Off lately, sustainability and eco-friendly products have become the buzzwords for every retailer.
Hence, Fashion retailers are introducing collections that are made from sustainable materials, and also shoemakers are now introducing products made from recycled plastic bottles.
Retail is seeing a plethora of brands coming up in the space of sustainability. I am talking about fashion and beauty brands.
The real question,
“Can a retailer adapt their product offerings to meet the expectations of the consumers who loves to care for their environment as well as love to buy products that are ecofriendly and sustainable?”
Sustainability should start with the core purpose of the business and brand.
My article answers this question and provides retailers few hacks and insights.
1. Sustainability approach : Change your instore lightings.
If you use power-consuming incandescent lamps, then it’s high time to switch to LED which consumes a fraction of the power and helps you drive your sustainability mission forward.
2. Switch to E- receipts: sustainability solution
You can capture the key customer’s data and use it for your data analytics. Moreover, also save on printing of paper invoices which in return would save trees and the environment.
A good starting point can be your shopping bag itself.
Areyou using plastic bags or re-usable & recycled paper bags?
Check out the innovative way to recycle the newspaper into a shopping bag.
recycled newspaper shopping bag
Packaging is likely to be a necessary expense for your business.
Sustainable shopping bags may even result in a cost reduction when compared to normal plastic bags.
Case study: Sustainability in luxury fragrances.
One of the most wasteful expenses in any perfume creation is its packaging.
The hard truth is that without the attractive outer box and attractive bottle, the customer does not get attracted to the scent.
Once the customer buys the fragrance, thereafter, its packaging material gets thrown in the dustbin.
Luxury brands spend 15-20% of the product cost on the packaging itself, which according to me is a wasteful expense and can be re-looked by perfume brand owners.
Having spent almost a decade in perfumery, one of the cases which blew me completely was the launch of CK one fragrance.
I had never imagined that a perfume bottle could even resemble a cough syrup bottle.
It was a disruption in the bottle packaging.
Case study:
Luxury niche perfumery house Jules & Vetiver found their brand on “sustainability” positioning.
One of the brand’s founding principles is “luxury without waste”.
It reflects in their packaging, as a result, they used the hand-stitched leather pouch as the outer packaging cover for their minimalistic stylist fragrance bottles.
Usage of recycled paper to create a multi purpose outer box.
Check out the brand’s video here:
Jules & vetiver perfumes
Conclusion:
The sustainability aspect should become the core of Retailer’s DNA.
Until then the words “sustainability , ecofriendly” would just remain a nice topic to be discussed in webinars, conferences.
ABOUT THE AUTHOR
Ritesh Mohan is a passionate retail professional with over 23 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector.
He has been instrumental in the growth of some of the regional brands as well in the Middle East region.
Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management.
He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.
This is my first blog article this year and I could not find a better day (Vasant Panchami) and a topic that is trending currently in the Indian subcontinent.
Yes, it is, “The Union Budget 2022”.
This is my analysis and perspective, and my views may differ from the rest.
I have attempted a different viewpoint than most economists and thought leaders.
I was invited as a panel guest by the Indo-Gulf Management association to share my thoughts on the Indian Budget 2022
Frankly speaking, the very concept of direct taxations like income tax, capital gain tax, etc are outdated especially in a country like India wherein the only a small percentage of the population pays the taxes. (source financial express).
The tax reforms should not burden the small percentage of taxpayers, rather the focus should be on GST kind of taxation which is consumption-based i.e. you pay for the services or products consumed or utilized. (Majority population pays for GST)
The Budget 2022-23 focus has been on ‘growth’ and ‘CAPEX spending’ across sectors.
It is futuristic looking budget.
A good push to infrastructure by significantly increased capital expenditure, with a renewed focus on supply chain and logistics, and domestic manufacturing
Railways have been the core of India’s infrastructure development and its budget outlay justifies the same.
Linking Railways with the concept of “One station- One product” will boost the local product consumption and logistics.
The locally manufactured products can now easily be transported through nook & corners of the country with ease.
I consider this step revolutionary rather than dolling out subsidies and tax payer’s money in terms of Guaranteed MSP which was actually not solving the farmer’s issues.
By providing the market to the farmers and linking them to the logistical strength of Railways will drive better returns for the farmers.
Actually, the focus of the budget has been in developing infrastructure and supply chain ecosystem for the “Made in India” products.
Budget 2022 from Retail Business Perspective:
FMCG sector growth depends upon rural growth & its consumption.
The 1.5 lakh post offices into the core banking system is a positive particularly for rural India and a higher minimum support price (MSP) allocation will drive consumption of fast-moving consumer goods (FMCG) products in the hinterland.
Bringing the rural population into the banking ecosystem will ensure that any governmental subsidies will reach the needy people through their banking accounts or post office accounts directly.
Supply chain / logistics– Budget 2022
As a part of the ‘PM Gati Shakti’ initiative, a Unified Logistics Interface Platform designed for ‘Application Programming Interface’ will be set up.
This is expected to provide for efficient movement of goods through different modes, reducing logistics cost and time, assisting just-in-time inventory management, and eliminating tedious documentation.
Learn about the business model of food delivery apps, click here
Digitisation measures
75 Digital Banking units in 75 districts of the country by Scheduled Commercial Banks are likely to provide a big push to the digital banking infrastructure of India.
The Most Resilient sector – Agriculture
The agriculture sector has grown 3.6% in 2021-22.
Sustainability initiatives – Budget 2022.
The Budget gave India’s renewable sector a big push.
