Tata Group set to crowdsource ideas for new watches, maybe even cars


December 16, 2015

Devina Sengupta & Jochelle Mendonca, The Economic Times

Mumbai, 16 December 2015

Consumers could have a say in the watch or even car produced by the Tata Group as its companies strengthen social media and digital platforms by crowd sourcing ideas.

Titan, which sells watches and spectacles, will be among the first to start asking consumers for detailed inputs in the next few months. The plan may be replicated across consumer-facing units such as Trent and Tata Motors.

Such companies use listening tools based on social media feeds to manage brand and reputation, said a data analytics partner at one of the big four accounting and consulting firms that’s working with Tata on the plan. Titan and other Tata group firms are taking this to a new level, the person said.

Consumer feedback will be used to inform product design and service delivery, said the partner, who didn’t want to be named.

Crowd sourcing is a way of getting ideas and feedback from a large group of people, primarily those who are online, rather than from employees and suppliers.

"Titan is already doing it for some of its brands," the company said in an email.

More companies are looking at this to increase engagement with customers. Over the last two years, they have been resorting to crowd sourcing to identify features and product names. Sony decided to use the method to choose the name of its new speaker range last year, while McDonald’s asked UK customers to suggest recipes for its menu.

Tata MotorsBSE 2.05 % is no stranger to such exercises.

"We involve our audience in all our new launches, by creating content and communities built around their interests which resonate with the values of the car," a spokesperson said in an email. "Crowd sourcing and social play a key role in our awareness campaigns as we recently saw in the Zica name unveil campaign, where a multi-city scavenger hunt fuelled by digital was used to reveal the name." Zica is the latest model in the Tata Motors range.

Lifestyle and retail company Trent did not respond to queries.

Unfiltered inputs mean the management team can quickly connect with what the customer is seeking.

"With growing internet penetration, the ability to aggregate such inputs has expanded dramatically while the costs have dropped," said Devangshu Dutta, CEO of retail consulting firm Third Eyesight. "Certainly, it also makes the business and the brand more approachable and friendly, if done right.

It also helps provide a different perspective.

"Businesses can get locked into familiar strategic analyses and predictable behaviour and crowd-sourced ideas can provide perspectives that may be way outside the management team’s conventional thought processes,” Dutta said.

Tata group chairman Cyrus Mistry has been focusing on digital over the past few years and all group companies have been asked to get more consumer centric.

ET reported earlier that the conglomerate had mandated customer-facing businesses to appoint chief digital officers to improve their offerings. Former Citigroup executive Deep Thomas was named head of customer analytics in February.

The new push is in line with the group’s aim to become one of the top 25 global brands in the next 10 years and double its total market value to $350 billion. The group’s total revenue stood at $108.78 billion in the year to March.

The Tata group is expected to launch its ecommerce venture in December based on the marketplace model, similar to that of Flipkart, Amazon India and Snapdeal. It will offer both Tata and non-Tata products, mainly related to electronics and lifestyle.

(Published in The Economic Times.)

Jabong FY15 sales cross Rs 1,000-cr mark, discounting leads to three-fold loss


December 15, 2015

Sagar Malviya, The Economic Times

Mumbai, 15 December 2015

Lifestyle online retailer Jabong crossed the Rs1,000 crore sales mark in the year to March, doubling its revenue from a year ago but deep discounting has led to a nearly threefold increase in the net loss.

Xerion Retail, which runs Jabong, posted a loss of Rs 43.6 crore on sales of Rs 1082.9 crore, as per a Registrar of Companies filing. A year ago, it had sales of Rs527 crore with a net loss of Rs16.6 crore. Sales of the company, incorporated four years ago, amount to a third that of Shoppers Stop, India’s largest department store chain started 25 years ago.

India’s ecommerce market is set to rise to $103 billion by FY20 from $26 billion now, according to Goldman Sachs. At this stage of evolution, online retailers have to go through years of operating losses, given high initial investments as well as the incentives they provide in the form of discounting to attract consumers online. At the same time, several online retailers are said to be getting more circumspect with discounts as they seek to shore up their balance sheets.

Jabong, which was started in a one-room office at Golf Course Road, Gurgaon, in December 2011 is now part of Global Fashion Group portfolio, a subsidiary of German online business developer Rocket Internet. Both key cofounders Praveen Sinha and Arun Chandra Mohan quit this year amid speculation that the company is on the block. A week ago, Sanjeev Mohanty joined Jabong as CEO and managing director from Italian fashion brand Benetton.

"Jabong is transitioning from a startup to a professionally managed profitable ecommerce business. We are putting together a strong leadership team," he told ET. "Our focus will be on more and more curation, building unique assets and increasing assortment."

High growth and losses are par for the course at ecommerce companies, an expert said.

