This is a backdated post. Apparently, I have recorded and released this episode on podcast platforms but never got around to posting it on the website. The episode was released on June 17, 2020.
Yulia Sitnikova, a project manager, a BA, and a product manager, tells her story about this variety of roles, how she got to transition from one role to another and what prompted these transitions.
Transcript (courtesy of Otter.AI)
Please note that the transcription below was generated automatically and may contain misspellings and errors. If you want to help with cleaning the transcript – please get in touch!
Vlad G 0:07
This is real world product management.
Hello everybody. This is a 15th episode of the real world product management and my guest today is Yulia Sitnikova, who is has been a project manager at VA and play the product manager role on some of the projects and engagements that she worked on. And I think she has a slightly different story than what we usually have on this on this show. So I’m going to go ahead and let you introduce herself and then we’ll get straight to the story straight to the point. Okay. Yulia. Welcome and go ahead please introduce yourself.
Yulia S 0:52
Hello guys. So, I had a lot of projects, on business site and on site of from before The IT companies so most of the projects I belong to the e commerce so and I just want to share my experience with you guys about the maybe most sufficient project in my career up to date and probably this experience can be useful not only for US market because this project was launched for the Russian market, but probably for the other countries. So a few words about the project the marketplace launched five years ago on the Russian market the like in new business model because up to date is you know, guys marketplace is a kind of the omni channel for any ecommerce business. But five years ago, some Russian businessmen thought that it is more attractive Have a separate business separate business model. And our company as well as to our competitors started this business as a additional business based on the euro for the Russian market model. So marketplace is well known now as an online online business. But five years ago, we decided that it can be a kind of the combination of the online and offline businesses. So first of all, I would like to I would like to say that our partner was a state owned company. I can say that it is the main logistic logistic company up to date or Russian post and Russian post decided that they need maybe some expert dice outside to log on to the market. Place as new business for Russian post. I was a project manager for the Auto Group Russian known as the company with 100 years history of distance sales. And we decided that it will be interesting also for our company to share with experts with Russian post and to get additional customer base and delivery points special terrorists from the Russian post. So it was a kind of beneficial project for both of us and we decided that we can combine the delivery opportunities of the Russian post and the assortment and distance sales expertise from the auto Corporation. Also a sell already mentioned. The second key point was the idea. The idea was about to support not only online marketplace, but also create an additional way to sell marketplace products by the offline channel. What does it mean? offline? In our case, was our printed catalogs printed we printed about 10 millions catalogs, which includes all the top sellers from the online marketplace. And we’re distributed between the postal offices and by the postal boxes for Auto Group, Russia customer base. So in this case, we thought that we can support our project our sales, because as marketplace like online channel was not so popular, it was new for the Russian market. We were sure that for example, says bye bye The printed catalogs can be more successful. So the target from our CEOs was to be on zero level of for contribution. And we decided that the idea to distribute marketplace project into two channel can help can help us also, I can say that the third point, which can be highlighted in case of this project was delivery. Probably, you know, Russia territory has far north or five East regions, and most of couriers cannot
reach at least regions and derivative deliver parcels to the end users. But in case of Russian post, we could use this Deliver options because Russian post up to date has about the full year 40 2000s of postal offices on the territory of Russia and they can deliver. I can say parcels or mailings to any point of Russia Federation. And in this case, it was like our additional benefit to propose end users for our marketplace to deliver parcels and products to any point of all the operation. Also, I can say that we have some thoughts, some new thoughts about the assortment. It is important because in that time, in most of marketplaces, we saw that The most top selling products from China produced by by Chinese suppliers and producers. And in case of Russian post we decided that for example, if Russian post can deliver and get goods from any point of Russian For example, we can add to the catalog and to the marketplace online channel. Some interesting Russian goods or Russian I mean produced by by the Russian producer. So for example, it can be honey or some berries or different Altai teas and so on. And we decided that it can be important to highlight these information also in media because state owned company should also support some actions, some businesses On the media and it was relevant to the idea of the PR department for the Russian post to highlight that, for example, Russian post marketplace can propose to the ante users not only Chinese products but