admin
March 17, 2015
Deepti Chaudhary, Shravan Bhat, Debojyoti Ghosh, Sohini Mitter, Forbes
India
Mumbai, 17 March 2015
BookMyShow
Funds raised: Rs 300 crore
What does it do: BookMyShow is India’s biggest online
movies and events ticketing company and occupies 85 to 90 percent
of the online entertainment-ticketing market; 70 percent of its
sales comes from movie tickets and the remaining from sports,
plays and live events. At present, sports accounts for almost
20 percent of its revenues and is seen as a future growth area.
BookMyShow reaches about 800 to 900 cinemas in 200 cities and
towns. About 60 percent of its transactions take place via its
mobile app which, say experts, is the most successful mobile ecommerce
app in the country.
Its USP: “Discovery of entertainment events-based information, curation and smooth fulfilment makes BookMyShow different from others [like Kyazoonga, Ticketgenie]. Its focus on customer experience, ability to offer a consistently good booking experience, and its knowledge of changing consumption patterns hold the key to its dominance,” says Prashanth Prakash, partner, Accel Partners, an investor in the company.
How niche BookMyShow’s focus has always been ticket bookings, but it now intends to go deeper into content around movies and events. It has started offering reviews and consumers are lapping it up. It will soon integrate social interactions on events in its services. “We have expanded to tier II and tier III cities too and want to go even more local. Payments continue to be a problem and we would like to focus on that. It is the next thing to solve,” says Ashish Hemrajani, founder-CEO, BookMyShow.
Why it will survive: One of the key realisations for BookMyShow is the role that content can play. It is therefore working at beefing up its content offerings. “The recent acquisition of Bangalore-based social media analytics firm Eventifier is a step in that direction. BookMyShow is well-poised to becoming a billion-dollar company. I don’t see too many roadblocks,” says Prakash.
Paytm
Funds raised $575 million (committed)
What does it do: Paytm is a unique web-cum-mobile platform.
It has taken a big leap towards mobile commerce, trying to cash
in on the wide mobile handset penetration, and is today India’s
largest mobile commerce company. It started by offering mobile
recharge and utility bill payments, and now offers a full marketplace
to consumers on its mobile apps. It has over 20 million registered
users and has in a short span of time scaled to more than 15 million
orders per month.
Its USP: It is a mobile marketplace in the making—one that can compete with ecommerce sites such as Flipkart, Amazon and Snapdeal. It has got commitments from deep-pocketed investors, including Alibaba (China’s ecommerce giant) and SAIF Partners, among others. The funds will be used to expand Paytm services with a view to dominating the online payment business that is expected to grow rapidly in the next few years in India.
How niche Paytm is already a leading firm in the electronic payment space. The long-term goal of Paytm is to be a financial services company for India’s unbanked population (41 percent of the total). The company intends to be the first gateway for paying bills and transferring money.
Why it will survive: A unique, well-accepted model and deep pockets will certainly help Paytm grow into a larger firm. “Payments are natural monopoly… The world has three large credit card companies; there would not be more than two large firms out of India in this space,” says Mukul Gulati, India head, Zephyr Peacock, an India-focussed private equity firm.
Pepperfry
Funds raised: Rs 164 crore
What does it do: Pepperfry is India’s largest online
furniture, home and living marketplace with over a million customers.
It offers more than 45,000 products across categories like furniture,
home décor, lamps and lighting, bath and body, kitchen,
home appliances, housekeeping and pet supplies. Started in 2012,
its managed marketplace model allows small and medium businesses
to sell their merchandise to millions beyond their geographical
reach. It has over 250,000 registered customers and has grown
350 percent year-on-year.
Its USP: Reach and range. It delivers to customers’ doorsteps in 150 cities. It plans to have 380 trucks by year-end, becoming one of the largest logistics companies. Its overall catalogue size is 80,000 listings (of which 10 percent are furniture), which is eight times the size of the next player, claims Ashish Shah, COO and co-founder of Pepperfry.