"There is a management churn issue but it is more difficult to bring losses down if you have to show high growth trajectory," said Devangshu Dutta, chief executive at retail consultancy Third Eyesight. "For Jabong, loss is not a problem as long as they have enough cash on the balance sheet and there is constant product injection in its portfolio to excite consumers."

India’s biggest homegrown ecommerce companies Flipkart and Snapdeal are flush with cash as overseas investors in the two companies look to get a piece of a market that’s set to surge further. Amazon India too has indicated that it may exceed the $2 billion that CEO Jeff Bezos had pledged to spend last year, with sales growing more rapidly than expected. In comparison, Jabong has raised about $100 million from a consortium of investors including Swedish investment giant AB Kinnevik and Rocket Internet.

Myntra, owned by Flipkart, and Jabong were considered the leaders in the fashion category, but Amazon India is gradually getting aggressive with the segment consistently among its top three. During the festive season, Amazon saw its fashion segment grow fivefold from a year ago.

Apart from this, most lifestyle product makers are either shying away from offering heavy discounts for their wares or giving price-offs for old merchandise, something that goes against Jabong’s business model of offering fast fashion or the latest collection.

Hence, the online retailer has launched over a dozen global brands such as Dorothy Perkins, G Star Raw, Tom Tailor and Bugatti Shoes exclusively for India that also helps them earn higher margins. Just two months ago, Jabong helped British brands Topshop and Topman enter Indian market through its platform.

"We are focusing on growing the ‘just-in-time’ marketplace model where we don’t hold inventory risk," said Mohanty. "This is helping us create efficiencies and de-risk a lot of our business, while allowing us to expand the number of vendors and substantially increase the number of products listed on our platform, which now stands at close to 400,000 SKUs (stock-keeping units). We also continue to increase our assortment to offer more choices to visitors on Jabong."

(Published in The Economic Times.)

Brand Salman gets legal boost


December 10, 2015

Bindu D. Menon, The Hindu Businessline
Mumbai, 10 December 2015

Brands riding on Bollywood heartthrob Salman Khan are heaving a sigh of relief with the Bombay High Court overturning his conviction for a 2002 hit-and-run case. Brand watchers point out that the verdict will only increase his standing among brand owners.

In May, a lower court had convicted Khan of culpable homicide and sentenced him to five years in jail for driving over and killing a man sleeping on a pavement. But the appeals judge ruled there was not enough evidence.

Khan tweeted that he accepted the ruling with ‘humility’.

But the biggest relief is undeniably for the brands he is associated with. According to celebrity management firms and brand consultants, the mass hero has as much as ?200 crore riding on him.

Khan endorses over 10-12 brands including Thums Up, Being Human, Revital, Wheel, reality show Big Boss, men’s innerwear Dixcy Scott and PNG Jeweller.

Film analyst Komal Nahata points that currently there is about Rs. 100 crore riding on his films.

“Salman Khan’s stand is vindicated. His upcoming film Sultan is slated for release in 2016 and has about ?100 crore riding on it. Brands which were previously considering exiting him as a brand ambassador will reconsider their decision.”

According to Shailendra Singh, Jt. MD of Percept India, “Salman’s brand was already flying high. Now it will skyrocket. The emotional connection of the fans, the box office and the brand was hugely backing Salman’s freedom and now they have got it. It is also interesting that it has come at a time when the three Khans (Salman, Shah Rukh and Aamir) are finally getting along.”

Echoing the sentiments, Jagdeep Kapoor, brand guru and founder of Samsika Marketing, noted: “Brand consultants will see how they can cash in only Salman Khan’s appeal to take their brand’s credo forward.”

As per industry sources, brands pay anywhere from Rs. 5 lakh and Rs. 5 crore per endorsement to Salman.

Picky MNC brands

Asked how MNC brands which are picky about their celebrity choices will react to the verdict, Devanghshu Dutta, CEO, Third Eyesight, said: “The arena we are playing in is largely driven by emotions and brands would also reconsider their decision. Indian companies are flexible in their approach but it is MNCs which are picky. Cases will not make a significant improvement in brand ambassador’s selection”.

(Published in The Hindu Businessline.)

Myntra considering offline experience zones in the next 12-18 months


December 8, 2015

Richa Maheshwari, The Economic Times

Bengaluru, 8 December 2015

Mobile application-only fashion retailer Myntra has tentative plans to roll out offline experience zones in the next 12-18 months, its chief executive Ananth Narayanan said. “We don’t have any immediate plans, but I think next year we will do it. This is something we are debating on,” said Narayanan.

With this development, Myntra will be joining e-commerce companies such as its parent Flipkart, Zivame, Pepperfry and Firstcry which are opening such stores to provide customers with a touch-and-feel experience of products as part of a strategy to stand out among fast mushrooming online sellers.

