Discount and deal sites helping e-commerce boom in India


January 29, 2015

Varun Jain, The Economic Times
New Delhi , 29 January 2015

As online shopping grows in India, deal sites that offer cash-back and discount coupons have emerged, helping retailers to add customers and widen the market. E-commerce entities such as Amazon have started to realise the importance of these deal sites and the impact they can have on business.
For large e-commerce players, partnering with discount coupon and cash- back sites is a way to gain a larger market share and build competitive advantage, said Ravitej Yadalam, CEO and founder of, a coupon and cash-back shopping website. For smaller companies, affiliate marketing, as the concept is known, is a way to garner brand recognition and a risk-free and cost-effective channel for customer acquisition and retention, according to Yadalam.

Anisha Singh, CEO and founder of, a Delhi-based coupon provider, says it is a good time for the online discount marketing industry in India. According to her, "a report by Motilal Oswal has stated that the online coupon/discount marketing segment has flourished alongside the surge in e-commerce in both US and China."

There’s no unanimity about the impact of deal sites and some say that they benefit mainly small and relatively new retailers.

Couponing websites are most useful for those retailers and service providers who are new, local, or too small to compete with large e-tailers in driving traffic to their websites, said Devangshu Dutta, chief executive officer at Third Eyesight, a consulting firm.

"In many cases, the benefiting merchants may not have any online presence at all, and the couponing site provides them a relatively low-cost, low-commitment model to create a presence online," said Dutta.

Amazon, the world’s largest online retailer, has tested the concept – the company refers to affiliates as associates — in the global market and has a different take.

"Associates are a great platform that we have had for 20 years and we continue to invest in them. When it comes to India, it is going to be one of our very important channels," said Samir Kumar, director of category management for Amazon India, acknowledging that deal sites are an efficient way to get traffic to its platform.

Flipkart, the other major e-commerce player in India, declined to respond to e-mailed questions.

CouponDunia, a discount coupon site, pushes over Rs 20 crore worth of sales to merchants every month, according to founder and CEO Sameer Parwani. With a monthly visitor rate of 4 million and an e-mail subscription base of 3.7 million consumers, it directs a substantial rate of traffic to partner websites, says Parwani.

Mydala, which claims to have sales of 200,000 vouchers every day, enables revenue to the tune of Rs 400 crore per month for their partners, according to a company official.

Another deal site,, manages over 2,500 transactions a day and has credited over Rs 4 crore of cash back to members, according to Swati Bhargava, a co-founder. It has enabled partners to generate Rs 150 crore since the company started in April 2013.

Given the boom in online shopping, turnover at deal sites has grown rapidly.

"Our overall business has been EBITDA (earnings before interest, taxes, depreciation, and amortisation) positive and has clocked in 600% growth in sales in the last two years…we are looking at increasing our merchant base to a million merchants in 2015 and coupons sales to increase to 8 million per month in March 2015," according to Singh of mydala.

Yadalam of says the company’s revenue rose 2.5 times year-on-year as of 2014 and its customer base is increasing by 150%.

(Published in The Economic Times)

FDI in multi-brand retail: Tata-Tesco JV plans Rs 250 crore investment to open more stores


January 23, 2015

Sagar Malviya, The Economic Times

Mumbai, 23 January 2015

Trent Hypermarket — the equally owned joint venture between the Tata Group and UK’s Tesco — plans to invest Rs 250 crore as the only Indian multibrand retailer with foreign investment aims to open more stores.

The planned expansion is likely to be seen as a test case for the ruling BJP’s stance towards foreign direct investment in the supermarket segment. The party’s stated policy is against FDI in stores selling multiple brands, but industry watchers and experts say the government is unlikely to meddle with Trent’s plan at a time when Prime Minister Narendra Modi is focused on bringing in investment.

Trent’s board has been authorised to raise up to Rs 250 crore through loans, guarantee, securities or way of subscription, according to a company resolution, a copy of which was filed with the Registrar of Companies earlier this month.

The board passed the resolution on January 5. In December 2013, the previous Congress-led government had approved Tesco’s application to invest about $110 million (Rs 680 crore at current exchange rate) in the joint venture.

Trent didn’t respond to an email seeking comment on its plans. Sources with knowledge of the matter said the company intends to add another five hypermarkets in 2015 to the dozen outlets it already has, but the main focus is on opening smaller convenience stores.

The previous government allowed up to 51 per cent foreign holding in multi-brand retail in late 2012 and said states can make the decision on whether or not to allow such outlets in their territories. But with main opposition parties, including the BJP, opposing the move as well as lack of clarity on some rules and stiff sourcing requirements made companies like Wal-Mart Stores of the US to stay away from making any investments in the segment here.

