How the Sales will look post Covid?

Massive disruption is being seen in the process of selling; sales teams are now planning for the Post-Covid-19 world to overcome the pandemic by learning the art of closing deals in video calls to engaging clients on social media platforms. If it comes to what's happening in the economy today as a result of the Covid-19 pandemic, there are two rates of instability of industry. First, routine sales meet & travel, and softer aspect of finalizing a deal, especially for B2B sales where a face-to-face discussion with key stakeholders or a dine and meeting is key to ironing out a deal's contours. Second, a decline in consumer demand in some industries, such as travel, hospitality, aviation, will see a resulting sharp decrease in their level of desire to proceed with other business functions. And any other sector should be more conservative and less likely to invest.

The blueprint for post-Covid era sales requires the search for innovative product lines but also shifting to alternative platforms to hold on to customers and explore with various retail formats. In industries such as real estate and technology services, there has been a large-scale digitization of business operations — including remote selling through webinars and gamified virtual walkthroughs.

For example, the regular day of a traditional salesperson involved visiting two or three potential clients, over breakfast, lunch or dinner to discuss products or services. Closing deals needs another few meeting personal touch was always important to customers before closing deals, but the sales team's adoption of digital for customer access has significantly increased. This meant that traditional sales strategy will have to be reworked and that teams will now need to leverage technology to engage with customers. Even after current travel restrictions are lifted, the new model is more or less likely to remain in place.

Travel is going to decline and companies will do things differently. So sales people are still going to travel, but not for the same reason as they used to. Sales person will visit clients, but instead of visiting clients three days a week they would visit them once and the rest of the time they would be using virtual calls however, this new paradigm pushes sales department to be more responsive because the campaign success can be measured in virtual meetings unlike physical ones.

Digital sales are becoming a global phenomenon. McKinsey and Company recently completed surveys of B2B businesses across 11 countries. In a study entitled The B2B Digital Inflection Point: How sales have changed during Covid-19, the company stated: "Nearly 90 percent of sales switched to a video conference / phone / web sales model, and while there remains some doubt, more than half agree that this is equivalent or more successful than sales models used before Covid-19."

In India, the pandemic has forced many businesses to re-examine their existing distribution strategies. Some sale will undoubtedly be affected due to fresh worries around hygiene, physical contact, social distancing, traveling to locations that are not sanitized, but there are also broader problems. How sustainable will this trend be when the pandemic is contained? Wouldn't people just revert to their old ways?

The human desire for physical contact, where seeing and believing will never go away. Many companies require live demonstrations, physical presence, convincing one-on-one.This would, however, minimize to a significant degree, for example vehicle sales would also involve a car inspection, a test drive. Yet a customer would do more of the online research, and the test drive would be a finale.

Changes which firms will do post Covid to manage sales are as follows

Connecting with new channels: - Orders will be collected via phone which was earlier taken from physical sales. The company's e-commerce website will witness a major traffic shift. Consumers will consolidate shopping into one or two days a month instead of four times a month, and Bigger-format retailers and aggregators will prosper. Firms like Tupperware India has moved from direct sales to what it calls "social selling" where each direct seller is given a URL that they can share within their peer group. Direct sellers typically send them to their Whats App and other contacts via social media. When clicked the URL it will take buyers to company website.

Remote Selling: - Covid-19 is refashioning how at this moment the organization handles its retailers and distributors, for example A real estate firm, creates leads via its website where members of the customer service get in contact with potential property customers by phone or mail. The company's brokers contact prospective investors and then tour the real estate sites before selecting a property to invest in. Part of this buying process has moved remote also organizing webinars for developers where videos of the property, the locality are displayed to prospective buyers and within the session of webinar various queries of customer is taken by sales executives.

New demand: - While, five-star and luxury hotels are working with delivery firms to send delicacies at home as well as hotels are offering quarantine services, while both quarantine demand and home delivery opportunities for luxury hotels are for the short term, they need to look at potential new revenue opportunities that are more viable by re-calibrating business models.