The electronic Vehicle manufacturing /charging business in focus.
A policy for battery swapping will aid in reducing the upfront ownership cost of EVs, thereby driving customer preference towards such vehicles.
This policy is also expected to encourage the private sector to develop sustainable and innovative business models for ‘Battery or Energy as a Service.
The main rationale behind Green energy is to reduce the burden of our foreign exchange outgo in terms of oil procurement.
Hence encouraging greener transportation would mean that as a country we are less dependent on imported hydrocarbons.
GDP growth rate projected for 2022-23 is approx. 8 to 8.5%.
Industrial sector projected to grow at 11.8%.
Exports to grow by 16.5%.
Housing/ Real estate
Job Uncertainty continues to make people wary of EMIs, with home loans registering a decline vs pre-pandemic levels.
But there was no relief pertaining to Interest waiver or extended period offered to taxpayers in this budget.
However, Affordable housing was clearly in focus, with the finance minister announcing the allocation of ₹48,000 crores under the Pradhan Mantri Awas Yojana.
Startup Boost
Current provisions to qualify as an eligible start-up (extended by a year to 2023);
India has the third largest startup ecosystem in the world after US & China.
New Delhi overtook Bangalore as start up capital.
In 2021, India saw 44 unicorns which is a record.
Beneficial tax rate of 15 percent – Boost to manufacturing sector.
This will provide stability & certainty to the sector.
Customs duty reduced
Customs duty reduced on inputs required for the manufacture of consumer goods like mobiles, cameras, gems etc
Removal of customs exemption on certain items, and providing concessional duties on the raw material that go into the manufacturing of intermediate products will support the Government’s objective of ‘Make in India’ and ‘Atmanirbhar Bharat’.
Some sectors ignored.
Aviation
The airlines expected govt to suspend Minimum alternate tax for the aviation and airport sector for min two years. This is one sector that has taken the hit along with the tourism and Hospitality sector during the Pandemic.
Generating Jobs
The focus on the manufacturing sector will indirectly generate employment for the skilled population.
No relaxation to the existing tax slabs.
There is no change in current taxation slabs for the salaried employees however there is no additional tax burden either.
You can watch the full webinar here.
Summary:
Despite all challenges, the Budget presented by our finance minister is quite forward-looking.
The rest will depend on its execution of governmental policies and plans.
ABOUT THE AUTHOR
Ritesh Mohan is a passionate retail professional with over 23 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector.
He has been instrumental in the growth of some of the regional brands as well in the Middle East region.
Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management.
He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.
Top Retail trends shaping the retail landscape in 2022
As we embark on the new year, allow me to predict the 7 retail trends that will dominate the retail sector in 2022.
The year 2021 has been a year of recovery for most of the retailers and the retail sector in particular.
The increase in the vaccination rates & our vaccines’ providing immunity towards new variants of the virus will help the economic cycle to bounce back to pre-covid levels in 2022.
What is the future of retail?
Is retail dying?
This is one of the most common questions that get asked very frequently across panel discussions.
So let me answer it now.
The retail industry exists until the people do. It is one of the oldest forms of business known to mankind.
With the shops closing across the malls is rather signaling an advent of the new era – One Retail.
New trends and tendencies in buying behaviors & customer expectations are emerging.
Hence retail is one of the most agile industries, it needs to adapt to the changing environment and flourish.
Re-inventing the retail model by keeping your customer’s expectations and habits at the core of the business is the mantra to survive and thrive.
Learn how covid19 changed the consumer’s buying behavior, read here.
Retail trends in 2022.
1. One retail to continue to thrive.
We all are living in a Hybrid World, i.e. digital as well as physical.
As per Statista Digital Economy Compass, the global average time spent using social media platforms per day is 142 minutes in 2021 – far higher than the 90 minutes recorded in 2012.
Surely this behavior has brought a change in consumers’ behaviors and their consumption habits, especially media consumption.
It gives rise to social commerce which is another manifestation of eCommerce.
Today retailers cannot depend on one or two or even three channels of communications or even touchpoints.
A study has revealed that on average customer checks the brand on 9 touchpoints prior to purchasing the brand.
Hence the brands need to embrace this change and talk the same communication message across the platforms (stores, website, tweeter, Facebook, Instagram, youtube, direct mailers, catalogs, market places, etc).
Retailers and mall owners need to learn the art of story-telling to this segmented targeted audience.
One of our regional mall players MAF- City Centre is doing it very effectively.
They have one message & story being communicated i.e. Providing great moments by making their malls – the center of their customers’ lives.
This vision is compelling the MAF team to come up with innovative ideas to remain relevant and active since they made the promise of making their mall – the center of their customers’ lives.
The malls like Emaar (The Dubai Mall) have taken the entire mall (all tenants) online, giving a buying option to their mall’s visitors more convenience. Some of the malls have concierge service as well.
“Keeping Customer at the center of all your activities” is going to help both retailers and mall owners to thrive in the coming years.
retailritesh
It is no longer an imperative question whether you need an eCommerce channel of distribution for your brand or not.
You need to be able to serve your customers across the touchpoints whether is e-commerce, social commerce, or physical store.
2) Immersive Retail experience
Did you recently visit the mall and pass by any of the fragrance stores?
If yes, then you would have noticed how fragrance retailers try to make use of sensory elements by diffusing their signature scents or aroma to the mall’s customers.
Use of Augmented Reality & Virtual reality will be more often used in the retail sector.
They provide value addition to the customers to engage with the brand virtually as well as in the physical world and provide product information and brand communications in a seamless manner.
