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Why Flipkart’s tying up with Mumbai Dabbawallas is a great move

Allow me to start with saying that I am not plugging for Flipkart, and have no love lost for a company with no customer service. But, when something is well done, it is well done.

Flipkart’s tying up with Mumbai’s Dabbawalas is a straight shot brilliant move. Whoever in the company came up with that, thought really out of the box. So, how would this work?

Embed from Getty Images

Flipkart aims to use the Dabbawala’s to deliver the goods when these guys go to pick up the empty lunch boxes. Now their empty run is now being paid for, and they actually have pay load. When they are making their return run with the lunch boxes, they would have made their extra loads and would not be returning heavy either. Because their empty ferry will now get paid for, the cost that Flipkart will have to pay will actually be lower. Certainly lower than what they have to pay for their current last mile drops.Why

The Mumbai Dabbawallas bring to the table their rapid delivery with a Six sigma level accuracy.

What Dabbawalas bring to the table is their accuracy of rapid and on-time delivery. They operate at a Six sigma level of accuracy with really no technology or even paper based system for tracking. Essentially, there is no operations management type of cost at all. That perhaps would need to change a bit for the deliveries that they make for Flipkart. Some amount of paper based (at least) systems will have to be introduced, and there in lies the risk of their Six Sigma levels dropping a bit.

Now only if the ecommerce company could find Dabbawallas in other cities, their per shipment operating cost would be under control and perhaps they would be a viable business too.

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Tesco – the slide for the high and mighty

Tesco share priceIf you have been following the news and numbers around the supermarket retail segment in the UK, you would undoubtedly have started getting aware of the carbuncles that Tesco is having to deal with off late. What has always seemed to be strengths for this company just don’t seem to be good enough. Sure, Tesco is still the largest retailer in the UK but it has slid to #4 globally.

Trouble certainly is mounting. Multiple profit warnings have been issued and share price has been going south for a while now. Recently they figured and declared that they had overstated their figures by some $400 mn. That led to action against some very senior employees.

Tesco’s position in the UK market is still strong and it still holds almost 29% of the supermarket business with the next competitor (ASDA) at 17% and is still the leader in online retail. However, the growth being shown by competition vs Tesco should be a serious cause for worry. Low price and hard discounters are eating away at market share rapidly. It is usually seen that successful companies, in times of trouble, take on shorter term tactical measures for course correction and often miss out the longer term larger picture. Is that what is going wrong with Tesco now?

But the tale of woes continues with the company now staring down the barrel of a £250mn black hole of a shortfall. Sainsbury’s has taken the opportunity to stand up and question how such an accounting glitch could possibly happen. Mike Coupe, Sainsbury’s CEO recently said: “We are a values-based business, which means we do the right thing.” Now, the new Tesco CEO, Dave Lewis (joined only last month) has gone on to say (in an email last week) that the culture at the company must change.

If all this were not enough, it has had to take delivery of a private Gulfstram 550 jet that it had bought last year for $50mn. It is expected that they will sell this plane along with the other four aircraft it owns thus wiping out its entire fleet of aircraft. The sale of all the five aircraft is still not expected to be able to plug the £250mn deficit.

Clearly not great times for Tesco, and troubled times ahead for Dave Lewis.

The Power of Tier-2, and Tier-3 locations in India

If you are even remotely interested in the progress of Retail and Ecommerce in India, you are surely aware of how large an impetus our Tier-2, and Tier-3 cities and towns can provide. In our experience, the basic factors which create an impact in consumer behaviour in these locations are:

  • Penetration of mobile technology, and hardware thus creating easy access to the Internet.
  • Availability of cash to make purchases, and the existing desire created by other media.
  • Lack of easy availability of material for purchase.
  • Lack of steady internet connections, and thus dependence on Cyber Cafes for making purchases.

Read through the slides below to know more about these trends as we discovered from our study.

Mentos isn’t that great – dimag ki batti nahi jalegi!

Dimag ki batti jala de? Don’t know about that, but the fact that Mentos is clearly targeting children as a large set of consumers is certainly worrying. Mentos has regular commercial spots in cartoon channels which are viewed by children of all ages across the country.