Re-invest your time: - The time saved on travel will now be used for up-skilling or learning about a new sector or industry to which you previously did not cater too. Getting a good knowledge of the organisation of your clients helps you stand out from the competitors.

Educate your customers: - Start a newsletter or podcast to share positive stories with your product / solutions about how your other clients are having success. It will offer your prospects confidence and keep you in mind while proving that your business is still alive and kicking.

The keys to navigate the next normal are speed, agility and a new understanding of consumer values. Sales leaders need to operate through three horizons simultaneously: navigating the crisis now, planning for recovery and leading the next normal.

Source: - From Article Leading with purpose by McKinsey & Company 

Sales leader should follow the quote “actions demonstrates commitment, so leaders must respond to the immediate needs of the sales organization beyond health and safety”.

Companies will adopt “SHAPE” model to lead sales post Covid

Start-up mindset: - The start-up mindset biases action over research and testing over analysis start-up leaders set an agile standard by daily team check-ins, weekly 30-minute CEO reviews and two-week sprint reviews.

Human at the core: - Organizations would need to reconsider their business model to push rapid change, develop it on how your employees work effectively, which may need a whole new level of coordination which coaching between front-line selling staff and leadership to meet customer standards.

Accelerate digital, tech, and analytics: - The best companies will respond swiftly to develop and extend their digital channels by using advanced analytics to combine new and innovative sources of data

Purpose-driven customer playbook: - Keeping customers at the center of business is a long-established concept, but post-corona-virus companies will need to reconsider decision-making processes to consider what consumers now value and design new use cases and customer experiences based on those insights and then segment clients.

Ecosystems to drive adaptability: - The disruptions in supply chains and retail purchasing networks have made adaptability essential not just for sustainability but also for quick exposure to opportunities. Adaptability will mean how businesses operate with organizations and investors in the short term but it may take new partnerships and non-traditional collaborations in the long run, including strategic M&A.

Steps need to be taken to increase the sales during pandemic are

1. Increase revenue through up-selling
2. Experiment with the cold call scripts and email templates
3. Sell longer contracts
4. Get more referral sales

Thus, trying something new which is mentioned above will certainly boost the sales of the organisation and will convert dry pipeline into a well of golden opportunities.

Home Delivery of Booze - Can Startups cash in the huge opportunity?

Lots of money and opportunity will eventually follow in India when booze is concerned and it is the liquor delivery sector that has led companies, services, startups and entrepreneurs alike to see a massive windfall. In India, liquor sales take place through three licensed vertical retail, horeca (hotels, restaurants and catering), and department canteen stores. The total horeca licensed places are around 30,000 in the country and the stock in hand is for 1 month at any given time, which means that the total unsold inventory at various horeca outlets throughout India would be around Rs 3,000 while liquor retail sales are opening, the service industry continues to be deferred due to corona.

According to the All India Brewers Association (AIBA), the liquor industry is contributing revenues to state governments about Rs 2.5 lakh crore. In the 40-odd days when liquor trade was closed, states lost revenue of around Rs 25,000 crores. After the lock down imposed in the country on 25 March, all liquor shops and distributors in the country were closed and production, services and supply were also halted. Although customers were supported by eCommerce and app-based logistics companies to get on their doorsteps a continuous supply of food and vital goods, alcohol buyers were left in the lurch.

The Indian food aggregators such as Zomato and Swiggy seem to have heard the alcohol lovers’ anxious prayers. The company has confirmed in a major announcement that it is making a foray into supplying alcohol to customers at their doorstep. The company is on the road to set an example for the entire industry, having already diversified its interests into grocery stores and home essentials delivery less than a week after launching similar services in Jharkhand Zomato and Swiggy  launched home delivery of alcohol in Odisha as part of measures to avoid overcrowding of customers in shops in the midst of the coronavirus pandemic. Zomato would soon spread to other towns, such as Rourkela, Balasore, Balangir, Sambalpur, Berhampur and Cuttack, beginning with Bhubaneswar.