IKEA
They’ve created a Place App for you to place furniture items into your house using a simple smartphone. You can see if it fits your design, room size, and other settings.
Gucci (pathbreaking innovation- experience hubs)
In their flagship store in Italy, they charge an entrance fee.
It is now a mixture between a café, a museum, an art gallery, and a shop to provide an immersive experience of all senses.
Thus, both new people and Gucci fans are actively engaged.
Nike
They use AR & VR in their stores. For example, you open an app, scan shoes, and get additional information about them. You can also try on other items unavailable in the store to order them or not.
Warby Parker
This brand makes and sells glasses.
They also have an app to try on different glasses before buying them online.
The same can be done with jewelry, watches, clothes, and everything possible to try on.
Charlotte Tilbury
They use AR for you to try on makeup, see what product shades fit you best, and save your money ultimately.
They have virtual mirrors installed in most of their stores.
It is particularly popular with Millennials and Generation Z, who prefer to talk into their phones rather than type.
The implication of this change in consumers’ preferences is that retailers need to incorporate Voice searches onto their eCommerce platforms and make them more SEO friendly.
4)Sustainability and circular fashion brands to thrive.
One of the good things that covid19 has done to consumer’s habits is that it has made us all “health-conscious”.
We all have started noticing and reading on the ingredients listing printing on the products that we buy and consume.
This change in consumer preference is one of the primary reasons why sustainable brands or purpose-driven brands and shop concepts based on circular fashions are growing.
To learn more about sustainable brands, click here.
5)Livestreaming Has Grown in Popularity
Livestreaming has grown in popularity over 2020 and 2021.
Home-bound consumers found live streaming to be a way they can engage when shopping online.
The challenge is to integrate live shopping with physical stores but it can be done by retailers who are technically advanced especially retailers like Warby Parker, Nike, etc.
6) Buy Now Pay later -fintech tools to become more prominent
In order to tap a large non-credit card users segment into the ONE Retail bandwagon, fintech products like Buy now and pay later will become more relevant as they bypass the credit norms laid down by traditional banking systems and do not hamper the credit ratings of the customers.
The biggest challenge in today’s time facing the industry is that there exists a humongous amount of data every day but most of the retailers lack the expertise in “making sense out of that data”.
There are software solution providers who would sell that tool but lack the expertise to provide “Key actionable insights” from the data on regular basis.
The primary reason for this gap is due to the fact that CEOs of most of the retail companies come from finance or accounting backgrounds and due to their limited vision, they fail to foresee the opportunity beyond the balance sheets.
Unfortunately, most of the retail companies are being driven like finance firms and not as retail firms and hence you see more retailers standing outside the financial institutional offices for filing for bankruptcies.
Hope this article will help my retail fraternity and member to incorporate a few insights into their retail calendar in 2022.
In case if any of my retail connections want to reach out to me for taking my advice or help in their retail initiatives, you can reach out to me through the contact me section on my website.
Ritesh Mohan is a passionate retail professional with over 22 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector.
He has been instrumental in the growth of some of the regional brands as well in the Middle East region.
Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management.
He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.
Farm to fork or Fresh to plate – Niches make Money.
Farm to fork or fresh to plate food tech concepts can re-vitalize FMCG brands into their new avatars.
The only way for FMCG brands to thrive in the digital age is to focus on niches.
FMCG is an acronym for Fast-moving consumer goods.
My inspiration to write this article comes from my interaction with my LinkedIn friend, Shahid khan and I am going to share some of my learnings from the newly emerging sector “Fresh to plate” or “farm to fork”.
These two terms were unheard of in the early 2000s or even in traditional FMCG (fast-moving consumers goods) kind of business.
Thanks to evolving tech developments and changes in consumer behavior,
customers are now open to accepting fresh food delivered to their homes and convenience which comes attached to it.
Any company operating on a farm-to-fork business model controls the entire back-end supply chain, powered by stringent cold chain control to maintain the quality and freshness of each product.
This starts from the time of procurement, processing, storage to the time it reaches the end consumer.
Watch the video advertisement to understand the farm to fork business.
Hope the business proposition for “fresh to the kitchen” or “farm to fork” is now clear.
Is D2C (direct to customer) similar to ecommerce?
A traditional food Ecommerce site may contain various categories such as fresh foods, packaged foods – spices, condiments, etc.
But when you focus on one category of the overall eCommerce grocery retailer, you started aiming for a niche segment that forms the basic premise for any D2C brand.
The D2C market in India is at a growing stage and is expected to attain a size of $100 billion by 2025.
D2C sales in the middle east region are estimated to account for $17.75 billion of total e-commerce sales in 2020, up 24.3% from the previous year.
The pandemic has played a major role in accelerating growth for the sector.
D2C has the obvious advantage of direct consumer connect as they control sourcing, procurement, logistics, and distribution directly to customers, removing the channel margin-eaters from the value chain.
In D2C, the brand look after the entire supply chain modules of the business.
What is the margin-eaters for any FMCG player?
The answer is mainly the end retailers’ margins, distributors’ margins, fixed costs, below-the-line marketing activities, and costs & finally advertising.
So in D2C business, your margins (retail & distributor) are saved whereas your customer acquisition costs are increased which over a period of time comes down with an increase in online orders and volume.
Challenges in D2C business model like “farm to fork” or “farm to plate”
Building a robust infrastructure that can sustain growth and enable quick scale-up. This needs a bottom-up approach.
Tech tools to maintain the temperature of warehouses, transporting trucks between 0-4degree.
