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#startup funding
No Money for Wedding Gifts
The young couple had just got back from their honeymoon. Excited as ever, they were sitting in their living room, steaming cups of tea in their hands and opening the vast array of wedding gifts around them.
One more crockery set, she said. That makes four. Here's a fifth one, he chipped in. 'And by the way, this large package looks like another one,
The two looked at each other. "What will we do with six crockery sets? Anyway Mom has given us two. And what about the five Borosil carafes and four pressure cookers? What are we going to do with all of this?"
Sounds familiar? Of course it does. Because that's invariably what happens with wedding gifts. Every guest wants to gift something that the young couple starting their life together will find useful. And what could be more useful than a crockery set? six crockery sets? What could be more useless?
But
And that, dear reader, is precisely the problem Cyrus Shaadikaranewala planned to solve. Cyrus had just been to the US to attend the wedding of his cousin, and had been extremely impressed with the concept of wedding-gift registries.You see, in several Western countries, when a young co decides to get married, they sit down and make a list of a it's things they would like to get as gifts. That's right it that decides this, not the guests at the wedding. This mundane things such as cutlery and crockery sets, or even ex gifts such as a Mediterranean cruise. It's another issue that this the leads to the first major disagreement between the two lovebied after all, they are not likely to agree on all gifts, are they? the wedding does not fall through as a consequence, the next step put up this list on a wedding-gift registry. These are websites the are designed specially for this purpose-they permit couples to up their wish lists on the site. the could d incl
How do guests access this list? Simple. The wedding contains the URI. of the registry. In fact, if it's an e-card, th are even simpler, because a link to the registry is then inserted the card. The rest is obvious. Guests who receive the card fo the link to reach the registry, and thereby get access to the wish of the young couple. Each guest can then pick and choose what or she would like to gift the couple, and pay for it. This gift is the attractively wrapped by the registry and delivered to the couple, a week after the wedding.
There is more. Sometimes a gift is expensive and the regi permits multiple guests to share the cost. A pragmatic way to co that couples actually get what they want rather than being sadde with multiple crockery sets.
And that, ladies and gentlemen, is precisely the kind of wedding gift registry that Cyrus wanted to set up in India. The concept wa new. Some people were trying it out, but it was still early days. Cy believed he could be a market leader in the space. And so he w about planning his venture, which we will call Wedgift.com, as real name has been masked. First of all, while a young couple mig put up their wish list on Wedgift, he needed to find out which kinds of guests would use is. And so he spoke to several friend The unanimous opinion was that this would only work wiyoungsters, typically friends of the couple getting married. Most alder people were likely to continue with the age-old tradition of ging cash, and were unlikely to use Wedgift. Which was fine. Even usage was restricted to only friends, the market size would still potentially be very large.
The next step, of course, was to identify possible gift items that they could list on their website which guests could choose from. Interestingly, they also had the option of gift vouchers, which would give the couple flexibility to choose their gifts after the marriage. All these were then made available on the website. Importantly, only the guests were asked to pay for their gifts. The couple did not have to par anything for putting up their wish list.
Then there was the job of identifying vendors for all these items and negotiating with them. There was an interesting option of tying up with a company such as Flipkart (or Amazon), where Wedgift would operate and manage the gift registry and Flipkart would source the guits from their vendors and deliver them. However, this option was dumped for a very simple reason. You see, the nature of the gifts and the occasion necessitated great packaging-gift-wrapping along with perhaps a ribbon and a card. It was unlikely that Flipkart would take care of this for a much smaller, niche business. Further, the wrapping could get damaged, the card and the ribbon could get crushed during delivery, and so on. In other words, they needed specialized packaging and delivery, which regular e-commerce vendors were not likely to provide. Specialized vendors were required, and after negotiations these vendors were finalized.
And finally, there was the big daddy of them all-marketing. Here Cyrus did something really smart. He realized that a typical Indian wedding uses multiple service providers-banquet halls, caterers, photographers, wedding-card designers and, of course, in some cases, wedding planners themselves. He spoke to several of these providers and worked out a barter arrangement, where they would pass on their clients to him and, in turn, he would pass on his own clients to them. Effectively free marketing. Smart,In addition, he was able to get press coverage for his company using contacts of his friends, which was once again free.
Now that everything was in place, Cyrus needed customen Fortunately, he was able to get two couples- friends of friends create their wish list on the Wedgift registry. And he was now all to go to the next step. The big, big step where he would ask ang investors to put their hard-earned money into his venture.