Swiggy said in a separate statement that their home delivery service went live in Bhubaneswar and Rourkela last month after receiving the necessary approvals from the government of Odisha and plans to extend to other major cities in the state. Earlier this month, the Supreme Court requested states to allow non-direct contact or digital purchases and home delivery of liquor during the lockout phase to avoid the spread of coronavirus due to crowding in the shops, there will be age checks at the time of order as well as at the time of delivery of the product. Users would be asked to submit a valid proof of Identity to be qualified for order, which will then be checked by the delivery partner when the order is issued. The service called Zomato Wine Shops would be available on the Zomato app's homepage and will enable users to select any product from the listed retailers and have it delivered right outside their doors of place orders.

All orders will carry a unique OTP which the customer must provide at the time of delivery. The news has certainly grabbed the eyeballs throughout, with businesses of all scales, especially those who are up and coming, looking to expand their horizons, vertically or horizontally, aggressively and actively. Within no time the internet became abuzz with the news of many other existing businessmen and investors who have set their eyes on this untapped Indian market and this has led to many unanswered questions which are as follows

1. Will Liquor delivery be the next multi-billion startup idea for entrepreneurs in INDIA?

2. Whether this kind of business model is high-risk high-gain for entrepreneurs and investors?

3. Will it be a new cash cow for the economy?

Liquor Delivery: The Trigger

It will come as no surprise that the market for liquor has skyrocketed since the shutdown, consisting of such a vibrant customer base. As the government eased restrictions on the movement of essential and non-essential goods from 4 May, it also took the decision to allow a fraction of liquor outlets to reopen throughout the country. This prompted other consumers around the country to flout social distancing norms such desperate acts by the people prompted the government to consider viable ways to curtail the spread of coronavirus and offered the involved parties an immense opportunity to capitalize on such a huge market. Whether or not liquor delivery was originally in every organization's plans, the pandemic's onset has intensified the effort to diversify their operations.

This actually has an impact across multiple facets. Startups such as HipBar, HipCask, sites such as WineBazar.in and LetsBuyDrink.com, etc., have already been doing business in space, facilitating the home delivery of alcoholic beverages in that time, also achieving varied levels of success, sometimes due to the grey area in operation and sometimes due to changing state government laws. It is precisely these issues that have made this lockdown the perfect opportunity to rake in the extra cash for these companies.

For certain nations, overall tax based on alcohol consumption amounts to as much as 25 per cent. annually, Delhi with per capita GDP higher than the national level, receives over Rs 5,000 crore. Last year Karnataka earned Rs 21,400 crore from the liquor sales. In this time of crisis, states like Kerala and Meghalaya, which have the highest per capita consumption rates for alcoholic beverages, along with Goa, which is also a tourism-driven industry are severely impacted. The central government has proclaimed itself to be hit hard, and the GST reserves and revenue sources of the states have dried up. 

In the aftermath of these spectacular results, states are pushing for a regulated compliance and delivery allocation to account for lost sources of revenue. It has also encouraged app and web services to continue their work and to stabilize their companies by expanding their offerings to multiple outlets and governments of the state. States such as Chhattisgarh, Punjab and West Bengal have all launched online portals and mobile apps that offer door-to - door alcoholic beverage distribution (9am-7pm) based on age verification by means of Aadhar numbers.

At the other hand, many companies have also requested state governments to encourage them to move forward with the distribution services in tandem with Zomato, with their near rivals Swiggy obviously interested in entering the space. ISWAI, the Indian Spirits and Wines Association of India, a representative body, has also called for more clarification on the standards and legislation for alcoholic beverage distribution through the states but the biggest challenge for Swiggy and Zomato will be the detailed clearance required by each state government to expand this line of business.

A Multi-Billion Dollar Opportunity for Entrepreneurs

Such technological measures will not only provide the government with effective ways to fight the spread of COVID-19 while maintaining regulations, but will also enable potential entrepreneurs to benefit from the clientele. The delivery model which works on the app has garnered huge success in India.  Though Zomato, Swiggy, Big basket has already been riding high with their unicorn status, there are more than 1,0007 logistics start-ups, including Dunzo and JhutPut, seeking to gain a substantial market share.

