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Monday, February 14, 2011

Guest Post: New entrepreneurship idea: Online concierge service for companies

This is a series of blog-posts based on my call to wannabe bloggers who wanted to start off their blogging career/hobby with one post and keep that going one at a time. Bargava Raman is a friend from Mu Sigma (I talk about my time in Mu Sigma here) who is currently based in Bangalore and works for Cisco's Marketing Analytics Team. Here's what he had to say about why he posted this blog here: "Been wanting to blog for a while - but indolence takes precedence as always.Havent written in a long time and only when writing did I realize I hardly know how to write :)

Do write to me if you want to post any of the themes listed in my previous post. Anyway, here goes Barg
ava on his new product/solution idea.
Randhir posted about his travel from Bengaluru to Hyderabad when he had to book a bus at very short notice.
Just got off my worst bus ride ever – All I can say is if you are ever given a chance to choose between a Bullock Cart Ride and a ride on the Omer Travels bus, choose the Bullock Cart.
In good-ol’ days when I was working with one of the top IT companies in India in Chennai, they used to have a concierge which took care of all such personal stuff. Amongst other things that they did one of the things which they were very efficient was in getting tickets(bus, train and air) and sending the ticket to the person’s seat. All that was necessary was to send them an email with the details necessary and they would call to let you know the available modes and fares and once you confirm – its a done deal. It could be planned a month in advance or on the date of travel. They were able to offer something to the employee.

Let’s spend a few seconds to think why it would be profitable. Marketing theory talks about Segmenting-Targeting-Positioning (STP) a product. Such a concierge definitely did that pretty well.  IT professionals are price-insensitive to a greater extent than the mango-man (aam junta).  Probably due to more income at disposal at a younger age or missing home or peer pressure or could be any other outlandish reason. But that held true more then than today (College students today are shopping for iPhones – many of my friends, including me, did not think about getting a mobile until 2 years after we started working !). The employees got tickets without bothering to go and stand in line for tickets(these were days before internet became so common) and the concierge too made some money. Well – all good things come to an end eventually. With the advent of IT in travel bookings, such services have died slowly (or have become very inefficient).

Now, what is the product idea that I am thinking about? For one, anyone could target such a population with a little premium for such a service which they consider very essential (just look around IT professionals in Bengaluru-very few native folks !)

What I am toying with is to create an online concierge service (or rather – just an online travel service). The segment would be the employees working in IT companies.  A premium would be charged for booking – but not big enough for them to immediately attrite and go back to the current process of booking on their own.

Why would this succeed? This is just a hunch and not really a well-thought out plan. But given that there are not a whole lot of websites that offer customers price comparison (a la-orbitz kind of stuff for travel in India is non-existent) – this could be a good place to tie-up with various bus operators and share the premium/commission.

Is it just travel-booking? Again – I don’t have a good answer for this. But then, thinking what can be added to this, probably vacation planning. One could tie-up with hotels and give good travel packages. Hey come on – such sites exist. Dont BS? Yes – I don’t deny that.  One could use cleartrip, redbus or irctc . But something that caters to corporate with a good customer service would work like a charm. And sites like makemytrip charges a huge premium to the partnering sites.  Competition could always be useful :-)

Will company make money ??? This is something I am very sceptical about. Let’s assume a medium case scenario (worst is an eventual close-down!).  For eg: 1000 folks use the site every month and say 10,000 folks use it in year. And say – we are able to make Rs 10 profit from each customer. That translates to Rs.1,00,000 per year.  Very minimal and hardly attractive. Cost would be hosting the site – with database connectivity- charges would be around Rs.10,000 per year. Also, if telephonic customer service is to be incorporated – paying the person for phone and working hours will make it very unattractive.
As a note: Alexa reports that redbus is ranked 500th in terms of page views in India. Consider monetizing through ads – the proposed site can break even. Effort to bring in additional features(like travel, packages etc) and impact of social media can make it work bigger.

What to do? Hey – isn’t entrepreneurship all about satisfying one’s ego and not caring about money? :p

Bargava - All I can say is an idea's success largely depends on its execution. There sure is an opportunity (supply-gap) here and you can always provide the service for a year and then exit with a sell-out to one of the existing players. If you need help brainstorming this or taking it further, let's talk. :-)
You might want to read this post on who is a typical entrepreneur and also read my other posts on entrepreneurship

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