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How to stay at home and shop!
Nandini Lakshman |
November 01, 2004
B S Nagesh, chief executive officer of retail house Shopper's Stop, has an anecdote that he loves to relate. Last year, when Kamalika Sengupta, a Kolkata-based corporate executive, fell sick with viral fever days before a friend's marriage, her shopping spree went haywire.
She had intended to buy a range of cosmetics, toiletries and other accessories, in preparation for the three-day extravaganza. Confined to the bed, she did something that she hadn't even thought of earlier.
Sengupta called up a Shopper's Stop's customer care associate, and requested her to bring home a range of items. She had a Shopper's Stop Gold Card (issued for its big spenders) but had never demanded such a service before.
Taking unsold goods outside the store was against the company rules, but the customer care associate consulted her superior, and together they complied. Was it worth the effort? Sure, it was. Without stepping out from her house, Sengupta blew up Rs 50,000 in 90 minutes flat.
Nagesh says, he had two options -- either to sack the staffers for breaching rules or just ignore it. He decided to read it as empowerment that had won a loyal customer.
"By home delivering what the customer wanted, we killed two birds with one stone. Not only did we make the sale, we acquired a long-term customer," he says.
For the Rs 500-crore (Rs 5 billion) Shopper's Stop, going over to a customer's house to make a sale might have been an exception and a one-off case. But it isn't for a host of companies across sectors, which are betting big on home delivery.
From bookshops and departmental stores to travel agents to banks, pharmacies and even fast food joints, everyone is offering their services at the customers' doorstep. All manner of products from medicines to bank loans, foreign exchange and even vegetables are home delivered.
Why are companies of all hues reaching out to consumers at their doorstep? Says, Madhabi Puri Buch, senior general manager and head of customer service delivery & operations at ICICI Bank, "We are trying to offer a customer convenience, which in many ways the customer is used to in other aspects."
Adds the head of a consumer goods company, "What's wrong with capturing value across the value chain? If the focus is on growth, then here's an opportunity for value addition."
But it isn't just customer concern that has set companies on a bonding spree. Even as they take great pains to downplay it, the main trigger is competition.
With little to distinguish between players, companies are trying to make a difference with their service, and they are all finding newer ways to reach out to the customer.
Also, the mobile phone revolution has provided the boost for home delivery. "Suddenly, all the service providers are accessible," says Buch.
For decades now, neighbourhood kirana stores have been delivering groceries to homes in the vicinity. And vegetable vendors either knocked on doors or stationed carts outside buildings.
Then came the new restaurants and takeaways that began serving their fare at home. Having spoilt the Indian consumer, it was only a matter of time before the big branded boys stepped on to the home delivery bandwagon.
So if you thought that Dakia and Dominoes were two new pizza concoctions, forget it. They are the new home delivery services recently introduced by ICICI Bank.
Four months ago, it launched Dominoes, a home delivery service for all its customers, catering to requests for cash withdrawals, deposits, loans or even a mere chequebook.
Actually launched three years ago, this offer was earlier available to only ICICI's high net worth, private banking clientele, who were charged a service fee of Rs 40 per transaction. "Now, it is on call to all our customers, like you order a pizza," explains Buch.
Initiated a month and a half ago, Dakia is like a courier service, with a minimum withdrawal sum of Rs 2,000. An ICICI Bank representative goes on a fixed beat which is available to all customers. Unlike Dominoes, this service is not on call and the response time is overnight.
Perhaps one of the first companies to swear by doorstep service was the Mumbai-based Crossword Bookstore, in which Shopper's Stop has a 51 per cent stake.
It began as an experiment more than a decade ago, but today, home delivery accounts for 3 per cent of the Rs 45-crore (Rs 4.5 billion) Crossword's 5 million annual customer base.
Says R Sriram, CEO & managing director, Crossword, "For us, competitiveness is through the watch and wallet. You add value to the customer's time, and the way to the customer's wallet is through the watch."
Early this year, as part of an incentive for its 50,000-odd Book Reward members, it tied up with cell phone service provider Orange to deliver service to its users. Orange users can now click on a book icon to order from any of Crosswords outlets across the country.
According to Sriram, not only do they deliver books that are in the store, if a particular title is not available, it goes out of its way to get it for the customer. "You have to look at newer ways to compete," he adds.
