TATA CLiQ has ambitious plans to revolutionise 'phygital' commerce in India
Tata CLiQ, the online retail arm of the Tata Group, is a long-term bet. Chairman Cyrus Mistry was clear that the group would not get into any me-too business, that there had to be a clear differentiator. According to KRS Jamwal, head of new projects at Tata Industries, which owns a majority stake in CLiQ, that differentiator is a superior customer experience. It's something many players have tried and failed to deliver.
For Jamwal and Tata CLiQ CEO Ashutosh Pandey, failing is not an option. Especially given the fact that when you attach the Tata brand to any product or service, expectations become much higher.
It has been a hectic 15 months in the run-up to building and launching an e-commerce portal that wants to perfect customer experience by providing a truly ‘phygital' experience by marrying digital with physical.
Watch Jamwal and Pandey talk about CLiQ's priorities, plans, goals and challenges, and how the definition of success in e-commerce will evolve over time.
There is a science part to it and there is an art, like most things. The science part is you look at the trends, you look at what are the big movers that will probably subsist for 10 – 20 – 30 years. Within that you see which are the trends that you think will open up large areas, large spaces. Within those trends and large spaces if you can think about a differentiated value proposition, that is interesting to us.
One of the themes TATA industries has been pursing for almost 4 or 5 years is the whole digital...we looked at this space almost 5 years ago now. We said there is going to be a lot of transformation in digital and mobile and what that whole piece is going to bring. Infact, going forward there is going to be a lot of interesting space around identity also. Therefore we looked at what we wanted to do in the digital space and two things that stood out for us very strongly: one was e-commerce, we thought digital will transform retail as we know it, and therefore TATA CLiQ, the e-commerce venture; we also thought that digital will also transform healthcare, and the third area where we thought it will (make) a major impact is the whole analytics and customer base. These are the three themes currently; there will be more going forward
One of the big things that come to my mind is that a lot of e-commerce companies have done work before us and have laid the ground for what we are trying to do. The second is that a lot of customer responses that we've received and the kind of support that we've got, that first day's orders, today's orders and the way the customers are looking up to us, that gives us a great deal of joy and satisfaction that maybe we are building something for the future.
Because we are a very federal structure, each TATA company charts its own future with its board and then navigates that future, keeping that in mind that the TATA group has both big and small.
While people tend to view the TATA group as a monolith, it's far more federal than it is monolithic. Within that monolith you have everything from sailboats to super tankers or aircraft carriers, if you want that analogy.
I think the TATA group over the decades has evolved to be able to accommodate both. Hopefully the TATA industries parentage, where we are used to pushing out young business with young teams and teams which are been given a fairly high degree of responsibility and authority to chart their course, I think it can work…People say that large business houses and VC funded startup – there is a lot of difference. Actually, even VC funded startups have to answer to a lot of people, we have seen in some of the stories in the last 2 years, depending on who your funders or backers are, it can be fairly difficult answering them as well, it's not an easy trade-off to make.
It depends on the horizon for which the business is being built. From my personal experience what we are doing right now, as a company, we are only focused on trying to perfect the customer experience. The platform is new, there will always be a little bit of ups and downs and customers will give us feedback because they are naturally inclined towards a brand. The effort that I need to do at the moment, for the next few months, is only to perfect that. If we are able, as a team, to deliver the good stuff to customers, customers have a nice experience online, a simple experience online and the deliveries are faster, we (would) have managed to do what we had set out to do. If I was on the other side and I always constantly had the pressure of trying to multiply the GMVs several-x,(and) at the same time burn cash in a certain way, I think the priorities would have gotten complicated. To my mind that is a big advantage of parentage. we have got an idea which has got an approval and that idea we have taken and run with it. There are times where we have taken decisions in a split second for changing over from one place to another place, which one would not naturally associate with happening with TATA group. But because the group has many companies, as Jamwal was saying, this nimbleness comes with a degree of responsibility that one takes.To my mind I have never faced a problem like that in this project. (One more point…)
I don't think structure and chaos are necessarily descriptors, chaos is not necessary startup and structure is not necessarily bureaucracy. Every big startup or every small startup essentially moves and becomes a big structure.Having a structure and somebody who understands structure maybe a big advantage.
One has to have a sense of perspective even when the customer is happy or a customer is dissatisfied, because what every customer is giving you is feedback and that feedback has to be validated with what we have, we have to be honest to ourselves. People are holding a mirror to ourselves, and therefore you are then encouraged to take decisions which are much more customer-centric. I think that is a very good thing as far as we are concerned. It's very early days for us, because this kind of brand name has come into this business, we will get this kind of customer feedback, I think it's expected.
The challenge that Ashutosh and his team will have to meet up to is the moment you attach the TATA brand to a product or a service, expectations go up and I think we have discussed that amongst ourselves that expectations will be higher, we will have to deliver to that higher level of expectation. There are some aspects which are easier to do in terms of authenticity of the products which we ship out, in terms of the fact that we are dealing only with the brands directly. I think that will be more assured. But in terms of the quality of service the experience on the platform, the experience of the “phygital” side of the platform, which is shop online and pick up at the store or reserve so that it gets delivered to you from the store...all that “phygital” experience, making sure there is delight at that “phyigital”experience is something that we will have to perfect.
