Consumer Tech: The Art & It's Making
Takeaways from "Inside Intel" powered by Huddle Ventures & AWS
India continues to see a new wave of consumption across Travel, Spirituality, Content, Vertical Commerce, and others. As a venture investor at pre-seed & seed stage, we have been witnessing tailwinds and innovations that will define the consumption pattern in the next decade.
Travel:
When it comes to trip planning or travel social related models, we often have seen low CAC's with impressive top of the funnel but also lower AOV's (or the margins made from discovery of experiences/DMC's). The need to innovate for conversion at the funnels below is ardent to be solved for as India's outbound travel is estimated to grow >6X in the next 5 years.
Experiential travel shows get promise as unbranded experience inventory has low discovery currently. However, as players targeting the sub-category increase over the next few years, discovery wouldn't likely continue to be a moat. High-touchpoint, personalized, and high AOV businesses with non-commoditised experiences can be appealing to cater to India1 & India2.
Expert led travel to leverage expert's operational & distribution expertise has been on the rise. Since platform margins continue to remain thin, the need to maximize trips is critical. Hence, platform’s ability to standardize experience for travellers and devise SOP’s to operate at scale can be considered as a moat.
Spiritual tourism has been experiencing greater demand (with high AOV's) but likely to face roadblocks to scale operationally. No aggregation, but owned internal operations is likely the way to move forward.
Spirituality:
The segment is at a juncture where restaurants were in 2014. The supply is moving online and we expect to see product innovation that improves platform experience to increase stickiness dramatically.
Post Covid, Zillenials and Gen-Z have become more spiritual but aren't sticky yet. Owing to low repeatability, products targeting them haven't been prioritised yet but we do expect innovation for this TG.
Reduction in transactional friction (eg. payment automation) related to cyclical products on such platforms is key. Products such as Virtual Puja witness lower repeatability but have the ability to breakeven the user costs in the first transaction. Growth in Virtual Puja will likely continue to exist. However, devotional institutions are more favorable towards physical devotees than virtual ones, and hence challenge remains to scale penetration of users across each individual devotional institution.
Content & Conversation:
With an unmonetized product, some projected clarity on monetization is expected if acquisition is majorly paid for. Erstwhile, a massive Top of the funnel has to exist necessarily.
Within Learning, building and targeting content around the persona of an individual can help build trust and transactional outcomes.
Expecting to see a sustained growth in PGC (platform generated content) as consumers are opting for content from controlled environments. However, as cost of production remains a concern in 0-1 stages, AI experimentation is critical to test content efficacy (fast), reiterate (faster), and maintain optimal recovery periods. With the emergence of Short form OTT in India, it is a must to appear as a brand (not just an aggregator) for the platform to build recall and retention.
We are likely to see innovation in products targeting stigmatised companionship. With democratization of infrastructure, AI led personal companion for the developing economies that is rounded around the individual persona can help target use cases like mental health, entertainment, commerce, spirituality, etc.
Vertical Commerce:
With multiple early stage players scaling fast within vertical commerce, it is evident that incumbents will be slow in doing a great job within a niche. We should expect winners within such sub-segments, but the scale remains a thought to critically ponder upon.
Expecting moats to be within the vastness of product offering for the TG & use case.
Incumbents faced difficulty in generating profitable bottomline in mass category products in any vertical and hence expect the difficulty to sustain for early stage players. Ability to effectively assort mass-premium products can help scale in early stages.
Some Fundamentals that Early Stage Investors like to see across Consumer Tech:
If the product is not planned to be monetised from users in the near future, we’d expect to witness clear indications of the the product being loved in 0-1 stages. This is evident with fundamental metrics related to Average Sessions, Power Users % & Growth, Consumer NPS, etc.
The product should have a clear possibility for transactional revenue.
Engagement is not just about impressions but outcome generated from successful user session. Ability to map the same and materialize it onto a monetisable journey is critical.
Acquisition methods need to be critically explained. For eg., Referrals should not be free and should be closed ended to get the reward included into a potential transaction.
Tech prowess to understand user behavior and reiterate digital products fast is witnessed as a moat amongst others.