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October 20, 2014
Devina
Joshi, Ankita Rai & Sonali Chowdhury, Business Standard
New
Delhi , 20 October 2014
Monday, October 6, 2014, was supposed to be India’s answer to
America’s ‘Cyber Monday’. It was the day Indian e-tailing giant
Flipkart unleashed its Big Billion Day sale, promising unthinkably
deep discounts across a host of categories. The day ended up making
history for all the wrong reasons – the website’s server crashed
frequently, there were complaints of fraudulent pricing, stocks
ran out within seconds of the sale launch, there were payment
and delivery glitches, and to top it all, an unsatisfactory response
mechanism from customer care. In short, Murphy’s Law operated
in full force – to Flipkart’s injury and chagrin. Founders Sachin
Bansal and Binny Bansal – who had claimed to clock $100 million
worth of sales that day – were forced later to issue apology emails
to their irate customers for not living up to expectations.
Juxtapose this against the success of Chinese e-tailer Alibaba’s ‘Singles Day’ sale (hosted every November 11 since 2009 to allow singles to pamper themselves). The company earned more than $5.75 billion in its 2013 sale – a record for a single day anywhere in the world, almost three times the sales of American Cyber Monday 2012. Backed by impeccable logistics and technology support, ‘Singles Day’ in 2013 witnessed 254 million transactions and 402 million unique visitors – two-thirds of China’s online population, creating a benchmark for the world.
Like everything else in business, the success of a sale of this scale boils down to delivering on customer expectations that you have set. In India, festivals and shopping go hand in hand – several brands garner 20-40 per cent of their annual sales during Diwali season alone. A retailer, whether it is an e-commerce website or a physical store, needs to be doubly careful about what he promises during a ‘festive’ sale: the damages from a sale gone wrong can be irreparable.
In Flipkart’s defense, it isn’t alone in such a fiasco – even physical retailers globally have witnessed property damage, severe injuries, even deaths, due to unexpected crowd surges, as Devangshu Dutta, chief executive at retail consultancy Third Eyesight, puts it. Recently, Australian retailer Target’s website crashed during a sale, and in the past, even Google and Groupon have had website crashes during peak sales.
What, then, should go into ensuring better preparedness during a discount bonanza in a bargain-frenzy market like India? How should retailers – both in the online and offline world – meet consumer expectations? What elements make for an ideal shopping festival?
Inventory planning
The triggers for consumers to throng a sale are many: frenzy, fear (of losing out on a deal), vanity or plain parsimony. Promotions that work well use the right combination of these buttons. Take Big Bazaar, which has year-round promotions to create occasions of consumption, whether one talks of ‘Sabse saste din’ (January 26 weekend), ‘Maha bachat’ (Independence Day weekend), or its sub-sales like ‘Exchange Mela’ or ‘Monthly Bachat Bazaar’. Once the consumer trigger is established, inventory needs to be planned on the basis of past experience and predictive data analytics, as well as considering macro-economic forecast parameters: festival measures, community measures, mood measures etc. For example, during certain festivals people buy specific kinds of things, or communities buy certain items at some point in the year. Next, Big Bazaar gets the best possible terms from suppliers, following which items are moved into the store at a specific speed. For Big Bazaar, the biggest satisfaction comes not from the quantity of goods that moved during a sale period, but also the velocity at which they moved.
For other retailers like Croma, the starting point is a conversation with brands, two-three months in advance. "We find out which new products/technologies are being planned for launch during the festive season," says Ajit Joshi, CEO and MD, Infiniti Retail. "We then ascertain what sort of marketing support and display they will need. The preview of products is very important."
