{ "version": "1.0.0", "segments": [ { "speaker": "PGK", "startTime": "4.0", "endTime": "30.09", "body": "Our story begins ten years ago when Amazon CEO, Jeff Bezos, visited Bangalore. Now this was Jeff Bezos' first visit to India after Amazon began operations in India in 2013. And people don't remember this, but Jeff Bezos at the time walked in with this very traditional Indian attire, almost from Manyawer. He rode on top of a massive lorry. It's the kind of lorry that you see, which is very colorful, which has horn okay please written in front of it." }, { "speaker": "PGK", "startTime": "30.25", "endTime": "60.485", "body": "And he wrote this in front of the World Trade Center in Bangalore. And in his arms, he had a check. And this is the kind of check that you see at the end of cricket matches when player of the match awards are given, except this time, this check was for $2,000,000,000. At that time, the next day, Binib Bansal, who was the founder of Flipkart, he called this quote unquote a gimmick. And this is the earliest and the first sign that Amazon was not going to be Amazon, the company that we all know from The US." }, { "speaker": "PGK", "startTime": "60.620003", "endTime": "85.465", "body": "This was Amazon, which had arrived in India with a very Indian playbook with playing by Indian rules. And this is because Flipkart had just raised a billion dollars a couple of months back, and Amazon came and upstaged it in the most Indian way possible. That was ten years back. Today, let me tell you where Amazon stands. Amazon has been losing market share in India for the last three years." }, { "speaker": "PGK", "startTime": "85.604996", "endTime": "123.67999", "body": "It has not been able to capitalize on various new markets like quick commerce, tier two markets, and apparel. Amazon was known for its very, very famous execution. And I quote Rahul Malhotra of Bernstein, who in an article in TechCrunch said, and I quote, founders, whether it is Deepinder, Adit, Vidit, or the team at Flipkart, have out executed the management team of Amazon India. Third, Amazon missed quick commerce in a huge way. Blinkit, which was acquired by Zomato for, like, around $600,000,000 is today worth around $13,000,000,000 according to Goldman Sachs." }, { "speaker": "PGK", "startTime": "123.74", "endTime": "151.24", "body": "That's nearly half of Amazon India's estimated worth. Two, not one, but two UPI apps have surged ahead of Amazon Pay. One of them is Navi, and the other, just last week, was Super Money, also launched by Flipkart. There has been a leadership change that Amazon has gone through. It's Amazon India's head, Manish Tiwari, stepped down and now they've gotten Sameer Kumar, Amazon's vice president of international consumer businesses, who has taken over the role." }, { "speaker": "PGK", "startTime": "153.22", "endTime": "210.04", "body": "Amazon is still the market leader with AWS cloud in India. Amazon has just started quick commerce in India. It is the last major player to enter quick commerce, and Amazon is known as a company for playing the long game. And this is where Amazon India stands to be. They have two choices and two parts ahead." }, { "speaker": "PGK", "startTime": "210.18", "endTime": "250.215", "body": "On one hand, Amazon India can join a long list of big tech companies that have come to India, put up a great battle, stayed on for a while, and then have slowly scaled down. This includes companies like Stripe, Uber, Netflix, on and on. Or it could be something like a Microsoft or a Google that goes much deeper into enterprise. In this sense, it is the last big tech consumer tech company. So I open this episode of two by two with a question to all three of my panelists, which is, are we past peak Amazon India?" }, { "speaker": "PGK", "startTime": "250.67499", "endTime": "282.66", "body": "My first guest is professor Vishal Karangalam, who's an assistant professor at the Indian School of Business, where he teaches software product management, digital innovation, artificial intelligence, and a whole lot of things about why start ups and companies get disrupted. I had a profess I had a conversation with professor Vishal a few months back because some of my colleagues who used to work at the Ken joined ISB and attended his courses. And professor Vishal and I bonded on the topic of product managers. And I think that professor Vishal is perfect for this episode because he's worked at big tech companies." }, { "speaker": "Rohin", "startTime": "282.9", "endTime": "291.56", "body": "Also, he's one of those rare academics who's already worked at companies like Google and Microsoft, and he's built products there, especially in cloud and analytics." }, { "speaker": "PGK", "startTime": "292.18", "endTime": "300.97498", "body": "Plus, he teaches innovation and disruption. So I thought I'd get him in and ask him this question. So, professor, are we past peak Amazon