first of all products from the Russian producer. So in order to support the Russian market and Russian in sales for the Russian products, also, we decided that we need maybe super product and super product not not for it’s possible interest from the end users. But from the margin gross margin because for both of companies, we decided to keep as already told contribution on the zero level or have after the project lounge. Slight minus in the contribution and we needed to create or to produce or to find some products with high margin. And we created with Russian post team new product called personalized letter. What does it mean? So personalized letter E to the postcard includes text any poem or something from the dead morose. So our project should be launched in October and you know, do the first quarter of the year and since November all end users Bought mostly the gifts and presents to their kids and their families. So, in this case, we decided that we can print the beautiful, nice postcards and write the poems from the dead morose Santa Claus in the USA and add to these postcards personalized welcome message for example examples for example, you buy the I don’t know toy to your kid and you would like to it in the order the letter from the debt morose. In this case you need to put in your order. Form a name for your daughter for example. And sure each and after that our system after receiving this order can propose to this particular girl based on her age some parents, so, actually we had the poems for the adults and poems for the kids. And it was interesting also for our IT team and IT system because we needed some algorithm to calculate it, which poem should be printed on this postcard? Also, I can say that it added more personality to the product, about the margin. We actually had in the time, different producers for calligraphy and we had a good contract so we could get the good prices for the postal postal carts printing and si SM right. Our gross margin totally was about 97%. So, actually, it was a huge margin. And I cannot even leased any products with the same margin in the market. Any way, we pronounced that, for example, we can sail, a one hundreds or thousands of the postal carts from the dead morose. But in fact, we realized in January after three months after the sales that we sold about 300 thousands of postcards. So for our printing team, it was a kind of a challenge because we needed during the high season, when every retailer prints, promotions, promotional catalogs and other stuff we needed To put additional order for the postal cards, but anyway, we did it and we got our contribution mostly things for these for the for the sales for these postal cards, because actually, we had not so high gross margin on usual products even on products for Russian producers but our contribution after the first quarter for our marketplace business was about the millions on to buy the Postcards from the dead morose. Actually also we decided before the project that our CEOs could take the decision to continue with the project or to stop after the first three months of sales. When they received not not even zero but plus about positive contributions, they decided that projects
can be continued. And probably we need to do some adjustments with assortment because it is not so good to spend a lot of budget to the marketplace online to printing 10 millions catalog catalogs and receive 80% of the orders on the football possible cards. So it means that only 20% of the our end users I interested in the real products like and electronic or textile or something. So for marketplace business. Of course it is dangerous situation and we needed to rethink what we Need to save in the first quarter in the further catalogs about the catalogs. We also have some decisions because after our first three months of sales are ended, we decided that probably we need to launch new catalog with seasonal goods every quarter for example, like in fashion, winter catalog spring, summer and autumn and we decided that in each catalog we need some seasonal bestsellers on the cover for the catalog and on the most popular pages. Also, after the our allowance and short sales, we decided to test any new goods only on my channel marketplace because case, we did not have any risks for goods demand because for example, if you will print 5 million catalogs and put on the page, any good event, for example, you will receive, I don’t know 5000 orders for the one single Excel product. So you need to be sure that your warehouse has this product already, or you need to hurry up, deliver this product from the supplier to your warehouse and then to the end user. So, it is difficult to calculate in case of the wide assortment. That’s why we decided to reduce the catalog by the pages for example, first catalog has 20 The four pages, and the next catalog probably had 18 or 12. I don’t remember actually, but less pages. And in this case, we could calculate demand in best way. Because we understood that for example, from this catalog we can get, I don’t know 30 thousands of orders and we can calculate this year for each good in the catalog, which can be in case of sales. So for forecasting for analytics, it was pretty good. In case of online channel, we decided that we can test everything because you can put on web any products and you can test the demand on any product. If eventually For example, you do not have this product on the web in the warehouse. So, you can just tell the demand and for example, send some thank you letter or welcome letter to the end user and propose in other products or some agent, no promotion and so on. Also, I can say that what was interesting after the first three months of sales, it did.