I think the first year is all about perfecting customer experience. GMV is actually an output metric, one would rather measure the input metric, which is to say how many do brands I have, what are the kind of offers we are making to the customer, how many people are we reaching out to, what's our TAT in terms of deliveries, what customer feedback have we taken and implemented quickly. Those kind of metrics if you do, I think chances are that you will get to a scale which is not minuscule in a sense.
But if we get obsessed about that, honestly I think the narrative of GMV itself is under question as we speak in e-commerce circles. But when we started out about 18 months back that were, people used to say how you can build a business where you have no GMV kind of ambition in the beginning.
I think the most important thing is to build customer trust and customer experience, and frankly because we are new to this sector to gain experience of it.We will make our mistakes and come back. But the thing is once we do that then the scale-up or whatever you call it, is matter of not of choice but it will happen by itself.
I have learnt one thing in business and in life, luck counts a lot. We did say we will not do a “me-too”, we looked at players in e-commerce and we said we don't want to do what is being done, we want to be different. A large part of that comes across in two value propositions that we thought we must focus on: brand-centric – that we will be partners of brand, we will not try and dis-intermediate, we will be partners of brand, and the second is phyigital, which is called omni channel. But the reason why we use phygital which is physical and digital is because many people are talking about omni-channel at the lowest level of its functionality. Over time we want to connect physical stores of all our brands, that means all 400, 800, whatever number we grow up to, to our platform and have as seemly as interaction as we can get out of that. The second piece was we were fairly clear that we did not want to go out there and without worrying about the customer experience and the customer delight, literally do this GMV chase.
We knew that we were not in this GMV chase, not in the short term, I think in the long term we all want to get a large share of the market, but in the short-term we were not in this GMV chase and that's the part that Ashutosh talks about. Getting the customer experience and the unit economics right is the first thing. And remember the whole phygital also allows us to change the unit economics a lot. If I am having a lot of ship-from-store or if I am having a lot of what we call click-and-pick which means you select it from our platform and then you pick it up from our store, if you have a lot of that, it completely changes both your delivery and perhaps your return logistics.Return to store will change your return logistics. There were a lot of things that we thought will be (a) differentiators and (b) where will deliver on customer experience.Long-term we all want larger revenues.
The platform we built is so complex; my favorite analogy is when men buy a Jaguar they like to affectionately like to call it a beast, because of the power of the engine, the horsepower under the hood. Our platform is a beast; it's a bespoke platform, unique, probably one-of-a-kind, because it is both omni-channel and marketplace.
There are people who have done omni-channel, there are people who have done marketplace, a platform that can do both omni-channel and marketplace is really rare and requires a lot of complex functionality. We figured after applying our minds, that re-purposing a platform probably might not work and then of course there are times in a business cycle when you should buy and when you should build. I think a year-and-a-half, two years ago, we were clearly at a time when we should build rather than buy.
Infact, TATA industries have funded or have participated in ventures with entrepreneurs, the one thing that perhaps changed in the last few years, and we are happy to bring about that change is traditionally, TATA industries used to, by and large, either do ground up or joint ventures. In the last 5-10 years, we have gradually started adding to that where we do selective investments in companies which may be led by other people, as long as we can see a way for it to be perhaps a TATA business one day. TATA industries is not in the PE/VC space in the conventional sense, my board is not going to give me any kudos for making 10x20 in 2 years or 5 years. Our job is entirely: what are the new TATA businesses that can be formed. And even if you have a success rate of 1 out of 3 or 1 out of 5, I think it's fantastic.
There is no question in my mind that both will co-exist, because increasingly the shopping journeys of people is both digital and physical, it's never one unichannel kind of stuff. In India the further complexity is that they aren't big shopping malls or organized retail. A lot of that is small scale, local, etc. Therefore there is an impact that e-commerce will definitely bring and therefore I think it will eminently coexist.Our model is built on the premise that they will co-exist. If they co-exist then physical and online can be made seamless and that is the model we are working on.
I think it's fantastic. I think the opportunities in India are enormous. But since you are a startup yourself let me say this, that when I look at Silicon Valley, Israel, other ecosystems that incubate a lot of startups, I find this in this wave 1. Let's call this wave 1 of the startups in India and I am so certain there will be wave 2 and wave 3. I think in wave 1, we have seen relatively few differentiated startups and many derivative start-ups. I think that's something to do with ecosystem and the funders; when you are willing to fund a wide range of startups whether they are differentiated or derivative, your crop will be of all sorts. Wave 2, which will be 2 years 5 years from now, there will be lot more focus on novelty and differentiation.That is coming. For entrepreneurs who watch your channel, my suggestion would be start focusing on what is your differentiation and how non-derivative you are, how unique how novel your idea is or your startup is.Those are the ones which will succeed.
Markets in India and China which are growing, especially in the e-commerce market where 30-40 million people shop online, 350 million people have access to the internet – that number growing, increasing, if you have anything which is slightly differentiated there is a lot of scope It's a very enjoyable part, at least for the next few years.