In the middle east, it is one such challenge wherein the temperature soars to 50% degrees during peak summers.
The “farm to fork” kind of businesses, need continuous investments.
Investments in terms of infrastructure creation, creating distribution hubs, trucks, Talent, digital initiatives, and most importantly tech support.
Farm to Fork- D2C model
Licious – brand’s core achievements in emerging unicorn startup in India.
Licious is 29th unicorn to emerge out of India in 2021
The latest funding would help it compete better with players such as FreshToHome and Zappfresh, as well as large players like BigBasket and Swiggy
Licious serves over 1 million orders every month
Fresh meat and seafood is still an underserved and unorganised sector that holds an opportunity of $40 billion
Technology tools in D2C or farm to fork businesses
Online Ordering Platform
In the D2C business, your online ordering platform or app is the front-of-house place where your customers interact with your brand.
From a profitability point of view too, it’s always preferred to get orders on your own platform so that you do away from the third-party commissions.
AI controlled logistics distribution cold chain.
Robust delivery systems within a hour within city limits.
Online ordering and processing – customer acquisitions
Customer retention
Online marketing
What the Middle East players like (al islami, alyoum, alain foods) must do to re-invent themselves?
Challenge themselves– first foremost thing the regional players must do is to challenge their core business model and practices.
Bring Fresh perspectives in thinking instead of shouting “freshness” in their advertising slogans.
Start thinking keeping 10-year horizon. Formulate strategies that can sustain the business for the next decade and command its leadership position in the marketplace.
Leverage their core infrastructure and combine it with the layer of technology innovation, keeping the customer centricity in mind.
Leverage their network of HORECA – not to sell the merchandise but in customer acquisition or pick up points.
Throw the modern trade thinking capinto the bin– Start imaging a world or marketplace wherein there exists no hypermarkets, supermarkets or power retailers. Then answer the question,
“How would you still be able to service your end customer?”
They formed a community of fishermen in south India or “solidarity-based agricultural undertakings” as called in the western world or as a “cooperative movement” in the democratic world.
Bringing fishermen online
The app works on a simple and gamified model.
Once a fisherman opens the app, the camera “reads” the fish, and detects the variety, size, based on which the fisherman puts in his bid.
At the other end, one or two “feet on street” bid at auctions, pick up the catch and transport it through the cold chain to respective hubs.
The app reads the fish based on neural network training that detects the kind of fish.
They use an AI-based, US-patented technology.
The consumer has to pick a product from the platform.
The produce is shipped from central hubs to distribution hubs, from where it is transported in vacuum-sealed pouches, cold boxes, and temperature-controlled trucks
“FreshToHome’s brand proposition is to provide food that is 100 percent fresh and with zero preservatives.
Definitely, not an easy feat to achieve in an unorganized sector such as the fish and meat industry in India.
India alone consumes USD 30 billion worth of meat products annually. The size of the market makes it attractive for the food tech players & investors.
Any FMCG brand that can disrupt itself first, disrupt its own processes and thoughts, have a better chance of survival in near future.
Any of the frozen food middle east players, seeking to get a fresh perspective on initiating their business plans for the food tech ventures, now know their GO-TO person (#retailritesh)
About the author
Ritesh Mohan is a passionate retail professional with over 22 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector.
He has been instrumental in the growth of some of the regional brands as well in the Middle East region.
Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management.
He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.
One of the sectors that saw huge spike in usage was undoubtedly ecommerce, logistics and fintech companies.
Buy now pay later is one such fintech solutions which is disrupting banking sector especially credit cards.
What is Buy Now Pay Later (BNPL)?
Buy Now Pay Later (BNPL), as the name suggests, is a micro-credit instrument.
It’s function is similar to credit card, that I allows consumer purchases just as a credit card.
BNPL users get to split their eligible online or offline purchases, i.e. purchases made with partnering merchants, into zero-to-low interest instalments or repay the total dues at a later date within the repayment cycle at no interest charges, according to the terms and conditions of the BNPL service provider.
For example, if you buy something in a store or online, you may be offered the buy now, pay later option at checkout.
If you get approved, you usually make a small down payment at the checkout.
You would then pay off the remaining balance in a series of interest-free instalments.
Why so much noise for “Buy Now Pay Later”?
Pandemic has changed the way we shop or our buying behaviour,
Convenience is the buzz word and if it comes with easy credit facility then it becomes a trend. (in urdu we say,sone pe suhaga, means cherry on top of the cake)
Global e-commerce transactions totalled $4.6 trillion last year, up 19 per cent from 2019, a report from Worldpay says.
BNPL accounted for 2.1 per cent or about $97 billion of that sum. (source: worldpay)
So, when you are talking about a trillion dollars sector, then it gets all the attention it needs in the marketplace.
There are a number of BNPL players vying for a share of the Middle East market, including Spotii, Postpay, Cashew, Tabby and Tamara. Australia’s Zip, a global BNPL platform, bought Spotii for $16.25 million in May this year.
Learn how to develop your Influencer Marketing Plan, Click here.
Why Millennials are in love with Buy Now Pay later (BNPL)?
Millennials hate conventional banking.
They are not interested in high interest rates on cards, and recurring fees.
Convenience of easy on-boarding. (Hassle free documentation of BNPL attracts them).
BNPL service providers often use new-age mechanisms to evaluate the creditworthiness of an applicant; thus, the customer onboarding process is usually fast and convenient with zero documentation requirements or joining charges.
The entire process is digitally enabled through internet-connected mobile devices or apps.