How niche It will remain loyal to its niche of furniture and furnishings, though it plans to go deeper into these segments by increasing product categories. About 55 percent of its business comes from repeat customers.
Why it will survive: Pepperfry’s current USP is reach, says Srikanth Iyer, founder and chief executive, Homelane. “They are in more locations than any competitor. They are far quicker than others in terms of delivery to remote locations. Pepperfry also stands out because it is the only one that is trying a mix of marketing: Not only online but also brick-and-mortar in airports etc. They are trying to build a brand which has the touch-and-feel element.”
Lenskart
Funds raised: Rs 200 crore
What does it do: India’s largest online optical store,
Lenskart, makes, prescribes, delivers and services eyewear to
over 1,000 customers per day. Nearly half of its customers live
in tier III and IV towns, such as Coimbatore, Puri, Mangalore
and Agartala. Though Lenskart sells high-end products like Ray-Ban,
most of its revenues come from mass-focussed in-house brands like
Vincent Chase and John Jacobs. It has also rolled out 60 physical
stores, mostly in tier III towns, to conduct free eye check-ups.
Lenskart does about 500 home check-ups every day.
Its USP: Over a third of Indians need corrective eyewear, and only a quarter of them have access to it. That’s the problem Lenskart is seeking to solve. Also, it has a first-mover advantage and is being backed by deep-pocketed investors. Physical stores will also add to its customer base and visibility.
How niche Lenskart has decided to focus on eyesight solutions in India. “It will not start selling shoes,” says founder Peyush Bansal. It already sells contact lenses, and ships products to countries like Australia, the UK and the US.
Why it will survive: Lenskart is trying to bring variety, says Pragya Singh, associate vice president, retail, consumer products and e-tailing at Technopak. “They have identified a space dominated by large regional chains with few national players. It’s about value and convenience. Eyewear needs a high service element. It’s a working model. What drives traction is multiple pairs—it becomes a fashion accessory. It’s easy to sell sunglasses but prescription eyewear has many other elements. They have a first-mover advantage too,” she says.
CarTrade
Funds raised: $44 million, one more undisclosed round
What does it do: CarTrade is India’s leading auto classifieds
platform with a focus on used cars. It offers vehicle listings,
price information and car certification. For those interested
in buying new cars, there are reviews, on-road prices, comparisons
with other models and latest news from the industry. It also operates
a B2B auction portal called CarTradeExchange, which is used by
banks and other institutions to sell cars in bulk. “We have
about 1.45 lakh listings on the site, four times that of any competition,”
says promoter-CEO Vinay Sanghi.
Its USP: It is the first company to offer consumer certification and repair estimates. There are 110 engineers in CarTrade who are responsible for a 125-point check about the car. They also produce the certification report. “We were the first ones to enable inter-city buying of cars. We got down to collating and bringing dealers from across the country on the platform,” says Sanghi.
How niche CarTrade will remain focussed on cars. Its main objective is to help consumers buy and sell cars using the internet. Its B2B exchange became the largest car auctioning site in the country.
Why it will survive: The automobile classifieds segment is being identified as the next billion-dollar opportunity, says Alok Mittal, ex-MD at Canaan Partners, who led the investments in CarTrade. “If you take any geography in the world which has more internet users than India, for instance the UK, the US and China, there are multimillion dollar companies in the used car space,” he says.
Ola
Funds raised: Over Rs 1,300 crore
What does it do: Olacabs.com is a marketplace for all kinds
of cabs and cars which can be booked on its online platform as
well as through mobile apps. The Bangalore-based company has a
fleet of over 1 lakh vehicles (an aggregated model as opposed
to ownership) operating across 67 cities. Ola says that it is
India’s largest aggregator of cabs, taxis and autos.
