Sunday, July 29, 2012

THE WEB IS WHAT YOU MAKE OF IT


I have often wondered “What is it that makes some online businesses click while others not so much as create any ripple at all?” and more often than not the answer that I came up with was “The Business Model”. Well, that is very obvious and anyone with some understanding of the internet and business in general would be able to tell you exactly the same thing – If you put together a true pain point of the consumers with an online service delivery platform that should automatically create a successful online business. In principle it is that simple, but in essence it is much more complex, otherwise you would have a lot more of Flipkarts, Cleartrips, and Naurkris, etc. Apart from the online platform itself (which can be very complex system in most cases) there are a lot of other systems like the order fulfillment, logistics, and supply chain management (to name a few) that make setting up the business ecosystem a very difficult proposition. Discussing the various sub-systems involved in an online business can be the subject of an entire book, so I am not going to venture into that. However, what I am going to discuss during the course of this article is a very important part of the consumer experience in the online business model – The USER EXPERIENCE. The discussion would be based on my personal experience as a consumer on various e-commerce platforms, my understanding of the online business from my experience as a web analyst in the past and from the many articles and books by experts on the same subject. Hope you enjoy reading it!

What is wrong with this picture?


 There is a specific reason online companies sometimes clutter their homepage with advertisements – Ad Revenue. But is it worth risking a good consumer experience? Maybe it is and as a result some of the best companies in the business have such a messy homepage. Maybe in some cases consumers have become accustomed to these kinds of homepages that provide an information overload. I am not going to get into guess estimates to calculate the cost profit analysis of putting up with bad home page experience at the expense of losing new customers who might otherwise have shopped with you. But what I am going to do is share my own experience. 
 

I was a loyal customer for makemytrip.com and from when I can remember have always booked my flights home through the same. I even booked hotels for a holiday using the makemytrip.com services. I was really happy with the services, but that was it. There was no WOW factor. One of the reasons for this was the user experience on the site. While it was ok for me to get past the clutter of the site and decide which ticket to book, there was no feature which could help me in ways that I had not thought of. Once in a while I would go to Yatra.com to find out if I am getting the best bargains. It turned out that Yatra was providing the tickets at the same rates. So essentially I was not getting anything extra by using the makemytrip.com services. So why was I sticking to it? The way I see it now is that it was a relationship of convenience and habit. I had become accustomed to the site – that was it. It was like a relationship where one of the partners is passively looking out, hoping to come across someone better, not wanting to lose what they already have until something better happens.


I had heard my friends talking good things about cleartrip.com and decided to visit the site. It was almost like love at first sight.  


 No clutter. You go to the homepage put in the details and do a simple SEARCH to get the results. As simple as Google search – no ne ed to look for the search section like in makemytrip.com.
 
There are a lot of features where cleartrip outclasses makemytrip. I will just tell you one and the most evident (apart from the simple UI, which I just love).

Once you have started the search process and based on the price you think you want to change the travel date (to get a cheaper ticket), cleartrip provides a feature that is simply AWESOME. Look at the picture to judge for yourself:  




 BEST FARES IN Month – This feature makes it easy for me to view the cheapest flight fares during the particular month, no need to do repeated searches. Repeated searches are exactly what you need to do in makemytrip.com



But I couldn’t break off the long term relationship (not exciting though) with makemytrip based on just this feature, now could I? Then the miracle happened – I was booking my ticket for the summer vacations and had just got a great round trip ticket fare. But as I was going to book it, the unthinkable happened – Makemytrip informed me that the tickets for that flight were no longer available – that was it, I had a reason to finally get out of this relationship. Without a moment’s hesitation I packed my bags, logged out and have never logged back into Makemytrip since then. I now book tickets on CLEARTRIP.com
 
I like their e-tickets better too. Judge for yourself:


And this was Makemytrip’s:














You can clearly see that the timing of the flight is very obvious in the cleartrip tickets whereas it is not so in case of makemytrip.com. And for the love of GOD please don’t show me ads on the ticket. Do you really think anyone reads those? (Okay maybe some customers do)
Well, now all of you might be thinking – Enough of this UI (user interface) and consumer experience “gyan” – how has it affected the business of the two companies?
That is exactly what we are going to look next. Oh, by the way, my dad who is an internet novice thought that it was easier to search for tickets on CLEARTRIP.com than on makemytrip.com – when I asked why? – He simply said - “It looks simpler” 

Show me the MONEY! – How UI affects business

Now I haven’t looked at the financial statements of both the companies (we will have a brief look in a while), but I am sure we can definitely pick up some interesting insights from the search data available from Google. 