Tesco is so far the only foreign retailer that has invested here, and there were concerns about the new government’s position towards the company after the BJP won the 2014 parliamentary elections and some ministers made comments against allowing FDI in multibrand retail. But since the Tesco investment had already been approved and going back on that decision could hurt India’s image as in investment destination abroad, industry experts say Trent is unlikely to face any action.

"The BJP wouldn’t want to upset the applecart severely. While they may not be in favour of FDI in multi-brand retail, they might not roll it back with retrospective effect," said Devangshu Dutta, chief executive at retail consultancy Third Eyesight. "BJP’s attention to FDI is mainly for manufacturing with retail being a small enabler. Also, food and beverages retailing is a local business and even a single state is large enough if there are constraints in other states."

Since four of the 16 Star banner stores operated by Trent Hypermarket were in Gujarat and Tamil Nadu — which were ruled by the BJP and AIADMK which were against FDI in the segment — these stores were divested into a separate Tata subsidiary, Trent-Fiora Hypermarkets. The new stores that the Tata-Tesco JV plans to open will come up in Karnataka, which is a Congress-ruled state.

(Published in The Economic Times)

Man in the mirror


January 16, 2015

Rashmi Pratap, The Hindu Businessline (BLInk)

New Delhi, 16 January 2015

Manish Gupta travels a lot as an executive in a multinational firm. Alongside a universal adapter and shaving kit, his travel bag is never without his favourite fairness cream and face wash. He has been hooked to Emami’s fairness cream for men since 2005, when he was still in college. His made-for-men face wash brand keeps changing as he loves to try the many new ones flooding the market.

Gaurav Batra’s addiction to fairness cream is fairly recent. He began buying a men’s fairness cream after fights with his wife over emptying her tube of cream. His colleagues were candid about using men’s toiletries and that made it easy for Batra to jump on to the bandwagon. “It is no longer ‘unmanly’ to use creams and lotions. We also want to look good, much like women,” he says.

Consumers like Batra and Gupta are reinforcing what Emami discovered nearly a decade ago. In a 2004 study on the use of fairness creams in India, Emami found that more than one-fourth of the users were men, and they were using products marketed to women. Sensing an opportunity, in 2005 Emami was ready with the world’s first fairness cream for men — Fair and Handsome. The product is a market leader in the category today and gave an impetus to what was hitherto a latent market for manufacturers — male grooming products.

Research firm Euromonitor pegs the men’s grooming market at Rs. 4,300 crore by March 2015. This includes men’s toiletries at Rs. 2,500 crore (including deodorants at Rs. 1,800 crore), while hair, face and skin care command a relatively modest Rs. 700 crore. Together they constitute about one-sixth of the market for the unisex category. Marketers have been quick to spot the potential here.

“There is much more opportunity to have newer products in these categories. The market is definitely under-penetrated,” says Vineet Jain, General Manager-Marketing (Consumer Product Division) of Himalaya Drug Company.

Male market needs

Himalaya entered the men’s face wash segment in June last year after it undertook a study to find out why the face wash market was stagnating. “We wanted to understand why there were no new users in the face-wash category, where growth had slid from 33-35 per cent to 18 per cent,” he says.

The company realised that men hesitated to use the existing face-wash products as their needs were different — oil, dirt and pollution were bigger worries for them, whereas the women’s products were geared towards acne control.

With its men-specific focus, not surprisingly, Himalaya has already captured 7 per cent of the Rs. 157-crore men’s face-wash category within six months of launch. The face wash segment itself grew 57 per cent from Rs. 100 crore in FY 2014. “In the past few months, many brands have entered this segment,” Jain adds.

Emami director Mohan Goenka says the men’s grooming segment is one of the fastest growing in the personal-care space, consistently outperforming women’s categories. The categories are expanding too — deodorants, face wash and hair care (shampoos and hair-styling gels).

The Emami men’s range now includes the HE deodorant brand and the Fair and Handsome fairness face wash, which was launched last year. Himalaya is readying more variants for its face wash besides entering newer segments, the details of which it is not ready to share yet.

Goenka believes the factors powering this emerging market are both personal and economical in nature.

Ready to groom

Indian men today are increasingly conscious about their appearance. Additionally, young men in college are typically more willing to experiment with their looks. “Among college-going students, the desire to be seen as being on the cutting edge of trends and fashion, besides the classical need to be attractive to the opposite sex, is now finding expression through new product adoption,” says Goenka.

Agrees Himalaya’s Jain: “Our consumer research for men’s toiletries found that 68-70 per cent of students are buying from us, and the 15-24 age group is buying 80 per cent of our products. It supports our hypotheses that today’s youngster is not afraid of saying ‘I use a grooming product’.”

