Does Flipkart need to move step in step with Amazon?

Flipkart, the leading Indian eCommerce company recently launched its own brand of Android Tablet devices, starting with a Digiflip Pro XT712. Flipkart claims that this step will take it closer to building an eCommerce eco-system. But, with the low price positioning of this device in an already crowded tablet & smartphone market – does this me-too strategy have a strong case?

(Near) Clones from different times, in different places

Flipkart is often referred to as being the Amazon of India. Flipkart, like Amazon started by selling books online and then expanded into other product categories. There was then a step towards selling eBooks via the eCommerce website. It then altered the business model to an eCommerce Marketplace model. Despite these similarities, does the move into tablets space seem right?

Indian Smartphone & Tablet Industry?

Questions come up immediately – Is this industry attractive enough? Is there enough incentive to compete here and try to achieve positive network effects? The Smartphone and tablet industry in India is an extremely crowded industry with over 60+ players in the space. A cluttered marketplace

Strong price competition and product commoditization are strong characteristics of this ma
rket
. The leading brands in India Samsung, Micromax & Karbonn take up 60% of the Smartphone space while the rest is extremely fragmented. Add to this the recent announcements at Google I/O 2014. The AndroidOne initiative will give further impetus to low-cost device makers making it hard for consumer to differentiate one tablet/smartphone from the other. And amidst all these dynamics, ENTER FLIPKART at the lower end of the price range.

A look from Amazon’s perspective

Amazon has a strong  experience with consumer electronics devices. The Kindle, when launched was the first of its kind. It was a new category of device a.k.a the e-reader with the much talked about e-Ink. It was a niche device that could render the Amazon eBook format and could leverage cloud delivery infrastructure downloading books via WiFi and WhisperNet.

The new Smartphone,  Fire Phone is positioned as a high-end niche device, competing not with the zillion other Android phone makers, but rather a few premium Smartphone makers in the US market – which is a completely different ballgame compared to the emerging markets.

The value proposition of Amazon’s Fire Phone is also well-defined and centered around Amazon services. Amazon Prime has substantial uptake in the US market. Bundling this subscription allows Amazon to further expand its user base. Trying to bump up transactions through the use of Amazon-specific apps & features is a clear intent. How well that strategy pans out or how drastic that step could be is a debate out of this scope.

For Flipkart, its not the same arena?

In fact it is not even the same game anymore. While this appears as a me-too response to the Amazon Fire Phone launch, I believe that achieving competitive parity can be useful but need not always be meaningful.

Digiflip, Flipkart’s inhouse brand, primarily appears to be an ‘electronic accessories’ brand. A Tablet to augment this line up of accessories is like driving in the opposite direction in a one-way to get into the business. In terms of positioning as well, the Digiflip Pro when compared to the Fire Phone is at a relatively different position on the pricing spectrum.

Over 2000 free eBooks are being offered as a goodie with this device, Flipkart also offers the Flipkart First subscription service, but I do not have enough to compare the popularity of this with that of Amazon Prime – I doubt though that similarities exist.

Will this boost online transactions?

It is widely said that e-Commerce & m-Commerce are the next big purchase channels for consumers. Flipkart is now a leading destination for device makers to sell Smartphones. Motorola sold over 1 million handsets through this exclusive-online retail partner in 5 months. Xiaomi is also planning to partner will Flipkart in its entry into the Indian market. Yet another Smartphone partner is in place – Karbonn, with whom Flipkart made exclusivity deals deal for cheap smartphone.

While these partnerships will boost the main line of business, the entry into ‘cheap tablet’ space could send the wrong-signal to these partners. These partners need to trust Flipkart to sell their devices on the website, than to feel threatened by Flipkart’s cheap competitive offerings.

That being said, would it not be more interesting to partner with these Android device makers like Samsung, Motorola, Micromax, Xiaomi, Karbonn and others to preload a Flipkart App on the device? Flipkart might want to extract more value at a lower cost by preloading the App an fulfil its eco-system intent than to start the line-of-business which is outside is core-business.

Leverage firm capabilities to find growth beyond the core

Flipkart has already started experimenting with its core business model by spinning off its logistics arm – eKart. While I see good merit in leveraging core-competencies to grow beyond its core, investing in this new line of business to gain competitive parity raises more questions than it answers.

Are Vertical Integration and Coopetition based business model related?

Coopetition (Cooperation + Competition) has been an aggressively researched topic in the recent past. I was introduced to this term only during my studies at HEC Paris and while I read this interesting article – ‘Coopetition based business models‘ it brought a few more thoughts to my mind.

This piece on strategy-business.com puts forth various perspectives about Coopetition based business models. It raises valid points about organizational resistance and subsequent benefits of pulling through the strategy – not only to the firm but also possibly to the industry as a whole. It presents the potential impact of effecting an increase in the size of the whole pie, thereby dramatically increasing the firm’s own share.  In Amazon’s case, my interpretation is that while Amazon entered the e-commerce space as a consumer-goods-provider, it soon transformed itself primarily into a platform-provider – cleverly shifting its position within the industry value chain.

While reading this article, I couldn’t help but think of two more examples. One – from my not-so-distant past and the other from my current day experience.