By this stage, Croma figures out each brand’s ‘fill ratio’, which is the purchase order issued versus the stocks received. That efficiency varies from brand to brand. Big brands have better forecasting and hence better efficiencies. "We are then in a better position to ascertain the frequency with which we will need the stock based on volume projections," says Joshi. A new phone launch in the country will obviously require a bigger inventory than a product that has been around for some time. Croma follows a strict ‘new product introduction’ or NPI process. This becomes especially useful in the case of new products entering India that do not have great familiarity to fall back on and that may or may not do well. Such a product is launched in select stores. If the product does well, Croma is then in a position to place a bigger order and increase its spread to more stores. At a chain level, Croma clocks an 8 per cent inventory turn, that is, its total inventory is rotated a minimum of eight times in a year, while 12 per cent of its sales happen during the festive season.
Take another technology retailer, The MobileStore, which patronises seasonal promotions instead of discounts, including free accidental damage cover, theft insurance, extended warranty, free accessories (screen protector, mobile cover, memory enhancer) etc. Inventory planning is critical in an industry where new products are rolled out by the dozen almost every week. "Whether it is the iPhone 6 or something else, we will ensure these phones are available ‘first day first show’," says Himanshu Chakrawarti, CEO, The MobileStore. The company uses algorithms based on demand forecast inputs to plan inventory.
Online portal Fashionandyou uses data analytics based on four years of sale history and performance of each category, brand and price-point mix across 16 categories, while FabFurnish takes into account the past six months’ sales records and makes forecasts based on demands in each category. "Analytics technology is available far more widely and at a lower cost than ever before. Predictive analytics can be used by retailers to create models for demand patterns, expected traffic, and even provide dynamic pricing based on demand," says Dutta of Third Eyesight. Remember the accuracy of an analysis depends on the input data, the robustness of the algorithms, as well as the company’s ability to apply the output effectively.
Some retailers like Crossword, a popular bookstore, run selective previews of a ‘sale’ specifically for their members, and then open it up for a wider audience. This helps them gauge demand and popularity of products and also avoids the under-inventory issue. The online world can also learn from offline retailers by deploying a time-bound sale preview only for its loyal members. "Also, if you know that the spike in orders could be huge, don’t run the campaign for the full day; run it for a shorter duration," advises Praveen Sinha, co-founder and managing director of online retailer Jabong. The idea is to avoid being over-ambitious. As many marketers and analysts have warned before, it is better to under-promise and over-deliver than to allow that big promise blow up in your face.
Dealing with traffic snarls
Traffic management is key to any sale – online, this translates into website visitors whereas at brick-and-mortar stores, it spells footfalls. In the physical world, jostling for space can be as much a turn-off as server jams on an e-commerce portal. Big Bazaar sales are notorious for their serpentine queues where customers have to wait endlessly to get in or check out. In fact, its yearly Independence Day sale has had to be expanded from one day to a weekend over time because of the huge demand. Now, Big Bazaar is better prepared to handle a disproportionately large number of people to come in during big promotions. Traffic management starts right at the entrance, with barricades and security staff regulating the number of people who go inside at a time. People are usually requested to wait for some time and then they are let inside.
It doesn’t stop at that. The retailer works hard to create the right kind of ambience and visual display at the point of sale.
The ‘hero’ product of the sale will be displayed right at the entrance for example, so that the minute a customer walks into the store, she becomes aware that something special is underway. In case of ‘buy one get one free’ or ‘buy this, get that free’ type of offers, the two items are placed together, possibly gift-wrapped as a package, to make them look enticing.
Offline retailers ensure they decorate their stores attractively during the festive season and train the sales on handling such huge traffic flows without getting frazzled. Interestingly, Croma uses the time before a sale, particularly the month of shradh, to educate sales executives about brands and upcoming launches so that they are ready to answer consumer questions once the sale starts. Ditto for The MobileStore, which uses the period before the promotion to train its shop-floor hands on how to give consumers a live experience of handsets and comparisons.
Anticipating footfalls is mostly about experience and applying that insight to predict future demands. "We have realised over time that things like heavy policing on some days, or the availability of parking spaces etc, has a dramatic effect on footfalls," says Joshi of Croma. Also, it was assumed earlier that on a long weekend, people would flood malls for a sale, but in big cities like Mumbai and Bengaluru, people react differently now by packing up and travelling to, say, their ‘second homes’ on the outskirts or even in other cities.