Actually, we received only 5%, for sales for online channel. And we understood that probably our business our marketplace business model is not about the sales by the online, but mostly sales by the offline Of course, up to date, We can say that it is not so good situation if you try to develop marketplace business because now marketplaces is mostly online channels and they use probably printed catalogs only is as equally put to the parcels. But in our case, we understood that probably the answer on the question why our offline catalog gets so many orders in the person with an online was in the customer base. Five years ago, we did not spend enough time for non finales the customer base because we thought that the main point should be quantity of printed catalogs The sellers in catalogs and wealth distribution using Russian post deliver points. But actually we did not understand that our assortment cannot be interested for example for some regions, we realized after the first sales that 25% of the orders overall from the from the employers are Russian post and actually we thought that okay, if the main people on the main points on the trade points in our case would like to buy our products to use our products and then just to sell this product from the catalog. It will be kind of free promotion. Bye In our case, it was a kind of fraud because after three months we got 40% of the returns. And after investigation on Russian foresight, we understood that the main reason it is the administrator freedom because Russian post has some has the old structure
or some post has a lot of Iraqi points in regions in Republic’s on on the Russian territory and each postal point has own plan sales plan and this sales planning consists of the Same as for the products selling in the postal offices and services, postal services, in case of the products, they cannot, I can say forecasting the sales, because it was first experience also for the pasta offices to save the real products by the catalogs, because of course, first of all they say or different services. And I can say that in this case, probably they did a mistake and probably their plans are wrong. So high and in order to achieve this pranced to reach these plans. Employers bought the products and after the sales period and it they return them. So for us, it was a kind of the not good situation from the contribution perspective because I can see that half of money we aren’t after the last month of our sales we lost on this returns because of course, all returns should be paid by the retailer or company sending the parcels. And in this case, it wasn’t that it was a Russian post, but it was Auto Group Russian. So we lost huge millions of rebels on this with John’s on tariffs for regions, the parcels but, of course, a Russian post supported us in this problem and they I discussed with their teams in different regions about the rules, so to avoid the same situation in the future, and I can say that it worked, but not for all regions. For example, for the nasco cousin, postal offices, the station always was the same. But anyway, for example, for Far East region or for Siberia and rural visitation was was better. Also, I can say that Russian post after our first sales started to think about the technical solution because when we launched this project, they use only one merchant. So anything marketplace should based on the business model when different merchants, producers or resellers can join into the marketplace and sell their products in pay fees to the Russian post, in the case of the Auto Group pressure for the first year of our partnership with a group Russia was the one partner for the Russian post. Yes, we tested for catalogs with us to sales during different seasons. And based on these numbers, a Russian post could estimate so is it project can be interested for example for another merchants? Do we need to put the additional budget to the technical solution because first technical solution Pretty easy for one merchant. It is, I don’t know it kind of the simple workflow a WordPress website. And the one we we needed to do to integrate this website with Auto Group brush up system to get the orders and a roll call with the returns and enter users feedback after the one year selling the products with Russian post, or the group rush understood that the next year will be not so profitable for the Russian post for the article pressure because Russian post announced that they would like to add foreign EU merchants It was good companies producers mostly We use for example, good electronic products. And we decided to participate in the catalogs during one more year. But after this year, we understood that okay, it was an interesting project. But anyway, quota group ration has, I don’t know, five, four, maybe six or seven times low contribution in this case and Auto Group passion is not the producer or seller. So actually it is not interesting for us to sell products while the marketplace and we finished work with the Russian post in one year, so totally, we spent on this project two years after that, I know that Russian forced you extended the quantity of merchants and say no, they also use first of all the offline channel catalogs at the main channel for the marketplace because as I can see the technical solution their marketplace online is not it’s not so good. They added some regions some localization, but due to the assortment and absence of promotion or something, I can say that they continues. They continue use offline channel catalogs as main channel for the marketplace. I can say that’s all maybe pretty overall, but if you have questions,
Vlad G 28:55
yes, absolutely. So thank you for this thorough story in thorough explanation. So I made some notes as as we were talking and I’d like to, I’d like to start asking some questions. And probably one of the questions that I kind of yearning I was yearning to ask all this all this time is the approach that these two companies this, you know, Alliance collaboration, however you want to call it between the catalog seller and the Russian post. The approach to this program this this effectively a two year program that you guys have worked on. It was a very waterfall methodology that you guys took. So you figure out what you wanted to do. You launched full catalog, you launch this for the full market of Russia for all the post offices, and then you just sit tight and waited to see what happens is that Is this a correct Is this a correct assumption?
