How To Start An E-Commerce Business For Millennials | InsideIIM Career Podcast - Ft. Sidharth S, TAS

 

 

Our guest today is Sidharth Srinivasan, an alumnus of S.P. Jain Institute of Management & Research, who has worked on the launch of one of the most aspirational e-commerce platforms from the Tata Group, Tata Cliq. We talk to him about the lead up to launching Tata Cliq, his experiences on working with Tata and the challenges he overcame to build a platform that caters mostly to millennials.

Can’t listen to the Podcast? Read the entire transcript below

Kunj: Today we have with us Siddharth Srinivasan, who grew up in Bombay, you've done your engineering from VNIT?

Sidharth: That's right.

Kunj: And then you did your MBA again in SP Jain Bombay?

Sidharth: Yeah, I've never been able to escape Bombay, then back to work there too, except for a couple of years and then to join the TAS program.

Kunj: You joined the TAS program from the campus right, Yeah. All right. So to begin with, the Tatas are known for hospitality businesses, they are known for legacy businesses like Tata Steel, Tata Motors, big brands, they've been around for years. But you went and joined a completely different business, a business that does not align with what the Tatas are known for. A business that, you know, yuppies are known for people who are young, people who want to start out on their own, a startup like business not aligned with what Tata stands for...

Sidharth: I think I'd actually disagree. The Tata Group has always been known for its presence in sunrise industries. It's just that we've been around for the past 150 years and therefore, those sunrise industries are not legacy industries. So if you think about it...

Kunj: Sunrise industries keep changing,

Sidharth: They keep changing right, every 20 - 30 years. So India didn't have a hotel, we built a hotel for the first time, India didn't have power plants and steel plants. We built that for the first time. In our grandfathers’ days, the steel industry or rail industry was the place to be. And we built those plants. And of course, those businesses have now become mature. Fast forward 20 - 30 years. We then had TCS, the first technology company out of India. When no one even heard that word, then it became our title. It was all about lifestyle and design. And again, people said that Tata Group can never do lifestyle and design, we’re very old fashioned and so on. But we've made a success over there. And I think Tata CliQ is yet another attempt to enter a sunrise sector at a time when we thought it was right, but do it in a way that aligns with our fundamental business principles. Tata Group is today a place where you have, to use the cliche, everything from salt to software, you can pick your space, it has something for everyone. And for me, it was about entering an area that we hadn't explored. The first part of my role was actually exploring the digital space and figuring out what we can do. The beautiful thing about the Tata Group today is, if you decide to even enter a new space, there is a lot of synergy with existing group companies. So what made it easier for us to enter e-commerce was the fact that the Tata Group already has a USD 6 billion retail presence. So between companies like Tanishq and Croma and Westside and Landmark and Titan and so on so forth. We had a lot of support coming in, we had a lot of business reality that helped shape the entire proposition, which would have been difficult if we didn't carry the Tata legacy. But at the same time, I think the Tata Group, makes sure that every company has to own its own spurs, unlike other conglomerates, which, you know, mandate that every group company will have to work with its group….

Kunj: Company and no one else I understand that. But that brings me to the next point, you actually created a business model and the plan for the Tata CliQ Launch while you were at TAS. How difficult was it to convince people who've been in the company for 20 years, 30 years to do a business which is completely online?

Sidharth: Not as difficult as you would imagine. I think what was difficult for ourselves was to try and find a business model that works. Because everywhere you go in life, everyone is telling us that e-commerce is all about discounting. You can never afford to make a penny. It is what people tell people who are investing, you can never actually sort of IPO this business, you can never actually make money. So it's all about just getting a valuation and exiting. And the Tata Group has never been about that. So for us to be able to develop a model, where we pick up a product from a nearby store, and then ship it to the customer, being able to imagine that at scale, where we are today, we have 4000 odd stores connected to the platform, not just from Tata Brands, but also from 40 - 50 - 60 other brands that don't belong to the broader group. I think that was a tough part. And it was quite rigorous. We spent almost 12 to 15 months when we had periodic reviews every two or three months with the leadership team, Mr. Noel Tata, who heads many of the retail businesses, was involved in plans, and eventually, we sort of presented to the Board, the Group Chairman then and got our approvals. As soon as we got approvals we were ready to go live as quickly as possible. When we created our name, at one point we thought for whatever reason, it'd be really cool if we were called Three Bags Full. Tata 365 was actually confirmed name, we still have a website to that effect.