To avoid queues on the dhanteras day – the day Hindus consider auspicious to buy precious metal or expensive household products – The MobileStore allows consumers to pre-book upcoming launches. Pre-booking is a great mechanism to manage traffic as one can anticipate how many people will walk into the store.
Managing traffic is no less cumbersome online. To improve customer experience on the site, e-tailers should allow customers access to information on inventory and how long it will last right upfront – may be on the home page itself as some companies like Amazon are doing. "When designing a campaign, you have to know at what time the ‘peak’ will come and how the flow will continue," says Sinha of Jabong.
E-retailers should also provide timely information to customers to earn their trust, says Ankur Singla, CEO & founder, Akosha.com, an online consumer forum that aims to resolve customer complaints, adding, "effective customer communication becomes even more important during a sale."
Depending on the SKUs on sale and discounts being offered, one can determine the number of transactions that can happen during the sale. "Based on the past history, find out how many conversions happen on a sale day," advises Pragya Singh, assistant vice-president, retail and consumer products, Technopak. "Design your marketing campaigns keeping in mind the objective, so that you invite only a certain number of people and not the whole world."
Logistically speaking
For an online sale, technology and logistics is an added area for concern. The efficiency and scalability of Alibaba’s network could be gauged from its handling of 156 million packages generated on ‘Singles Day’ in 2013, compared to a daily average of 13.7 million packages generated from transactions in China retail marketplaces (in 2013). Alibaba’s cloud computing platform enabled it to handle the traffic volume generated and manage transactions. The company also stirred demand by sending out $50 million worth of digital coupons prior to the sale. Some of these were specifically designed to drive purchases through mobile devices or on social networks. Free data was also offered to customers in some areas so they wouldn’t exceed mobile data limit while shopping. Strikingly, mobile sales made up 21 per cent of the transactions.
"We support our merchants to carry out seamless delivery of their shipments through our ‘powership programme’," says Shivani Dhanda, head, marketing, eBay India. The service includes product pick-ups from an eBay merchant’s doorstep, automated tracking of shipments and faster deliveries by logistics service providers. The logistics team needs to be prepared to handle additional workload during a big sale. This can mean hiring or outsourcing more staff, getting temporary workers aboard etc.
Sanjiv Kathuria, co-founder and CEO, DotZot (the e-tail logistics arm of DTDC), says, "We assess what the business plan means in terms of the number of shipments, orders sizes, weight of shipments (whether the e-retailer is planning to sell more microwave ovens or mobile phones) and then align ourselves with the retailer and accordingly book space in aircrafts."
Delivery is just one part of it; the logistics partner also has to see how many pick-ups and dispatches are to be done in a day. "If in a regular week, we pick the product from the retailer twice a day, we have to build capabilities to quadruple that for sale periods," says Kathuria. The staff has to be incentivised to work longer hours or handle more packages a day. Unless planned in advance, one can expect a day-long sale to end in minutes, leaving scores of people dissatisfied.
Paying the ‘price’
Pricing can be fixed on the basis of the SKUs selected for sale, category margins, popularity of the product, past revenue from same/similar brands during a sale period and so on. Discounts offered by competition need to be tracked as well.
Indeed, deals and discounts should be thought of well in advance, after discussing them with vendor partners. While offering discounts, e-commerce portals usually get approvals from the vendor. "We provide merchants of all sizes a level-playing field to compete for the share of the buyer’s wallet, which leads to an automatic mechanism of competitive pricing so that the buyer gets the best deal," says Dhanda of eBay.
What is an absolute no-no for a retailer is manipulating prices before offering discounts on them. "For an e-commerce business, the combination of external analytics showing an inconsistent pricing trend and social media to spread negative messages cause the quickest, biggest damage to the consumer’s trust in the brand," opines Dutta of Third Eyesight.