Yulia S 30:03
I can say it depends because for example for the logic rapacious budgeting system, maybe you know Germans in German companies, they prefer to forecast any sales for three years from from one from one to three years. So, all their project planning is about the planing minimum of one year and maximum for three years. And we are responsible always for the contribution be in your contribution and in your in your net sales. That means that most of the projects, for example, for Otto Group ration is based are based on this forecasting system and in my case, when I needed to lounge the project’s product in three months. It was an unbelievable situation because we did we even didn’t have the tools for financial planning for such short terms. And in this case, I divided for CRM, my methodology for working with this project into two parts for example, for the budgeting, for the assortment planning or for the warehouse and logistic planning, I used waterfalls. So, I gave them the forecasted figures based on my thoughts and after the show sales based on the on the sales for the first quarter, but for example for the IT department, and for the For example, CRM department, I can say that we worked in Agile methodology, because we changed a lot of the process processes, business processes on the CRM side based on the feedback from from the end users on it site. For example, if you have the three months to deliver to integrate your your, your earpiece system with the you application, so, you need to be you need to be jail because, of course, we did not understand what product what technical solution will be. So the one which my team got from the arrest and foremost was the plan, plan in projects. So Based on this plan we needed to discuss For example, we should meet, I don’t know, one time in two weeks and discuss our steps. So, we are moving we were moving step by step with the IT team from the rational side because we took the information from them. So what was delivered and then run to the our IT department and do integrations on this particular part. So I can say that for some departments in this project, it was an agile and for some processes, it was a kind of waterfall waterfall. Mm
Vlad G 33:46
hmm. Okay, okay, that makes sense. And yes, I was kind of expecting, I was kind of expecting to mix but the larger picture was still moving at you know, in a waterfall fashion. So I was kind of thinking, um, I’m just gonna say it and then I’ll let you disagree and see how you will respond. I was kind of thinking that if this is this is a very old fashioned project management project management methodology that is typical for large companies. It’s there’s nothing wrong with that. I mean, they’ve been using it for a while. And we know that we still work with that. We try to work around that when we introduce a product mentality or product mindset. So what I was thinking of was, let’s imagine, right, let’s imagine a slightly different scenario where you had an ability to move faster, you know, in a product, building fashion, but deliver less value, but also at the same time, you’d be able to get your answers faster. So for example, instead of a fourth quarter, November when you actually look launched this. Let’s say for example, again, it’s an imaginary scenario. You were able to launch in August. And you would get the answers that hey, catalogs are better by September October, and you would know that not in November, not when you just started then and you know, all things are set set up differently, but just started getting you started getting this, you know, for side, you start knowing what you knew late in the game earlier. How would you change the Christmas season, which is when you guys made most of your revenue? How you change the system now knowing what you know. And and and being able to deliver chunks of functionality or chunks of this offering faster? That makes sense. There’s a question makes us Yeah,
Yulia S 35:52
Yeah, Yeah, I agree with you. Absolutely. Because, of course five years ago and in German competence Company two was a kind of reusing all purchases for the new project a new product. So, I can say that first of all, we needed to do the customer customer development because actually Russian post as well as Auto Group Russia have own customer base. And for example, we we could send some catalogs to different target groups from the database from the clients base for Auto Group process, for example, based on the farm locations on the Russian territory. And for example, for the our best clients, our I mean, Auto Group Russia. So also we could send different catalogs for example to test Do we need actually to print 10 millions catalogs because it is the Huge amount for pre spending spent for printing, or probably, we can do different formats. For example for one target audience, we can send, I don’t know, email for another target audience we can send the catalog with I don’t know why hundred pages for another target group for 24. So, we could attest on a lower volumes, even printing the catalogs and there’s the assortment in these catalogs. For the online channel, I can say that we could test different clients based I mean online on the client base because we focused on the offline channel. First of all, because it was easier for