Its USP: It commands a market share of over 60 percent in the fleet cab-services industry in India. “Along with the mobile app, the cashless payment options [through Ola Money] and mobile technology for driver-partners, we have also localised offerings through a 24×7 call centre, cash payments and dedicated driver support systems,” says Bhavish Aggarwal, founder, Ola.
How niche At present, Ola plans to operate in the transportation space and expand its services across multiple categories (mini, sedan, prime and pink for women) within the cabs. “Our vision is to revolutionise personal transportation in India by making transportation available as a service on-demand without having the need to own a car,” says Aggarwal. Its current network has about 35,000 auto rickshaws as well.
Why it will survive: The main differentiator for Ola is the quality of the entrepreneur, reckons Avnish Bajaj, managing director, Matrix Partners India. Matrix is a series B investor in Ola. “Bhavish’s desire to win is par excellence and it shows in the aggression in execution. He is also the rare breed who has learnt quickly on the job and added strategic clarity to complement the executional excellence, which is a potent combination,” says Bajaj.
Housing
Funds raised: $121 million
What does it do: Housing.com is a real estate portal which
allows users to search for apartments for rent or for sale through
virtual tours of each room, using photographs and authenticated
details. Late last year, Tata Value Homes tied up with it to sell
apartments online, putting up an inventory of 150 homes across
four projects in Pune, Bangalore and Chennai on the site. Housing.com
sold 115 homes worth Rs 60 crore in five days, and has now tied
up with Tata Housing to sell properties in eight projects.
Its USP: Giving clients a near-perfect sense of properties and delivering realistic leads to brokers. Its proprietary 3D rendering platform, Slice View, helps customers check the building plans and floor plan for each home through a 3D model of the structure. It also uses data analytics to weed out listings that may have expired.
How niche Housing.com will always be in the real estate space, but within that, it is mulling over a precise business model for ecommerce, allowing end-to-end buying and selling of properties. Right now, it is into rentals, resale, land and new projects. It is about to launch serviced apartments, which would give it presence across all housing categories.
Why it will survive: “If you’re only depending on the integrity of online listings, platforms are open to misuse. You need to have verification and validation and that’s what Housing.com has done well. Realistic photographs are a huge plus,” says Devangshu Dutta, chief executive of Third Eyesight, a consulting firm.
Caratlane
Funds raised: $50 million
What does it do CaratLane is an online jewellery retailer
with a network of over 4,000 global vendors. It offers the largest
collection of diamonds and diamond jewellery in the country. It
has over 100,000 stock keeping units (SKUs) for solitaires. CaratLane
sells only diamonds certified by international laboratories like
GIA, AGS, IGI and HRD. Every gold product of CaratLane is hallmarked.
While CaratLane offers products in over 150 cities and towns in
the country, it also offers home trials for up to five jewellery
items across more than 20 cities.
Its USP: CaratLane, with its largest collection of diamonds, solitaires, unique and updated designs, has already established a name for itself among customers. Free trials called ‘try at home’ and no questions asked returns, along with authenticity guarantee certificates have further added to the comfort of customers.
How niche It will always be jewellery for CaratLane, which was originally into solitaires and later expanded into diamond jewellery and everyday wear. Now, it has launched evening wear. “It’s a function of us designing and moving up the ladder,” says Mithun Sacheti, founder.
Why it will survive: People might still buy traditional jewellery in-store but for gifting, everyday wear, online could occupy a nice niche, says Pragya Singh of Technopak. “CaratLane has bridged the gap between online/offline through ‘try-at-home’. The first few times you have to give customers this feeling you’re choosing the right product. They have also successfully established a niche,” she says.
BigBasket
Funds Raised: $60 million
What does it do: BigBasket.com is the first comprehensive
online grocery store operating in Mumbai, Bangalore, Hyderabad
and Pune. It has over 10,000 distinct SKUs and more than 1,000
brands in its list. No other e-grocery has managed to raise money
in a business where margins are wafer-thin. Fruits and vegetables
are procured only on order, which reduces loss of stock by 3 to
4 percent.