"The intent has to be correct. Perceivably false discounting was the downfall for Flipkart," opines N Chandramouli, CEO, TRA (publisher of the Brand Trust Report). "This is not the information arbitrage age and one can’t falsify data. People search and compare products on the internet before buying them." To regain trust Flipkart will have to tout honest prices, safe transactions and exclusivity of its deals, say analysts.
"Server capacity can be relatively easily enhanced, merchandise availability and service levels can be improved – these aspects have ‘technical’ fixes, but repairs to the reputation take far more effort and involve factors that are outside the company’s control," sums up Dutta.
Get the basics right: Seeraj Katoch
With digital touch points playing a key role in the consumer’s buying decision process, content marketing has to be a key component for brands to create the right content for the right platform that will lead to a surge in the conversation around the brand. Using a combination of platforms and creating relevant content for each of the platform will help drive content during the sales season.
Online companies are increasingly coming up with social media strategies to help brands engage with their consumers to increase sales throughout the remainder of the year. Even before the sale is planned, brands would have their champion products (high selling) which could be derived through data, so marketers can prepare content around that to target consumers. It is crucial to highlight the special product, something where they have a bigger bargain than the others in the market. For instance, during the sales period, you have discounts on several products but always place the champion product at the top of the line. During sales influence marketing plays a crucial role. Influence marketing can be done in various ways – through blogging, Instagram, Facebook and Twitter, but the impact needs to be generated at that point of time when the customer wants to make that purchase.
Top bloggers can be engaged to write reviews about the product and talk about the best features that can influence the market. Even post sales, influence marketing continues to play an important role. We had collected this data once and realised about 80 per cent of the purchase that happened post sale was same as the purchase during the sale season.
You can leverage the power of online social tools that helps drive the market analytics, know what people are talking about on all social platforms, articles, newsletters. The brand cycle and consumer journey can be identified through this. You can also employ online reputation tool to manage reviews, complaints, queries and so on. This tool helps in engaging with the consumer, addressing queries on time and also creating customised messages in line with the consumer interaction and issues in a more personalised manner.
SEERAJ KATOCH
Chief operating officer Tangerine Digital
(Published in Business Standard )
admin
October 13, 2014
Sagar Malviya, The Economic Times
Mumbai, 13 October 2014
The world’s largest online store Amazon and India’s largest listed retailer Future Group have signed a deal to jointly sell goods over the Internet amid growing friction between online and offline retailers over heavy discounting.
Future Group will sell more than 45 own labels of apparel initially, followed by in-house brands in the home, electronics and food categories, while the US-headquartered company will handle order fulfillment and customer service for the merchandise on its portal. Both firms will also develop a new line of products across categories to be exclusively sold at Amazon and Future Group’s retail stores. ET was the first to report, on October 3, that Amazon founder Jeff Bezos and Future Group’s Kishore Biyani met in New Delhi to discuss an alliance.
The complaints by traditional retailers led to the government saying it would examine the policy on ecommerce. Following this, Amazon’s October 10-16 Diwali Dhamaka Week has been a subdued affair with sharp discounts restricted to stock clearances and products only being sold on the site. Under the deal, Amazon and Future will also jointly develop discounting strategy and price tags on their products won’t be very different from rates at stores so that both channels don’t end up cannibalising each other.
In its home market, Amazon had similar alliances with retailers such as Target Corp and Toys R Us in the past decade though both soured over time once the online seller gained scale and attracted other large brands.
Following the India deal, Future Group’s four dozen own brands such as Lee Cooper, John Miller and Indigo Nation will be taken off from other online marketplaces where they are currently being sold.
Amazon’s agreement in India also indicates its aggressive intent to spread itself across many product areas quickly in India — especially foods — a relatively niche category for online retail, which it has only recently entered. In July, the US company announced it would invest $2 billion in India operations that exceeded gross merchandise sales of more than $1 billion within a year of its launch. It completed a year in June this year.