The Pitch
The angels gathered in the room were definitely interested. This wa a concept that was new to India, but very popular in the Westers world. And given the huge popularity of Western movies and serials in India, as well as increased travel to the US and Europe such a concept was bound to catch on. At least among the young generation. Admittedly, the older generation would continue to p cash in most cases, but friends of the couple, in other words th younger generation, formed a huge target segment. There was al the benefit of an early mover advantage. Being among the fint get into this space. Wedgift had a great chance to become a mark leader, provided they got their act right.
There was also the benefit of marketing through their partner Assuming wedding planners, photographers and card designers we okay promoting the company on a reciprocal basis, marketing com were virtually nil. Plus this was a brilliant case for word-of-moub based promotion. Once a couple went through this process, assuming both they and their friends had had a pleasant experience, all the unmarried friends would automatically become potential customm for Wedgift when they got married. Of course, if they got divorced and remarried, so much the better-at least for Wedgift.
Fortunately, Cyrus was also extremely knowledgeable about the business. And passionate as well. All questions the angels fired a him were answered satisfactorily and in great detail. In other words things seemed to be going just fine.However, there was the flip side as well. First of all, there was the cultural issue. In India, while it was perfectly all right to expect wedding gift, you could not demand one. One of the angels mimicked a typical response from a mother to her daughter who was A about to get married, 'Hai hai, tu gift mangegi? Ki ho gaya hai teme? Naak katwayegi saaddi [You mean, you'll actually ask people for gifts! How embarrassing]?' (Incidentally, this snippet is in Punjabi, one of the most colourful and expressive languages known to mankind.) Indians are known for their deep-rooted cultural values. Would they be willing to change? Even if the gift registry were only circulated to friends, would the parents of the young couple allow them to do so, with the possibility of ridicule staring them in the face?
And then one of the angels had a bright idea. How do your prices compare with those on Amazon?"
They are obviously higher, since we do not have their volumes, and therefore cannot get huge discounts.'
So what's to prevent a guest checking the couple's wish list on the Wedgift site, and then buying the gift on Amazon? This statement was made with a touch of pride, as if to say, 'So there."
For the first time Cyrus sounded a bit uncertain. 'Yes, that could happen. But some of our products are services such as cruises and stays in resorts, which you will not get on Amazon. Also, products are gift-wrapped, saving the guest a lot of hassle." There was an attempt to be confident, but the keen observer would have made out a slight. hesitation.
The angels looked at each other. Perhaps the business was not as great as they had earlier thought. And then, of course, there was the possibility of Amazon or Flipkart identifying it as a niche and getting into it themselves. Building in a wish list into the software was no big deal, and the only thing to add was the gift-wrapping. Not really an issue if they decided to ger in. Hmmm... Maybe...
And so the meeting ended on a somewhat sombre note. What ad initially appeared to be a great idea was perhaps not so great, after all. Too many uncertainties and no real entry barrier. The angelsquietly put away their chequebooks-figuratively, of course trooped out of the room to pick up their cups of coffee. Invent could wait.
Analysis
What happened in the case of Wedgift is fairly evident, isn't it? The was definitely a PROBLEM waiting to be solved. It made emite sense to get guests to give the couple gifts that they really wanted. E though there was a cultural issue and the concept had not yet b tried out in India, it seemed workable, at least among friends. In words, a great NICHE within the e-commerce space-andal enough one. And it was undoubtedly an INNOVATIVE solutne tried and tested internationally. If the concept caught on, the SIZE THE MARKET was immense, given the propensity of young peo in India to use the Internet. It was also highly SCALABLE, since only real manual intervention was the packaging and delivery--who could also be outsourced over time. In fact, the concept could cal go viral. Above all, the TEAM-in this case a one-man show extremely impressive passionate and knowledgeable.
But the major, major issue was the RISK. What if a guest w to check out the wish list on their website and then buy the am gift from Amazon or Flipkart? So much cheaper. And, of cour the possibility of Amazon and Flipkart entering the same busines There was no real ENTRY BARRIER in this business-especial 1 for these giants who only needed minor tweaking to enter the g registry business. No sit. It simply didn't make sense. And therefore the angels, in their wisdom, said, 'No, thank you
The Impact of the Coronavirus-or Any Other Crisis
We're sure you know the answer by now. Many people are likes cut down on shopping at physical outlets such as malls and mor to online purchasing. Therefore, a business such as Wedgift, which is entirely online, is likely to benefit. Of course, the other problemsuch as people checking out a gift on Wedgift and then buying it on Amazon remains. But the message remains the same online is a good way to go!
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