us, of course about in case for example, if you would like to develop the market Place as online channel assists, you probably need to test the different online audience. And we already knew that Russian post sales a lot of services buy online for their customers in that time AliExpress already was the first and the main, I don’t know ecommerce company in Russia and Russian post you about the quantity of parcels for each end user what they order it and so on. So, deep analysis of the Russian post customer base online customer base, also could help. Maybe do not spend time on printing catalog on buying the products, which which we needed to keep on the warehouse to sell For the catalog sales, but to use the online channel, maybe in most of cases using the current Russian post clients database, so I can say that we need it actually cause deaf and in this case probably we might spend less budget and earn more contribution, maybe Event of the Year for example, if you understand that your catalogue have each person have the postal card sales. So do you need actually 24 pages I can see now I can say we could send on the I don’t know. six pages, catalogs and good The same contribution from the postal carts gross margin and spent much more with less money on the printing and delivery they get a loss because of course, we also paid the delivery the catalogs to the postal offices on the Russian territory. So,
Vlad G 40:21
so I’m sorry to interrupt. So let me help me understand a you would pay different amount of money for for a smaller catalog. So like, it depends on how many how many pages they are, so it weighs differently. Yep. And then you pay less. Okay. Yeah, makes sense. Interesting. You said customer development and not customer research. As an know your customer versus customer development. I was kind of hoping you would go into somewhat different direction. Although I I agree with what you said. You’re not wrong. I was thinking. Maybe there is something you wanted to do in terms of educating Your customers about the online services. Because most of most of your response, ro ease is situated around, you just you know, we could have sold better through offline catalogs, which is true. But, you know, the point of the project was to build an online marketplace. And I was kind of hoping you would go into the direction of Oh, hey, we could have spent this time making our customers like online interactions. Do you think is a possibility? Do you think something could have been done? Back in the day, you know, those five years ago when you started this project? Would you be able to do something to increase the percentage of your profit or percentage of your revenue generated through the online sales or was it not completely not the right time and not the right place? And never are going to happen.
Yulia S 42:01
So I can see that it is the kind of my thoughts, but I can say that five years ago, it was not the right time for the online marketplace. Because on that time, we had two competitors. First competitor award the real marketplace for the fmcg goods launched by the Stanford students, because they would like to move this idea, this business model to the Russian market. And as they know, they closed their business because actually, the main reason was mentioned by the CEO of that company that the idea of marketplace is good, but that it was not right or right time and probably Probably our idea to print the catalogs saved our money in this case, because I can say that, yes, we could spend more budget for the promotion and advertising, targeting and so on online, but I’m not sure that our end users were ready to buy the products using this business model. Because for example, the next competitor was more successful than we and the closest competitor, it was it is a company called pvh. So it is a kind of club with the for the goods with the
great discounts, which I available, I available for the limited time so this idea was good for that for for the market on the time, and that’s why they are alive up to date. But for example in key so the competitors with the similar business, they closed his business and on the reason that it was not the right time, I can say that probably, of course, we could use the online channel in more ways for example, I know that Russian post rejected any budgets on the promotion. And they thought that for example, if you put the link on the porch, the market marketplace on the main porch that.com, the true website where where people find their parcels or direct their parcels, so it will be enough for the bush tomorrow. Because everybody knows Russian posts, but in our case, maybe because of the new business maybe because of the not so good promotion from the Russian post. Actually, we did not get enough customers for online channel, I can see that. From the AV perspective, I mean, average order value, online channel was more efficient because, for example, users could buy two or more goods in one parcel. So if, for example, we will wait three years, I don’t know four years and started to do targeting started to do promotions for the online channel. I can say that, for example today, this marketplace can be Can can be the business with good contribution. But of course, it is a long way it is a long way to the hour days.