Goenka calls this the ‘legitimisation of men’s grooming’, long seen as an embarrassing activity kept under wraps. “This has been boosted by celebrity associations and endorsements of brands, and a high level of media exposure, besides the rise of aspirational brands in the men’s grooming space,” he says.

Seen from a consumer angle, Jain senses a growing desire to look metrosexual as more and more men are working with MNCs, travelling abroad and seeing this trend in other countries. “It has been supported by Bollywood. The acceptance of being metrosexual is very high now,” he adds.

Fair and Handsome gained a handsome market share when Bollywood heartthrob Shah Rukh Khan was its brand ambassador. Today it is the market leader in the category, commanding more than 50 per cent of it. Nivea too got noticed with actor Arjun Rampal as the face of its men’s range. “Our association with Arjun has given us a lot of eyeballs and is working well for us,” says Sunil Gadgil, marketing director at Nivea India.

In the absence of the first-mover advantage, Nivea believes its well-rounded portfolio will persuade the consumer to choose Nivea Men over others. Its products range from dark spot reduction moisturiser and oil-control face wash to deodorants and shower gels.

“We see ourselves as a challenger in a fast-growing market,” says Gadgil.

Mass of buyers

The market today is no longer confined to urban India, as rural consumers are slowly, but surely, opening their purse strings for personal care products. “The rural market is still in the early stages of penetration compared to a relatively higher urban penetration. However, early signs of adoption are all around: in men’s fairness creams, rural India has been growing significantly faster than urban India,” says Emami’s Goenka.

Himalaya’s Jain says only about 15 per cent of the market for unisex face washes is in rural India. In the case of men’s face wash too, the split is skewed 90:10 towards urban areas. But the growth is equal — at around 55 per cent.

“I don’t see any efforts by manufacturers to drive rural growth. Rural consumers have historically been looking for sachets and small tubes, and prefer basic benefit products. We still see men’s grooming products being targeted at higher value packs because urban India offers lower cost of distribution and higher sales,” Jain says.

And this is possibly where the challenge lies for this category of products. Devangshu Dutta, chief executive at Third Eyesight, says that the biggest barrier to adoption of male grooming products by the masses is the price point. “These are discretionary products; you can cut back usage easily.”

India is largely still a price-conscious market. “So the ability of a company to provide affordable options can drive usage in this category,” he adds.

As of now, the usage of male grooming products is dominated by higher income groups. “But the absolute number of these consumers is small. The bigger opportunity is lower down the pyramid. You need to have products that are mass and you need to have multiple products and brands in the same category,” says Dutta.

Gadgil adds that the challenge is really about offering the Indian male what he needs. His grooming needs are different from those of females, for whom skincare is already a part of daily routine and they have a higher level of engagement with the products. Men look for products that have utility. “There is still a lot of scope to address these needs,” he adds.

Jain sees a challenge in convincing men who are soap users to switch to face wash. But going by the history of personal care, that may not prove all that tough. The growth of deodorants, for instance, is telling — the male deodorant market is around Rs. 1,800 crore today, while it’s Rs. 1,000 crore for the female product.

Marketers see no reason why this trend cannot continue in the case of hair and skin care products. “A lot of consumer research has been done in the deo category and that is why companies are able to target barriers and fill the need gap. As more and more manufactures focus on other categories, find need gaps and fill them, other male grooming products will also proliferate rapidly,” says Jain.

It’s, obviously, all down to knowing what men want, really.

(Published in The Hindu Businessline – BLInk)

How Vijay Shekhar Sharma’s Paytm morphed into ecommerce marketplace to compete with Amazon and Flipkart


January 12, 2015

Gulveen Aulakh & Jayadevan PK, The Economic Times

Bengaluru/New Delhi, 12 January 2015

Inside a four-storey office in Noida’s Sector 5, Vijay Shekhar Sharma, the founder of One97 Communications, pointed to a sign on the glass wall of a conference room — "Go big, or go home," it said, adding, "One million orders a day will happen here first. That’s our vow. That’s our game."

In the reception below, a dozen-odd job aspirants were waiting to be interviewed.

That was in mid-September. On Sunday, ET reported that Chinese ecommerce giant Alibaba is set to invest $575 million in One97 Communications-owned Paytm at a valuation of over $1.9 billion. A deal could be announced in the first week of February.

In the weeks leading up to September, Sharma, 38, had doubled down on hiring for Paytm, ploughing in profits from One97 Communications, a mobile value-added services firm, to build up its unit into an online marketplace. "We’ve bet the whole company on it."

"Every rupee we had was being used to grow Paytm," Sharma said. To compete with the likes of Amazon, Sharma needed more money and a strong strategic investor.

That’s exactly what seems to have happened over the past few days, making it the fastest Indian startup to cross billion-dollar valuation. Paytm, which began as a mobile recharge and utility bill payment service in late 2010, quickly morphed into a fullblown ecommerce marketplace similar to Amazon and Flipkart, only focused on mobile right from the start.