India?" }, { "speaker": "Prof. Vishal", "startTime": "301.75497", "endTime": "313.4", "body": "So, obviously, whatever I'm going to tell you about Amazon comes from, you know, my learnings, my observations, and what I've actually seen happen. Your question was, are we past Amazon's peak? I think that was your question. Yeah? Yes." }, { "speaker": "Prof. Vishal", "startTime": "313.4", "endTime": "325.055", "body": "So I'll actually I think about it differently. I don't necessarily think of Amazon's peak as actually come. I think Amazon's peak is going to not be in retail, though. I think their peak is going to be in AWS. AWS." }, { "speaker": "Prof. Vishal", "startTime": "325.055", "endTime": "333.875", "body": "That's the way I think about it. Like, I think of Amazon as an entity. I'm not thinking Amazon as a consumer tech e e commerce company. Right? I'm thinking of Amazon as a larger company." }, { "speaker": "Prof. Vishal", "startTime": "334.335", "endTime": "353.75", "body": "I think AWS has a lot of leverage, and it's got a very long game, that they're playing in. And I think that's their big play. If they do want to do something in ecommerce, and we can talk about it in detail as we go forward, but, you know, I've been thinking about it once you started speaking to me. I look. One, they can exit out of the ecommerce business completely in in in India." }, { "speaker": "Prof. Vishal", "startTime": "353.75", "endTime": "370.68", "body": "That's one choice they definitely have. The other choice they have is they can go the quickcommerce route, which they seem to be doing evidently. Or the other one is they can say that you can I'll become very selective as far as ecommerce is concerned, but I'll double down on my investments in AWS. And if you actually look at the company overall, and this is where the interesting thing is. Right?" }, { "speaker": "Prof. Vishal", "startTime": "370.68", "endTime": "394.095", "body": "So if you look at the company, the margins in their retail business have always always been very low. I mean, the AWS business is just phenomenal from a margins perspective. So the question to ask is really as a shareholder, would I want them to continue to invest in the ecommerce business, or do I actually want them to move the money over to AWS where I'm making much more money? Now, obviously, that has a lot of downsides. We should talk about what'll happen if they get out of it." }, { "speaker": "Prof. Vishal", "startTime": "394.095", "endTime": "412.88998", "body": "Will AWS continue to do what it's doing if they don't have the retail chain? But my opinion in this matter is I think, we have not seen the peak of Amazon, but it'll be different from what we think the peak would be. Like, I don't think the peak of ecommerce is what we're gonna see. I think AWS is going to be the big thing for them to think about." }, { "speaker": "PGK", "startTime": "413.13498", "endTime": "436.41", "body": "I like it. I'm asking a very clear yes or no answer, but professor Vishal is the academic, and he's basically telling there are many, many nuances to this. My second guest is Srikanth Rajgopalan. Srikanth is the CEO of Perfio's account aggregation. And now Srikanth is someone who many our listeners know as the guest who appeared on the very first episode of two by two, which, by the way, is one of our most popular episodes till date." }, { "speaker": "PGK", "startTime": "436.73", "endTime": "446.655", "body": "Srikanth previously led business and product teams at AWS, Amazon payments, Nokia, and AmEx. So, Shrikant, I'm going to ask you, are we past peak Amazon India?" }, { "speaker": "Srikanth", "startTime": "447.195", "endTime": "453.535", "body": "So, Praveen, first of all, thanks for having me back. I was hoping you'd get somebody better or somebody more current with Amazon." }, { "speaker": "PGK", "startTime": "455.45", "endTime": "457.53", "body": "That's true. It's been like it's quite significant time." }, { "speaker": "Rohin", "startTime": "457.61002", "endTime": "462.67", "body": "Career suicide, to talk about your current employer on the two by two podcast." }, { "speaker": "Srikanth", "startTime": "463.69", "endTime": "482.055", "body": "That's correct. But, just for the record, it's been eight years since I left Amazon retail, six years since I moved on from AWS. So whatever I say, take with a pinch or a bowl full of salt. Right? I think my unequivocal response to your question is we're still at day one." }, { "speaker": "PGK", "startTime": "483.01", "endTime": "485.27002", "body": "Such an Amazon answer. I love it. Please continue." }, { "speaker": "Srikanth", "startTime": "485.65", "endTime": "496.87", "body": "Yes. I mean, once you work for Amazon for a while, you it's almost like a DNA transplant. Right? So these these things stay with you. I think that day one culture hasn't left them." }, { "speaker": "Srikanth", "startTime": "498.655", "endTime": "533.685", "body": "They've probably experimented with a