Upon approval, a BNPL service provider issues a line of credit based on its assessment of the user’s creditworthiness and income.
After signing up, users can visit a partnering merchant application, website or offline store (in some cases), add the desired items to the shopping cart, and select their BNPL provider’s payment option at ‘check out’ to buy the selected items in a secure one-tap manner.
Users can then convert their dues into zero-to-low interest EMIs, according to the terms and conditions of their BNPL service provider.
These BNPL companies are operating like mini banking institutions wherein they incentivize the purchase with cash backs, extended credit facility etc.
How does BNPL operate?
The main premise of Buy Now Pay later companies is “Consumerism is here to stay”
Ritesh Mohan
“Why wait for tomorrow when you can have your favorite gadget or dress today at equated monthly installments, which are interest free”
BNPL player’s services or model help countless customers, especially the ones who have just started working, to better manage their expenses by allowing them at least a few weeks to make the repayments.
BNPL services, thus, are rewarding spending tools for those who are yet to recover from the many financial shocks of the pandemic-induced lockdowns or are outside the credit card ecosystem.
Word of Caution- Buy now pay later
Customers must keep in mind that a BNPL facility is still a loan that needs to be repaid in full on time to avoid penalties and an adverse impact on their credit scores.
Since the sector is in its developing stage, following are some challenges.
Customer and Merchant acquisition
Getting both customers and merchants to come online with BNPL player is one such challenge, however BNPL players are identifying themselves as more of the omnichannel solution providers to the retailers in order to mitigate the risks involved.
Goods returns
Returns can be an issue, too.
If you return an item, it can take substantial time and effort to have the BNPL credit provider acknowledge the return.
You may still be obligated to pay your installments till the issue is resolved
How does the BNPL players make money?
At the outset, the financial looks similar to that of credit card company.
Net take rate represents the commission charged to merchants (Take rate) minus payment processing fees that the BNPL company pays.
Debt financing cost corresponds to the interest BNPL providers pay banks for liquidity (to provide loans to their customers). Debt management cost equals the credit check costs plus payment collection costs minus late fee payments collected from customers.
Provision for debt impairment is the weighted average percentage of loans that are not paid back (i.e., bad debt)
GMV refers to Gross Merchandising Value, the sum of all payments conducted on the BNPL platform.
Marketing and sales expenses are the expenses incurred as BNPL providers acquire and onboard both merchants and customers to their platform.
General and administrative expenses include team salaries, technology, and other infrastructure costs.
Let’s take an example: Suppose your net take rate is 5% (assuming merchants pay you 6% and you pay 1% in payment processing fees). If you pay 1% interest on your loan, and it costs you 1% to manage consumer loans, the percentage of your non-performing loans can’t exceed 3%; otherwise, you lose money.
Profitability for BNPL or for that matter with any tech firms is based on
Scalability – acquire more customers and merchants.
Incentivize the purchases especially up-selling using BNPL product.
Negotiate better terms with both Merchants and Banks (for debt financing cost).
Access more data on customer’s spending and build a separate data insight report for the merchants to buy and take benefit.
Buy now pay later – a boon for ecommerce sites.
Reduce cart abandonment rate.
This is the main challenge for any ecommerce site is to reduce the cart abandonment as over 40% traffic that comes on to the site, leaves the cart without click on the “Buy now” tab.
Improves the basket size by means of upselling. Hence your average transaction value increases along with the average transaction quantity.
Ecommerce retailer gets their full payment while their customer enjoys installment plans. This helps in customer retention and build trust.
Lower customer acquisition cost- Increase in sales for the same amount of efforts done in getting the online traffic through marketing efforts.
Attracts first time buyers with the installment option at the time of check-out.
Since the cost of earning new customers is up by over 50% in the last five years, keeping your current customers is more valuable every day.
Summary
Providing your customers with many payment options is essential to boost customer experience and it can help you convert more shoppers into paying (and loyal) customers.
Buy Now Pay Later option just does it.
It’s a win-win option for both fintech BNPL players, Banks, Merchants and consumers.
References: The Guardian.com, Observer’s Fintech , thefinancialexpress.com , worldplay.
About the Author
Ritesh Mohan is a passionate retail professional with over 22 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector.
He has been instrumental in the growth of some of the regional brands as well in the Middle East region.
Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management.
He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.
De-mystifying myths of creating Influencer marketing plans
Most entrepreneurs and solopreneurs struggle with developing an influencer marketing plan for their businesses.
In the digital age, anyone with a smartphone can claim or can be an influencer.
Influencer marketing or Key opinion leaders (KOL’s) is a term which does not reflect in traditional business schools or in MBA books.
Hence it seems complex and proving to be a money-making machine for the influencers.
My purpose in writing this article is to peel the layer of complexities from the jargon – Influencer marketing or even writing an Outreach marketing plan using influencers.
What is Influencer Marketing?
Influencer marketing is a communication strategy that identifies people/ Key opinion leaders, who have a strong influence on a brand’s industry or target audience.
In an influencer marketing strategy, a brand does collaboration with an influencer for reaching out to the segmented audience/followers of the influencers.
The collaboration can be both either for money or for the kind purposes (barter in terms of giveaways which the influencer may use to give away to his/her followers by means of contests etc.
The premise – Influencer marketing.
The premise remains the same i.e. People love to buy from the people whom they love or trust.
Here the influencer becomes an authority on the subject matter and uses his/her influence in persuasive selling by promoting the benefits of the product or the service that is being promoted.
