This is why I believe so:
- They shop for PRICE and not PRODUCT.
Nothing demonstrates this better than the BIG BAZAAR SALE.
Mr. Biyani has proven beyond doubt that DEMAND HAS INFINITE ELASTICITY in India if price is reduced.
The scene outside and inside of a Big Bazaar sale is the sign of ULTIMATE GREED of an Indian Consumer.
It symbolizes what Indians will do to get a product at the LOWEST PRICE.
- Price First, Brand Later
My Nani (she is probably 85) calls the Kirana Shopkeeper and FIRST asks - 'WHICH BRANDS have discounts' and she THEN DECIDES on the products.
Of course, there is a level playing field.
So, if the shopkeeper tells her - "Maaji, the Colgate toothpaste has Rs 5 off compared to Close Up, she will NOT BLINK twice before buying Colgate and ditching Close Up.
When Colgate finally arrives in the bathrooms and we freak out, she pulls a sorry face saying "Arre sorry baba... I didn't know that you were so so concerned about Close up or Colgate. Dono, same hee to hain naa..." she will say ( both are the same aren't they).
- We are LOYAL to the person who provides us the best price - NOT always the best service.
I am CONVINCED that the Indian Consumer doesn't mind going through a bit of a hardship while shopping for a better price.
I mean, the food mandis, the Crawford markets etc etc are the WORST places to shop. But they THRIVE!
- We LOVE TO BARGAIN AND BARGAIN AND BARGAIN!
I don't think this needs an explanation.
'The Bargain' is a beautiful GIFT the vegetable vendor gives the housewife early in the morning.
He knows what price to finally sell at. She knows what price to finally buy at.
But they both will ride on a bargaining see-saw UNTIL the Housewife completely ENJOYS the fun of bargaining to the fullest (the vendor doesn't do it for fun - he does it as part of time spent to close his deal).
Considering all this, I propose that we apply ALL these FINE principles of Indian Consumer Buying to e-commerce, and create a new MODEL of 'Vulture Commerce' via a new Company called 'Vulture Company'.
- Create a VULTURE COMMERCE holding Company. Funded by VULTURE CAPITAL (lots of funds around).
- Identify the e-commerce players like taggle that are BOUND to go BUST and start meeting their investors.
- BUY at least 50-100 e-commerce plays at anywhere between 10% of their ASSET COST ( I still WONDER why TAGGLE.IN was not ACQUIRED (even for Rs 1) rather than being shut down in such an UGLY WAY)
How Vulture Company will get Funded, how it will Operate and make Money (a wee bit complicated - so have a strong coffee before this section)
First, let's assume that a Company called Saltfried.com (e-commerce site) got funded by a VC called ChunnuMunnu for US$ 5 million.
That's a funding of 25 Crores.
This is how they SPENT the money in 18 months
- Cost of IT, site, hosting, technology = Rs 1 crore
- Cost of advertising and brand building = Rs 7 crores
- Cost of discounts and losses (selling consumers items for less that purchase price) = Rs 10 crores (that also means that the topline was 20 CRORES (selling at 50% LOSS and showing the loss as discounts).
- Salaries and G&A etc = Rs 5 Crores
- Cost of Advances, etc etc = 2 CRORES
TOTAL = 25 CRORES
Now, at funding stage, ChunnuMumnnu VC owned 20%.
Let's go to them and offer them to BUY the Saltfried.com BUSINESS at 10% of the investment = 2.5 CRORES.
This will get us BRAND, TEAM, and A GOING CONCERN for 2.5 CRORES.
Why will the ChunnuMunnu VC sell? 'Coz we give them 1 % in the VULTURE CAPITAL COMPANY (ps - the DUMB founders get WIPED OUT).
NOW, let's do this with 100 COMPANIES out there!
So, our 'Vulture Company' will have 100*20 = 2000 CRORES TOPLINE BUSINESS
Also, a BRAND VALUE SPEND (collective of all Brand acquired) = 100*7 = 700 CRORES
and teams, people etc etc
NOTE - the Brands and the Companies are kept separate (LIKE WPP owns JWT, CONTRACT etc etc). BUT there is a lot of rationalisation of costs etc etc. So, there is a possibility of breaking even slowly with this SCALE of operations.
Now, imagine taking our 2000 CRORE e-commerce top-line Vulture Company to BIGPAPA VC.
We project that Vulture Company can easily get VALUED at 1 BILLION US$ (since 5000 CRORES = 2.x of Revenue).
Going back to how we BUILT the Vulture Company - Remember we gave each of the 100 ChunnuMunnu VC's ownership of 1% each in Vulture Company.
So, thats 100 * 1 = 100% ownership.
On the Cash Side, we need 250 CRORES (to buy 100 companies at 2.5 crores each)
So, we take 500 CRORES from BIGPAPA VC and give them 25 % of the Vulture Company.
Immediately BIGPAPA has made 100% returns (because they now own 25% of a 5000 crore Company = 1250 CRORES WORTH), where as they are paying only 500 CRORES to get that stake.
Each ChunnuMunnu VC gets 0.75% of a 5000 CRORE COMPANY (1% diluted by 25%), which is now valued at 3.75 CRORES (and is better than nothing than 0 which is what Taggle.in is worth now).
Now, this VULTURE Company begins to sell e-commerce to Indian Consumers with VULTURE TACTICS:
- Always the lowest price
- One group site serves BETTER than the other, so consumers THINK that when they switch sites, they have landed up at a better place (but all sites are owned by the Vulture)
- Bargaining mechanics are fully built into all the sites - to give the ENJOYMENT.
- PRICE FIRST, PRODUCT LATER is the motto.
Over a period of time, this becomes THE AMAZON of India and WINS.
All those on board, RAISE THEIR HANDS!!
I love the in built bargaining mechanics.. That will be the differentiation for Indian Consumers.
Kis lomdi demaag ki upaj hai yeh?
1st and only Q:
How will you convince the first chunnu munnu VC to sell off his 25 crore ecommerce site for 2.5 crores for a 1% stake in Vulture Capital? Right now you hv nothing - not even the backing of Bigdaddy VC.
Working it the other way round... which Bigdaddy VC is gonna launder away 500 crores or even 250 crores unless you have those 100 chunnumunnus already invested with you.
oh, the 100 companies are already invested.
Just wait and watch.
in 99-2000 dot com bust, VC's went bankrupt. Then their receivers sold what they owned at 5-10% of cash invested.
Stage 1 is already set. Now we wait...
Are you preparing you war chest to buy such brands that will go bankrupt ?
SuccessFactors (company sold to SAP) was built using technology purchased from a bankrupt company. Mighty good strategy though.
Yes stage 1 is all set.
I love the Evil and Opportunist bent of mind.
This just proves something I've always maintained - When I'm Good, I'm Good, When I'm Bad, I'm Even Better ! This is just Bad Vulture behaviour but your dead on. Give it another 2 quarters and Cash Rich would be the best place to be.
Alok 'chanakya' kejriwal's modern arthashastra.Lmao.