Kunj: So that you talked about what were the names that you didn't go with? Yeah, but the name that you did go with, which is gotta click. Tell us a little bit more about that because I'm not sure what it means

Sidharth: Sort of a simple thing. Yeah, we already had the name Tata with us, which was a reason for our existence. So we were very keen that had to be in our name. So you already had four letters. And we were thinking website names or app names, right? So how long can it be? So you already have a Tata? It has to be short so that they go together, we said that it's at the click of a button. It's like a clique. So you are part of a select group of customers who have this experience. And we also needed a name that could be trademarked, and we figured that Tata CliQ could be it and that's how we went about it. So yeah, not a very romantic story, a little bit of practical consideration. But I think when we saw that name written on a piece of paper, we really loved it, and all of us got it.

 

 

Kunj: Ecommerce was definitely a crowded space when you guys decided to enter ecommerce.

Sidharth: Yeah.

Kunj: What was your argument or What was your hedge against getting into a very crowded space in e commerce in a country like India, where everybody's so excited about getting into e commerce?

Sidharth: Fundamentally because the Tata Group forces you to take a long term view and in the long term, it won't be called e-commerce. It's just commerce. Right? I have a one-year-old today. And for him, he talks to the Google speaker all the time, he knows how to use a phone, that's a way of life for him. And if you think about these customers, 20 years from now, if you have to future proof your current businesses, you have to be in that space. There's absolutely no getting away from it. And India is going to be having a large consuming class of 400 - 500 billion people who would be having the power to spend on retail. We have large retail businesses that we need to sort of future proof and here's a great way to do it in the medium term, or in the short term. What was our angle in? It was just the fact that we saw that other retailers also weren't prepared for the e-commerce decision. Globally, when e-commerce took off, Amazon took off, say in the late 90s in the US, Walmart was already a $400 billion company. So although they responded say 5 - 10 years late, when they did, they went at it with a bang. And now Walmart is the second-largest e-commerce company in the US, after Amazon. They had money to invest, they'd made enough money they had survived for a long enough time that they were able to invest in this space, unlike in India, where organized retail itself was hardly 5 - 10 years old when e-commerce took off, so organized retailers themselves had not started making money...

Kunj: Take us to that exact moment when you are presenting to a board and they are finally giving approval to the Tata CliQ business and saying that Yeah, let's do this guys. Let's go ahead.

Sidharth: It was very surreal for us at least to be given that. It was my first time presenting to a board , we were in that very famous Tata Sons office, right. There's a big bust of our founder Jamsetji Tata right at the end right? And sort of being there and watching him stare at you is a little intimidating, although it's just a bust, just the caliber of the people in the room really forces you to bring out the best in yourself. It was just a whirlwind after that. As soon as we got approval, we wanted to go live as quickly as possible.

Kunj: You've been mentioning omnichannel a couple of times as if we all know it. I’m going to ask you very specifically because I don't necessarily know what exactly is omnichannel. How is it different from how e-commerce websites have been run so far?

Sidharth: Okay.

A typical e-commerce website. What they do is they will buy merchandise from a brand, say Samsung will sell them a bunch of mobile phones, they set up their own warehouse where they keep that merchandise and then they ship that to the customer when you place an order right. So that is simplistically - the e-commerce model. What this model does is that you are adding to the amount of inventory that's already available with various retailers. We are one more retailer that carries inventory right, therefore You have to set up a warehouse. There is a cost with that. And therefore it adds so much cost that eventually you either have to pass this cost to the customer, or you have to absorb it and make losses. Right. What omnichannel essentially is, is to say that we don't need any more warehouses, we already have warehouses, they're called stores, right? every store carries a lot of inventory, which when you walk into a store, they actually sort of pack and give it to you right there. So the premise of omnichannel is why not use the inventory lying in a store to serve a customer's order, irrespective of whether their customers are online or offline customers, right. So the same product which is lying in the back of a store can be given to you if you walk into the store, or can be shipped to the customer if the customer chooses to buy it online. How do we do that? We have courier partners who basically come to the store say three or four times a day, pick up all the orders that have been placed in the last few words right and then they go and deliver it to the various customers.