Google Insights for Search is an interesting tool that Google provides which can provide some indicative data related to search. For example when I tried comparing the search terms “makemytrip” and “cleartrip” for the time period from Jan’06 to Jan’12 in the “Air Travel” category (this was intended to find the interest level in the two rival companies), Google threw up the following graph:


 
To start with if we look at the 2006 data, we find the Cleartrip pretty much started getting its first visits during that time whereas Makemytrip.com was already up and running and hence the big difference in the interest level in the 2 search terms (blue line - makemytrip, red line – cleartrip). Makemytrip was obviously the goliath and had an unassailable lead at this point. However, thanks to some of the features just mentioned and a host of others that were not discussed, interest level in cleartrip started to rise slowly but steadily until after 2009, the blue and red lines intersected and for some time cleartrip even trumped Makemytrip. Given the constant innovations like the personalized dashboard, cleartrip will certainly become more and more popular at least in the AIR TRAVEL category and this would mean more revenue. 

Cleartrip.com dashboard – Another feature I just love – it has seamless integration with Google calendar as well 

 
Makemytrip.com dashboard – That’s it?


Let’s now take a quick look at how the search term “cleartrip” has grown relative to the Air travel (Industry/category context). Clearly cleartrip has outperformed both makemytrip and air travel when compared to Jan’06 numbers.  


These numbers also have another interesting story to tell apart from the obvious fact that cleartrip has been performing really well. Cleartrip in spite of having a very little offline marketing has been able to generate tremendous brand recall which would ultimately translate into higher ROI.

Financials

At the end of the day it is always the bottom line that matters the most and no matter how great the User Interface or functionality of a site is, if it is not bringing in a profit it is no good. So how did these two companies perform w.r.t this all important metric. Let’s take a look. For lack of data (Cleartrip financial data not available for financial year 2011, 2012), I will compare just the revenue and Income after Tax of the 2 companies for the financial year 2010. 

 
Company
Revenue (USD Million)
Income after Tax (USD Million
Makemytrip.com*
82.41
(6.21)
Cleartrip.com**
12.39
1.37
Source:      * Google Finance: http://goo.gl/Z46Id             ** MEDI4NAMA: http://goo.gl/CSles


A quick look reveals that Makemytrip ran a loss of $6.21 Million during FY10 whereas Cleartrip earned $1.37 Million in profits after tax. This was also the time when interest in the Cleartrip search term reached its peak. Surely some of the UI effect must have spilled into the company financials as well.
However, Makemytrip remains the biggest player in this space in India and have continued to make handsome profits after 2010. In addition the revenue base of makemytrip is much bigger than cleartrip. From the business perspective Cleartrip can think about venturing into new travel categories like packaged deals for international travel. At the moment cleartrip has launched a feature called “SMALL WORLD” (in the beta phase), which provides travel related information like destinations, sights, restaurants, entertainment, shopping, hotels, etc.

Social Media Strategy

In a world where Facebook has become a second life for people, no discussion is complete without the social media strategy. In this respect, both Makemytrip and Cleartrip started off on the same note (Facebook was being used in India only post 2006 – so none of the 2 companies had any advantage over the other). However, Makemytrip clearly enjoys a larger fan base (because of the wider product offerings) compared to Cleartrip. However, from a personal experience Cleartrip has a better social media engagement strategy than Makemytrip. I had left a thank you message on the Cleartrip Facebook page and had received an almost immediate reply, which would be really pleasing to any enthusiastic consumer. I did get a reply from the Makemytrip social team as well – 3 DAYS LATER!!

In case Cleartrip decices to provide a social media platform to book tickets, such proactive approach by the social team will definitely help the company garner more fans and in turn more business. 


Region wise interest

On a closing note I have compiled the region wise interest in cleartrip and makemytrip from Google Insights for Search.

The data seems to suggest that Cleartrip is more popular in Maharashtra as compared to Makemytrip which is more popular in Karnataka.  

Final Words…

I have fashioned most of this article from “My Point of View”, so a friend of mine asked me what is the general opinion about user friendliness of a website among people in general.  From what I understand, user friendliness is a feature that Indian consumers are still willing to compromise on as long as they are already familiar with a site (similar to my story of transition from Makemytrip to Cleartrip). In addition given the fact that Cleartrip started during 2005-06 almost half a decade after Makemytrip, I was sure that Makemytrip was going to beat Cleartrip usage in any consumer survey. Nonetheless, I decided to collect data from Facebook friends through a survey to find out which among Makemytrip and Cleartrip is their online travel agency of choice.
Here are the results:

Clearly Makemytrip is the choice of the majority (46%), with Cleartrip managing around 19% votes. While this might be discouraging to look at, but given the context, we can surely see a silver lining to the cloud.

The image below shows the Alexa rankings of both the websites. Clearly Makemytrip.com is way ahead of Cleartrip.com in terms of usage, and hence can be expected to have more customers following. 

Compete.com paints a similar picture (data pertaining to US only)


What all this data means is that Makemytrip got a head start of 6 years and has built up a considerable lead. However, Cleartrip has managed to get 19% of the market (from the Facebook Survey) within the last 4-5 years- which is encouraging and also bears testimony to the better design of the site.

I am sure 6 years down the line; we will have a major shift in all these data points.

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