bunch of things over the years, and they've now I think they're at a point where I think I agree with professor Vishal that they need to pick the battles. Right? And I'm seeing that they're kind of picking the battles. To your point on payments, and that, the bragging rights of being a leading leading UPI app, what's the race for? To be the biggest to lose money hand over fist, right, in a market which has a zero revenue stream?" }, { "speaker": "Srikanth", "startTime": "534.945", "endTime": "564.30505", "body": "What's the point? Right. I think, from what I remember, that payments business for Amazon is a much, much bigger business. It's much more, well rounded in terms of enabling affordability for consumers, enabling, short term credit for sellers, as well as insurance products, which is like, you know, kind of, you know, insurance for your purchases and stuff like that. So I think there's a lot happening beneath the surface that's not necessarily in the public domain." }, { "speaker": "Srikanth", "startTime": "565.42", "endTime": "581.435", "body": "The one vanity metric, which is very easy to track because it's public, is your share of UPI downloads or transactions. Quite honestly, that's a vanity metric. But your point, are we past, peak Amazon? Absolutely not. There There are many levers that can be pulled." }, { "speaker": "Srikanth", "startTime": "581.495", "endTime": "584.875", "body": "It's now a question of, you know, where that balance lies." }, { "speaker": "PGK", "startTime": "585.175", "endTime": "597.15", "body": "Alright. And now I'm going to bring in my third guest, my co host, Rohin. As an avid user of Amazon and as a CEO as well, I've do you think we are past peak Amazon India?" }, { "speaker": "Rohin", "startTime": "598.41003", "endTime": "629.83", "body": "Yes. I'm I'm I'm not going to stay on the fence on that. And and I'll try to explain it, from a couple of angles. Firstly, I am an avid user of Amazon, and I shifted over from Flipkart. I used to be an avid Flipkart user, and then Amazon came and then just offered, like, a much simpler, a much more powerful, a much more compelling experience, a better curated set of products, and everything just made sense." }, { "speaker": "Rohin", "startTime": "629.83", "endTime": "664.1", "body": "And I kind of completely switched off from Flipkart for many years, and I switched entirely to, Amazon. I mean, I'm not unlike many urban consumers, like, who did that switch. But I found that especially over the last two years, the, quote, unquote, enshidification of Amazon's catalog has me pulling back. It's no longer easy to discover or purchase. So firstly, you know, I'm right now, I'm talking about just the ecommerce side of it." }, { "speaker": "Rohin", "startTime": "664.1", "endTime": "688.18", "body": "Right? I think and both professor as well as, Shrikant have mentioned AWS. I wanna talk about Prime as well. But those are all important things. But on ecommerce, it's really torture trying to buy something from Amazon these days because it's literally the same drop ship Chinese product rebadged with AI generated names with 50 different variations of it." }, { "speaker": "Rohin", "startTime": "688.18", "endTime": "708.21497", "body": "Right? So unless you know what you're looking for, Amazon is not a joy to shop. It's really quite a pain. But that said, the reason why unequivocally said it's past its peak is because I'm looking at Amazon from the point of view of what's lead indicators and what's lag indicators. Right?" }, { "speaker": "Rohin", "startTime": "708.75995", "endTime": "709.0", "body": "And" }, { "speaker": "Prof. Vishal", "startTime": "709.0", "endTime": "709.16", "body": "when" }, { "speaker": "Rohin", "startTime": "709.16", "endTime": "741.84", "body": "you look at ecommerce and consumer behavior, I I think a lot of the behavior, in the last maybe, like, eighteen months or so where consumer behavior is changing very rapidly. And Amazon doesn't seem to be at the forefront of responding to that behavior. So usually, you see when large powerful companies stop being at you know, doing such things, we tend to justify it saying maybe they're focusing on something else. Maybe they don't want to lose money. Right?" }, { "speaker": "Rohin", "startTime": "741.84", "endTime": "758.295", "body": "We tend to justify away what's happening. And I I think for me personally, that's very worrisome because almost all of the trends I mean, quick commerce is just one of the trends. Right? The other one is, of course, the fact that long tail, which used to be an advantage, is now a disadvantage. Right?" }, { "speaker": "Rohin", "startTime": "758.295", "endTime": "775.275", "body": "And Amazon is not on top of it. So Amazon seems to be responding to lag indicators of consumer behavior changes. Okay. I mean, we'll do, fintech or UPI, but we are not really interested in x y z. Somebody else took that game