Will this be the Year of Rationalisation?

A tough question that needs a perspective. The first wave of dotcom boom and its eventual burst was a function of Internet penetration and adoption. Some of the ideas that are successful now had perished then. And there are many unique ones now. Yet it is still a function of reach and adoption. The last couple of years have been phenomenal for the industry. It has seen big investments, big spends, big campaigns and even bigger promotions/offers. I am sure the consumers are making the best of it and absolutely love it.

However, I am not sure if all the businesses love what is currently happening. Everyone is after audience accumulation and hence a certain percentage of eventual conversions. I have increasingly heard that there is space for everyone; within a certain vertical. But is there space for anyone?

This proliferation has added madness to competitiveness

• Selling below your landing cost and promoting it?
• Assuming shopping delight is customer delight?
• Convenience does not mean conversion?
• Width of range cannot substitute depth of range?

Burn money, however illogical it sounds, will obviously only last this long. If burn money means scaling up operations and adding to the costs on the basis of over-optimistic hypothetical revenues; the longevity of the burn money is even lesser. The effect is already showing with some of the businesses scaling down operations, shutting down units and some of them on ventilators. Some businesses have become massive in scale and their meltdown would mean doomsday for the digital economy.  So there certainly is a lot at stake.

However I feel that we are now entering a phase of rationalisation.  It will not restrict itself to fiscal rationalisation.  I am hoping it will move much beyond that.

• Logic : Gestation period for ideas that are appealing to the digital immigrants. Additional avenues to transact.  Aided transactions.
• New Ideas : Trends vs. Audience. Purpose vs. Need.  Convenience Vs. Adoption. Promise Vs. Potential.
• Growth : Incredible vs. Incremental vs. Incidental.
• Expansion : Current Revenue vs. Planned Revenue. Hub vs. Spoke(?)Insourcing vs. Outsourcing
• Manpower : Core Vs. Support Vs. Ancillary
• Logistics : Shared Vs. Owned Vs. Outsourced Vs. Aggregators

Hopefully this rationalisation will help in limiting the impact of over optimism in some cases. We all know now there is no looking back for the digital economy. There are detractors who will have a counter argument for everything; though they are equal beneficiaries of the current wave of convenience.

Many expected the local shops and vendors to shut down.  Digital was supposed to consume that economy completely. But what we have witnessed is probably the best examples of adaptive entrepreneurism. It is driven by survival and the need for growth. It is also a fantastic CRM case study.

• From WhatsApp groups to Mobile
• Adversaries to partners – they have done it all.
• They even have a mini- telephone exchange with a single objective of getting the customer what he wants without losing him.

Even malls, multi-brand outlets, brands etc  have started reverse engineering their customer outreach programme.

I feel we might now see better levels of coordination between these two worlds i.e. online and offline. There will be rationalisation here too.

• Margins ­– A fair share that makes it viable
• Sourcing – Both ways. So better movements of stocks. Network buy across primary channel and partners; thereby price parity
• Delivery – Localised, since it would be sourced locally
• Returns, Replacements & Complaints – Attended to by the nearest partner or drop it with the nearest partner

As long as the consumer benefits, they will stay. Maybe they too will rationalise expectations at their end.