Failure to launch: the story of a girl and her batua businessSneha Jain
This story is about Rajni, a graduate from India’s most reputed institutions, and her meticulous foray in e-tailing as an entrepreneur. She had the right mix of innovative product, great supply chain, fantastic PR and a great marketing skill but guess she faltered somewhere; and then followed series of consequences. The sanctity of market research was being questioned.
A native of Mysuru, Rajni was born in a family where the child’s future is decided by parents much before the child knows the meaning of word ‘career’.
“Complete your Class XII, get into IIT, and after graduation get an MBA degree from the IIMs,” she had heard her father saying this right after her Class VII final exam.
Unlike children of her age, Rajni did not play trivial games nor did she aimlessly swing in the garden; she was either made to do mental maths of the next grade or asked to solve puzzles from her puzzle book.
But children always find a way to sneak out of situations; so did Rajni. When her father was travelling for work or working late in office, Rajni would sit in one corner of the room with her drawing book and keep scribbling something secretly. Nobody knew what was she hiding in those white sheets of paper. However, this hide-and-seek game didn’t continue for long. She managed a fantastic JEE score, which got her into IIT-Delhi, as planned by her engineer father.
Rajni started preparing for her MBA entrance exam right from her second year of engineering. The logic was- earlier you start, better are the chances of scoring a high percentile. Amidst all this mad rush, she would sneak out of the campus to pick up HB pencils, charcoal and white canvas from local stationery stores.
It was the last semester of college, there was a tech fest in NIT, Bhopal. It was the last year of engineering and all friends wanted to spend time off campus, so Rajni decided to attend the tech fest in the City of Lakes.
The three-day fest was filled with fun and enjoyment. On the fourth day, all friends went shopping to the local streets of Bhopal. While traversing streets of Bhopali market, batuas caught her eye. It was intriguing. Batuas are small purses used by begums to carry cloves, betel nuts and other mouth fresheners. It was also used to keep currency. Bhopali batuas have unique zardozi work on it and have traditionally been part of the Nawabi culture. Rajni loved it and bought one for herself.
CAT results were out, Rajni had scored 98 percentile; her father was slightly disappointed but she still had fair chance to get into IIM Indore, Lucknow, Kozhikode. She cracked the group discussion, and personal interview round for IIM Indore. “Keep your CGPA high, you should get into P&G or Google”- her father’s words kept ringing in her head, but her heart was designing batuas made of raw silk and silver threads. Her black and white drawing book was now full of colourful designs. Free Wi-Fi and all-time connectivity at IIM campus were a great help in researching batua manufacturing and designing. By third semester, she had a consolidated a list of karigars (local designers) that she had collected during her visits to Bhopal in the last one year. She had a complete database of wholesalers from whom she could procure cheap chanderi silk, bagh cotton, tussar silk and other raw material.
Placements were round the corner, she took up the offer from Amazon. Her friends didn’t quite understand why she had opted for Amazon as compared to a hefty Unilever offer. “It’s a well-thought decision, I want to understand the e-tailing business”
Three years at Amazon had fetched her a lot of designer friends, supply chain experts, pool of vendors, decent understanding of e-tailing and an effective way of devising pricing. It was time to take a tough call - to quit and follow your passion or to stay and follow the mundane. Following the passion seemed more attractive, especially in the mecca of startups. At 28, she had made up her mind that she would launch a designer batua brand along with a designer friend of hers.
Very unlikely, but there weren’t much of family tussles. The stage was set, steaming hot coffee and gruelling discussions started taking place at Rajni’s garage-cum-office in Mysuru. The focus was on getting the inventory ready and doing the shoots, so that product pictures could be uploaded on the site. A technology expert was hired, work was in full swing. Content writers were briefed thoroughly about product type and the nature of creative writing. Pricing was internally decided between the two of them, designs were set, materials were procured and vendors finalised.
There was no looking back. If everything went fine, the site and the app would be flooded with orders. Rajni’s father was more excited than her. It was the D-day: October 4 was the launch date.