away." }, { "speaker": "Rohin", "startTime": "775.515", "endTime": "782.635", "body": "Right? And we say, like, okay. I mean, they're doing something else better. Oh, we won't do quick commerce. By the way, it's not that they're not they're doing it now." }, { "speaker": "Rohin", "startTime": "782.635", "endTime": "821.02997", "body": "They've been trying fresh deliveries or, you know, daily deliveries for years now, but they were never convinced about it. Now, again, they seem to be getting into it because everyone is doing it. So for me, Amazon on the ecommerce side looks like an organization which is not trying to ride or shape consumer behavior, but is really responding to it with almost like a twelve to eighteen month lag. And that for me is always worrying when organizations do it because in some senses, it either means that the organization internally has deprioritized it, which means we're going to see more of that. Right?" }, { "speaker": "Rohin", "startTime": "821.08997", "endTime": "861.015", "body": "And, I mean, of course, I'll talk about AWS and Prime. I think Prime is absolutely, one area where no one saw the importance of I mean, I'm not talking about Prime for shopping, but Prime, the TV, and streaming option. That's really powerful. But that said, in ecommerce, sadly, I think it's past its peak, and I don't think we can imagine an AWS if shopping didn't exist. If Amazon wasn't that cultural cache and consumer brand that it is, AWS would have come up as yet another data or, like, cloud based, hosting platform, and there are many of those around as well." }, { "speaker": "Rohin", "startTime": "861.495", "endTime": "882.97003", "body": "If Amazon loses that cultural cache and it just becomes an AWS, will that itself be strong enough, or will we start seeing even that coming under attack? Right? So it's like in this defensive state where they're ceding parts of its territory to others saying this is too small, this is unprofitable. That's how I kind of see it." }, { "speaker": "Prof. Vishal", "startTime": "882.97003", "endTime": "886.17004", "body": "I mean, there's too many things I want to say right now. Yeah. Yeah. Yeah. Yeah." }, { "speaker": "Rohin", "startTime": "886.17004", "endTime": "893.70496", "body": "We I want you to I'm supervisor, I told you I'm this is not the discussion where anyone will be able to kind of sit on the edge." }, { "speaker": "Prof. Vishal", "startTime": "893.985", "endTime": "895.425", "body": "My chair as well. Hold on. No. No." }, { "speaker": "PGK", "startTime": "895.425", "endTime": "909.48", "body": "No. We can't even but the but I just wanna set this up and say that this is one of this is a great two by two discussion because we have three guests who essentially say, is Amazon India past its peak? Rohan says, yes. Shrikant says no. And professor Vishal says, well, it depends." }, { "speaker": "PGK", "startTime": "909.48", "endTime": "910.54", "body": "Okay. I like that." }, { "speaker": "Prof. Vishal", "startTime": "911.31995", "endTime": "913.8", "body": "I teach in a b school. What do you expect me to say? But anyway" }, { "speaker": "PGK", "startTime": "914.44", "endTime": "933.115", "body": "But I want to spend five minutes from the perspective specifically of Shrikant, the new professor, on I just want to step back and talk about Amazon as the company. Like independent of India. Right? Because, Shrikant also spoke about day one as a culture of execution, etcetera. But what makes Amazon the company special?" }, { "speaker": "PGK", "startTime": "933.115", "endTime": "954.625", "body": "Because I gave a list of companies that big tech companies that have tried to come to India and have not succeeded for whatever reason. I like Stripe, Uber, etcetera. There's no reason to believe that Amazon is the same as all of them. There's something intrinsically different about all of them. And if we believe that there is going to be Amazon's future is going to be different, it means that there's something inherent about Amazon, the company that we need to spend, maybe, like, five, ten minutes at least talking about it." }, { "speaker": "PGK", "startTime": "954.625", "endTime": "961.08", "body": "What makes Amazon, the company, so distinctive and special? I'll let either of you go." }, { "speaker": "Prof. Vishal", "startTime": "961.24", "endTime": "964.78", "body": "Maybe because you worked there, I'm sure you'll give some inside information." }, { "speaker": "Srikanth", "startTime": "966.68", "endTime": "969.56", "body": "Not particularly inside information, but and this is well documented." }, { "speaker": "PGK", "startTime": "969.56", "endTime": "969.8", "body": "Of course." }, { "speaker": "Srikanth", "startTime": "969.8", "endTime": "996.07996", "body": "I think the starting point is you should, for any of us who's either either an entrepreneur or a business leader, one of the most one of the things we absolutely must read is the Amazon leadership principles. Right? And that kind of