Basically, influencer marketing is all using the benefits of word of mouth and trust of the influencer in putting the product or service in front of the dedicated audience (followers) who may be interested in the product or service or may end up buying the product in the future.
Influencer marketing brings the brand’s product or service into the consideration mindset of the targeted audience/followers.
learn as to how your brand purpose can make or break your business, click here.
How big is influencer marketing in terms of value?
According to Adweek, the industry is set to reach $10 billion in worth by 2020.
Other networks like Snapchat, YouTube, and TikTok have their own set of influencers with different demographics.
Myth- Influencer marketing means using celebrities.
One of the most common myths in the market is that brands think that influencer marketing means using celebrities.
This myth is partially correct since today most of the influencers have become a celebrity in their own domain/ or niche.
So the next question comes to mind..
“Can influencer marketing be done without using popular celebs?”
The answer is straight-forward.
“Yes”, it can be done.
You just need to know how to develop creative influencer campaigns that focus on targeting the right audience, not the largest audience.
Putting your brand in front of its segmented audience, will be more beneficial rather than talking to a large audience, who may or may not be your core target group.
It also depends on the product category you are selling.
If you sell Coca-cola, then using K-pop band BTS makes sense but if you are selling specialized medical diagnostic machines, then talking to the specialist medical doctors and clinic owners would result in getting you more traction on your communication strategies.
Focus on the right audience, not the largest audience while choosing the right influencer.
How to find the right influencer for your brand?
Study your niche segment or industry in detail using social platforms like Linkedin and facebook and Instagram.
Look out for the people who are producing content in a contextual manner for that industry.
Check and study their engagement on their posts – Trick here is to focus more on comments rather than likes.
Use Hashtag strategy to see who is following a particular hashtag in your niche and adding them to your list and make a connection with them.
Follow your competition social media posts and see which influencers they have been using in the past. Follow them and their associated influencers.
Find influencers that share your audience
Understand the authority of the selected influencer – are they positioned as thought leaders in their niche or not.
Develop a campaign with them and monitor its results.
Mistakes marketeers make with the influencer marketing plan
The most common mistake is that marketers or business owners forget the core premise – what brings them into the business.
How are they making a change in their customer’s lives with their products or services?
Most people forget to set clear campaign objectives and measurable metrics prior to initiating the influencer marketing plan.
Decide on your campaign objectives.
Is it Brand awareness campaign
Is it Building brand identity
Audience building
Engagement
Lead generation
Sales
Customer loyalty
You need to decide on the above prior to embarking on this journey.
Type of campaigns – Influencer marketing plan
Different types of influencer campaigns include:
Gifting: giving influencers gifts in exchange for mentions, posts, etc.
Guest posting: getting an influencer to allow you to write for their blog
Sponsored content: paying an influencer to share your content or create content that is tied to your brand.Most of the social media platforms shows this as sponsored ads to inform their followers that it is a commercial campaign which is a paid form of advertising.
Contests & competitions: To build audience engagement, contests are very effective.
Affiliates or Discount coupons or codes: sharing affiliate codes with influencers so that they earn money each time someone that came through their funnel purchases from your brand. It can help brand to sell more on their sites and also helps the influencer to make commercial sense out of the collaboration.
Endorsements – wherein the influencer is recruited as brand ambassador
Tools for doing your research for the Influencers or Key opinion leaders
Today, digital marketing has become quite easy and complex at the same time.
There are several tools to do research and base your selection based on analytics and results provided by these tools.
And the following tools are also helpful for identifying social media and blogging influencers.
Personally, I use Buzzsumo for my keywords analysis and Ninjaoutreach.
(you may try these tools and use whichever you may feel comfortable and user-friendly).
What is the correct metrics to be used to study the effectiveness of Influencer marketing Plan?
There are several metrics which one can use based on the set objectives.
Brand awareness – check your share of voice post your influencer campaign, has it increased or is it same as earlier.
Follower base metrics – did more people followed your brand post the campaign or not
Engagement – how many enquiries generated, comments received and how many people shared your content on to their feeds.
Sales metrics – was any increase observed in sales?
Personally, I prefer to keep things simple so for me the Sales generation metric is the most important, the rest of them are for vanity purposes.
I believe,
Too much analysis leads to decision paralysis.
retailritesh
Successful influencer marketing campaigns.
Check out the case study of the Pringles valentine’s day influencer campaign in India
Check out the campaign done by Heinz using the blogger programme
ABOUT THE AUTHOR:
Ritesh Mohan is a passionate retail professional with over 22 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector.
He has been instrumental in the growth of some of the regional brands as well in the Middle East region.
Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management.
He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.
Customers can relate to your story, find themselves in sync with your mission, and will become your brand ambassadors.
Always remember my selling tip:
“People don’t buy product or services, they buy your beliefs, values”, “They believe in what you believe in”.
Satisfaction feeling – when buying from Purpose-driven brands.
People buy goods to satisfy their urge or aspirations in possessing a product or service.
But if this purchase provides them with the inner satisfaction or intangible feeling of “feel-good” factor that they have positively contributed to the society or environment in some way or the other by purchasing a purpose-driven brand.
In a survey done in the US, it was found 66% of Americans would even switch from a product they typically buy, to a new product from a purpose-driven company.
Acceleration in the introduction of the Purpose-driven brands:
Pandemic has changed the customer’s preferences and behavior when it comes to purchasing products.
Today people are much more aware of what they are buying, they do read the ingredients labels on their products to see as to what is being sold to them, is it ethical ingredient or sourced by harming the environment.
