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Coupon culture proves successful in India

06 May 11 17:14
Cutting out coupons

Entrepreneur Kunal Bahl reckons the key to business success is understanding what your customers are interested in.

"I often say Indian consumers are all about ABCD which is astrology, Bollywood, cricket and discounts and if you're doing one of those four you're in pretty good shape."

Mr Bahl chose to focus on one of these factors when he launched Snapdeal, a company which provides money-off coupons, aimed at a wide range of platforms.

"We'll do mobile coupons, we'll do internet coupons, we'll do insert coupons," he explains. "We are a couponing everywhere company."

Growing up

Entrepreneurship runs in Kunal Bahl's blood. After working in the coal-mines, his father set about establishing a manufacturing business. The will to succeed imbued family life.

"Me and my brother used to get incentivised to do well in our courses so we can watch one movie on a Friday night or go to have a pizza," Mr Bahl recalls.

He adds that his father, "still works six days a week, probably 10 to 12 hours a day and that energy just doesn't go away. To me that's very inspiring."

Mr Bahl studied in the USA at the University of Pennsylvania. He found the approach to education very different to that back home.

"In India, if you raise your hand in class… to ask a question that's looked down upon… it seems like you're disrespecting the teacher because they feel that you… didn't understand what they were teaching you. America is completely the opposite."

He says he learnt a lot from the experience. "Learning to think for yourself and sometimes breaking the rules… inspiring that learning amongst yourself, your team and constantly questioning what people are saying, is what you need to do."

Firm belief

Kunal Bahl says entrepreneurs in India can encounter a lot of resistance to innovative ideas. He call this "environmental viscosity".

He recalls the dismissive nature of shops when he broached his discount service in 2008.

"Their view was 'Oh my brand is supreme; I do not do discounts; I do not know what couponing is; India doesn't do discounts, we don't have a couponing culture.'

"We got all kinds of reasons why this was not going to work," he says.

Ironically, it was the economic downturn that convinced retailers of the merits of coupons and which kick-started Snapdeal.

"They were calling us and saying 'you guys told us you will help us sell our products or services. Tell us more'," he remembers.

The entrepreneur says it is important to have a firm belief in your own ideas. He was able to withstand the scepticism he originally encountered because he had researched his product and had confidence in it.

"There was a lot of investment happening in retail in India and we realised…there was going to be a supply-side glut," he explains. The result would be retailers who were desperate to shift their stock - and discounting is one approach that could help them to do this.

"People respond to incentives and this is an incentive for people to shop," he says.

Don't 'copy and paste'

Kunal Bahl admits that the concept of money-off coupons is not an original one; the idea is more familiar to consumers in the West than in India.

Indeed, he reveals that he got the idea for Snapdeal when he launched a detergent company in the US.

He remembers "we had no money" and were "completely bootstrapped". He saw coupons as a cheap and efficient way to get consumers to start buying his product.

"That product eventually got into four thousand stores in the US, was featured on Oprah's Club, Wall Street Journal, The New York Times - all without spending a lot of money on marketing," he says.

It was then he realised he could build a business around couponing.

But Kunal Bahl believes the key to making progress lay in adapting the approach for the Indian market.

"Localisation… is critical in markets like India," he says. "You cannot copy paste a model from the West." You need "an in depth understanding of the texture of that local market… to be successful".

He says that, at first, they had to start providing coupons offline, because many people did not use the internet. Mr Bahl says the explosion of the internet in India has resulted in them having a new subscriber every four seconds.

Pick your team

Despite the strong growth rate of his company in the last twelve months, Mr Bahl admits it hasn't always been easy.

"I would say the biggest mistakes we've made have always to do with the people," he says.

He says they've had to put in place "checks and balances" to their recruitment process to ensure "the most suitable person for that role makes it through".

"At the end of the day it's the people, it's our team that drives the business forward and if you don't have the right person in the right role, it's very easy to go wrong."

But the entrepreneur also adds that persuading the right employees to work for you can be just as difficult. "India is a hard market to get high quality talent to work for companies that are in their growth phase," he explains.

"There is a lot of societal pressure to work with a company that's a big brand because it helps your matrimonial resume."

Path to politics

Kunal Bahl believes a certain amount of humility is needed to launch a successful business.

"You may be a very capable person, a highly accomplished person but you cannot think of everything," he says. "Neither can you do everything yourself," he adds.

Indeed Mr Bahl says his work as an entrepreneur has given him "a great experience to learn more about people: how to work with them, how to get them to work with you, how to create value by getting some smart minds together".

He believes the set of skills he's learnt will come in useful in his future plans.

"I want to go into politics," he reveals.

"I think that in India we have policies, we have good regulation. However the last mile in the implementation of policies is something that we could add a lot of value to in terms of… more efficiency."

For Kunal Bahl, the processes involved in resolving problems in business and politics are very similar; both require the ability to identify "what's the problem, how to solve it… who are the right team members to bring on board to solve it and then get down to solving it".

He says, "to me, from a role perspective, it's very similar to what I do in my day job right now."

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