Its USP: It has the first-mover advantage as well as a pan-India presence. BigBasket has access to large capital, its founders have domain expertise in grocery management, and its emphasis on the use of technology and analytics distinguishes it from others. It also has the ability to supply and source products directly from farms and mills. Therefore, its perishable products have no warehousing, no storage and no preservatives.
How niche It will remain loyal to grocery etailing, but within that, it will add as many products as possible to cater to all household needs.
Why it will survive: Grocery shopping is a big pain in India, with heavy traffic, lack of parking space, long queues at payment counters and difficulty in carrying the products home, says K Ganesh, promoter, BigBasket. “We have grocery and tech domain expertise and the ability to scale and have a presence at multiple locations at low margins.”
PolicyBazaar
Funds raised: $37 million
What does it do: Policybazaar, co-founded by Yashish Dahiya
helps consumers compare products like term insurance, health insurance,
motor insurance and investment plans. It provides a neutral comparison
from all major insurance companies. Its online systems and integration
help consumers analyse products and provide them a hassle-free
gateway to buy online.
Its USP Unlike its competitors who tend to highlight the selling propositions of a plan, but hide its fine print, Policybazaar first understands the needs of the consumer and then suggests options to choose from. It is the single largest insurance distributor (online or offline) in India outside of banks, with over 30 million unique visitors each year.
How niche In early 2014, it launched a new platform called Paisabazaar.com to offer financial advisory services. Under this, it provides comparisons of non-insurance products, including different types of loans and credit cards. It will be further expanding its product offering by introducing financial instruments such as mutual funds and corporate deposits this year.
Why it will survive: The insurance sector is expected to get a major boost from the Reserve Bank of India as the central bank is looking at ways of financial inclusion, says Harminder Sahni, founder and managing director, Wazir Advisors, a consulting firm. “Insurance retail has a lifetime value; the customers are acquired for a lifetime. It has far more stickiness than brands,” Sahni says.
HOW THEY WERE CHOSEN
Forbes India spoke to a cross-section of experts in the ecommerce
space, including investment bankers, private equity investors,
venture capital firms and angel investors, besides analysts from
various industry verticals to arrive at this list. The companies
were selected on the basis of having a well-accepted product or
service, funds already raised and the potential for future growth.
(Published in Forbes India issue dated 20 March 2015.)
admin
March 16, 2015
Deepti Chaudhary, Shravan Bhat, Debojyoti Ghosh, Sohini Mitter, Forbes
India
Mumbai, 16 March 2015
When
Mithun Sacheti received a LinkedIn request from Tiger Global in
the first half of 2011, he didn’t even blink. It was probably
one of the many that came in every day, he thought. Turns out,
the chief executive and founder of CaratLane, India’s largest
online jewellery store, had never heard of the international investment
firm. (To be fair, Tiger Global does not have a website even today.)
A few days later, Sacheti learnt about Tiger Global’s credentials as an investment firm known for backing fast-growing local businesses worldwide. He did not waste a minute. A conference call was soon fixed up. But, put it down to happenstance and the busy life of an ecommerce honcho, Sacheti “forgot” to take the call.
Fortunately, the investment firm still didn’t give up on Sacheti and a meeting was set up with Lee Fixel, the media-shy partner at Tiger Global Management in New Delhi.
Two hours later, Sacheti left with a term sheet in his hand. And a month later (in June 2011), nearly $6 million were transferred to CaratLane’s bank account. The first investment by Tiger Global in CaratLane was in place. And last month, the startup announced that it had raised $31 million from Tiger Global, the fourth capital infusion by the fund in as many years.
Even a few years ago, this story might have sparked a gasp or two.
Not today.