defines the way that Amazon works over a period of time across businesses, across geographies. That is a fundamental rooting mechanism for the culture. Right?" }, { "speaker": "Srikanth", "startTime": "996.62", "endTime": "1007.64496", "body": "And Amazon being Amazon, it left nothing but chance. It documented that in so many bullet points and stuff like that. Right? So the first is the principles on which they work. The second is in mechanisms." }, { "speaker": "Srikanth", "startTime": "1008.105", "endTime": "1010.58496", "body": "Right? I mean, there is this very powerful saying that" }, { "speaker": "PGK", "startTime": "1010.665", "endTime": "1020.05", "body": "Sorry. I'm just gonna get it. When you start with the principles in which they work, can you, like, elaborate a little? What are the specific principles apart from like, you said that it's documented, but it'd be good for our listeners to know at least a couple of them." }, { "speaker": "Srikanth", "startTime": "1020.05", "endTime": "1025.35", "body": "If you if you knock out anything else Mhmm. And just remember one of them, it's like always start with the customer and work backwards." }, { "speaker": "PGK", "startTime": "1025.6849", "endTime": "1026.1649", "body": "Got it." }, { "speaker": "Srikanth", "startTime": "1026.1649", "endTime": "1040.97", "body": "No matter how difficult it is. Mhmm. No matter how, how should I say, vague or undefined the customer problem is at the moment, keep at it. Keep at it until you get it and then work backwards from what it, what it needs to fulfill that." }, { "speaker": "PGK", "startTime": "1041.0499", "endTime": "1041.5499", "body": "Okay." }, { "speaker": "Srikanth", "startTime": "1042.25", "endTime": "1061.735", "body": "Usually, when you have such a very strong principle like that, it's very unlikely that you'll go horribly wrong. You might make a few detours and a few, you know, blind alleys here and there. Very unlikely you'll go horribly wrong when you start with the customer and work backwards. The second is something about what they what they call long term thinking for the long term. Right?" }, { "speaker": "Srikanth", "startTime": "1061.7949", "endTime": "1066.9349", "body": "I'm just boiling down. There are there are a bunch of leader leadership principles of not you're not possible to go through them." }, { "speaker": "Rohin", "startTime": "1067.075", "endTime": "1069.5", "body": "We'll link to it later in the show notes as well." }, { "speaker": "Srikanth", "startTime": "1069.58", "endTime": "1070.22", "body": "I beg your pardon?" }, { "speaker": "Rohin", "startTime": "1070.22", "endTime": "1073.5", "body": "We'll link to it when we publish the episode in the show notes." }, { "speaker": "Srikanth", "startTime": "1073.5", "endTime": "1082.46", "body": "Two things are relevant to this context. Right? One is staying rooted with what the customer is asking for and finding ways to deliver that. And the second is to say that, hey. We know it's hard." }, { "speaker": "Srikanth", "startTime": "1082.46", "endTime": "1103.7799", "body": "It's gonna take time. But we're here for a decade, a couple of decades. Right? And that's where I think if you look at some of the peer groups that you mentioned, that's a missing element. Because typically, most organizations, MNCs, which come to India, look at it as more of an experiment." }, { "speaker": "Srikanth", "startTime": "1105.2799", "endTime": "1115.205", "body": "They're kind of disappointed by the willingness or ability of Indian customers to pay. Right? And they're then satisfied with India as a talent base." }, { "speaker": "PGK", "startTime": "1115.205", "endTime": "1115.705", "body": "Yes." }, { "speaker": "Srikanth", "startTime": "1115.845", "endTime": "1125.225", "body": "Right. That's typically what you find from most MNCs who are operating out of India, not Amazon. Right. To your point on that, on that stunt on a truck," }, { "speaker": "Prof. Vishal", "startTime": "1127.69", "endTime": "1127.85", "body": "The back" }, { "speaker": "PGK", "startTime": "1128.01", "endTime": "1129.95", "body": "I didn't call it a stunt, by the way, but sure." }, { "speaker": "Rohin", "startTime": "1130.01", "endTime": "1136.89", "body": "You almost did. Oh, come on. It is a stunt. What else? Like, you know, I mean, if it walks like a stunt, talks like a stunt, let's call it a stunt." }, { "speaker": "Prof. Vishal", "startTime": "1136.89", "endTime": "1137.05", "body": "You call" }, { "speaker": "Srikanth", "startTime": "1137.05", "endTime": "1144.7251", "body": "it a stunt. Right? But the backstory to that is quite quite revealing. Okay? I was there in between 2013 and '16." }, { "speaker": "Srikanth", "startTime": "1145.185", "endTime": "1149.185", "body": "So this is our first annual review where Amit and his leadership team" }, { "speaker": "PGK", "startTime": "1149.3451", "endTime": "1151.985", "body": "This is Amit Agarwal, who's the head of Amazon