India's alcohol industry is the world 's third-largest with an estimated $35 billion behind just two big nations, China and Russia.  According to Euromonitor International, a well-known research firm, India's spirit industry – which includes whiskey, brandy, rum and vodka is estimated to grow 25 percent by 2022 to 2.92 trillion rupees ($41bn). Combine it with India's beer market, by 2022 the combined demand is expected to be as high as $56 billion to $60 billion (4.4 trillion rupees).

With the increase in the rise of smartphones, the rapid use of digital payment systems and the growth in customer trust in technology-driven delivery firms the app-based liquor delivery start-ups could comfortably account for not less than 1% of the overall market over the next two years, which will amount to $600 million (3,800 crore rupees) now that Indian delivery startups are growing it would be safe to assume that India 's online liquor delivery market would be nearly $ 3 billion – $4 billion business in the next 4-5 years.

Liquor Delivery: The Challenges

It is just the dawn of India's liquor delivery market. Just like every emerging sector, it always comes with a range of its own policy challenges, as well as emerging businessmen. The government has to re-examine its liquor policies to gain entrepreneurs' trust. The uncertainty in the business model of liquor delivery is a major problem and companies like HipBar have already felt the brunt of that.   The biggest barrier to the sale of liquor continues to be the disparity of laws between various jurisdictions. Retail laws are not only special but there is also a disparity in income, rates and also age limits.

The major challenge is about managing inventories. Imagine a consumer order on the app for a particular variety of beer, and something else is delivered which is not desired also retailers worry that online businesses such as Zomato , Swiggy and others may threaten profitability, which is a major deal in the liquor store industry due to the high sale license price. For businesses like Swiggy and Zomato there are no rules as retailers believe they won't be able to access the orders they normally receive because applications can monitor the whole chain from ordering to last-mile delivery. Just a few retailers could go for exclusive Zomato and Swiggy tie-ups. In this situation, when exclusivity comes at a premium, smaller retailers would miss out on the market. Data misuse by food delivery apps could monopolize consumer data from liquor distribution, claimed by some restaurants in the food delivery space. Retailers want to own this data as they think consumers will be linked directly to sellers.

To sum up

Governments in almost all states have imposed on the alcoholic drinks a heavy 'extra corona tax' to maximize revenue, thus helping the operations of delivery services. Brewery workers have also called for this model to be affirmed, because it will help thousands of workers to get paid and restaurants, roadside dhabas will benefit from this arrangement which have been dry all along this time. What seems to be a controversial issue on the surface can be the one which provides the economy and its related businesses with a big cash flow it is really an opportunity worth exploring for entrepreneurs. How far the liquor delivery firms extract the revenue will rely on the policies the government chooses to adopt.

OYO – IS IT THE END OR NEW BEGINNING?

OYO ambitious plan to become global hotel superpower has taken a hit, a never seen crisis is faced by them which threatens to wipe out a large part of its business for the foreseeable future and impact its $10-billion valuation Corona Virus Outbreak has hit the travel and hospitality industry globally and it will take a long time for the industry to recover.

Earlier Masayoshi Son announced Ritesh Agarwal one of the star entrepreneurs backed by his SoftBank Group Corp and said the OYO group is going to overtake the biggest hotel chains in the world in the coming years.

As the SoftBank is still incurring huge loss on its investment due to the failed IPO (Initial Public Offering) of shared-office company WeWork. SoftBank booked for profits on OYO's rising valuation abut as of now they are forced to take losses on their investment. OYO valuation last year was at $10 billion. The situation is highly messy where Ritesh Agarwal  borrowed $2 billion to buy shares in his own company as the valuation rose, and Son personally guaranteed the loans from financial institutions, including Mizuho Financial Group Inc whereas if the valuation of OYO drops then the two of them will incur personal losses and banks may ask for more collateral. It has more than $1 billion of cash reserves which will keep the business running for next 36 months.