Vlad G 46:15
I see So you’re saying that was not the right time not the right place. But if if you were to start the same thing today you would be successful.
Yulia S 46:23
Yes. With yeah with opportunities. So which Russian post has it is definitely because even today I can say that nobody even Yandex in other ecommerce platforms do not have such delivery network as sir I suppose test. So it wrote Yeah,
Vlad G 46:50
because they’re they’re the largest. Yeah, I mean, even even here United States we have companies large companies like Amazon Walmart partners. up with the United States Postal office, which is basically the government, the government Postal Service. They, they they have them as part of the logistics chain. And there there’s a lot of partnerships one way or another that utilize USPS capabilities. I wanted to ask you a couple of more questions about this, this whole thing with with understanding that this is, you know, five years ago and and things were the way they were. So, you said there was no promotion on about this, this whole service. So how did your customers find you? How did your customers know that they can receive this catalog? Or did they just announced, you know, did the catalog and analysis just arrived in their mailbox? How did that Bark Bark? In other words, how did you made your service known to Your customers?
Yulia S 48:01
Yeah, actually we have we had a few ways. So first of all, in case of the printed catalogs, we used customer base, Russian post and Auto Group, Russia customer base. We just sent the catalogs to their mailbox, physical mailbox. And so we knew that these customers really appreciate printed catalogs, not online channel. That’s why we got for example, orders from these customers and the response rate, I mean, conversion conversion was pretty good about the 4%. In case of the catalogs distributed to the postal offices, it was another case because we are not The orders we got from the postal offices because each postal office so, the team from postal office should send the paper order forms from the customers to the head office and to the our CRM department. So, we knew who that So, what are the H? What are the H for this customers their personal data and after data analysis, we understood that we got about the 90% of new customers so, we did not have any cross with our I mean, Auto Group Russia. Customers who who always buy the products by the catalogs And it was a kind of surprise because we did not understand what to do with this customer base because they order it only in postal offices like informat MLM business so somebody from the postal offices, proposed them some offers from the catalogs and they bought it so we did not understand So for example, if we will skip the postal offices and send them the catalogs, do we want to continue with buying our products or it was a kind of the one time one time sale. So for online business, actually essay, total radium. We put the link on In which the market marketplace on the main porch their website, so this site can be used by any person who or who orders the products from the alley AliExpress or I don’t know, another e commerce companies and not only commerce or who always buys the products, not products but postal services. So we thought that it is enough to put this link and any banner on the main poster website and after that, this traffic traffic can be used by the push to market but I can say that it did not work because probably First of all, People who check I don’t know, dragging their parcels on the main page, the website, first of all use this site for the main purpose to direct their parcels but not to why any additional products. So I can say that they needed additional promotion. Maybe you Chanel mailings or something.
