Empire Strikes Back!
Manufacturers and Platforms
Thanks for your wishes for Teachers’ Day last Sunday which kept pouring in during the week as well. We are all better off with each other in our lives.
Most of my newsletter is focused on platforms as central and driving force in today’s world though I have occasionally spoken about how platforms have been challenged by incumbents including governments and non-profits. Today’s newsletter focusses on efforts made by incumbents including manufacturers to limit the growing power of digital intermediaries aka platforms.
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DTW
During the Week, online B2B marketplace unicorn Udaan took shots at the powerful FMCG brands including Amul and Parle for denying wholesale supplies to Udaan.
Controversy stems from the existing distributor relationships of FMCG brands and how VC money funded business model of Udaan is disrupting it and thus causing heartburn and financial hardships down the distribution supply chain.
Similarly fate awaited Thalaivii when PVR and INOX demanded a four week gap between the theatrical and digital platform release for all language versions. The theatre chains have seen the writing on the wall and have already compromised by reducing the usual 8-week window to 4-week. The issue was resolved in short term by releasing Telugu and Tamil versions with 4-week window and Hindi with 2-week window between theatrical and OTT release. Multiple hacker groups including Tamilrockers, and Movierulz continued with their antics and released the pirated copies as soon as the movie was released in theatres. There has been an ongoing tussle between the producers and distributors on one side and online hackers on other but addition of OTTs have added another dimension. Of course, this would continue to linger and perhaps some of the big producers including Dharma, YRF etc must flip to their original distributors to even out the game.
Though the producers are heavily dependent on digital platform intermediaries yet they could use their specific offerings, regulatory proximity and customer relationships to counter platform power.
PVR and INOX tried dealing with power of OTTs like Netflix and Amazon Prime through withholding their access to movie goers. If the movie producers went straight to OTTs, theatre chains simply would try to shut them off and banish them from theatres. This might be a big financial loss to producers as box-office collections still form the bulk receipts of entertainment businesses.
Various producers like Balaji Telefilms (ALTBalaji), Viacom(Voot) etc in India and Disney (Disney+) at global level have tried to challenge the hegemony of Platforms through creating their own streaming services.They would like their audience to have a direct relationship with them and thus control the customer experience.
Other industry groups like Confederation of All India Traders (CAIT) have tried to use regulatory and public opinion to force the e-commerce platforms to create a level playing field for both online and off-line retailers. They are support initiatives like BharateMarket which is an e-commerce platform that allows retailers to create their digital shop for free. They wish to reach around 7 crore traders and 40,000 trade associations by December 2023.
Similarly , National Restaurant Association of India (NRAI) has launched multiple campaigns to face food tech giants like Zomato and Swiggy fall in line though the jury is still out.
To conclude, manufactures and traditional businesses can reduce the power of digital platforms by withholding their inventory thus creating a FOMO in platforms. They can also give their support to alternate platforms or even try to reach out to their customers directly through D2C brands.
OTW
Over the Weekend, I was moderator of a panel discussion Conflux2021 organised by Alumni Relations Cell, IBS Hyderabad. It was an expert panel of Kunaall Jumani, Parinita Jain, Snigdha Manoli Menda and Rohan Katriar sharing their experiences and insights about D2C brands.
It is always a pleasure to catch up with “old” friends and the discussions bring back fond memories of classroom and beyond class interactions. I am proud of our alumni who have made their mark as professionals in multiple industries and roles. The panel members were representing important parts of the D2C ecosystem including D2C entrepreneurs , advertising , internet intermediaries and e-commerce platforms. You can watch the recording of the Conflux2021 session on YouTube channel of ARC.
For those who are following Aru’s Fortnightly Podcast tynkrring with XYZ, you may want to listen to her latest episode on Sustainable Fashion. Episode 2 of Aru’s podcast is out now. Watch, subscribe, comment and share
Thanks to your wishes and guidance , Aru is among 20 under 20 Roll of Honour Season 1 conducted by WhiteCanvas and BrainFeed. This contest was organised over last ten months to identify Top 20 Youngsters under the age of 20 years.
Stay Safe and Get Vaccinated.
I Love You
Shailendra
OTM
Opportunities through MountainSpeak are available with Cult.fit, for stellar sales folks with 1-3 years of experience at Chennai, Kolkata, Ahmedabad and Chandigarh. Please get in touch with Divya PS IBS Hyderabad MBA2016 or simply drop an email with your resume to divya.ps@curefit.com to speak further.
and Congratulations to Aru! All the very best to her for all the future endeavours.
Sir, but how long can the manufactures and traditional businesses withhold their inventory ? And how can they ensure a customer base which is as large as what is being provided by digital platforms ?