Which Brand will
Survive Post CORONA??
“Tough Times hardly lasts but Tough
People do”!!! This is an old age saying
and is absolutely correct in the present circumstances. The survival of any
brand post any tough situation like CORONA is hidden in the DNA of the brand
itself. The robust the make-up of the brand is …. The more chances it has to
come out of the present crisis unscathed or with little damage.
Now when I say the brand has to be
tough means may things. Right from the financial situation/ diverse businesses
to the dynamic management. But the most important is how much inner strength
has been built into it over the period of time. It is very clear that in any
tough situations there will be losses and most of the brands will take hits. In
the present circumstances when almost all economic activities are stalled there
is almost no demand for the goods and services and hence almost NIL or a
trickle of revenue exists for most of them. Meanwhile the fixed expenses are to
be met.
Unfortunately many brands had really
panicked in this situation. I am talking here about the big brands who had long
years of success behind them and consistently seen their stock prices rise. The
only reason I could find is that the robustness is not built in to the mind and
character of management. The good weather managers really had never seen this
kind of ugly situation and were caught napping due to their short sightedness.
Some of them only worry about quarterly numbers. It looks good on their resume
to say that during such and such period the company or their segment grew at
the rate of 18% or whatever is the healthy rate. Now they are put into such a
situation where they not only have to be worried about the financial numbers
but also their survival or shall I say their next promotion or switching of
jobs. In some cases they have to be worried about the Board and their survival
in the present position too. This had made them panicky which had percolated
downwards. The entire down-chain had been behaving in survival mode. The
situation is precarious as the extreme survival mode may let people sometimes
disregard or even discard the values which the company stand for. I had been
seeing signs of this personally and had discussions and talks with various industry
insiders and friends. Some of the situations I want to put up for readers.
Make My Trip. Now here is a brand which was
carefully built upon the customer centric image. In this corona time everything
has been thrown out of the window. Customer is no longer cared; how else you
can justify the NIL response on website about various complaints. Did anyone
try to reach them on phone? There is no way to connect. Either you can’t
connect or you can only reach IVR. Even
if you reach them also; there is no solution provided and their AI based
assistant is a pathetic joke. I quote from my personal example and I am waiting
patiently for them to resolve my complaint which otherwise borders on the
criminal cheating and fraud. I had asked them to cancel my tickets from
Bengulure to Paris of 29 Apr 2020 as I won’t be able to travel. They had told
me that the cancellation charges will be applied in my case. This was even
though the airlines itself cancelled the flight. I agreed for the cancellation
charges. I was told that the money will be refunded to the same instrument from
where it was charged. Even after all this the money has not refunded to me till
date. Firstly they calculated the refunded amount wrong and then credited the
amount to some makemytrip wallet. That means I am stuck with MAKE MY TRIP only
for the flight bookings now even when I had been charged cancellation amount to
the tune of some Rs. 27000/-.
Go
Ibibo. Same is the
case with GOIBIBO also. This is more difficult than MMT to contact and only
promises to resolve issues. My tickets from Zurich to Bengulure for 26 May 2020
are still not cancelled whereas the airlines had cancelled the flight long time
back. Though sometimes I am able to connect with them over phone but got no
resolution only promises that they are trying to resolve with Airlines in my
benefit. Almost close to Rs. 1.1 Lacks of my hard earned money is blocked with
them. This is even after telling them that I am willing to take the hit of
cancellation charges.
Both of these tickets were of International
flights which don’t operate domestic routes. Now if the airlines and aggregators
insists upon me to utilise amount to travel with them only then I am stuck. I
understand that their business has almost stopped due to all travels and flights
being cancelled but that is no excuse of this kind of callous behaviour. The
entire model of these aggregators are based on customers’ confidence and if
that is shaken in this tough time then they can forget any business. As such
there will be only limited business in the coming 12-18 months, so if customers
are not sure whether they will get there refund then they will simply stop
booking with them and will go to direct airlines site for the booking where the
refund is fast and prompt in case of cancellation.
Now contrast it with Indigo
site.
I had cancelled four tickets of my family
due to COVID reasons and those were not only cancelled and refunded to my bank
but no cancellation amount was charged. Guess with whom I am going to travel in
future. I understand that the fear of losses will make you take irrational
decisions but you are bound to loose loyal customers this way. I predict gloomy
future for MMT and GOIBIBO. They will bleed from all sides and
customer acquisition for them is going to be difficult if not impossible.
However, customer retention will be a herculean task. No wonder if they fold in
near future or require to sell out stakes to get equity infusion on cheap
prices or loans on heavy interest rates.
E-commerce
Domain: Amazon vs Flipkart.
Both of these brands are leaders as far as
e-commerce is concerned in India. It’s a 120 billion USD size market as of now.
The major chunk of this pie is with both of these brands. Market share of
Flipkart is largest. Flipkart share is 31.9% whereas Amazon stands at 31.2%.
Flipkart share goes to 38.3% if you account for Myntra and Jabong also which
were acquired by Flipkart. Rest of the pie is distributed in many smaller
players. Both of these brands prided themselves upon customer service and attention
and rightly so as the entire foundation of e-commerce business is based upon
the customer’s trust/ beliefs. Over the years these companies not only looked
for customer’s satisfaction but customer’s delight too. They have built their
processes around this concept and also spent considerably towards achieving
this only to see the concepts and philosophies go down the drain in the time
when they should have stuck with them. The culprit here is not Amazon but
Flipkart and I quote here from an experience faced by me personally.
I had ordered one pack of N-95 face
masks consisting three pieces for an amount of Rs. 950/- from AMAZON.