India at that time?" }, { "speaker": "Srikanth", "startTime": "1151.985", "endTime": "1152.4651", "body": "That's correct." }, { "speaker": "PGK", "startTime": "1152.4651", "endTime": "1152.9451", "body": "Yeah." }, { "speaker": "Srikanth", "startTime": "1152.9451", "endTime": "1170.6101", "body": "Showed up at, and did a review with Jeff Bezos, and he looks takes a look at that typical six pager. And he goes through that, and he starts a meeting and says that, guys, I didn't send a bunch of computer scientists to run India. Right? I don't want computer scientists. I want I want cowboys." }, { "speaker": "Srikanth", "startTime": "1171.745", "endTime": "1186.9", "body": "Right? So that changed the game completely. Right? Because, typically, Amazon has always been manic about data, justifications, stuff like that. But I think they got it, that India was a completely undiscovered and virgin territory." }, { "speaker": "Srikanth", "startTime": "1186.9", "endTime": "1204.265", "body": "You can't apply the same principles that worked in a different market and hope to succeed in India. Right? So they're willing to go that that far and saying that it doesn't matter if what you guys do is completely unique to India and can't be reused anywhere else. That's fine. But we're in India." }, { "speaker": "Srikanth", "startTime": "1204.805", "endTime": "1233.995", "body": "Right? I think that culture stays. So three things. If you if you pair away everything else, focusing on the customer, thinking in decades, and being willing and able to do exactly what is required for that market to succeed, no matter if it's not being done anywhere else, I think these are positive indicators from a cultural perspective, which I think is why I said that it's we we've still just not seen, anywhere close to peak peak Amazon. Yes." }, { "speaker": "Srikanth", "startTime": "1233.995", "endTime": "1238.235", "body": "There are, I agree with you that it's getting a little cluttered to find what I want." }, { "speaker": "Rohin", "startTime": "1238.235", "endTime": "1241.63", "body": "Maybe there'll be micro peaks and micro troughs within their sectors." }, { "speaker": "Srikanth", "startTime": "1241.63", "endTime": "1249.97", "body": "There will be those experiments where they probably, you know, index too far one way or the other. But that tells you a deeper story. They're willing to experiment." }, { "speaker": "PGK", "startTime": "1250.4299", "endTime": "1265.445", "body": "Professor, I have I think I'll throw it to you. I think I just have, like, two part question. Question part one is that what do you think? Because you teach disruption, you teach companies, you teach strategy. Like, in your mind, what is Amazon's specific distinctions, and what makes it so difficult?" }, { "speaker": "PGK", "startTime": "1265.445", "endTime": "1302.385", "body": "And what makes it so interesting, different that you think is something that gives it some kind of power. And I think the second point that I have is I'm just taking off word-of-mouth Srikanth Sarinj. If it's very nice to say, I guess, I agree with him that in terms of, oh, you have to think in terms of the customer, you have to be obsessed with it, and you have to think in terms of decades. But I imagine one of the problems with something like that is when you think or when you're constantly in the long term thinking, you can justify losses in the short term very easily, thinking that, oh, it's okay that we miss quick commerce because we are thinking in terms of decades. It's okay that we are losing payments because we are thinking in decades." }, { "speaker": "PGK", "startTime": "1302.385", "endTime": "1304.22", "body": "How do you now reconcile these two?" }, { "speaker": "Prof. Vishal", "startTime": "1305.24", "endTime": "1335.42", "body": "Well, that's also my struggle. But I think we need to can take one step back. And honestly, like, while I can I think Shrikant articulated really well about what the company stands for and how it actually inspires their own workforce to innovate and come up with what's right, I think it's important to understand the industry a little bit? Right? So if you if you start understanding the industry and start understanding how can you differentiate in ecommerce, then you'll be able to kind of make a sense of saying that why did Amazon do what it was able to do." }, { "speaker": "Prof. Vishal", "startTime": "1335.42", "endTime": "1337.26", "body": "Right? And we'll be taking as an example." }, { "speaker": "Srikanth", "startTime": "1337.26", "endTime": "1337.66", "body": "Right? So" }, { "speaker": "Prof. Vishal", "startTime": "1337.66", "endTime": "1358.93", "body": "we'll take US as an example. So if you think about it, in a typical retail business, if you talk about typical retail and more so in ecommerce, right, any any retail business, you think of three different levers that you have, and you start thinking of these three things as being