Four months ago, even Food Bazaar, the food retail outlet belonging to Kishore Biyani's Pantaloon group, took to home delivery. It began as a test market at its Vashi store in Navi Mumbai, and it has now rolled out its service at its Gurgaon store. Home delivery will go national by the end of this financial year.
At the Vashi store which has annual revenues of around Rs 20 crore (Rs 200 million), 15 per cent of sales come from Food Bazaar on Call. That's why, it displays huge posters which scream: Gadi tak to kya, ghar bhi pahuncha denge (we deliver not just till your car but your home). On June 1, it introduced Food Bazaar on Call. It is a two-pronged model, says Vinod Bajaj, head of Food Bazaar.
On one hand, within the store, it home delivers the goods when a consumer requests it. On the other, customers place their order on the phone and they are duly home delivered. "Customers are used to ordering from home, so we are offering that service now," adds Bajaj.
Food Bazaar, which initially began as a shop-in-shop in Pantaloon's hypermarket Big Bazaar, has struck out on its own.
Spun off as an independent company recently, today, of the current 18 Food Bazaar outlets, four are stand-alone with the rest still in the hypermarket. Bajaj says that by this fiscal end, there will be around 30 stores and most offer home delivery to their customers.
It is the same at its flagship Pantaloon stores. Recently, when Archana Pathak went shopping for the festival season at one of Pantaloon's Mumbai stores, she requested the sales girl if her purchases could be home delivered.
She had gone on a shopping spree and she was weighed down with more bags than she could carry. Pathak was surprised when the store agreed to deliver it to her place. Did the fact that she had blown up more than Rs 5,000 at one go, swing the deal for her?
Not really. "With everybody opening stores, it is only the quality of service that is going to bring back customers like Pathak," says a Pantaloon manager.
And while many companies are not really making a noise about home delivery but only providing it on demand, the banking sector is taking great pains to create awareness about its home delivery offerings.
With more than half-a-dozen aggressive new age private sector banks gunning for business, keeping ahead of the pack is the name of the game.
"For us, home banking is a strategic feature that is a part of our convenience proposition. When you have to make a mark in a competitive category with almost 130-odd operational banks, you need to offer something new to the customer," says Shashi Arora, senior vice president, marketing at Kotak Mahindra Bank.
So as part of its home banking platform, Kotak offers cash and demand draft delivery and cheque and document pick-up. It also has a special service branded Beat Service for current account holders.
Besides that it operates a daily cash and document pick-up service which businessmen, like shopkeepers, with large daily cash transactions can avail of.
Unlike many banks which charge a transaction fee or have different services for its high net worth clients and mass-based customers, Kotak Bank claims its home delivery offer comes at no cost, and is available to customers across the board.
How is all this done? Kotak has recently tied-up with a third party service provider Le Concierge. "The tie-up goes beyond banking into non-cash delivery including utility bills," points out Arora.
And if you want even a bouquet to be delivered to someone, Kotak Bank will do it. "You do certain things to acquire customers. But these are measures to retain them and enhance loyalty," he adds.
That's exactly why the Rs 1,000 crore (Rs 10 billion) global travel firm Travelex Asia started home delivery. While 70 per cent of its revenue comes from the distribution of travellers cheques to agents, the balance is from retail which includes home delivery.
Customers are clearly feeling the difference. When Govind Sharma came down from the US for medical treatment in August, he was surprised to see how much things had changed since his last visit three years ago.
Earlier, if he wanted to exchange dollars in Mumbai, he had to trudge down all the way from the suburbs to Thomas Cook's downtown office, 20 km away. This time he just called up Travelex. They even asked what denominations he wanted the money in.
"We are giving consumers what they want. If you don't do it, you fall behind," says Gavin Azavedo, chief executive officer of Travelex. Two months ago, it tied up with HDFC Bank to meet the forex demands of its customers. "We have now become a one-stop forex shop for HDFC," he adds.
But the logistics of home delivery are all outsourced. For instance, at ICICI Bank, the people who put the money in the ATMs operate the Dakia service. With only variable costs involved, companies claim that all their offerings come for free.
Is it sustainable? "The more the customers, the more the cost. But with more customers you have more revenues and it all balances out in the end," says Kotak's Arora.That it helps companies to build a long-term relationship with the customer is another plus. And with it happening at his or her doorstep, the customer is fast turning from king to couch potato.