Understand the local drivers when starting a "Me too" business
Copying internet models that have worked in the early internet markets like the US has been a prevelant business practice worldwide ever since the internet was invented. From the Yahoo, Amazon, eBay, Expedia clones half a decade ago to the more recent Airbnb, Gilt, Uber and, Zillow and Yelp clones today. Almost every successful internet business model has seen copycats come up worldwide. There are some investment/incubation firms that seem to have made "Immitate and Invest" a business model.
Entrepreneurs/investors that are making a living from copying business models that have worked elsewhere need to understand the business drivers of the business model worldwide and try and understand if these drivers exist in India and what local tweak may be required for the business in India. Couple of examples in the Indian context
a. Dating (Match.com of India) - Do women feel safe to put up their profiles on an internet site? Are they culturally open to doing so in a largely conservative Indian society?
b. Ecommerce (Amazon of India) - Is there brand loyalty while shopping online in India or are consumers price sensitive? How does one pay in a largely cash dominated societey in India?
c. Social Travel (Airbnb of India) - Is there enough trust for end consumers to list their homes for daily/weekly rentals by strangers? Is tenancy regulation amendable to this business model?
d. Private Taxi Marketplace (Uber of India) - What are the altenate modes of transport available to the consumer? What pricing is neeed for the private taxi operator to make money? And how does that pricing compare to the other modes of transport (Can that pricing being sustained in the market? Given the traffic in key cities like Bangalore and Mumbai, can the taxis reach on time?
In all of the above examples, the "me too" business clearly requires significant local innovation in order to make the model viable. An entrepreneur needs to build in the friction involved in trying to localise the business to Indian conditions which could impact time to market and profitability.
Some Me too models that don't require on ground execution in an English speaking country like India may not work at all. For example, if it is a product play only that consumers need to adopt, there is no advantage of a local player over an international player if there is no langauge barrier. So India doesnt need a local Google, Facebook, Whatsapp, Pinterest while China may due to the language barrier. The business driver in the above is mainly marketing/customer adoptoin which an international company can do as effectively as a local company. So a "local moat" doesnt really exist in these businesses.
It is encouraging to see "me too: entrepreneurship flourish in India. However, there is no free lunch when it comes to copying business models. It requires a lot of deep thinking and superlative execution and long long hours at work.
Entrepreneurs/investors that are making a living from copying business models that have worked elsewhere need to understand the business drivers of the business model worldwide and try and understand if these drivers exist in India and what local tweak may be required for the business in India. Couple of examples in the Indian context
a. Dating (Match.com of India) - Do women feel safe to put up their profiles on an internet site? Are they culturally open to doing so in a largely conservative Indian society?
b. Ecommerce (Amazon of India) - Is there brand loyalty while shopping online in India or are consumers price sensitive? How does one pay in a largely cash dominated societey in India?
c. Social Travel (Airbnb of India) - Is there enough trust for end consumers to list their homes for daily/weekly rentals by strangers? Is tenancy regulation amendable to this business model?
d. Private Taxi Marketplace (Uber of India) - What are the altenate modes of transport available to the consumer? What pricing is neeed for the private taxi operator to make money? And how does that pricing compare to the other modes of transport (Can that pricing being sustained in the market? Given the traffic in key cities like Bangalore and Mumbai, can the taxis reach on time?
In all of the above examples, the "me too" business clearly requires significant local innovation in order to make the model viable. An entrepreneur needs to build in the friction involved in trying to localise the business to Indian conditions which could impact time to market and profitability.
Some Me too models that don't require on ground execution in an English speaking country like India may not work at all. For example, if it is a product play only that consumers need to adopt, there is no advantage of a local player over an international player if there is no langauge barrier. So India doesnt need a local Google, Facebook, Whatsapp, Pinterest while China may due to the language barrier. The business driver in the above is mainly marketing/customer adoptoin which an international company can do as effectively as a local company. So a "local moat" doesnt really exist in these businesses.
It is encouraging to see "me too: entrepreneurship flourish in India. However, there is no free lunch when it comes to copying business models. It requires a lot of deep thinking and superlative execution and long long hours at work.
3 comments:
Thanks Suvir, good to see you post one article a month..thanks for the insights..
Well. thats all good but is there a framework that we can use to analyse the models and drivers. I believe if something like that can be framed, it would be awesome.
I think each business model will have different business drivers. What is key is to understand the drivers of the business one is planning to imitate in a local country and assess what the local nuances are and how to tackle them. A framework can be academic and not yield any insight. Micheal Porter's Strategy framework or tons of other research out on business strategy can be used as a framework to assess any business, not just "me too" businesses
Post a Comment