your main differentiating factors. Right? So, typically, they talk about price as being a differentiator. Like, you know, I can sell cheaper." }, { "speaker": "Prof. Vishal", "startTime": "1358.93", "endTime": "1372.05", "body": "I can sell higher. I can create more value, all of those kind of things. They'll talk about selection as being a differentiator, saying I have, you know, multitude of SKUs. Like, I think Amazon India said, I have, whatever, 1200000.0 different SKUs, and I wanna go to 1500000.0 SKUs. So whatever number you pick." }, { "speaker": "Prof. Vishal", "startTime": "1372.05", "endTime": "1393.2999", "body": "Right? So selection usually is spoken about as a differentiator. And then experience is show spoken about as differentiator. A lot of things that Rohan was talking about is experience. And what we do is we and I'll talk about experience a little bit more deeper, but what I want to segregate in the experience is a lot of people think of experience as your discovery, buying, and payment experience." }, { "speaker": "Prof. Vishal", "startTime": "1393.2999", "endTime": "1409.005", "body": "There's a lot more to experience than that. Mainly, it is your inventory management and delivery experience, which actually seemingly is more important than anything else, and we'll come to that in a second. Right? So that's the experience piece. Now you break these three things down, and there's actually a lot of interesting research that's happened in this area." }, { "speaker": "Prof. Vishal", "startTime": "1409.005", "endTime": "1426.33", "body": "So, you know, one is we can actually look at what companies have done. We can also look at what peer reviewed research says. And research has actually been done in this area. And we found that if you take price as an example, like, conventional wisdom will tell you that, look, price online has to be lesser than what it is offline, and it's true. Research proves the same thing." }, { "speaker": "Prof. Vishal", "startTime": "1426.33", "endTime": "1450.5701", "body": "Right? Specifically, there is this very nice paper where they'd actually what they've done is they'd used Internet channel, as the channel in which you can sell books and CDs. And they looked at, I think, 8500 different price observations over 15 different months across 41 different companies which were selling, you know, these sets of products. And they saw that Internet prices and I have numbers here. So the Internet prices were about nine to 16% lower than, other retail." }, { "speaker": "Prof. Vishal", "startTime": "1450.5701", "endTime": "1454.09", "body": "Right? So offline retail, which we expect, which is great. Right?" }, { "speaker": "Rohin", "startTime": "1454.09", "endTime": "1455.53", "body": "Which country was this, professor?" }, { "speaker": "Srikanth", "startTime": "1455.53", "endTime": "1455.85", "body": "This is" }, { "speaker": "Prof. Vishal", "startTime": "1455.85", "endTime": "1459.31", "body": "in The United States. Right? Because I'm talking about Amazon, Venus." }, { "speaker": "PGK", "startTime": "1459.8251", "endTime": "1460.145", "body": "Yeah. Yeah." }, { "speaker": "Prof. Vishal", "startTime": "1460.145", "endTime": "1470.865", "body": "Fair enough. The industry. And because that's important context, because you'll see a lot of things they did well in US, they brought to India. That also helped them a little bit, didn't help them a little bit. So it's important to kind of understand that context." }, { "speaker": "Prof. Vishal", "startTime": "1470.865", "endTime": "1491.105", "body": "Right? The other thing that we see online, which is also interesting, by the way, when we talk about pricing, is, they it was observed that the price adjustments online were about hundred times smaller than what it was in retail, which means your adjustment number is smaller, but the number of times you're adjusting is larger. We call this dynamic pricing. Right? Now we call all of this thing, algorithm driven pricing, whatever." }, { "speaker": "Prof. Vishal", "startTime": "1491.1849", "endTime": "1515.0", "body": "The pricing difference will say it'll be, like, 5 rupees, 10 rupees, 20 rupees, or 5ยข, 10 cents. But in retail, it's different, right, because menu costs are very high. But the third one is the interesting one. You see, you will assume that because there's so much of information transparency that's available online, the prices have to be similar, right, across all of these online commerce companies. But what you actually observe is that the dispersion is larger." }, { "speaker": "Prof. Vishal", "startTime": "1516.1", "endTime": "1516.5", "body": "Okay." }, { "speaker": "PGK", "startTime": "1516.5", "endTime": "1517.38", "body": "What does that mean?" }, { "speaker": "Prof. Vishal", "startTime": "1517.38", "endTime": "1539.77", "body": "So what it means is the same item is priced differently by different online retailers, And you see that even today. The price