Tag: service

The service marketplace paradox

This came out of a conversation a few weeks back, and resurfaced in a conversation yesterday. There is a fundamental paradox in service marketplaces – the more useless the general quality of service is, the more useful the marketplace. Let me explain.

Let us take the market for plumbers, for example. There are several hyperlocal service marketplaces in India (like HouseJoy or LocalOye) which supply plumbers on demand. Their biggest challenge is offline transactions (as this article about US-based HomeJoy describes) – once two sides of the market are introduced to each other, they take further transactions online.

Thus, there is a huge amount of activity and value taken offline once the introduction has been made, as the long tail of the client/pro relationship takes hold. Clients are perpetually motivated to move their pro relationships off platform, because it’s one less intermediary to go through to directly access the pros they love.

In other words, once I’ve discovered a plumber through HouseJoy (for example), and find his work to be good, the next time I need a plumber I’ll simply call him rather than call HouseJoy (cutting out the middleman). If the plumber is reliable and produces reasonable service, HouseJoy has practically lost me as a customer for plumbing services for a long time.

On the other hand, if the plumber I used the first time is good but not reliable (doesn’t arrive on time the next time I call him), I’m likely to use HouseJoy (or a competitor)  the next time round. In other words, the worse the service providers are (in terms of reliability, not quality of work), the greater the likelihood of the platform getting business!

This is the fundamental paradox of service marketplaces. When services are reliable, you don’t need a marketplace. So if you need a marketplace only if services are unreliable, the server side of the marketplace is full of unreliable people. The hope, and the value that the marketplace adds, is that by aggregating a bunch of unreliable people, some level of reliability is guaranteed. The question is how sustainable this is.

Think of this another way – the level of reliability offered by a marketplace can be described as the sum of reliability of service providers and reliability of the marketplace itself. So for a given level of overall reliability, the marketplace adds more value if individual service providers are less reliable!

Extending this model to other marketplaces and services is left as an exercise to the reader. Feel free to use the comments section to write your analysis.

 

Maybe not a fanboy any more

Over the last one year or so I’ve been on course to becoming an Apple fanboy. I had already quite liked the interface of the iPod touch and the iPad, though I hadn’t taken very well to the wife’s iPhone4. And then around this time last year, she bought herself a Macbook Air.

That was a gamechanger as both in terms of physical specifications and ease of use, it seemed a world away from the Windows laptops that I had at that time. A couple of months later (my laptop needed replacement anyway), I bit the bullet and invested in a Macbook Pro. And I became a bigger fanboy. I even decided last month that my next phone will be an iPhone (I’ve never had one so far).

After the events of the last two weeks, however, I’m not so sure. I was upgrading the iPad (it’s technically my wife’s since I had gifted it on her birthday two years back, but I’ve used it more than her) to iOS 8.4 when the update failed midway. It was inexplicable. I tried it a few more times, upgraded iTunes on my computers, downloaded the OS again, did a zillion things but the update continued to fail.

Considering that the iPad isn’t as integral to my life as the phone or computer, it was two weeks before I took it to hospital. Yesterday I went to iCare, an authorised Apple service centre, and showed them the iPad. They took it in and asked me to come back after an hour. An hour later, they said it wasn’t updating and that there was a hardware issue and the iPad was effectively dead.

It was then that I started losing it (I thought the lack of updation was a routine bug that happens with OS upgrades). And it was clear that these guys had done nothing more than what I had done at home. Connected iPad to iTunes, hit on the process to update, see error code, become clueless and give up. And then say “hardware issue”.

I mean, I’m an engineer, and I know that there is clearly no hardware problem with the iPad. And I couldn’t have possibly burned something in it when updating the OS. Who are they bullshitting when they say that it’s a “hardware issue”?

And so off I went to another (this time unauthorised) service centre which had come recommended. They made me wait, and tried all sorts of things. I had to wait longer here since they had to download iOS 8.4. Again it is not clear if they did anything beyond what I had already done at home. And I repeatedly told them not to repeat that but to find out what the problem is. And they seemed clueless.

So the iPad is a brick now. And since it’s been two weeks, I’ve really started missing it. I’m fairly pissed off with Apple right now, for making something that cannot be repaired. And for staffing their service centres with incompetents who do little more than what can be done at home.

I’m not sure I’m a “fanboy” any more. It seems like there is too much “tail risk” in apple’s products. To their credit, they possibly recognise that and exhort you to buy extended warranty (which I now plan to do for my Macbook). But it’s surely a problem that their repair centres (I’m not talking about the “unofficial” place) don’t do much more than what can be done at home.

I’m not so sure that I’m going to buy that iPhone now. If you’re investing so much (relative to “competition”) into a single product that carries so much tail risk, I don’t know if it’s all that worth it. But lack of worthy androids might just push me in that direction.

Meanwhile, I need to figure out how to salvage my iPad. Does anyone know of any competent apple service centres that I can take it to, where they’ll do more than just a cursory sniff? And are the so-called “geniuses” at Apple stores in the US actually good?

Impact of online retail on offline retail

The other day we had to buy a couple of electronics items, and we went to this long line of electronic stores close to home. Since what we were looking for was closer to the long tail, we eschewed the small “standalone” stores and went to the chain stores. And the service at each store was simply underwhelming.

Sales staff seemed extremely demotivated, and seemed to have no incentive to make a sale. There seemed to be no senior sales staff around who would guide these staff to serve us well. They just stood by standing around, and the only thing they did was to pull out the item that we requested, and then look at the price tag and tell us the price.

With the coming of online retail, one reason for people to shop offline is service. When we had to buy a refrigerator recently, we wanted some human help in determining the pros and cons of various brands, and which are the faster selling ones. And off we went to the nearby (standalone, non-chain) “white goods store”. And we had booked a refrigerator on our way out!

What online sales is doing is to set a higher bar for salesmanship in offline stores, and stores need to recognize this. Just standing around when a customer shops and showing him price tags will not cut it any more – what offline stores need to figure out is what service they can offer that online stores don’t. And provide that aggressively, in order to not lose business to the e-retailers.

Another advantage for offline stores is in terms of letting the customer touch and feel the goods – a refrigerator or a washing machine or a television, for example. The downside is that inventory costs can be prohibitive and there are only so many models that the retailer can put on display – but then based on sales patterns they can choose which models to actually put on display (the top selling ones).

One reason mobile phone sales have so easily moved online (Moto and Xiaomi, for example) is that even at an offline retailer you don’t have much opportunity to touch and feel a mobile phone – in a large number of cases it’s dummy models that are stuck there rather than working ones, and that doesn’t particularly add value to the customer in terms of purchase decision.

Finally, based on my limited sampling of “white goods” stores on 10th Main, Jayanagar 1st Block, Bangalore, I think the coming of online retail is not going to affect the standalone family businesses (that the BJP seeks to protect) as much as it is going to affect the chain stores. The former are agile and able to adapt to customer needs. It is the latter that are sluggish and seek protection.