Vlad G 52:26
Okay. Okay. Thank you. That makes sense. Again, given the context of that time and given the context of that market, it makes sense. And x actually explains the fraud that you mentioned the 25% of orders that generated the return. You said about 40% of the of the ghosts were returned. Yes, that makes sense. And I was wondering, was there anything unusual Was there any other challenges On, maybe again, the service offering side of things, right? I’m trying not to say the product because technically that was not a product that was a program divided into multiple projects. And I understand that. Was there any Were there any challenges, especially around the logistics in and I’ll explain why. In the software world where most of us live in. But as software product managers, we tend to forget that there’s a huge world out there the real world where certain things don’t really abide by software rules, right? The deliveries that instantaneous deliveries not electronic, there’s a physical item that needs to make it from point A to point B to point C, and over you need to be able to track it or at least you need to be able to make that physical delivery. Personally, I’ve seen this and one of the systems I was a part of building, not building Myself, obviously, but was part of planning and building was a set top boxes tracking system for one of the cell phone, TV and other service providers here in United States. Again, I’m not sure if I can name names. Yeah, so I’ll just I’ll just be generic. Yes. And one of the one of the funny things was that how much details you need to be able to capture for a physical item that is traveling from, you know, through several kind of several goalposts or several checkpoints like this item is at the warehouse item left the warehouse and he’s in the distribution center item left distribution center and he’s on truck. traveling to the customer item has been installed with the customer item has been activated and now is in the working condition. And now you have all the telemetry coming in. So the was interesting. It’s still saucer world, but it was kind of was in touch with physical world. So I was wondering, you mentioned Far East regions, and again, since I’m from for me, so with union that kind of have an idea what you’re talking about, but for for the audience, I wonder if there were any issues. And I remember we mentioned that when we were prepping for this episode, that there were some logistical issues with delivering to forest regions. Now, if you can, maybe briefly talk through that. Yeah. What was the challenge? And how did that challenge manifested itself? In your offering? What What did it change in your service?
Yulia S 55:43
Yeah, of course, we faced with the challenge with the fara foreigners region. For example, probably you know, but you’re in three or maybe five months. You The Far North region is absolutely frozen. So, I mean that if, for example, somebody from this region, or durrett, the product from your catalog or buy online does not matter, you can deliver this product as this product only in several months. So actually, we had on our logist in our logistic Center, the calendar, so it was the, I didn’t know freezing and freezing killing there for the far north or regions. Because we should understand for example, if somebody from the Sweden’s or the with the, I don’t know cookies or tea or something. So you need to understand when you need to deliver this product. So for us Sample our warehouse employees storage these orders during probably one or two months before this region will be unfreezing and only after that deliver the parcels to these regions. Also you need to understand that for example, if even you have this calendar, so the climate can be different and for example spring in one year has a differences with this print in another one year. And for example we faced with the situation of when we delivered some parcels to the farmer knows and understood that we cannot get any payments for these parcels because they have the cost on delivery. Payment during probably three months and only after investigation and chicken with Russian post we understood that these particular region has I can say the longest winter season and it need more time for freezing and only after that by helicopter helicopter parcels could be sent to the to the people who order it by the catalog and by the marketplace. So, was it was a kind of surprise because you cannot forecast demand on this products you cannot forecast the payment and returns on this parcels because for example you can we got the returns from the far from the far east and far knows, even in six months and for example, when a calculated business model, first of all of course, I took the medium of figures for the Russia for example, you can receive the last return or in three months since date of sending the parcel, but for example, in case of the farmers, you could receive the return in six months, so, and it will bouquet So, it means that, in some cases we needed to update business processes also for CRM, because probably you know in CRM, for example, if you sent the parcel with the payment date, in one month, you did not get any payments. So, this particular customer consumer can be added to the blacklist and we understood that we need to rethink to review our business practices for some regions because for some regions we needed to white released all the end users because they had a huge parcels and orders on a huge amounts but they cannot just receive their parcels due to the climate within and they cannot wait but we needed to change our CRM system, our earpiece system or for this type of clients. So it was a pretty interesting call. So in case of the postcards because I can say that we lost our sales because We just started to send the postal card scenes in November. But in case of the foreigners, I can say that we needed to start to send the Postcards from the admirals from the September to be sure that keys from the far north can receive the letters from the dead Morris in the right time.
