It’s not really the best product, but the ones who actually end up owning the category that wins the market.
Park this thought and let’s go back in the history of Indian startups.
Flipkart vs. Rediff / Indiatimes / Indiaplaza.
Flipkart wasn’t the first company to launch ecommerce business. We had Rediff / Indiatimes / IndiaPlaza and several others before Flipkart.
But who ended up defining the category? Flipkart.
Apart from creating the right noise (a good mix of funding/PR/customer support) to launching CoD (FYI: Flipkart wasn’t the first to launch CoD) – Flipkart got many new users to try out
Ecommerce Flipkart. Did they have the best product? It was definitely better but they took the pains of educating the users and kept hammering our brains with benefits of ecommerce (discounts played a big role).
Paytm vs. PhonePe vs. Mobikwik vs..
I am a late PhonePe adopter and I must say that it is a damn awesome product. The UX/feature sets are well thought out and is a superior product compared to Paytm.
But then, Paytm has almost won the wallet market.
Was Paytm first to enter wallet space? Do they have the best product? Definitely not. But they were the only ones present when demonetization happened. They were the most aggressive and were seen as a ‘godsend’ solution to consumers and SMEs.
Paytm marketed the problem as well as solution (remember the “Modi” ad?).
PhonePe isn’t really marketing any solution (not sure how many ‘normal’ audience understands UPI integration).
In fact, Paytm’s biggest contribution to Fintech space is the fact that it made QR code a mass feature.
Was Paytm the best product out there? IMO, Mobikwik and Freecharge were much better product than Paytm – just that they were slow to react to demonetization while Paytm moved like Dhoni and kept owning larger share of the category.
Freecharge vs. Paytm
Freecharge pretty much defined and owned the ‘recharge’ category. The fight between the two (FC and Paytm) was quite a fun thing to watch.
Was Freecharge a better product? Well, after a certain point Paytm was quite better than Freecharge but FC already had owned the category. They were leading the race – if they get their free coupons on Pepsi bottles, Paytm would just copy them. The recharge game was led by FC (and not Paytm). A different matter that recharge as a category itself became too commoditized (operators jumped in / too many players) to remain relevant.
Category owners end up educating the users – which Flipkart (ecommerce), Freecharge (recharge), Paytm (wallet) has done. They create a habit. It takes a lot of effort (operationally / funding wise), but they create the right perceptions in consumer mind and win the category.
But eventually categories become too competitive and eventually commoditized for players to enjoy the market share.
The ones who rule are the ones who keep redefining themselves, ones who drive the narrative and importantly, build an ecosystem around the product.