No News today. So we will just talk about some company in Sweden 🤗
Did somebody say E-Commerce?
Swedish home furnishing retailer IKEA recently announced its plans to launch an e-commerce platform by the end of this year. According to its press release, the online experience will first be made available in Mumbai, followed by Hyderabad and Pune
But that isn’t the main story here. The main story — “What on earth is IKEA?” 🤔
Think of IKEA as the furniture store that sells you everything you’ll ever need but promises to do it at a price nobody can match. It takes pole position in cost leadership (read as a seller of cheap, but quality furniture) and a pretty reliable brand all in all.
Last year when it opened its first store in Hyderabad, people thronged the facility in hordes and almost caused a stampede 🐘
So with this new e-commerce platform, maybe it’s IKEA just saying “Guys, You don’t have to hurt each other to buy some furniture. Get it online”
Anyways, with that being said this isn’t really exciting news. So we need to make up for this somehow. How about this? What if you could use this information to sound smart at the coffee table today? Wouldn’t that be swell?
Here’s how you go about this sneaky little operation 😏
Initiate the discussion by asking if anyone’s been to an IKEA store. Unless you stay in Hyderabad, chances are nobody has seen an IKEA up close. When everybody shakes their head and says “No”, that’s when you hit them with trivia.
- Ask people if they knew that almost all of the furniture sold in IKEA are DIY (Do It Yourself) types, meaning the buyer gets to assemble and put it all together, like a big bulky puzzle
- Tell them about Flat Packing, a technique that involves packing different parts of, say a table — flat, so that you can save on space and ultimately, transportation&warehousing expenses
- Also, don’t forget to point out how IKEA manufactures everything in bulk enabling it to easily negotiate with its suppliers. A better bargain from the suppliers always means better prices for the consumers
Finally, tell them that this cost leadership strategy might not work all that well here. For instance, IKEA pays a hefty import duty to ship stuff to India. So if they are going to go big, maybe they need to find a way to source things locally.
Firing on all Cylinders? 🔥
On Thursday, Zomato said it had fired 100 employees working in the customer service department due to its increasing focus on automation.
If you’ve ever used Zomato you know what they are talking about. Back in the old days when you logged into the app to sort out issues with your latest order, you’d be greeted by a customer service executive almost immediately. Now, you get a bunch of automated texts asking you
“What’s wrong with your order?”
“Do you really need help?”
“Are you sure you want to talk to an executive?”
“100%? Lock kiya jaye?”
Yeah, you get the point. According to Zomato, this is their way of reducing redundancies. However, the top question on everybody’s mind is still the same? Will Zomato turn profitable now?
Time for some math now
Zomato spends around Rs. 4 to Rs. 5 per order on customer support. Now that adds up to about Rs. 200 crores per annum. Let’s say the company fires its entire customer support team. Zomato could actually end up saving about 200 Crores.
Not bad by any stretch of the imagination. Until that is, you read the fine print.
Zomato spends close to Rs.3500 crores on promotional stuff like discounts. That’s about 3300 Crores more than what they spend on Customer support.
So this cost-saving measure, albeit a step in the right direction, is not going to turn Zomato profitable. At least, not until they cut down on promo codes and discount specials.
However, as loyal users of Zomato, we hope that day never arrives.
Fun Fact : The Gurgaon-based company claims to have 130,000 restaurant partners across 500 cities employing over 230,000 delivery partners. Currently Zomato serves around 40 million orders every month as compared to Swiggy’s 30 million, both expending on average $50 million every month.
Tweet of the Day
Thursday saw the auto sector being dealt another blow as the industry continues to face tumultuous times