On 8 ^th of April, OYO’s founder Ritesh Agarwal said due to corona virus there is a drop of 50-60 percent in revenues and occupancy levels which has resulted in severe stress on the company’s balance sheet. OYO plan is to terminate the agreement with hotels that cannot generate a minimum revenue of $100,000 in a year, reducing the number of hotels within its umbrella and decreasing the size of employees which will bring down its monthly expenses down to around $25 million from the current levels of around $40 million. OYO followed aggressive expansion strategy last year to increase its footprint into Europe, Southeast Asia and the US apart from India and China which led to huge losses up to $335 million last year and they are now focusing on markets like India, Southeast Asia, Europe, China and the United State.

 OYO runs over 43,000 hotels with more than a million rooms apart from this they have 130,000 homes around the world under the umbrella of OYO Home, Belvilla, Danland, DanCenter, and Germany based Traum-Ferienwohnungen brands. It will keep sustaining its presence to Japan, Brazil, Mexico and the Middle East but at opportunity cost of leaving some parts of India where, it has shrunk from 550 cities to 400 cities currently.  OYO is now availing the services of renowned specialists like Alvarez & Marsal and Accenture Plc to suggest turnaround strategies the restructuring of its human resources is taken care by Aon Hewitt last year.

As stated earlier that the company was increasing its presence across geographies, many roles within the organisation were rapidly replaced by technology one of the side effects of scaling up too quickly, hence as a part of its restructuring exercise, the company has  cut about 15%-20% of its overall consolidated workforce in India (about 12,000 people); in China 30% of the 10,000 employees were downsized also reduced the non-discretionary staff of 6,000 by 50% in China and the current strength is of around 25,000 worldwide. India announced its lockdown from March 24 where interstate borders were closed and travel via flights, trains, and buses came to standstill, hence hotels across the country as well as globe is suffering.  

Earlier OYO founder announced that he is foregoing his own salary for a year, whereas the leadership team is taking pay cuts in the range of 25% - 50% while few employees were granted voluntary leave with limited benefits. In the financial year 2019 the company reported losses at the expense of expansion globally particularly China increased to 35 per cent of revenue in financial year 2019  to $335 million which is explained by the fact that in any new country, the revenue starts rising in from the second year onwards, making up for the costs incurred in the first year of operations. The global financial year 2018 loss was $52 million while India loss was $50 million in financial year 2018 and $83 million in financial year 2019. Its revenue for financial year 2019 increased to $951 million from $211 million in financial year 2018.

OYO was in trouble even before the covid-19 hit the China due to the fraudulent behaviour by few of its China employees and hotel partners apart from it many of hotel suppliers left the platform as the company was not fulfilling its promises. Budget travellers are increasingly opting for better chains such as Quanji  and Atour Hotel Group in China as they are offering more value-added services, but  in the short to medium term, China will be OYO’s best-looking market. Major recovery is seen from covid-19 in China and domestic tourism will see a revival with the upcoming summer months.

In the beginning OYO purchased rooms from hotels at fixed prices a profitable proposition for the hoteliers as they did not have to worry about occupancy but later OYO changed the model to a dynamic one wherein the control of the room rates and inventory rested with hotel owners and later on shifted to minimum guarantee price scheme wherein it took the entire inventory and the responsibility to fill the rooms due to this hotel were not allowed to feature their rooms on other booking platforms  said by Amitabh Mohapatra, He is the current president of  Guest House Welfare Association in Gurugram. Once oversupply of rooms was there, they were not able to achieve the target and did not gave the assured minimum amount and delayed payments they also started penalising hotel owners with hidden costs, excuses were given of poor service, convenience fees and data subscription fees, guest complaints.