Meanwhile, it was reported recently that Amazon plans to open its first brick-and-mortar store in New York.
The company’s main rivals in India are Bangalore-based Flipkart and Snapdeal, the latter a Delhi-based company that counts eBay, Azim Premji and Ratan Tata as investors.
Together, they have sold goods worth more than $4 billion, with Flipkart alone estimated to have crossed $2 billion. The battle is set to intensify. According to a report by consulting firm Technopak, the $2.3-billion e-tailing market is expected to swell to $32 billion by 2020 and account for 3% of the total Indian retail sector.
In the offline retail market, just three companies — Aditya Birla’s Madura Garments, Arvind Brands and Future Group — either own or sell more than two dozen brands each, thus becoming the preferred options for any online player looking to partner retailers.
The move holds benefits for both sides, but there are pitfalls as well.
"The upside is Amazon getting instant product diversity and capability while Future Group can explore a new channel for sales," said Devangshu Dutta, chief executive at retail consultancy Third Eyesight. "However, if the business is not aligned in terms of orientation and customer service, then it could create issues going forward, especially when one of the biggest barriers for online sale is inconsistency of products."
Future Group has more than 75 own brands that earn it at least 15% higher margins on average compared with national brands, which is why Biyani is bullish on private labels across categories. The tie-up means Future Group’s brands that now have a presence in 98 cities and towns will be marketed to 19,000 PIN codes serviced by Amazon across India.
Industry insiders also said the Indian retailer’s move reflects a bid to expand into new distribution channels such as ecommerce in the search for growth. Last month, Snapdeal agreed to create Croma’s Flagship Store on its ecommerce portal to sell electronics items including mobiles, tablets and laptops.
The $3-billion Future Group, on its part, has opted for SAP’s Hybris OmniCommerce solutions and plans to invest nearly Rs 100 crore to beef up its ecommerce venture. It is targeting about 20% of revenue from online sales over the next 18 months. By 2020, the aim is even higher — at 40% of its sales through ecommerce or virtual platforms.
(Published in The Economic Times)
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October 9, 2014
Parimala
S. Rao, Catalyst (The Hindu Businessline)
Chennai,
9 October 2014
“Amma, can we whatsapp the photo to Pramod in Dubai?”
asks the youngster excitedly, after his mum has taken a picture
of him in front of a towering grey-and-yellow model of a Transformer.
She nods, and he grins happily, proud that he can show off his
very own bit of high-end retail to a friend in the Gulf. It’s
this spirit that seems to imbue the hordes of shoppers and visitors
to Kochi’s retail mecca – LuLu Mall.
Opened just over a year ago, the complex covers a sprawling 17 acres near an intersection of three highways and houses over 215 retail luxury and lifestyle brands, including those in the food court and entertainment areas, with more waiting to set up shop in the 25 lakh sq ft of leasable space.
Owned and managed by the EMKE group, the LuLu retail chain has had a strong presence for over two decades across West Asia, with over 90 malls and 110 hypermarkets in 34 countries, including Dubai, Abu Dhabi, Doha, Bahrain, Kuwait and Saudi Arabia. Setting up shop in Kochi in early 2013 was a considered decision based on the recognition that, with rising disposable incomes, shoppers in the region had more cash in hand, not to mention the ennui that had set in with the sameness of merchandise on offer at all the glitzy retail spaces nearby.
Typically, malls need to target the population within a few kilometres’ radius. However, due to the large square footage, a mall such as Lulu needs to build its brand as a destination catering to a highly mixed profile of customers, says Devangshu Dutta, Chief Executive at consulting firm Third Eyesight. “A destination mall’s viability depends on a large enough pool of customers with a high discretionary income and a positive spending outlook, as well as infrastructure that supports ease of travel to the mall. Economic conditions in recent years have been conducive to large shopping-entertainment developments like the Lulu Mall,” he adds.