Vlad G 1:01:27
Okay, yeah, thank you. That’s that’s something that is something I was. I was wondering. Now you could share. Okay. Probably last question that I have about it about your story. And it’s more around the planning and financial forecasts, I remember you said you were forced to create a forecast for three years and then you divided that into a smaller chunks to so it would be manageable and you can work with that. Let’s not spend too much time on that. But if you can Just briefly talk me through, what did you do in order to avoid having to forecast the whole three year span? What could you possibly have done back then to improve your situation?
Yulia S 1:02:14
Yeah. So first of all, we decided we CEOs that cannot forecast this project for three years, because, first of all, to the kind of new business new business model, and we got a lot of new points, which should be to the business model. And I can say that we had a lot of dependencies on merchants or new merchants on Russian pause because if you work with the state owned company, it can be kind of surprise some changes in the rules or business process. So, it is the kind of risk for any commercial company and we decided to with the supervisors to calculate only forecast for the one year for the one year First of all, so, actually, I used the business model which calculate some of the main the main role. So, in the our budgeting like or net sales demand, gross margin on products contribution level percent of the returns, because we understood that is the kind of risk for the contribution to have more returns. In comparison with plant also we use like epi a V because we understood that for example, increasing The AV I mean average order value by even 200 rubles can rise our contribution. So we need to sing to think what we can do in get along which assortment we need to propose some suggest to the end user to authorize our a VM. Also, we decided if we want to bring to the catalogs one time per quarter, so we can divide our annual budget and business model calculation into four parts. And each part has different different First of all, net sales. Because for example, the lowest lowest net sales Aurora in summer and of course, the highest In winter, so it means that, for example, even for each quarter, I had different KPIs for AV for the quantity of four doors for this year for the for example, of course, I understood that for the new year time, my share of the personalized letters will be higher or highest during the year. And for example, in summer, we do not have any holidays when people can send to each other personal letter, so I need to focus on the products. So in this case, my ARV can be different in case of four quarter and for example, second quarter. So all this KPI was pretty different and have dependency on the Season, a winter, summer, spring and autumn and totally after calculation each quarter and KPI for each quarter I needed to combine all these parts to the in your plan in your budget. And our CEO can could estimate is it will be profitable project for our company in years year or not. Do we need I don’t know two to eight budget to it some more products or something. I don’t know do it some watches for the serum department or call center for example if you would like to attract more customers. So it was kind of mathematic based on the in Europe Plan. So, when you’re already calculated for parts, you can easily to understand when you can lose the money I mean contribution and for example, which Porter can cover all your losers during the for example, in this case we agreed with our supervisors for example, for the summer sales, but can be even in minus So, it means that contribution will be not positive, but it is okay for us because if we will see the in yield, then we understand that you are in four quarter, we can cover all the minuses for the summer and even an additional contribution.
Vlad G 1:07:52
I see. Thank you. That was interesting that was interesting. And that was very useful in understanding how how to approach this and how people will probably approach this as they as they work on these issues when they are forced to operate in Prague program project environment without the product mindset, I’m not advocating product mindset for you know, as a key to solving all the problems clearly it would have been beneficial in your case to an extent not not everywhere not even in all the not in the in all the areas of operations but in some definitely would have been helpful. Thank you for the story and thank you for answering all my questions.
Yulia S 1:08:41
Okay. Now, thank you a lot for the chance because it is really interesting to describe your projects, which which which was five years ago, but to the kind of the good Time to me to understand maybe my mistakes or what was good what was not. Because only in this case you have time to think what was done really and which project was launched by me and by my team. Thank you for this chance.
Vlad G 1:09:18
Oh, sure, absolutely. Thank you. You’ve been listening to the real world product management and I’ll be your host Vlad Grubman. Until next time!