Some of the other complaints faced by OYO are

1. OYO has been manipulating prices and artificially controlling demand with fake bookings.

2. They have been indulging in discounting of hotel room rates without the permission of owners

3. OYO has been charging below cost price and agreed rates where hotel owner is feeling cheated cases of illegal charging of hotel service fee from customer which were not passed on to the hotels

4.  Manipulation of the micro-market rates which aid in bringing more traffic on their platform forces hoteliers to reduce room rates

5. The rating system is erratic and one-sided

6. They are not prompt enough to move the money from their end to the partner end

OYO size has increased tremendously from the past and to grow and sustain int the market they require huge funds which will be met by SoftBank but they themselves are going through their own troubles.  The key investors of OYO are SoftBank, Lightspeed Venture Partners, Sequoia Capital, and Airbnb, while its smaller shareholders are Didi Chuxing, Grab, and Sunil Kant Munjal, chairman, Hero Enterprise. OYO’s asset-light model where it doesn’t own its properties and lean operations expenses where unlike hotels it doesn’t invest in front office, housekeeping, and F&B staff will help it survive this crisis.

List of OYO brands in India

1. OYO Rooms

2. Townhouse

3. Capital O

4. Collection O

5. Corporate and Executive hotel brand Silver Key

6. Palette Resorts

 Innov8 Gurugram-based co-working space provider was acquired for an estimated ₹180 crore to ₹200 crore last year. It also operates OYO Life, a long-term, co-living, fully managed, rental housing which target millennials and freshers joining new company. When compared with established hotel chains like Marriott International, Indian Hotels and others which have bigger balance sheets and generate profits OYO is more vulnerable. It has build itself as an internet start-up that leverages market power through network effect more the independent hotels are brought into platform it attracts more customers which means more business and in this way competition becomes irrelevant for rivals, then it raises larger capital which increases valuations and then the profits starts to generate by increasing prices and commissions.

 OYO has establishing itself as one of the biggest hotel chain in India it became the second-largest hotel chain in that country within 18 months after launching in late 2017, it has expanded to 79 other countries while buying hotel brands in  US and Netherlands,  entered China by breaking the  taboo about foreign companies entering there, OYO has raised $3 billion over the span of past four years and is spending on attracting and retaining hotels and customers, making technology investments and building a large workforce. It faces a prolonged battle to save its business from collapse. The company from the past months has moved fast to cut expenses and conserve cash. OYO is invoking force majeure clause with its hoteliers in India and refused to make fixed monthly payments now the payments to hotel supplier is made on the basis of customer bookings.

OYO is offering some of its properties as quarantine centres or for hosting medical workers and aircrew by reaching out to governments in India and other countries to. All the travel and hospitality firms along with OYO are hoping to get relief from the government. The future of OYO and similar companies in that space are waiting for announcement of favourable policies by the government.

OPPORTUNITY AVAILABLE

1. As businesses are heavily cutting costs a big opportunity for OYO post-Covid-19 world will be the availability of budget option

2. After months of lockdown millions of people will be out of their homes to enjoy themselves also the wedding industry, youngster parties and corporate function will look for venue bookings

OYO CHALLENGES

1. Formulating plans to survive the unprecedented situation

2. Ensure to retain its credibility with key stakeholders

3. Focus to increase the revenue and sustain its valuation

4. Maintaining the service standards consistently and focus on sustainable growth

5. To increase the demand which is falling due to travel restrictions across the globe and to prevent the further spread of Covid-19

6. Transparency with the hotel partners and fulfilling the promises made

GOOD MEASURES

1. They have launched CO - OYO app which will help hotel owners in such a way that they will be able to keep a tab on the bookings and entries made at the hotel reception

2. Initiative such as OYO Connect/OYO Direct/OYO Sambandh/OYO Globally, which will improve the relationship with existing customers as well as asset owners

3. The company had made cancellations easy for its customers alternatively, OYO was giving travellers credits that could be used to rebook later

4. Working on technologies and automation which will give them the edge over competitors

5. They are improving their brand image and cementing the relationships with US authorities and the healthcare community by offering its rooms for free to American medical and healthcare professionals fighting coronavirus

6. Training is being given to its business development officers in accounting and financial matters, apart from usual sales training.

7. Behavioural training is being offered for staff across departments Improving the code of conduct and soft-skills

 

Thus at the end of the article I will conclude that, Currently OYO has to contend with fallout of rapid expansion, conflict with partners, restructuring and a pandemic which is giving the company most difficult time, but as we know there is Silver lining to Dark clouds so we hope that OYO will come back bigger and stronger.