On a humid Sunday afternoon, the enormous and cool interiors draw swathes of visitors, generations of families out to shop or just to have a good time — for instance, among the many wonders at the packed Sparky’s fun and games zone. This is a fantasy land of golden roundabouts, bump-a-cars, a 5,000-sq ft ice-skating rink and a 12-lane bowling alley, as well as a games arcade.
But this is Kerala, and any mall here would have to be different in one key respect – jewellery stores. There are about half a dozen of them in the mall, traditional old-world stores jostling for attention with others offering trendy, offbeat designs.
At 4 pm, they are already full of shoppers. There’s an NRI family buying wedding jewellery at Bhima’s, while a group of chic Kochi ladies is inspecting a new line of gold-and-silver necklaces at Avatar Diamonds.
The 25-year-old Avatar brand has branches across the State and abroad. There is a big spike in sales to locals during the wedding season, a salesperson says, but over the next few months, the main shoppers will be NRIs visiting for the holidays. There are customers from Bahrain and Saudi, for whom the brand has created special lines.
Across the corridor are designer Western wear outlets. Business is good, especially during vacation time, say the store managers at Vero Moda and Jack & Jones, while the manager at high-end leather goods store Calonge says discerning clientele seek out its trademark braided leather products. Everyone’s on the lookout for promotions and offers, though, and there are plenty of those.
International offerings
LuLu Celebrate, the mall’s three-storeyed flagship store, specialises in bridal wear but also offers a wide variety of sarees and salwar sets. If luxury is in focus, quality and affordability are also important, says Ajmal, a floor manager at Celebrate. This is why the shop is so popular with people from Kochi and nearby. Looking to pick out a traditional Kerala saree for a friend, I find the offerings range from the simplest mundu with a plain-coloured border for less than ?500 to a beautiful cream-and-gold designer affair for about ten times that.
Nearing 6 pm, the crowds are so thick that there are small queues near the escalators — though there are 18 of them! Shoppers can take breaks at the many facilities on offer. There are water fountains, baby-rooms, rest-rooms, ATMs, even a bank that is open 365 days from 10 am to 11 pm. Prayer rooms, first-aid and ambulance services are on offer too. A 300-room JW Marriot hotel is located within the complex, and PVR Cinemas runs a busy multiplex.
The most crowded part, though, is the 2-lakh sq ft LuLu Hypermarket, India’s largest. If we thought getting into the mall was difficult (car lines were three abreast and about 300-m long), this would be even more challenging, with a surging wave of people trying to get in. Queues at each of the 27 check-out counters were about 10-people-deep each, forcing us to reluctantly give up the idea of sampling its fresh and frozen delicacies and the diverse cuisine at its hot food counters. There was also no time to check out the 2,000-seater food court with 22 kitchens, nine restaurants and many coffee shops. Lulu Mall Kochi’s Marketing Manager Aiswarya Babu later says the hypermarket not only stocks international foods but also believes in sourcing local and encouraging growers of organic produce.
Brand-aware shopper Madhulika Menezes, who lives in Chennai, says she spent a brief but interesting time at Lulu Mall some months ago. All she had time to shop for was some deliciously flaky and flavourful baklava at the hypermarket, but it gave her a taste of what to expect. When she goes back, she will allot at least a day to tour the mall.
Long-haul business
Built at an investment of over ?1,600 crore, the mall, which now has an occupancy of 95 per cent, is operating at a trading density that is among the top 10 in the country, says Shibu Philips, Business Head, Lulu Mall, Kochi. As mall developers and their investors realise, this is a long-haul business where no one expects to start earning profits before 8-10 years. For a group that has been operating malls for over 20 years, the primary concern seems to be to put customer delight on par with the profit angle. One cannot happen without the other, as it has shrewdly recognised.