The order is non-returnable due to hygiene policies. When the item arrived
there was only one piece available inside the packet. This brought me a huge
disappointment as I waited close to 7 days for the delivery. On reaching
customer service the Amazon’s response was quick. I was asked to send the
picture of it and the entire money was refunded in a matter of hours. I got a
bonus mask as the policy says non-returnable. One more thing the call from them
was prompt and within minutes of raising the issue. Now contrast this with FLIPKART.
I had ordered three books from the app for Rs. 1050/- approx. The money was
deducted from my credit card whereas the app says that the order has failed as
the transaction was not completed. I waited for some time and then reported the
matter and asked for a call back. There were slots available for call back and
most of them were for next day. Anyways the call was made to me by them on same
day and after reporting the matter I was advised to contact bank. So I
contacted Amex guys who were very prompt and efficient in dealing. I was told
that the money was sent to Flipkart and was provided with a “Merchant
Transaction Number”. I was also told that with that number Flipkart can
immediately trace the money and send my order. I contacted Flipkart and told
them the same.
One would have thought that with
this my part is over and Flipkart will take the responsibility and do something
to resolve the issue. I was surprised when no action was taken by them for four
days. I again contacted them at-least three times on different days and each
time I was told that the matter will be resolved in eight business days. This
was in-spite of me telling to raise the issue to complaint cell. The eight
business days remained constant each day and hence I reached Amex guys and
raised the dispute.
Guess where I am going for my online
purchases next. I consciously wanted to use Flipkart as I thought it was a home-grown
brand but with the majority stakes with Walmart it’s no longer local. So I will
stick with Amazon only. I am also waiting for TataCliq to build up and that way
I can also support local.
This adverse condition reminded me a
story of a farmer:-
There was a farmer in a hinterland
who continued ploughing and toiling his land even after the village astrologer
told him that there will be no rain for the next three years as such a thing
was told by ‘Indra the Rain God’. Actually Shiv told Indra only to make rain
when he plays his DUMROO (small handheld drum) and Shiv due to some reason was
angry and decided not to play dumroo for three years, so goes the story. All
other farmers stopped toiling as there was no point but our illustrious farmer
continued his hard work. Other farmers often used to taunt and laugh upon him.
The village astrologer asked him as to why he was working hard as there is not
going to be any rain. He politely replied that he is continuing so that he
shouldn’t forget how to plough after three years. On hearing this Parvati; wife
of Shiv asked him, “shouldn’t this go
for you also?” Shiv was worried and decided to play his dumroo lest he forgets
how to do so. On hearing the sound of dumroo; Indra immediately sent the
rainfall and the hardworking farmer was rewarded as his land was ready whereas
for all others it was a lost opportunity.
The point I am trying to make here
is that no one knows for sure how this present crisis is going to end and where
it is going to take the world and businesses. Now is the time to prepare
ourselves for whenever the opportunity arrives.
Take the case of Yulu and
Bounce.
Both are providers of self-driven
two wheelers on rent. The rates of both of them are quite reasonable and that’s
where the similarity ends. Yulu is into basically cycles and electric bikes
whereas Bounce majorly is in gearless scooter segment. The business of both
these companies had totally stopped during lockdown. On one hand where Yulu had
been preparing in this lockdown the bounce was caught napping when the
limitations were removed. Now when one can see lot many vehicles available in
Yulu zones; the bounce stands bore deserted look. Yulu had spent time in
renewing its inventory during lockdown. New vehicles were bought through their
dealers and old ones were renovated and repaired. The Bounce did no such thing
(at-least it seems so) and was not to be seen around after lockdown.
Guess which brand is going to be
Customer’s preference.
Further Lets contrast between the
credit cards.
SBI holds almost 18% market share
only behind the market leader HDFC with 27% share. American Express is nowhere
in the scene though in the last couple of years it has seen steady rise of share.
In my point of view one of the reason is less acceptability at various business
places which is on the rise. High membership cost also is one of the reasons. Presently
Amex is slowly climbing up due to its sustained campaign and no membership cost
cards.
In the lockdown period (till now it
continues) there was no way you can talk to anyone in SBI Card customer
services on phone even if you land in dire emergency. They will always advise
to use YONO app. This sometimes is not helpful. So what did people do? They
simply stopped using SBI card and use other cards mainly Amex or HDFC. This was
experience of my friends and mine too. HDFC replied after some effort whereas
the response from Amex was wonderful. They not only replied promptly but were
very helpful in resolving the issues and yes there way of courteous talk was a
pleasant change from the rough language used by cheap cost cutting call
centres. The excuse of the call centre is working with reduced manpower doesn’t
cut any ice as it is same for all of them. Then how come some perform where
some don’t. The difference is what is going to define their survival in next
five years and their bottom-line.
Guess which card the customers are
going to prefer. It’s not a pleasant thought when I think about the SBICARD
shares which I bought through IPO just before lockdown and which had lost
almost 40% of their value. Only satisfaction is that I didn’t buy any from
secondary market and not wasted more money into it. There will be gloomy days
ahead for SBI Cards for next one year.
However, not all big brands left it
to providence and kept sitting some revamp themselves. There are many examples
of brands reinventing themselves keeping customers as focal point like Maruti
home delivering vehicles, More Stores liasioning with RWAs and getting bulk
orders to reduce delivery cost and supplying on time, Five Star hotels (Park,
Marriot etc.) designing menus for home delivery etc.
The point is that in the lifeline of
a brand there will be few instances which will be tough. The character and
toughness of their management will define whether the brand is going to survive
or perish.
I
am predicting gloomy days ahead for Make
my Trip, Goibibo, Flipkart, Bounce and SBI Card. Let’s wait and watch.
