will need to connect their Spotify accounts to their Uber profile screen from an iOS or Android device. A music-enabled Uber driver will be matched with the paid subscriber, and the music streaming will begin from any of the subscriber’s Spotify playlists once inside the vehicle. Subscribers can be a back seat DJ and control the music directly from their phones or enjoy the ride and let the mobile app do all of the work.

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It is no secret that audio partnerships are a growing trend in the automobile market. Big name players, including Ford, Toyota, and Nissan, are partnering with satellite provides like Sirius XM to promote additional listening options than traditional radio or CDs.  With MP3 streaming capabilities standard in most vehicles through the use of USB or auxiliary inputs, car manufacturers have to meet the changing demand of how customers acquire their entertainment while in cars.   A survey released earlier this year notes that 58% of drivers still use AM/FM radio for in-car entertainment most of the time, with just 6% saying they stream online music.

While this information is relevant for drivers that own their own vehicles, Uber recognized that not all residents of major cities own cars and there was untapped opportunity. The company partnered with Spotify to market to this overlooked market segment. Spotify’s services are utilized by 40 million subscribers in more than 75 countries worldwide, and Uber’s services are available in more than 45 countries worldwide. The partnership makes sense as the companies’ target segments align: tech enthusiasts between the ages of 18-34 that live in large cities.

It is too soon to tell if the partnership will pave the road for future endeavors for either company, however, the partnership between Spotify and Uber showcases that technology and retailing are going global.  As the holiday season ramps up, Uber may see an increased use of its services as customers go shopping or seek an alternative to walking in cooler weather. Spotify can provide the soundtrack to each shopper’s personal experience – one that is shared with an Uber driver for a few minutes.

 Will you upgrade your Spotify account to take advantage of this partnership? Does this break the rule about drivers getting to choose the music for a road trip? Let us know in the comments!

 

Retailers Around the Globe Prepare for a Busy Holiday Shopping Season

Beautiful woman shopping online for Christmas.

With just 45 days until Christmas, retailers around the world are getting ready for a busy holiday shopping season. A report released by Adobe earlier this week predicts that consumers will be moving towards mobile devices, such as tablets and phones, to do their purchasing – accounting for about 30% of the overall sales this holiday season. This is an increase of more than 15% compared to last year.

Adobe’s report, which compiles data from more than 5,000 global retailers  notes that Brazil, the United States, the Netherlands, and Australia are the four biggest economies that rely upon the holiday season to see a spike in sales online for established brick and mortar stores. Therefore, global retail companies should be mindful of shopping patterns, especially in the Asian-Pacific market, to maximize revenue in these markets.  The report leverages sales from last year and projects spending for the upcoming holiday season. Estimated country by country sales are shown below in the graph.

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While Japan, Hong Kong, and Australia see relatively consistent online sales through the season, countries like Thailand and China show large spikes in their sales. November 11 is the largest shopping day for China as Guanggun Jie (Single’s Day) is celebrated amongst its single population.

On the other side of the globe in Europe, another study  details that more than half of Europeans exchange Christmas gifts.  Italians lead the holiday shopping tradition, with more than 70% of the population participating. Britain and France are the best prepared as both countries begin their holiday shopping as early as September.

In preparation for the increase in online shopping, Amazon.com announced (that it will add 13,000 workers to its seasonal payroll and 1,000 new permanent jobs at its eight UK fulfillment center.  The company also plans to rollout Sunday delivery in seven cities in the UK, increase its two-day delivery network in Europe, and add Amazon Lockers to tube stations in London.

As more customers adapt mobile technologies into their daily lives, retailers will need to adapt to meet demand. Double-digit increases for online shopping this holiday season indicates a customer trend of moving away from traditional computers and visits to brick and mortar stores. Customers are more savvy and technology friendly, and therefore seek better deals without the hassle of busy shopping malls.  Customers will visit Facebook pages for coupon codes or flash sales, follow Twitter feeds for the latest company announcements, and receive email blasts with the latest newsletters highlighting new product releases.  Having a Web site that highlights special deals may increase traffic to a retail store, especially combined with price  matching of similar goods from other retail outlets.

When will you start your holiday shopping? Are you following the trends of accomplishing it earlier, or are you a last-minute deal finder? Let us know in the comments!