“The idea is to maximise availability for your target consumers,” said Devangshu Dutta, CEO of Third eyesight. “With these developments, the divide between online and offline is becoming artificial,” he said.

[You may also be interested in reading “The Next New Thing: A Retail Store“]

Myntra has also launched a fashion network for brands and consumers on its mobile app in order to boost its sales and consumer engagement as it inches towards profitability.

“Our overall unit economics are getting closer and closer to profitability. The firm will break even in 2016,” said Narayanan.

The Bengaluru-based company is currently clocking gross merchandise volume at a rate of over $500 million (about Rs 3,335 crore) annually, a growth rate of about 66% over the previous year. It is now trying to get to a GMV runrate of $1 billion (Rs 6,670 crore) by May-June next year. Separately, on the Myntra app platform, brands can now make a page, track their performance on dashboards and create content and start marketing campaigns.

“If they (brands) have a large community, then they don’t have to spend anything. But if you are a small brand and want to build up a community, then you may want to spend money with Myntra,” said Shamik Sharma, chief technology officer at Myntra.

Customers, on the other hand, will be able to view personalised feeds, upload pictures, seek opinions of friends and experts. Recently, Myntra partially relaunched its mobile site to enable social sharing features of the app. According to the company officials, the brand has over 7.6 million active consumers.

According to an April 2014 report by venture capital firm Accel Partners, Indians bought fashion products worth $559 million online in 2013 and the figure may increase to $2.8 billion by 2016. Online retailing in India grew 56% annually between 2009 and 2014. Etailing in India is expected to swell to $6 billion (Rs 37,200 crore) in 2015 from $3.5 billion last year, a recent PwC report said.

[You may also be interested in reading “The Next New Thing: A Retail Store“]

(Published in The Economic Times.)

IRCTC earns Rs 20,000 crore from online sales till March; revenue nearly double of Flipkart


November 27, 2015

Sagar Malviya, The Economic Times

Mumbai, 27 November 2015

Revenue from online ticketing on Indian Railway Catering and Tourism Corp crossed the Rs 20,000-crore mark during the year to March 2015, nearly double the turnover of India’s largest online retailer Flipkart.

IRCTC generated Rs 20,620 crore, or nearly $3 billion, through online ticket sales in the last financial year, up 34 per cent from a year ago when it sold tickets worth Rs 15,410 crore. But unlike loss-making marketplaces, IRCTC posted profit after tax of Rs 130 crore, up from Rs 72 crore in the previous year.

"Bulk of the sales may be attributed to IRCTC’s rapid growth in e-ticketing which has been due to its interface and setting up of a very robust process. Capacity enhancement was done to book 7,200 tickets per minute as against 2,000 tickets per minute in the existing system," said Sandip Dutta, public relations manager at IRCTC, which set a record in April when it booked 13.4 lakh etickets on a single day. That compares with 27 tickets a day when it began in 2002. In fact, 55 per cent of all rail tickets sold are booked online.

The government-owned portal posted a 19 per cent increase in income at Rs 1,141 crore, which mainly includes service charges on tickets, sales of Rail Neer water, onboard catering services and licence fees from outsourced catering vendors.

This is similar to online marketplaces where sales don’t include actual goods sold but instead count commission from sellers and revenue from advertisements on their ecommerce sites. IRCTC’s combined income from commissions on ticketing, travel and tourism was Rs 670 crore, a tad higher than Flipkart’s turnover of Rs 659 crore earned from shipping fee and selling commission on its ecommerce portal.

By having a monopolistic position, higher web traffic and sales, IRCTC can attract several brands on its portal, feel experts. "A large part of the Indian population trusts IRCTC and brands across consumer, food and tourism can use it to advertise or sell their products on the portal," said Devangshu Dutta, chief executive at retail consultancy Third Eyesight.

Since IRCTC doesn’t compete with any of the online marketplaces in India, Amazon has partnered the rail portal for two years with an annual guarantee of Rs 18 crore a year. India’s ecommerce market is expected to breach the $100-billion mark by FY20, triggered by increasing internet usage, discounting and investment by online retailers, according to Goldman Sachs that has revised its previous estimate. The majority of an upward revision of 27 per cent is contributed by the e-tail segment, which is estimated to reach $69 billion by FY20.

ET View: Expand the IRCTC Menu

There is a huge potential to capitalise on the large and fast-growing cash-flow. The Railways now need to visualise IRCTC as a major-league online retailer, and not merely for rail tickets. IRCTC needs to be positioned as a huge online market place, bringing together buyers and sellers for myriad goods and services. It needs to leverage its expertise in bringing individually ordered food for passengers to provide doorstep delivery for a wide variety of goods and services. The Railways need to explore stock market listing for IRCTC.

(Published in The Economic Times.)