In the Smartphone industry, Samsung & Apple are fierce competitors. Despite this fact, Samsung still makes the 64-bit A7 processor for the Apple iPhones (See here). Their partnership extended to more areas than just the processor.

In the Flat TV Industry, Samsung is a clear global leader in market share. Yet, notably Samsung is a major supplier of flat panel displays to several other TV makers in the industry. (See here)

In the consumer electronics industry, known for its rapid pace of innovation, is this a conscious strategic decision? Do vertically integrated corporations have an inherent competitive advantage over others in the industry value chain?

On the one hand, evolving customer specifications are a definite source of competitive intelligence for the firm – gaining insights on industry trend evolution. On the other hand, being suppliers of ‘critical components’ of a product gives the firm a higher bargaining power – allowing some control on the supply chain within the industry and also impacting product portfolio planning.

Read the original research ‘Coopetition based business models‘ via Strategy-Business.com

Can firms challenge critical mass in multi-sided platform markets?

I came across this nicely written piece about platform markets – “From Netscape to eHarmony: The High Risks and Big Rewards of Platform Markets” on http://strategy-business.com

Technology eco-systems are common in markets with multi-sided business models – For e.g the smartphone app-store connecting developers & phone-users, online-marketplace & storefronts connecting buyers & sellers.

The article introduces the term ‘tipping point’ – an alternate representation of a critical mass of users needed to create positive network effects. An interesting question raised herein is: How can you identify a platform market that is attractive to enter, and under which conditions is it appealing? Defining the granularity of the market & bringing in the right competitive advantage is one route to answering this.

Firms looking to displace dominant incumbents – be it in the smart phone industry, television industry, eCommerce industry or others – must think through the value proposition to switch current users.

Click Here for the original and complete article

Is my SmartPhone NFC enabled?

Two interesting pieces of news from NFCWorld.com

Vodafone to launch NFC mobile wallet across Europe

Mobile network operator Vodafone‘s NFC mobile wallet is going live today in Spain, will be available in Germany in mid-December and expand to the Netherlands, UK and Italy in spring 2014. Vodafone Wallet works with a range of NFC phones as well as with NFC tags that can be used by customers with other smartphones and feature phones.

Click Here to read more.


One in ten consumers say they have an NFC phone

The number of consumers with an NFC phone has doubled since 2012 according to Deloitte‘s third annual Global Mobile Consumer Survey, with 10% of 37,600 consumers surveyed in 20 countries saying they know that they have the technology embedded in their smartphone. 62% say they do not and 28% do not know if their phone has NFC or not.

Click Here to read more



What is interesting is that while Vodafone is rolling out a pan-European to boost the adoption of its NFC based mobile-wallet, 28% of customers (albeit globally) do not know if their phone has NFC?

So where should Vodafone start from? Promote SmartPass – the wallet – alone or also work with Smartphone-making partners to promote NFC?

HP puts NFC in Enterprise printers – like I said last year

Earlier today I came across this article on NFCWorld.com – “HP puts NFC in Enterprise Printers

Not so long ago, I did an assessment for enterprise printer makers on this blog and had proposed a product strategy to map innovation cycles between printers and contact-less technologies. Happy to see it was in line with what dominant printer makers are thinking.

The 50th entry – a collated list …

It has been a while since I have started this blog. It has been enriching being more disciplined in creating original content (while curating some). Looking back over these 49 blog post entries, I thought it might be a good time to take a pause – and collate in the 50th entry some of the original content I created in the process. So here it follows …

1. Smart e-Governance – An entry strategy for Smart Cities
2. mPOS: Addressing new customer segments! A case of blue-ocean strategy!
3. Yahoo acquires Tumblr – a move towards competitive parity?
4. A case for new market entry – is this the right diversification?
5. Business Model Canvas – validating a reading – DxOLabs.com
6. Are you happy with your LinkedIn account?
7. Market sizing, product strategy … dealing with a shrinking 2D printing market..
8. The Perpetual Learner – where should he go?
9. The Fit for Growth℠ approach & Business Model Innovation

The central theme inter-twined among these has been technology – that is what I am passionate about. Hope you find them interesting.

Smart e-Governance – An entry strategy for Smart Cities

There is a lot of discussion and hype around Smart Cities. Analysts use different criteria to define Smart Cities as an aggregation of different types of services. While the obvious Smart Players exist, several companies also aspire to grab a big chunk of this pie. With this mind, they are all busy charting out plans to be Smart City players – trying to tie together individual services & technologies under their umbrella and assessing what more can be done to close the gap.

Typically ‘Smart’ Transportation vendors are looking to fill the gaps and hoping to be a dominant player. I decided to take an alternate view to this approach. Trying to map out the value curve of what I believe are the main factors of competition in the industry and then reversing this value curve to explore other opportunities. The merits of the approach may be questioned; nevertheless it was an interesting exercise to delve in.

Resorting once again to the value curve, I have attempted to devise an alternate entry strategy into the Smart Cities. Being aware that Blue Ocean Strategy creates uncontested market space, this one is an attempt to create a sneak-in-entry strategy.

Your thoughts are more than welcome.