Many employees own equity in Paytm

In October, Sharma set in motion a massive fund-raising exercise that was to last several months and culminate in a deal that would give Paytm the money and the muscle. Around the same time, he inducted veteran Silicon Valley investor Mike Levinthal onto the board, a US-based partner at a venture capital firm told ET.By the end of January, Chinese entrepreneur Jack Ma, who built the world’s most valuable ecommerce company Alibaba, is likely to make the deal official. Sharma declined comment but at least two sources said that in October, he met top executives from Japan’s SoftBank, Singapore government’s Temasek Holdings and Chinese ecommerce firm Alibaba.

The companies couldn’t be immediately reached for comment.Alibaba and Alipay will have one member each on the company’s board, besides two founder directors, one of which will be Sharma, said a source close to the developments. Of the current 2,000-strong team, about half hold equity in the company. About 100 executives in the senior management and tech teams have shares worth at least Rs 1 crore, said another person. ET could not immediately verify these claims. The company is learnt to be issuing new shares so all current shareholders dilute their stakes, after which Alibaba and Alipay are likely to get an equal split of equity following the infusion of $575 million.

As a company, Paytm has evolved from when it was first launched in December 2010. "At one point of time, we looked like a recharge portal, then a utilities payment service, now we are a marketplace," said Sharma. The company motto this year, printed on its 2015 calendar, is "Game on!" On New Year’s Eve, Sharma threw the "biggest party in town" for employees with local band Euphoria performing. He was back at work early next day.

Co-workers know him to be perpetually in motion, putting in long hours at work alongside his team at the Noida office, which does not have any cubicles. "I get at least three emails where a customer satisfaction issue has been highlighted. He (Sharma) personally looks at all escalations," said Amit Lakhotia, vice-president of business at Paytm.Having skydived from a plane in Australia and rafted through treacherous rapids in Rishikesh about 20 times, Sharma is an "adventure junkie", always looking for the next big adrenaline high, said people close to him. Sharma and his friends also like going on road trips across Europe, one of them added."I’ve known him for seven-eight years and I can tell you his mind is all over the place all the time. It’s a mark of impatience, of getting things done, which is needed when you’re leading a fast-growing company.

At times, conversations can go in many different directions — he has so many different ideas," said a director at one of One97’s companies, requesting anonymity. Sharma was born to Sulom Prakash Sharma, a biology teacher who retired as the principal of Agrasen Inter College in Harduaganj, a small town near Aligarh in Uttar Pradesh. His mother was a housewife and Sharma grew up in a studious atmosphere at home. He was a top scorer in school and was one of the youngest to graduate from Delhi Engineering College in 1998.

He started his first venture, web solutions firm XS Corps, while finishing his electronics and communications engineering course. A year later, in 1999, he sold the company to US-based Lotus Interworks LLC. Over the next few years, before starting One97 in 2000, Sharma was part of a number of companies including Riverrun Software Services Group, Inter Solutions Software and Startec Global Communications, where he was chief technology officer. The companies focused on design and development of of various products and applications for the technology, media and telecom industries. Sharma is one of the few startup bosses who have mentored other startups during their early days.

Gaurav Dahake, founder and CEO of, recalled that Sharma guided the IIT-Kharagpur alumnus when he approached him through a business networking site and connected him to Pratyush Prasanna, vice-president at Paytm, from the same school. Prasanna was founder and CEO of Plustxt, a privacy enabled text messaging system in seven Indian languages that was acquired by One97 in 2013. "He is very approachable. I simply left him amessage on a community on Quora saying ‘How do I get in touch Vijay’ and I got a prompt reply from him," Dahake said.Sharma is popular among the startup, venture capital and emerging business communities as passionate, aggressive, being a stickler for detail and consumer-centric.

"He spends a lot of time on the design and user interface of Paytm, the way it should look and feel to the end consumer," said Lakhotia, who has worked with Sharma for the past two-and-a-half years. To be sure, even with a combination of Sharma’s experience in dealing with the Indian consumer and Alibaba’s money and experience in China, it’s not going to be an easy run. Flipkart, Amazon and Snapdeal, three of the largest Indian ecommerce companies now, have significant market share and access to capital.

Paytm is likely to differentiate itself by connecting millions of Chinese merchants on Alibaba’s marketplace to the Indian market and the consumer in its home country to a wider variety of products available on the marketplace. But there may not necessarily be an automatic match, said an expert. "India has different needs from China so you can’t just port something from China and bring it here. Indian banking systems are also regulated differently and I’m not sure how much of this synergy will actually apply," said Devangshu Dutta, CEO of retail advisory Third Eyesight.

(Published in The Economic Times)