About the impact such large malls have on smaller counterparts in the vicinity, Third Eyesight’s Dutta says: “A destination mall that comes up within the catchment of other existing malls certainly reduces the footfall into those malls – this impact is the maximum in the first two years after the launch. However, smaller competitors can survive and thrive if they differentiate and focus their offerings to be highly relevant to the local population, many of whom still frequent smaller malls, the high street and traditional markets, and visit the larger mall as an occasional outing.”
Aiswarya Babu says that, on an average, 60,000 visit on weekdays, and the number goes up to 95,000 on the weekends.
Lookalikes?
Given its success, will there be a rush to emulate the Lulu model? As Dutta says: “Successful destination malls do inspire other developers to consider similar projects. However, the overlap of high population and high spend, and the ability to consistently drive footfall, is a difficult combination to create. At this time, the number of large malls that can be supported is limited. So, while new destination malls could cannibalise traffic from the older mall, a lot depends on how well they are planned and executed, and how Lulu Mall handles itself in the face of such future competition.”
A vision statement on the Group’s web site quoting Managing Director MA Yusuffali commits to making the world a harmonious place to live in, in every way possible. If the Group’s vision is to go beyond the merchandising to create a fun and happy space for families or a hangout for the young, to offer all sections of society a global experience, as it were, it has certainly achieved this. Big retail, it seems, is the new equaliser.
(Published in Catalyst – The Hindu Businessline.)
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October 6, 2014
Shruti
Chakraborty, Quartz India
Mumbai,
6 October 2014
The fireworks began much before the festival, when India’s
e-commerce giants rolled out glittering advertising campaigns,
reportedly spending some Rs200 crore, last month.
That’s a small indicator of the big prize that India’s shopping websites including Flipkart, Snapdeal and Amazon are fighting for—the massive bump in sales in the festive season surrounding Diwali (October 23).
Without dominating this season, no website can hope to lead the
all-out war this sector has come to resemble. For smaller sites,
this month alone can account for a third of their annual sales.
And with every passing year, the size of Diwali sales is rising.
But what makes this online contest exceptional is that the entire
e-commerce sector in India, too, is coming off an exceptional
year. There’s been a massive capital influx, strong growth
in the user base and a steady uptick in adoption of online shopping,
partly a result of improved economic sentiment since a new government
took over in New Delhi.
“We have grown more than 600% in the last year or so,”
said Sandeep Komaravelly, senior vice-president for marketing
at Snapdeal.com, which has 20 million registered users and reaches
over 4,000 towns and cities in India.
“Given the increase in the scale of our operations, we are
expecting a 100% jump from the sales we had last year during the
festive season,” Komaravelly added.
The company has already seen the results of their marketing efforts
early on in the festive season. Between 3rd and 5 October, Snapdeal
registered a 100% jump in sales and sold a smartphone every six
seconds, a laptop every 20 seconds and a tablet every 30 seconds.
A saree was sold every 30 seconds and a pair of shoes every 10
seconds.
“We expect it to be the biggest Diwali we have seen so far,”
Komaravelly said.
Flipkart, the other homegrown e-commerce giant, seems to have
similar expectations with its ‘Big Billion Day’ campaign—purportedly
India’s biggest sale (currently underway, not entirely glitch-free),
with deep discounts and offers across 70 categories. “A large
chunk of the annual business happens in the time between Dussehra
and Diwali,” said Shoumyan Biswas, head of offline marketing
at Flipkart.
But this time, the festive season could be so big that Flipkart,
which has 22 million registered users, reportedly doubled its
delivery staff over the last few months.
Some of this expansion may well have been coming. The e-commerce
market has attracted huge investment in the last year. In July,
Flipkart raised $1 billion, the biggest round of funding in any
Indian startup and one of the largest amounts raised in a single
round worldwide. Within a day of Flipkart’s funding announcement,
Seattle-headquartered global e-commerce major Amazon said it would
invest $2 billion in its Indian operations.
Snapdeal, after raising $233.7 million this year, may also be
looking for more money. Tata Group’s chairman emeritus Ratan
Tata and Wipro chairman Azim Premji are investors in the firm.