Kunj: it becomes more efficient also because then the network of stores helps you ensure that you are never going to have warehouses because that will be expensive.

Sidharth: So so it's three things actually, let's start with the customer benefits. The first and most important thing is that the customer has access to every single product of the brand. Right? Think about fashion brands, how much merchandise will a large ecommerce company be able to buy? It's always going to be limited because it will be buying those styles, which I believe are selling. So you're wearing this beautiful sort of Nehru jacket right? A retailer an e-commerce company may choose not to buy this because you're a minority, but we will carry it if it's available in any store across the country. We have it so if you make that purchase, we will bring it from that store and give it to you. So I think range and availability is the first benefit. The second benefit to customers is eventually we'll get the product to you much faster. You see warehouses are outside the city. So the closest warehouse from where we sit today in Bombay House is Bhiwandi. Whereas the closest Store is Army Navy, which is half a kilometer away. Correct, right. So eventually my ability to get you that product in two hours, three hours, one hour will be significantly better if I'm able to use the store. And those are the customer advantages. The advantage to us as a business is that you don't invest in warehouses, right. And because you take those costs away, you don't feel the need to eventually pass that cost on to the customer. So it's more sustainable, it's a better way of operations. It's more complicated, you have to manage these various stores. Various stores have their own challenges. For instance, this beautiful jacket may have been left near the changing room, so people can't find it when they go to the store. So those challenges exist. And that's why it's actually taken us three years to get this model exactly right. To an extent that we are able to operate very close to a warehouse setting. If the jacket doesn't fit you can walk into the nearest store on the way to get an exchange right then and there. You can buy a product and collect it on the way home, right? So all of those possibilities. So that's omnichannel. Now we're going to get into the launch of the website. So yeah, you've done all this movement when you actually go out in the market and you open the Store for Business.

Kunj: So once Startup Week has been launched. Firstly, what became your specific area of responsibility? Because project planning is very different from actually getting into day to day execution. So you would have gotten one specific area of responsibility. So what was your area of responsibility? And how did you see that CliQ grew from when it launched say, about three, four years ago?

Sidharth: Yeah. So we launched on May 26 2016. Like the date is etched in my memory. And the day we launched, we had this launch inside a store because that was our model, right? So it was in a Westside store in Mumbai, and three hours after we launched while our CEO were still talking to the press, etc. our website crashed. It's because of the amount of traffic that we got. It was just surreal. We really didn't anticipate that sort of thing. If you ask me, what did I do the moment after the website launch, it was frantically trying to figure out how to sort of get it back up. So in the evening, we had this get together at the Taj where our team, all 30 - 40 people were meeting with the brand partners and so on. And there were four or five of us locked away in Bombay House, with our technology partners trying to get the website up. But once things stabilized, my first role was handling digital marketing, we said that as a brand, we won't focus too much on mass media, we will get our initial traction to digital because if customers have to eventually shop online, we might as well catch them online.

Kunj: And more efficient,

Sidharth: more efficient at a smaller scale. So if you want to reach out to your first million customers, I always recommend digital marketing, figure out, iron out all your chinks, figure it all out, and then go mass media. What really helped me in that phase was building a team of specialists. I'm the first to admit that I didn't know a lot of digital marketing then. I still don't know a lot of digital marketing now, although I am significantly better. But we hired right. I went out and hired people who are 10 times smarter than I could have been. And we said that you know, this is an exciting opportunity to get in at the ground.