Today, this self-consciousness and self-awareness have pushed millennials towards Purpose-driven brands.
People are keen to know, how much amount of chemicals are being served in their spices, foods, cosmetics, etc.
Read about changes in consumers’ preferences post-pandemic, click here.
One of the main aftermaths of the Pandemic is the shift in the trend of consumers towards the WELLNESS & HEALTH categories.
Most of you who know me must be aware that the company I work for is also a purpose-driven brand i.e. LIHT ORGANICS.
It’s not only our mission to provide sustainable, organic, vegan makeup solutions to women who are well aware of the ill-effects of chemical-based beauty products,
But it is our Philosophy that everything we will do in the brand must be organic, ecofriendly & provides clean beauty options to our women customers.
In fact, when I was first interviewed by the brand, I was sold out on the brand’s purpose and vision as the brand proudly states – “Make up safe enough to eat”.
Hence Purpose-driven brands also attract the right talent towards them.
Examples of Purpose Driven brands
Dove: The personal care brand is on a mission to improve the self-esteem of women and girls everywhere.
They do this through their products, but also through their marketing imagery (featuring unretouched women of all shapes, sizes, and ages) as well as social media campaigns and content that support their message.
Nike – Nike is driven by a goal of promoting equality is not just in the sports world, but in all arenas.
Their work on reducing plastics going into our oceans by recycling them into the shoes has been remarkable.
Neeman’s – this is a homegrown brand from India, which has caught my attention.
They recycle the plastic water bottles into great comfy shoes and help to reduce the plastic bottles ending up in our landfills.
Their shoes are made of natural, renewable, and sustainable materials which makes the customer feel extra good about purchasing them.
Tesla – Even in the automotive sector which is considered as one of the major contributors to global warming, we have Purpose-driven brands that are excelling in their mission.
“Accelerate the world’s transition to sustainable energy,”is the brand purpose of Tesla.
Elon Musk communicates that Tesla’s goals go beyond the auto industry, and aspire to change the world.
Starbucks seeks to “inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”
(Please take note that nowhere Starbucks or tesla talks about coffee or cars).
How to build a purpose-driven brand?
Before you can build a purpose-driven brand, you need to figure out what that purpose is and what values you stand for.
What problem do you solve or need do you meet?
Get clarity on what you stand for
Once you have clarity on your purpose, you need to fuel it with your passion (drive).
Align your purpose with Passion.
The purpose is nothing without passion. It drives your whole business and shapes your products or services.
Start communicating the reason of your business and purpose in the form of a story.
Produce content around each theme and master the art of storytelling.
Being consistent
Brand’s purpose is not the CSR activities that you do once a year. You need to live, breathe, feel it every moment of your lifetime.
It is not a fashion trend or a fashion seasonal assortment that you introduce once and forget about it. You need to build your brand around that purpose & your belief systems.
Results showed that 64% of those surveyed across the globe would “choose, switch, avoid or boycott a brand based on its stand on societal issues.”
Watch this video which narrates Unilever’s ambitious plan for making purpose-driven brands.
Conclusion:
Today, we all live in well connected informed world.
In case we want to build a brand’s differentiator and scale it up by ignoring the competition then building a purpose-driven brand is a very good strategic move.
I would end my article with a quote.
“By standing for something bigger than what they sell, tuning into customers’ beliefs and taking decisive action, companies have the chance to recast their customer relationships and connect with consumers on a deeper level.” –Accenture
References: Neeman’s website, Liht organics website, Accenture report on purpose brands, author Simon sinek’s book – start with why.
About the author:
Ritesh Mohan is a passionate retail professional with over 22 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector.
He has been instrumental in the growth of some of the regional brands as well in the Middle East region.
Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management.
He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.
What is making Primark defy all odds and still be successful in only physical store format?
There are plenty of factors but the main one which I believe is that of a kid in a candy store feeling, only this time it is replaced with fashionable clothes.
The feeling, “I can buy all these fashion items without burning a hole in my pocket”
That’s what is driving growth to this value fashion retailer.
Experiential retail- Primark way
Primark introduced their world’s biggest store, as well as it being their new Flagship store, this time- Birmingham!
The store reinforces experiential spaces within the store.
if you are looking for a bit of pampering on your shopping day, instead of visiting a beauty salon, why not take advantage of their Beauty Studio. Get your beauty regime done in the store.
Services like manicure and pedicure are rendered to the shoppers.
They have taken cue from IKEA dinning hall and have a full fledged The Mezz Restaurant to refuel you before continuing your shopping spree.
Post Pandemic insights taken note by Primark team
One category that has come out as a winner post covid19 is Wellness.
People today are more self-aware and have started asking as to what are they using or consuming.
Personally, I have even seen women checking the ingredients listing printed on the packaging.
Wellness is about peace of mind, and however you would like to interpret this, this comes in many different forms.
From touching base through a Spiritual perception, perhaps taking on Yoga or any other Athleisure hobby – Wellness items help cover this aspect with soft and sustainable workout wear.
Primark team has thrown a complete wellness studio within their store.
Primark wellness lines which is made of sustainable fabric, ethically grown cotton, and consumers can feel like “chic & cozy”.
Read as to how you can compete with Amazon, click here.
Hyper Personalisation – Primark custom lab.
Shoppers can print their messages on the T-shirts, merchandise like cups, or even paint their personalized shoes.
Learn more about Hyper Personalisation, click here.
Conclusion:
“Reinvent and Readapt yourself in order to stay relevant to your customers”.
About the author
Ritesh Mohan is a passionate retail professional with over 22 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector.