E-commerce players have scaled operations and expanded teams,
with the fresh rounds of funding. “In the last couple of
months particularly online retailers have gotten a lot of visibility
with their fundraising rounds and partnerships,” said Devangshu
Dutta of Third Eyesight, a consulting firm focused on the retail
and consumer products industry.
“Compared to previous years, a lot of money has been spent on driving traffic and they have gotten a lot of press. The companies have improved their service and delivery infrastructure as well.” There is also a shift in the consumer mindset now. Shopping online is more than just experimentation for customers, he added.
It’s not just the sheer numbers of online shoppers that
go up around the festivals. The typical basket size also increases.
“Customers spend around Rs1,000 on the website at other times,
during Diwali the average goes up to Rs1,500 on our website,”
said Sanjay Sethi, CEO and founder of Shopclues, which registered
over Rs350 crore ($56.8 million) in online sales last year. “We
expect a 40-50% increase in sales this festive season.”
And as India’s online marketplace matures, it’s not
just discounts on electronics and fashion—typically the most
popular e-commerce segments—that attract consumers. BullionIndia.in,
for instance, a startup that allows customers to buy gold and
silver online at wholesale price, is offering a discount around
Dhanteras, an auspicious day preceding Diwali when Hindus purchase
precious metals.
“While customers are buying other products online, buying gold and silver online hasn’t caught on as much. But we are offering discounts at this time and that has impacted our sales positively,” said Sachin Kothari, director, BullionIndia.
(Published in Quartz India .)
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October 6, 2014
Avinash
Bhat, The New Indian Express
Bangalore,
6 October 2014
As Diwali approaches, brick-and-mortar retailers are scrambling
to compete with online websites offering hefty discounts to woo
shoppers.
Offers like one-plus-one and 50% discounts are becoming the norm across shops.
This week, major online retailers like Snapdeal, Flipkart, Jabong and Amazon announced campaigns to target festival shoppers. Realising the need to compete, physical retailers are also offering huge discounts.
The online market in India has been growing at a dizzying pace, and attracting huge investments. In 2014 alone, Flipkart raised $1 billion in funds while Amazon announced plans to invest $2 billion in business expansion. Snapdeal, another online retailer, attracted a sizeable investment by industry magnate Ratan Tata, who has put in an undisclosed amount into the Delhi-based company.
According to a study by research firm Crisil in February this year, the online retail sector is estimated to grow at 50-55% for the next three years. Revenues have already touched Rs. 13,900 crore in 2012-13, and are likely to grow further as the online market share in the overall retail space still remains small.
This growth has not escaped the attention of brick-and-mortar sellers, who are being compelled to ramp up their online presence. Trader associations have vowed not to supply goods to online retailers who sell below the market price. This has led to online retailers saying that they are mere marketplaces where the prices are decided by other sellers.
As murky as the situation might be, consumers are the clear winners in the entire deal.
“I have been buying products online for a long time now. They offer door delivery and in case I do not like the product, I can get it returned without having to go to a store and wait in line. This is much simpler,” says Arvind T, an HR professional in the city.
“The offers are sometimes better or at least as good as the stores when you factor in the delivery and the ease of shopping online,” says Siddharth R, an IT professional.
It is this ease of shopping online that is adversely affecting the more traditional methods of shopping, feels Devangshu Dutta, CEO of Third Eyesight, a retail consultancy.
“Offline retailers have been investing in infrastructure since 2000, and there is high capital involved. As long as they are able to respond to these (online) offers, they do not have to match the discounts as they have a very large segment of touch and feel buyers,” he says.
However, the writing on the wall is clear for physical stores, Dutta feels.
“They need to match the service offered by the online sites. With assured service backup with online retailers, customers will go for the lowest priced products and a difference of even `200-400 could be a deal breaker for some,” he says.
Diwali sales under way
(Published in New Indian Express.)
