There was a fascinating post this past weekend by @johnnie on “when good design is not enough” and solving the “chicken and egg” problem for well designed products. He stresses on a very important point about how distribution is as important to the success of a product as the design itself, giving some very relevant and successful examples. There has been some follow up commentary as well by the likes of @cdixon saying “distribution matters as much as product”. I thought this would make a perfect setting to get back to writing after months of being MIA, to talk about my favorite topic - in India, distribution matters MORE than product.
I had written a similar, yet different piece at some point last year on how its all about loving your product. That theory very much still holds true, but what I’ve learned over time is that in India a well designed product is only the start. The actual effort of building a business around it is the hard part. The underlying primary reason for this goes back to the state of our country in general - developing, unorganized and still in large parts uneducated. This leads to a number of factors that make distributing both consumer and enterprise products a challenge.
Its common knowledge that Indian people are one of the most price sensitive kind in the world. This makes it very hard to retain a customer, as they will switch easily if they find an alternate solution that is cheaper. Now, this is where design gurus will point to building engagement within design to improve retention - but this is where India is so different. People are okay compromising on experience as long as they get something that fits their needs and is cheaper. Culturally, we are used to compromising and have the “chalta hai” attitude, we don’t strive for perfection - cost in most cases is the first and usually only factor to consider. Case in point being mobile apps: most mobile apps are free, which is why Indian users have exhibited lowest retention among the Top 20 countries by active mobile app usage.
Relative to the West, Indian consumers are still getting used to technology. The most popular Indian technology products still have terrible design, and this is what people have gotten used to. A great example of this is Tally - the number one Indian software product built for India. The experience is so basic and the design so outdated, that folks like @johnnie would be surprised how they have clocked up more than half a million customers. Yes, that is >500k! This is where the distribution part comes in - they have established an enviable 2 tier sales strategy using “channel networks” to achieve scale.
The other issue that doesn’t help distribution is payments. There are only about 15-20m credit cards in India vs 600m in the US. People still prefer using cash for basic transactions, effect of the parallel “cash” economy. In such a situation, you need to have an offline sales mechanism, which in turn makes scaling harder and riskier - a good example is the Cash On Delivery model in e-commerce, which typically accounts for 20-30% of all transactions. Another example is Buildabazaar, a good tool for SMEs to build e-commerce stores on their own. But they don’t even accept credit cards as a mode of payment since none of their customers would ever use it. They have to have sales reps/account managers on each account. Very different from US based Zendesk, where I’ve used it for over 2 years now for more than 20 people on our team, and never spoken to a sales rep - all self serve credit card payments.
So how do you address this distribution challenge? What has worked in the past? This is something I’ve been researching on and will hopefully have more answers soon, but in general the reward/hook strategy seems to be working. Either reward the customer for using your product, or give them a hook which will make it difficult for them to leave. On the reward side, Indians love free stuff, so would make sense to incentivize them to try your product. On the hook side, get customers to give you valuable information that is difficult to migrate - Tally again being a classic example.
Every country brings its own set of challenges - with India I think sales/marketing/distribution is the biggest. What do you think? Would love to hear more success stories on companies/people who have been able to crack this.