Consumer-tech and COViD-19: how can companies survive and thrive?

In light of the COVID-19 pandemic, we recently hosted a webinar with 15-20 of India’s leading founders in the Consumer/Consumer technology space. For the benefit of the larger founder and investor community, we have tried to boil down the key learnings and takeaways:

1. Survival:Cash is king! Preserve run-way, avoid adding fixed costs and attack variable costs with a knife.
   
   "Re-negotiate receivables to give yourself as much of a cushion as possible. Everyone is optimizing for cash in hand and everything is negotiable”

1. Fulfilment:While transport is now eased and deliveries are happening in 15k pin-codes, inter-state deliveries are still unpredictable due to variable state border patrolling. The widespread labour shortage will continue to affect logistics operations in the short term. The government’s directive to call logistics an essential service should ease congestionbut zoning makes it dynamic.
   
   “Pent up stock is expected, will overwhelm the system in the short term as movement resumes “

1. Planning:Avoid demand planning right now as the situation is very fluid. Demand has dried up beyond essentials in tier-1 and tier-2 cities, even essentials have no online demand in tier-3
   
   “Avoid long term revenue planning for now, assume the recovery will take the best part of the year”

1. Execution: Policies are central, execution is local.Solve issues at a hyperlocal level. Liaise closely with local SHOs to ensure business continuity.
   
   “A lot of variance in implementation from state to state and district to district, work at the most local levels”

1. Team management:Over-communicate and walk the talk on employee safety. Give masks and sanitary kits to the blue-collared workforce, engage the corporate workforce with online training modules, organize regular town-halls to get employee buy-in for company-level initiatives.
   
   “Morale management of workforce is key– overcommunicate”

1. Hedge inventory:Decentralise inventory across multiple locations to avoid a single point of failure in case of local lockdowns. Engage with vendors strategically to plan supply resumption.
   
   “Strategically diversify inventory across multiple locations”

1. Distribution: After online,explore General Trade in your distribution mix due to the resilience they’ve shown. For online, CoD orders are a big no-no, focus on pre-paid.
   
   “General trade stores were the last to shut and the first to re-open”

1. Marketing:While fallen CPC costs can be enticing, market only as much as you can fulfill demand. Newsprints are offering attractive online packages, can get good long-term deals.
   
   “CPRs have taken a hit, people don’t seem to be interested in brand and sales communication”

1. Content:Engage current customers with thoughtful content. Do internal surveys that can feed into future strategy post lockdown exit.
   
   “Good time to build a repository of high-quality content”

1. Manufacturing:Seeing early signs of coming back in April-May, overall recovery expected in 3-6 months as per experts. However these are unprecedented times andthings changing by the day.
   
   “Demand should start coming back from the end ofApril, however overall recovery will take much longer”

1. Exit strategy:Expect phased re-opening across the country with permission to move non-essentials gradually. Warehouses can start re-opening however with strong restrictions on shifts and the number of employees in each shift.
   
   “Import cargo has started clearing on ports, smartphone and consumer electronics supply should resume soon”

1. Think ahead:Think about long term strategy, such as deal-hunting for attractively priced retail units in malls or opportunistically hiring high quality talent like folks headed to top-tier global B-schools who are uncertain of going this year.
   
   “Retailers are reneging on contracts with mall operators, a good time to deal-hunt for prime locations”

1. Opportunities: Time of unprecedented consumer behaviour change. Speak to customers, anticipate changes and try and capitalize. People are very receptive to new changes and the adoption of new habits in this time. Relook and revalidate your PMF with the customers as well as look for products that might have better PMF right now.
   
   “Health, wellness, etc. will have massive tailwinds. Use the time to re-orient business to win. Also, the best time to implement business model tweaks – use technology, subscriptions, pre-paid ordering etc.”

Co-authored bySanjot Malhi&Nayan Baderfrom the Matrix team.