Digital Will Be The Next Sugar
As we enter the new decade, it is interesting to reflect on the decade gone by. The biggest facet of the previous decade has been the rise of entrepreneurship in driving career options and changing the lives of consumers like you and I. The previous decade has been characterised by the birth of nearly 20 unicorns, cash guzzling and struggling for profitability due to mind-boggling consumer discounts, employing millions as part of the gig economy and in some cases, ugly battles and lucrative exits for the founders. This article looks at how our lives as consumers changed over the decade gone by and the likely changes in the upcoming decade.
The biggest theme that emerged in the previous decade was the attempt made by entrepreneurs to organise day-to-day unorganised services based on rising internet penetration and providing assets as a service.
As a household, we organised all our unorganised services and shifted them online. It started with buying books online as books were standardised products with limited prices preventing any undue surprises. Then came the miraculous rise of apparel in e-commerce. Apparel was considered to be a difficult category because of intrinsic consumer needs of fit, texture and the desire to touch and feel from the end consumer. However, due to a great shopping experience, online exclusive deals and ridiculous consumer discounts, we shopped at Myntra, Jabong and Amazon.
With most household spends going online, it was a matter of time before groceries went online too. Big Basket innovated in this category by offering specific delivery slots and offering a wide portfolio. Groceries, however, is a complex animal. Despite the incredible rise of e-commerce, it constitutes at best 2-3 per cent of the entire category with local kirana stores constituting 85 – 87 per cent of the total category. One of the reasons for this is consumers still buy fresh vegetables from the local kirana store while banking on e-commerce for branded goods running on the replenishment model. In addition, we ate online with Swiggy, driven by the experience and the discounts. Although there were trade protests with Zomato and its alleged trade practices.
With interest in food and eating out came lifestyle diseases and the relentless focus on fitness. Ten thousand steps a day became a passing fad as innovative fitness regimens came to the forefront. Sugar became the new villain while oil and ghee made a stunning comeback to our daily diets.
The nature of shopping changed along lines of festivals. Similar to China, where the singles day rings in billions in sales, the Flipkart Big Billion sale and the Amazon sale were events we looked forward to and preferred to buy during that period to rake in the massive offers. The biggest success story of us buying goods online was the rise of consumer electronics and in particular mobile phones. With rising consumerism in the economy, we decided to buy high priced items like mobile phones online with the advent of online only deals, a great range and rise in a minimum threshold of consumers buying online. As a result, e-commerce contributed about 40 per cent of consumer electronics sales.
The holy grail of any Indian household, education and pharmaceuticals is going online next. In any Indian household, the children’s education is given the utmost priority. This was earlier dominated with local tuition providers who raked in a phenomenal amount of money. This category seems to be going online with the rise in Byju’s which aims to drive scale and operational profits in the next few years. The real holy grail in India is actually the cash transactions at around 85-90 per cent of the economy. With demonetisation and the lure of payment apps, some of us decided to try payments online based on the BHIM app. A fraction of us even decided to buy mutual funds online.
The way we looked at entertainment changed. Most of us stopped watching television for a long period of time. We watched cricket on Hotstar and the hit web series (Game of thrones, Sacred Games, Breaking Bad) on OTT platforms. This rise of OTT platforms was derived by the utilisation of our idle time during our long cab rides on Über and Ola and the quality of content with the added benefit of convenience. We forgot to use torrents for movies and pirated MP3 songs online as affordability and quality drove out piracy.
In addition, some of us loved to imitate our favourite movie stars on Tik Tok (its subscriber base is 200 million in India and some of them make cringeworthy videos) while the rest of us decided to make our neighbours envious of our lifestyle on Instagram (subscriber base of 80 million in India).
The second half of the previous decade was driven in bringing ‘Bharat online’. While every major player fought over the first 100 million consumers based in the top 10 metros, the real challenge to scale up was to target the next 400 million consumers in the next 80 - 100 cities. Enter the rise of regional content in news (e.g. DailyMotion) and entertainment and local cuisines.
At work, starting your own firm and building your own unicorn started becoming cool. The neighbourhood aunty no longer passed cheap comments at a wannabe entrepreneur as she was amazed at the potential supernormal returns that might be generated due to this successful and unsuccessful journey. Our eco-system, including entrepreneurship cells at undergraduate colleges and incubator cells at business schools (e.g. NSRCEL in IIM Bangalore) provided necessary guidance for this journey. It was easy to start your own company, from securing finance (if you had the three magical letters of IIT or IIM), utilising the ‘pay per use’ technology infrastructure by leveraging software as a service.
At work, there were a million tools that came from start-up companies to make your lives easier. From automated expense filing to smart capability building modules to tools assisting in measuring productivity in sales and spends, entrepreneurs tried to simplify our corporate lives or may be ended up making them more complex.
The next decade will be driven by the need for sound mental health, physical fitness and the return to the benefits of the decades gone by.
Although popular parlance is dominated by the need for more technology based solutions with jargons of artificial intelligence, neural networks, cyber security and machine learning floating around, the real business ideas lay in key consumer trends likely to emerge in the next decade. Some of these trends include the rise in need for mental health services, targeting specific consumer niches (e.g. young moms, senior citizens, private lives of married couples), need for specific diets (e.g. fat and protein rich, zero carbs) as lifestyle fitness becomes the number one priority. To address the mental health and lifestyle diseases calamity, an associated ecosystem of counsellors and dieticians is likely to rise disproportionately.
As history has shown, humanity keeps moving forward in a decade and decides to go back in the next decade. The offline store is making and will make a stunning comeback in the years to come with the physical presence of touch and feel being valued by consumers. Leading e-commerce players like Xiaomi, Lenskart are already building offline stores. This will be accentuated by the need for lifestyles our grandparents were brought up with, namely lots of sports grounds and academies and need for physical fitness.
While digital was a fashionable word in the previous decade, it might end up being a villain in the next one. There should be a rise in digital detox centres where they consciously jam your phone signals so that you can speak face to face with other human beings. Like China, with rising loneliness and inability of people to communicate face to face, companionship is bound to emerge as a ‘pay per use’ model.
It is only but natural that leading e-commerce companies will target the holy grail of any FMCG company, the rural Indian consumer. It is interesting to see how this theme will play out. While rural India brings in numbers (35-40 per cent of FMCG sales), it has a higher cost of service of 5-7 per cent of revenue. With none of the unicorns likely to turn operationally profitable soon, the rural theme might actually not play out so well.
The usual suspects will make a fuss about the usual products. There will be hooplas of analytics to drive micro market efficiencies and newer productivity tools that will measure how you are spending and earning money as a corporate. In a stunning turn of events, ‘gut based decision making’ might make a comeback as excessive data often throws up pictures that are confusing and ends up wasting more time than creating value. As stories capture the human imagination, everyone including you and I is bound to turn a storyteller. Qualitative anecdotes will dominate corporate decision making rather than the lure of analysis paralysis of hard numbers.
Last but not the least, the most important trend will be that consumers will buy and use apps and services that protect their data. Any firm that hints at messing up personal consumer data will go bankrupt overnight.
In conclusion, the next decade promises to be a fun filled one. It will be interesting to reflect on these predictions when the next column is written at the end of this decade.