Kunj: It wasn’t difficult to get them to work for a brand like Tata because, you know, actually sort of the association is a little, you know, old business and that sort of thing. Is it exciting enough for digital marketers to come here and work with you?

Sidharth: I think it's intriguing enough to try and figure out the key. We said that we will do everything in the house, which is always going to be challenging. Most brands hire an agency. Yeah, but we said let's try and do everything in house because this is our competency. Why do brands want to work with me? It's because brands believe that they can get customers online, but we can, right? So let's build that. And that's what I spent the first two, two and a half years doing. I think what we did do well at that point in time, was to try and be at the forefront of everything that these large companies like Google and Facebook were bringing to India.

Kunj: Can you give me an example

Sidharth: Like there were these new ad formats, which allowed you to play a video for those of us on Facebook. There was this little sort of image on your newsfeed with products underneath, and what we did was we innovated on that. We made videos in your newsfeed with products underneath. And the products for the videos are the products that were shown in the video. So we had these models walk across, and whatever they were wearing was available to shop very often. For me the insight was that very often I see something and I want to buy exactly that. But it's not available right, and they land you on some page that has some different products. And we said, why not show the same products? And that did really well. Both technically there are concepts like nested audiences, what it is, is very simply if you have 10,15 20,000 customers of a certain kind, so if you believe that these are customers who are willing to make high-value purchases, or these are customers that are looking to buy a new season fashion, right, not looking for too many discounts. You can use Google and Facebook to find yourself more such customers and you can use that for analytics and attribution. I spent a lot of time by myself doing that. And I saw that is my evaluation. Credit goes to the team, because we had these incredibly bright people who knew Facebook better than me and Google better than me and affiliates better than me. So what do I do? Right? My idea was set up a track and trace mechanism, figure out leads to more app installs through some other channel, right? So to be able to figure out these linkages, and not make simplistic conclusions, that Facebook is not working.

Sidharth: Figuring out I actually saw first saw the ad on Facebook, and then he went away. And then he searched gotta click on Google and shop from there. So being able to make that what we call multi-touch attribution was crucial.

Kunj: You've learned completely on the job. Your education or your previous experience had nothing to do with this?

Sidharth: I am a marketing major, so to speak. Digital Marketing is a completely technical and completely different kettle of fish. Yeah. So the first principle - apply something that's relevant to the customer. You have to talk to the customer that matters to you, your target group technicalities of how you do this, I think is crucial. So you get immediate feedback, and we’re able to use that. And I think since this podcast goes out to a lot of kids in the schools, I think my sincere request is, do not pay for a single certification in digital marketing. The two big daddy's in the space are Google and Facebook, right? Both of them certify you for free. Both of them have hours and hours of tutorials correct. You can get yourself certified. If you see yourself having a career in marketing just listen to what I said. In a few years, all e-commerce is going to be called commerce. All marketing will just go by digital marketing. There is going to be digital as part of it. But digital marketing is no longer going to be new media.

Kunj: You know, everybody dreams of getting a P&L responsibility in a way that you know, it's important if you're hoping to become CEO one day to have a P&L responsibility. What is a P&L responsibility and in the context of an e-commerce website, what does it mean?

Sidharth: So as the name suggests, P&L responsibility essentially is that you are a revenue function, which means you bring sales into the company, but not just that, you are also responsible for profitability. And those don't necessarily go hand in hand because you can do a lot of sales by being unprofitable. So if you give a lot of discounts you can do a lot of sales. Ecommerce companies look at profitability at multiple levels. They look at profitability after the cost of discounting. So fundamentally, how much commission did I get? How much discount was given? Therefore, how much money did I make there? Right? A lot of companies where lot of sales actually comes at the customer's doorstep. So after the cost of collecting payments and doing the delivery, what's your profitability, it's what some people call NM - net margin or what we call PC, and then there is the profitability of the cost of traffic. So once you've covered all of these costs, you've covered what are called variable costs, the costs associated with the sale. And after this, whatever money you make, contributes towards your fixed costs and your fixed costs are largely technology and salaries. What an e-commerce company also forces you to do, I think better than any, quote-unquote offline or old-world company, it forces P&L leaders to look at customer experience. If you are a CEO, which is where most people want to get to, everything is outside of your control. And yet you're responsible for everything. And therefore, a CEO doesn't physically go and sell, he doesn't physically go and deliver products, and he doesn't sit and do digital marketing. But at the same time, he's responsible for all of those outcomes and customer experience, and building the vision and this and that being able to get your work done from other people through influence by setting up the right processes, by measuring the right metrics by having the right north-south metric that people should chase having good interpersonal skills by motivating people with the vision. All of that which I think a CEO is supposed to do is forced to do as a business head.

