Stop Screwing Seasonality!
Subhendu Pattnaik
Strategic Advisor to CMOs in Asia Pacific, CMO Advisor, Principal Analyst, Forrester | IIM Indore Fellow (PhD) | Ex-CMO | Top 50 Brand Leaders Asia
I keep coming back to the same point again and again in some form or the other. You are happier when you do not have everything you wish for. Don't believe me? Here is a post you might want to read - Satisfaction lies in Scarcity, not in Abundance. But, that is a separate discussion altogether.
Seasonality is another manifestation of the same - scarcity. Mangoes are scarce in winter, so you wait for summer to come. With cold storages, we are screwing seasonality and killing the essence of joy which is associated with it. Instant gratification seriously limits the eternal bliss.
It does not stop at that. Seasonality ensures the prices are low in the season (in case of perishable goods) and seasonality ensures prices are low in off season (hotel room prices in winter). If you are smart among 100 dumb people, you will be made to feel special, if everyone is smart - you are one of the 100 people. So, do you stop being smart because others are smart too? Wrong question. The right question is how do I preserve my smartness and continue to be smarter.
I feel worried to see startups putting in money and effort into building great business ideas which leverage seasonality. Travel industry booms during clear-blue-sky months which are not hot (in India) and it booms during warm summers (in US). Not surprisingly, the prices of the hotel rooms and flight tickets soar upwards. And startups are born. They offer rooms of the hotels in off-seasons and market them. Huge discounts to travellers, big margins for the startup and some earning for the hotel in the lean period - Everyone gains. Right? I don't think so.
Seasonality ceases to be a seasonality when everyone understands seasonality.
Everyone knows that two days before Diwali, the price of fireworks increases, thus everyone decides to buy two days before - the rush continues and prices never are low. Simple classic example - I used to go for lunch to our office cafetaria at 1:30 when I first joined. I found the cafetaria full. I decided to go at 1 PM and could see cafetaria does not have too much crowd. A month or so later 1 PM had the exact same sized crowd as that at 1:30. I changed my timings to 2 PM and enjoyed for a few days and now - the scene is the same at 12:30, 1, 1:30, 2, 2:30. I, of course, can't merge breakfast with lunch all the time.
These startups are soon going to confront harsh realities. Other smart people will see this bunch of smart people and join for the lunch( at the same time). Hotels will realize they have more sellers now to sell for a commission and they will increase their off-season prices. To keep the prices still attractive and competitive, these startups will be satisfied with smaller margins and try playing the volume game, less realizing that to gain more volume, they have to shell out more cash and burn out faster. Price-sensitive customers travelling will see that travelling in the off-season is not giving them the astronomical savings they used to get and then it will become routine. What will happen to all those VCs who funded that seasonality-powered-startup? What will happen to the hotel owners, startup founders, employees and customers.
Seems like - world has adjusted itself to make hay when the sun shines. Till others are smarter, I will stay and once others are as smart as I, I will quit. Why then - why then choose seasonality and screw it?
Dear Cold Storages, Store necessities. Not delicacies.
Stop Screwing Seasonality!
Interesting read. And all the more relevant with the plethora of startups, most of them are integrators in one form or the other. While some may indeed spur the demand (and increase market size, e.g. taxi integrators are now forcing people to rethink decision of buying cars), others (e.g. food tech companies, grocery delivery companies, home services integrators) are merely trying to pull the existing pie towards them. Unless they don't have a core product to sell, I am not sure how much traction these integrators will generate in the real world to generate actual top/bottom lines. I am sure they would be projecting multimillion dollar potential in their presentations to investors (and thus being able to afford lofty salaries for their staff), I wonder how much can value they will really generate in reality.
Senior Advisory Consultant (Partnerships & Strategic Alliances)
9 年So dont you think All efforts and energies should be directed in creating wealth for the smart consumer , rather than engaging in a price war by retailers. This way sales will go up with increase in disposable income. But the big question is how to do it....