5 trends for the Mobile

Also find this post at: http://www.chinnovate.com/top-mobile-trends-in-asia/

In the past couple of years, mobiles have emerged as the single largest attraction of innovator’s, entrepreneurs and obviously, the consumers. The smart phone rush has already taken the world by a storm (Apple shipped 250,000 iPhones a day in 2011), and the end seems nowhere in sight. As the world is trying to fish out the smartest products and their corresponding business models, I list trends that are likely to form the basis of future companies or even industries.

End of the Retail Divide The rise of e-commerce separated retail in two well defined categories: electronic retail (which is about 10% of total retail) and physical retail. While it is true that customers were basing their purchase decisions on what they researched online, the two categories mainly competed on price and convenience. However, with the rise of smart phones and tablets, consumers are now carrying intelligent, connected apps with them to the store. The technology shy retail organizations will have to redesign retail from the scratch and take advantage of the mobile to leapfrog the shopping experience for the consumer (for examples and statistics, see “The Future of Shopping”, HBR December 2011).

Reinventing Music Pandora, LAST.FM, Jango, Dhingana, SAAVN and the likes have gone a long way to prove that the world will listen to music without paying through the roof and without resorting to piracy. While record labels were traditionally slow to accept these models, the success associated with these start-up’s is opening new opportunities for reinventing the business model of record labels, who have so far been fighting the futile battle of stopping piracy. While these ‘music as a service’ businesses will only continue to grow bigger with the proliferation of Internet on mobile, we’re still at the tip of the ice berg. There will be more entertainment on mobile – and music is going to be one of the big industries influenced by it.

Location Based Services ‘LBS’ has always been associated with a lot of hype, but for all the right reasons. The vertical holds great promise, as seen from the likes of Foursquare, Glympse and even upcoming start-up’s like Zomato which combine content seamlessly with location. Of course, it is a pity that these start-up’s are only limited to areas with high penetration of mobile internet and major smartphone markets such as India do not quite make it to the list yet. However, with a stream of GPS smart phones, indoor LBS technologies and faster data connectivity, the next 5 years will see an increasing number of businesses growing in this space.

Mobile Payments Breakout The concept of mobile payments isn’t really new, but has so far failed to gain enough traction to grab eyeballs. Most banks have used mobiles for second factor authentication and some also have websites dedicated to mobile which allow users to perform banking tasks such as payments. The recent start-up Dwolla goes a step further as it replaces the credit card by even extending credit. While the Dwolla model may or may not find success, the payments model definitely will. With the expected (and long awaited) rise of NFC, mobile payments are all set to be as easy as swiping a credit card without carrying half a dozen of them.

More Smartness in Smart Phones While the knowledge based services are still in the nascent stages in the internet, we don’t have to wait for them to succeed on desktop before reaching the mobile. Given instant availability and voice recognition capabilities, smart phones can make the best use of knowledge engines. Now that Siri has already got the world excited, expect a lot of effort in improving Siri and developing similar capabilities across other platforms. Although unlike the trends above, capabilities of underlying technologies will be play a more significant role than the accompanying business models in the short term.

Distribution in India: Ceramic Tiles Industry

A DECADE AGO, dealers would line up at Kajaria’s Headquarters in South East Delhi looking for an opportunity to stock, retail or distribute their products. There were few manufacturers, and the construction boom was still a few years away. Today, the manufacturers have increased manifold, especially in the highly accoladed Gujarat state of India, but the increase in the number of dealers has not kept pace. While major old players such as Kajaria have emerged as brands given their rooted presence in the distribution channel, the hundereds of new manufacturers are only commodotizing this space.

BIRTH of a commodity

SOME MAY ARGUE that a ceramic tile has always been a commodity. Afterall, manufacturers are using similar manufacturing equipment and suppliers and the designs are almost never copy protected. Yet, in the decade after the liberalization of India’s economy in 1992 circa, only few players could afford to set up new plants and they ensured quality which was much higher than that of the practically non existent unorganized sector. The success of a manufacturer largely relied on it’s ability to collect payments from dealers and reduce its manufacturing costs to attract a larger market so far using white cement or cheaper varieties of marble.

Today, however, the boom in the construction industry has led hundereds of prior agriculturists and other tradesmen to invest their money into the tiles industry – especially in the conducive atmosphere of Gujarat where ceramic zones have almost sprung overnight in HimmatNagar and Morbi regions. The cheaper gas and fantastic infrastructure has allowed the players in the region to produce newer products such as the Vitrified (or Porcelain) Tile and it’s variations such as the Double Charged and the Glazed Vitrified Tile.

The old world manufacturers who had become superbrands given their exorbitant media spends did the traditional incumbent’s mistake and did not focus enough of their attention in these products. At first, they tried to compete by importing the same products from the technically advanced China, and branding it with their Superbrand credentials. Now, they are finally making efforts to buy stakes in these Gujarat companies in order to retain their competitiveness.

Even though some of these newer products are now branded and sold at a premium, they struggle to differentiate through anything but the legacy of their brands.

BUYER Power and Seller Power

GIVEN THE LACK of significant differentiation between products and the increase in manufacturers from 10′s to the 100′s, the dealers are now more spoilt for choice than ever. Every few months, the manufacturers cut each other’s price for a greater share of the pie. While more consolidation is likely to happen over the next years, the industry will retain a retailer dominant face for a much greater period of time.

Factors that support retailers:

1. Lack of price transparency.

2. Medium Complexity of the end user purchase decision.

3. Lack of a strong top of mind recall for end users.

BRANDS everywhere

IN SUCH A SCENARIO where a large portion of the customer only relies on misinformation given by the dealers, the dealers are able to manipulate not just the prices but even the attitude about the brands that a customer may have just encountered.

To accentuate their profits, the retailers have now started a unique arrangement wherein they purchase products from the manufacturers but using their own logos and prices. Given the fragmented nature of retail in this industry, these are rarely strong brands that have presence pan India, yet the dealer is able to manipulate the customer into buying those by either worsening attitude about other brands or simply presenting these India manufactured products as imported products.

While it is unlikely that this trend will continue for a long time as the consumers are increasingly more informed, in the short term manufacturers have to increasingly deal with such sabotage at their point of sales.

to be continued..