Kunj: What are some of the problems that you would be hands-on about? And what are some of the problems that you would keep a distance from and you would want to trust your team to execute those?

Siddharth: So trust but verify right? Let the team do everything, but you verify everything. So in that sense, nothing is too small. But I think let's go the happy part, right? You set up processes, and you review them. I think that's fundamentally what the role of a business head is - you review them at a frequency that you're comfortable.

Kunj: What percentage of Tata CliQ is a Tata company? And what percentage of Tata CliQ is an e-commerce company?

Siddharth: We are 100%, a Tata company, and hundred percent an e-commerce company.

Kunj: And that's very diplomatic,

Siddharth: I know it's not a diplomatic answer, come to the office sometimes. We'd be very happy to have you.

Siddharth: What is Tata about us, I think, fundamentally values there are values that we will not compromise, there is a certain integrity that you will always expect from us and we think long term we build long term, it's in our DNA. That is what is Tata about us. What is e-commerce about us? Everything that you expect from an e-commerce company. It means a culture where we don't clock your punch in and punch out right? We trust you to do your work and you play table tennis at the office.

Kunj: You were in the TAS program where the whole benefit that is sold a lot of times on campuses is that you will have so many businesses to go to and you know, you will get exposure to B2C and B2B and hospitality and retail and core industries. You've not explored a lot of it. You've been only on this one all your time over here. Yeah. Why stick with it for so many years?

Siddharth: Seems like this year I think the pitch from TAS is that we are this incredible breakfast buffet in the sort of lounge of the Taj right and you can eat whatever you want. And there are two people when it comes to breakfast - there's the person who wants to eat everything. Or you're the kind of person who feels happy with a few items, but it's comforting that all of this is available to me, and I've chosen what I've chosen. If you invest time with a particular company, they recognize you, you build some equity over there and they are able to sort of grow you. Secondly, to get a role change, you don't necessarily need to change companies like we discussed, I have seen everything from technology to business development, traditional marketing, to now handling a P&L role and editorial category. So you are able to make those role changes within that same company. And it gives you the satisfaction of delivering impact over a longer period of time.

Kunj: We're going to try and summarize all the conversations that we've had with Siddharth today.

1. The first learning in my mind is that irrespective of what businesses you're building, build something for the long term and build something that is future-ready. Today's sunrise businesses are going to be tomorrow's legacy businesses.
2. The second learning I want to talk about is actually about you know, when you are in the middle of a launch, you have this temptation of coming up with a brand name that is unique and innovative and just really stands out, but it's far more important to come up with something that is simple to understand and easy to communicate.
3. Third one is actually my favorite. The best courses and digital marketing are absolutely free. Between Facebook and Google, you will get the tools that you require to crack digital marketing for any kind of business that you want to run.
4. Next learning is actually to hire a team that is smarter than you, that will ensure that the execution is great. And also you can scale up much faster.
5. The final learning is that the road to CEO is paved by taking up tough roles that require loyalty, accountability and impact.

On that note, thanks a lot Sidharth for doing this, I love the insights you have about not just digital marketing or the e-commerce space, but also about how careers need to be built. And I really appreciate you taking out this time. I think this was really valuable, what you've shared with us today. Thank you so much. Also, if you like this podcast do reach out to us on Instagram. Check them on Facebook. And we also put out a lot of great stuff on YouTube so don't forget to check that out.