There were 5,424 hits in a single day. Congratulatory messages came flooding. The start up idea was new and fresh, there was no two opinions about it. It was February, traffic on the site was more or less stable, app downloads had increased but sales were not so motivating. One season is too early to reach a conclusion, the founders decided to wait till july.
Next big step was to do aggressive marketing- they hired a PR agency. Traffic on the site increased, sales increased a bit but not as expected. It was September, almost a year had passed by, they had a huge inventory and lot of borrowings from family.
Everything had been taken care of - design, material, nature of embroidery, content on app, marketing and branding, corporate tie-ups, etc but the traction was not upto the mark. The founders were struggling.
It was mid-December and a cousin of Rajni’s from the US was home for winter break. During tea discussions, she told him about her startup and that she was contemplating shutting down in a few months if things don’t recover.
Cousin: “Did you conduct market research before dirtying your hands in the venture?”
Rajni: “I didn’t feel the need to spend an extra buck on research. My designs are lovely, the karigars have a great flair, the product is innovative, branding and positioning have been taken care of, so why market research? Moreover, I don’t trust market research.”
This is a common belief amongst entrepreneurs that they know their product better than anyone else. They generally question the sanctity of market research. The founders, in this case, did not take any effort to find out about their competition and their offerings. Founders were too egotistical to check strengths and weaknesses of their idea, its feasibility and its saleability.
Here are the ways in which market research is important for them at early stages:
- Idea/concept evaluation- It was very important for Rajni to determine the initial interest in her product idea and identify the right target audience. The objective should have been to evaluate the idea and the concept. The idea or points of differentiation in either service or pricing or some other parameter must be strong enough for target audience to flock to the product. Concept/ idea evaluation helps in identifying highs and lows of the idea.
- Competition analysis- The purpose of the competitive analysis is to determine the strengths and weaknesses of the competitors within the market, make strategies that will provide a distinct advantage, and create barriers that can be developed in order to prevent competition from entering your target market. This would have enabled founders to even understand their own brand’s strength and weakness, thereby enabling them to capitalise on strengths and alleviate the weakness; and be ready for opportunities and threats from external sources.
- Willingness to pay research- Over cups of tea and coffee, pricing of batuas was fixed. Rajni and her designer friend did not do any spade work to get an idea about how much money the consumers were actually willing to pay for the product. Willingness to pay research would have allowed them to understand how persuasive their product was and how much the consumers were willing to pay for it depending on its perception. Willingness to pay would have determined the maximum price at or below which a consumer will definitely buy one unit of batua. The founders could have designed their product price accordingly.
After 15 months of loss and lot of insistence from her cousin, Rajni hired a research agency to diagnose reasons for low purchase.
Outcome of research
- Designs had a positive appeal and consumers were open to purchase from the site.
- Perceived value price of these designer batuas was 30 percent lesser than their tag price. This meant that there was a gap between what consumers were willing to pay and what the founders were charging.
- This eventually meant pricing strategy was erroneous. Either they had kept huge margins or the cost incurred was too high, so there was a need for reworking the cost and price calculation.
The founders were in denial mode (as most founders are), with the outcome. “My daughter knows A to Z of the retail business and she scored the highest in pricing strategy in her B-school; there is some mistake in your research process”, her father argued with the research agency.
It was April already, the founders thought of trying their luck for two more months before they implemented suggestions from research agency. Those two months were a disaster.
As a last resort, they reworked on price. The product designs remained the same with a few additions, margins had to be slashed down. “I think you are making a mistake, how can you sell a premium product for so less,” her father yelled. In August, new rates were up on the site, sales picked up gradually, demand was increasing. So much so was the case that they had to engage more karigars and have more channel partners to keep up the delivery schedule. More than two years had passed by, the sales were at an all-time high.
Some research needs to be done at the ideation stage, some during the launch, and some post-launch. It’s very critical for startups to see value in market research and not waive it off as run off the mill. Market research is capable of throwing up data beyond imagination and this reduces aimless spends and associated business risks and henceforth increases chances of business success.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)