In case you are not that familiar with Mentos, it is a brand of mints (of the scotch mint type) and is marketed by Perfetti Van Melle International. These oblate spheroids with a crunchy exterior and chewy interior were first made in the Netherlands in the ’50s and now are sold across the world in various types of packaging. Till the time that Singapore had chewing gum banned, Mentos remained a rather popular substitute.

Nutritionally speaking, its a rather poor food though it provides some energy without too much calories. The original Mentos mint roll has 10 calories per mint with no protein, 2.5 g carbohydrates, 2 g sugar and negligible amounts of fat and sodium. But per piece of candy, it has rather a large amount of sugar. Mentos now is also made sugar free. The sugar free variety has is sweetened using aspartame, which is uniformly known to be harmful for adults and children. The list of side-effects of aspartame is indeed long, and certainly not the kind of chemical that you would want your children to be introduced to.

Do you still believe Mentos lights up your child’s brain?

Flying Around (Experiences on the Road – III)

I have spent my life traveling full service airlines and mostly in business or in first. For a long period of time (at least on domestic routes) on Indian Airlines, till very recently on Jet Airways and a smattering of everything else. The change of career path (with the initiation of KOOLSKOOL) now gets us to look for cheaper fares, and some amount of low cost carrier flying brought in some interesting insight.

Quick comparison

Lets do a quick comparison of cheapest available return fares on three different airlines – Indigo, Jet Airways, and Kingfisher. The route chosen is Bangalore-Delhi-Bangalore, and the dates are 26th Oct (for onward) and 30th Oct (for return). The cheapest tickets we could find are listed in table 1.

Clear trip price

Clear trip schedule for 1750, for March 11 2010

Clearly, the real low cost carrier beats every other fare hands down. But, that would be an unfair comparison. Lets bring in food. Table 1, also shows the price of food in the LCC flights. Kingfisher Red will serve you a sandwich for free and provide you a small bottle of water. The other two will sell you food for say Rs 150 a sandwich, and Rs 50 for a can of an aerated beverage. Table 1 also shows approximate costs of food that you might buy on-board. The full service airlines, of course, serve you a free hot meal (depending on the time of the day), but the stark difference still remains.

Elite Tier

Lets now assume that you are a Platinum level on the Loyalty Programs of both Jet, and Kingfisher (Indigo doesn’t have a loyalty program). You would get lounge access in most airports. Jet doesn’t have a lounge at Bangalore, but they give you a food coupon. You do get to sit in peace for a while and eat a bit and/or sip a beverage. Surely that has a cost as well. Lets throw in a Rs 250 (my guess)for the food, and the same amount per passenger in the lounge. That makes is a Rs 500 (per journey) that the airline spends on you for the lounge. Table 1 above also adds the cost of lounge access to the Indigo ticket.

Add the miles twist
jet airways fare

Jet Airways fare, on 11th March 2010

Now, Indigo does not have a loyalty program and thus you don’t get frequent flier miles. But, assuming you are the same Platinum level frequent flier, the miles that you get are as in Table 2 on the left along with the miles that you will need to get yourself a free return ticket on the same sector.

For the final math!

So, with what we have seen so far, one calculates backwards to figure the number of flights (see Table 3) you will have to take to be able to get a free return tickets on this sector. And second, given the differential between Indigo fares and the others, how many Indigo tickets you might be able to buy within that extra flying.

jetlite schedule

Jetlite schedule showing 1750 flight, for 11th March 2010

The verdict

This is rather clear. Talking money, it makes no financial sense to fly a full service airline at all. Unless, of course your company/ office/ employer or someone else is paying for the ticket.

Disclaimer
  • The entire analysis above is based on a spot check, and the fares of each of the airlines could easily differ on other days.
  • The fares on all the airlines could have been different due to the current load.
  • The analysis above is not derogatory in nature, neither is it a paid advertisement (or otherwise) of any airline. It is but an observation. A similar analysis (with similar or different result) would have been possible with other airlines in India.
  • All calculations provided above are for the cheapest available fares in economy, on the airlines’ individual web sites. Choosing different sectors, class of travel and source of ticketing may alter the calculations.
  • Passengers of these airlines are expected to use their own judgment to purchase tickets. Our above post in no way aims to influence a buying decision.
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