on Amazon is slightly different from the price on Flipkart. Right? So what the research kind of observed is to say that, look, things like competition, branding, awareness, trust, these seem to be important enough factors because of which there is dispersion in price. Correct." }, { "speaker": "Prof. Vishal", "startTime": "1539.77", "endTime": "1561.675", "body": "Which brings to the point that Rohan was talking about where he said that he used to be Flipkart. He went to Amazon because there was some amount of experience trust intangibles that were available on Amazon because of which he was okay to move from one company to the other company. Right? So those are the price intangibles. So what ends up happening, if you look at this way, this price doesn't seem to be a big competitive advantage." }, { "speaker": "Prof. Vishal", "startTime": "1561.93", "endTime": "1585.015", "body": "Right? That this this becomes the problem. If you look at assortment, assortment or selection is a bigger challenge because the more the selection, better discovery you need, more difficult it is to for you to find what you want. So you have to build the right kind of experience, which brings us to the third kind of, you know, leg of the stool, if you will, which is the experience, and which is where I think Amazon shined. And where it shined is if you think about the experience." }, { "speaker": "Prof. Vishal", "startTime": "1585.715", "endTime": "1606.0149", "body": "Because they're operating in a place where it's the long tail, like you were saying, they had to have a great product discovery experience. So which means they ended up investing in the tech to make sure that product discovery was meaningful. You know, they were one of the first to come up with very good recommendation engines. They had all of these ways in which you can filter products meaningfully. You can find the right product that you want." }, { "speaker": "Prof. Vishal", "startTime": "1606.3949", "endTime": "1619.69", "body": "All of these things is what they did first in The US. Right? So they perfected the art of discovery and making the product available, if you will. That's the first thing. But the interesting thing that they did and there is also another interesting research paper on this that says that they got their supply chain right." }, { "speaker": "Prof. Vishal", "startTime": "1620.15", "endTime": "1637.765", "body": "And the supply chain they got right works very well in The US, and this is also important to understand. Right? It works really well in The US because, you know, the idea is, like, if I actually make it an optimization problem and I do a network design, the math actually works in The US. Because if I say it's gonna take twenty minutes, it's gonna take twenty minutes. Right?" }, { "speaker": "Prof. Vishal", "startTime": "1638.145", "endTime": "1661.74", "body": "And what I can also do is I can optimize for these three d's of supply chain expertise, and Amazon did it really well. You know, the three d's that we typically talk talk about are distance. Distance essentially says that if you have a longer distance, right, you can actually have larger, ways of transportation, consolidation, if you will. So they have these large trucks that move about stuff in The US, if you remember. Then we talk about what is called as density." }, { "speaker": "Prof. Vishal", "startTime": "1662.685", "endTime": "1672.145", "body": "You know? Density, basically, you can say that if everything is going to one city, I can consolidate orders slightly better. So there is amount of density. And then there is demand. Demand is always gonna be variable." }, { "speaker": "Prof. Vishal", "startTime": "1672.525", "endTime": "1687.98", "body": "But if you come to this conclusion saying, you know, I have to ship 500 miles. And because I have to ship 500 miles, time is okay. I can consolidate all my orders, put it together, and ship it together. Then you have a lot of advantages. And now you can use this demand to understand where do you put your warehouse." }, { "speaker": "Prof. Vishal", "startTime": "1688.12", "endTime": "1694.515", "body": "Right? So they got their network design right. They got their supply chain consolidation right. And they did really, really good job at it. Right?" }, { "speaker": "Prof. Vishal", "startTime": "1694.515", "endTime": "1701.655", "body": "And and in US, it works really well. And they got the same thing to India. Right? So tech expertise and operational expertise." }, { "speaker": "Rohin", "startTime": "1703.06", "endTime": "1741.43", "body": "If you'd like to listen to the full episode, you can head over right now to the can and become a premium subscriber to catch up on everything else that we've discussed. Your premium subscription will also get you access to all of our long form stories, newsletters, visual stories, and all the other podcasts that we produce. 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