He has been instrumental in the growth of some of the regional brands as well in the Middle East region.
Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management.
He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.
Consumers’ preferences and buying behaviors keep evolving and the current pandemic had a big role in accelerating this change across the sector whether it is travel, non-food retail, leisure, movies & F&B, etc.
All sectors have been impacted and there is no sector that is insulated from the aftermath of covid19.
The COVID-19 pandemic has changed how we work, travel, communicate, shop, and more;
But are these habits going to stay with us for long?
My article is an attempt to understand this change wherein I have used various polls (across social media), one-to-one discussions with experts, and have consolidated in this article to find the key insights that retailers could use in their businesses.
Consumers’ preferences – Masks & social distancing
One of the major impacts that covid19 has to do all the businesses, is that it has accelerated the adoption of digital initiatives amongst most of the businesses.
Food and household categories have seen an average of over 30 percent growth in online customer base across countries. (study by Mckinsey)
The e-commerce sector has responded rapidly to the challenge of creating positive experiences in response to the pandemic.
Companies have pumped in investments in logistics and supply chains and widened their product ranges to cope up with the emerging trend towards ecommerce.
The emergence of new sectors
Never before, we saw telemedicine being used so frequently.
Thanks to Pandemic, the new field emerged of telemedicine consultations with hospitals adopting tech products to connect to their patients who were under lockdown.
The emergence of health care prescription analytics.
Since the consultation was done on digital platforms, the customer data and past history were tracked to give a more holistic diagnosis to the patient.
The power of data analysis can now be used by pharmaceutical companies to understand the consumption patterns as well as how often their brand of medicine is being prescribed by the doctors.
How are consumer preferences & behavior changing?
It is a known fact that to develop a new habit, one has to repeat it over 21 days and continue it over 3 months till it becomes a part of an individual’s lifestyle.
Five key trends in the behavioral changes emerging post covid19
Increased digital adoption: people shifting to digital platforms for day-to-day needs.
Loss of freedom in terms of Mobility & WFM: less use of public transport, more remote working, etc. Work from Home is the new Norm.
Google has announced adopting to WFM for all their employees.
Homes became workplaces which added to stress levels as individuals don’t know when to switch OFF work and switch ON their personal lives.
Change in buying behavior: move to value-based purchasing and online shopping.
Various sectors in the exhibit showed a double-digit decline as people moved away from fashion apparel to wellness products. Digital gadgets sales showed an increase since adoption of e-schooling.
Increased awareness of health: wearing masks, increased hygiene, healthy eating etc.
Interpersonal relationships: increased divorces across the world, increased pet adoption etc.
Read about farm to fork business model, click here
Consumers’ Preferences – World became more HUMANE
The entire globe came together as one to fight the current pandemic -which is never seen before thing.
Irrespective of their statuses, all the countries whether developed, developing, or under-developed came together to help each other by providing vaccines, medicines, equipment, etc.
Consumers’ preferences –Staying true to your purpose
In the short and medium-term, the buying behavior is going to shift towards purpose-driven brands.
Brands that have kept trust and credibility during the Coronavirus crisis are likely to benefit in a big way.
Post the crisis, people might become less prone to experimenting with “flashy” or “edgy” brands, as well as with brands that are generic and touted as “value-for-money”.
The focus will shift sharply towards brands that have been able to win consumer trust in this time of crisis.
This gives brands a big opportunity to pump up their CSR initiatives to win the trust of their customers.
For instance, Personally, I loved the initiatives by Air India (India’s national carrier) wherein they flew millions of Indians stuck during lockdown to their respective cities and countries under the scheme of Vande Bharat.
As a traveler, I shall never forget Air India’s contribution towards its citizen and in the future personally, I shall not change my airline as they have now earned a space in my heart.
I always recommend to my readers, “Its Heart that matters and not Mind”
(Makes me recall an advertising slogan in Hindi “Dil ka Rishta- strive to win hearts”)
Read about new rules of quarantined economics, click here
In the middle east, PWC surveyed 501 consumers in Abu Dhabi, Cairo, Dubai, Jeddah, and Riyadh as part of a wider PwC global survey of the impact of COVID-19 on consumers.
Overall, 62% of Middle East survey respondents said they had experienced a decrease in household income due to redundancy or reduction in hours – the highest proportion of any territory surveyed.
An additional 15% had lost out on earnings as a result of caring for others or illness, meaning 77% in total reported a fall in household income, compared with an all-territory average of 48%.
The findings reflect in the pictures shown below.
How long are these consumers’ preferences going to stay?
This question is in the minds of every marketeer, the answer is only time will tell but we need to prepare our brand and businesses to adapt to these changes in preferences.
Few Tips:
Build your business model around customer convenience. Irrespective of online or offline retail… (for me it is just the manifestation of serving customers).
Create the new customer journey starting from online to offline(in-store) and stay true to your Brand Promise across touchpoints.
Every touchpoint counts & matters; whether it is social media, your Influencer campaign, your CRMs, or any marketing initiatives.
Good time for organic and wellness brands to tap the emerging markets as customers are just ready for early adoption.
new purchasing habits, and new opportunities for retailers to promote themselves and attract shoppers.
References: Mckinsey study, PWC survey, think with google case papers.
About the Author:
Ritesh Mohan is a passionate retail professional with over 22 years in the Retail sector, handling some of the biggest brands in the beauty, fashion, and fragrances retail & FMCG sector.
He has been instrumental in the growth of some of the regional brands as well in the Middle East region.
Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management.
He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.
