IntroductionValue Leadership has three dimensions. These three dimensions are Product Leadership, Customer Intimacy, and Operational Excellence. As usual, we will take the details of the concept as explained in the book, Marketing Genius by Peter Fisk and then extrapolate the ideas with the help of an Indian Case-study on Ninjacart, an IT solution that aims to give the farmers more money by directly taking their produce to the retailers through its collection points and selling it through the retailers. ( Ninja Power, Outlook Business, August 30, 2019, pages 34-40.).
Now, let us take each of the three Value Leadership Disciplines. "Product Leadership --these companies have an obsessive focus on innovation and quality in order to offer the best products. Sony or Coca-Cola are examples."
"Customer intimacy -- these companies have an obsessive focus on service and relationships in order to offer the best solutions. Dell or Lexus are examples".
"Operational Excellence -- these companies have an obsessive focus on efficiency and consistency in order to offer the best price. Aldi or Toyota are examples." (page 134),.
The diagram from the book ( page 135), is even more illustrative:
As seen in the diagram, any company that aims to be a market leader needs to be good at all three Value disciplines. Our case-study in this article, Ninjacart, has aimed to do just this.
Readers may also read the previous article on learning the art of personalized and value-added service.
Let us look at the finer aspects of Ninjacart, along with the three disciplines.
Product LeadershipSony or Coca-cola are global companies that have a remarkable focus on innovation. Similarly, Ninjacart has innovation in its DNA. It has a business model that adds value to each of the main stake-holders of farmers, the retailers, and the customers. Ninjacart has eliminated the middlemen and the customers have also had the advantage of ultimately paying fewer prices. Hence, there is a big innovation in the basic business model itself.
That said, Ninjacart has technology-based value-addition as well. Their tech product has capabilities to forecast demand. In the past four years, they have claimed that their prediction has improved from 80% to 97%. This is one sure way to reach to customers, as more the retailers who enroll in the Ninjacart eco-system, the more the customers can buy vegetables and fruits at far lesser prices. Here is the re-assurance to the farmers as well -- their account is credited within 24 hours after the product reaches the retailers.
And then comes the reach. Ninjacart has 50,000 retailers spread over Bangalore, Chennai, Hyderabad, Delhi, Gurugram, Mumbai and Pune. Since 2016, Ninjacart has been compounding revenue at 100%.
In the financial year 2019, its revenues have reached 1.2 billion rupees.
Customer IntimacyNinjacart has two tiers of customers. The farmer is the first customer for whom the middle-man is a constant irritant. Hence, the middle man has been removed. The farmer is happy as he is able to get 15 to 20% higher prices than the market rate. Yes. When an organization manages to reduce costs in the business model and pass it on to the customer, faith in the particular organization involving the customer will increase. This is exactly what has happened. The farmer is the main customer, but then the retailer is as important in the entire supply chain as well. He is the next important customer of Ninjacart. He is, in fact, more of a business partner. The retailers are happy as they can stock required quantities as required and get a higher fill-rate, which is "a measure of how well a retailer can meet consumer demand" (page 38 in the Outlook Business issue referenced above).
The retailers also save on transportation cost and the stock reaches them at a discount of 5-10%. This is exactly what we mean by customer intimacy. It should be noted that online players have customer intimacy as a mantra. For example, Amazon.com is ruthless about entering rural markets and is now having students as delivery agents to connect to villages within a radius of ten kilometers from a town with a population of over 1.5 lakh. The range of every item sold adds substantial value to the customer and is difficult to miss at any point in time.
Ninjacart has done good work in customer intimacy. The retailers are happy about the door-to-door delivery of vegetables and fruits. This value addition is similar to the Ola car or auto reaching the customer within minutes. Business models that have a big IT thrust, it is now abundantly clear, will be able to have customer intimacy like never before. Read the phrase "obsessive focus on service and relationships" in the quote from the textbook above. Note that Ninjacart has been able to tick all boxes in this respect.
Operational ExcellenceRead the phrase "these companies have an obsessive focus on efficiency and consistency in order to offer the best price" in the quote above, taken from the textbook. Once again, Ninjacart has been able to fix and operationalize a business model that is scalable and profit-oriented. It is based on value-addition and it has a very efficient operation. Note the advantages of scale. An expert from the industry has this to say about Ninjacart. "Strong execution capabilities, supply-chain efficiency, and technological expertise are the three factors that make Ninjacart stand out" ( page 38 of Outlook Business quoted above).
Future of the business modelThirukumaran (co-founder and CEO of Ninjacart) is on record of having said this as his goal. "The goal is to become India's largest B2B supply chain company and move beyond fruits and vegetables. And with their strong value proposition, loyal customer base and consistent
investor backing, it isn't difficult for the start-up to move at ninja speed towards its goal" (page 40 of Outlook Business quoted above)."
The case-study does mention that Ninjacart has already imposed entry barriers on new entrants. It is having a large presence in cities and is likely to forge ahead with its expansion plans this year. When it goes into FMCG products and other consumer products, their learning experience will become better and that process will add even further value.
How start-ups like Ninjacart succeedThe young founders of most start-ups in Bangalore and Chennai, start by working with some company and then acquire an MBA to hone their competencies. They then scout around for a business model that will yield profit in the short run, not exceeding five years. Somewhere down the line, finance is not an issue, if the basic business model is good. Walmart, for instance, has already invested 50 million dollars in Ninjarcart that has already received $147 million from Accel and Tiger Global. Well, the story of most start-ups is similar. They are lead by youngsters with a fire in their bellies. Thirukumaran, the CEO has an MBA from IIM-Kozhikode. The MBA qualification is insurance for the start-up to succeed. MBAs always have an eye for detail and the ability to think aloud and can visualize the future.
These are the qualities that will always stand out. Ninjacart has ticked all the boxes pertaining to the three value disciplines explained above.
ConclusionAny business with a sound business model will always make a good difference. The case-study on Ninjacart clearly substantiates this and goes on to reinforce the strength of any start-up founded by young professionals. The future is always good and viable as a business proposition.