The pursuit of Indian startups by global investors is no longer an exception, but rather the rule. And the more focussed the ecommerce vertical, the faster the chase. Just like Tiger Global first identified a category—jewellery—and, then, a company that was dealing in it exclusively—CaratLane. “People cannot discover the product in a giant website (a horizontal). Secondly, it (horizontal) doesn’t allow you to customise products,” says Sacheti, explaining why an investor like Tiger Global would prefer to back an independent online jewellery retailer instead of adding it as a category to the long product list of its large portfolio of horizontal ecommerce firms.
It is increasingly evident that investors in India have warmed up to ecommerce ventures that typically stick to a sharp vertical: Eyewear, grocery, aggregators for taxi and ticket services, financial products and so on. In 2014, 35 verticals were funded by investors who put in a total of $261 million into such firms, estimates VCCEdge, which tracks investment activity in the country. These niches are a far cry from horizontals (or marketplaces like Flipkart and Amazon), which engage in multiple categories and are generalist retailers.
Experts call this a step in the evolution of ecommerce in India.
There are currently three heavyweight horizontals—Amazon, Flipkart and Snapdeal—slugging it out for the top slot. They are all burning cash fast, have not yet reached profitability, have either deep pockets (like Amazon) or are backed by loaded investors and have left almost no space for a fourth undifferentiated, horizontal player.
But entrepreneurs have quickly realised that online retail is about more than the multi-product category play. The Indian ecommerce industry is likely to clock a compounded annual growth rate (CAGR) of 35 percent and cross the $100-billion mark in value in five years, a study conducted by The Associated Chambers of Commerce & Industry of India (Assocham) with PricewaterhouseCoopers (PwC) has said. According to the study, the Indian ecommerce industry is currently valued at $17 billion.
This expansion also means that, like those in other developed markets, Indian customers will scout for specialised offerings.
Investors, too, are keen on backing these ventures as they have better margins unlike the horizontals which are grappling with profitability issues. Also, many missed the ecommerce bus a few years ago as they either didn’t believe in the online retail business model or simply didn’t move fast enough. And now, valuations of existing big-ticket ventures have become too high for them to enter or compete against.
“Right now, one cannot get funding by competing against Snapdeal or Flipkart. It is not so simple to beat horizontals,” says Sasha Mirchandani, founder and managing director at Kae Capital, an investment firm, which has invested in HealthKart, an online health products store. “If you look at the US market, verticals have scaled up… take Zappos (a shoes etailer) or Diaper.com, for instance,” he says.
Verticals and horizontals tend to have different economics. Niche players need lower capital than a marketplace model does to scale up the business. Verticals also tend to burn less cash than their marketplace counterparts. “Verticals are interesting as margins are significantly better than horizontals,” says Niren Shah, managing director, NVP India, an investment firm which has invested in startups like FashionandYou and Pepperfry. “These companies are not much into discounts and, more often than not, these categories are inherently structured to support high margins; some of the gross margins are as high as 50 percent,” he says.
Verticals don’t have the scale of horizontals and not many of them will transform into multibillion dollar businesses but “they tend to become cash flow positive much faster”, says Shah, adding that furniture, home décor and grocery are the niches to look out for in the future.
Take Yepme, which retails its own brands online, and is looking at breaking even this year. “We operate after discount and coupons at a 48 percent margin because we are only private labels,” says Vivek Gaur, CEO and co-founder, Yepme.com, which started in 2011. The firm is now planning to take its offerings overseas.
The advantages notwithstanding, unlike for a horizontal, where a customer will find something of interest while browsing the site, the biggest challenge for a vertical is to identify an area which caters to a real customer need and is a real hook.
In the same context, creating entry barriers against cash-flush horizontals is a challenge for verticals as well. A few firms have, however, chalked out a thus-far effective strategy to combat the Goliaths. Lenskart, for example, not only ships spectacles, but also offers a number of features like home eye check-up programmes, a try-before-you-buy service, a virtual studio, new lenses in old frames as well as an exchange programme. The company also has 60 offline stores in the country. “Offline stores that do free check-ups are small outlets and mostly in tier-III towns. We believe the combination of stores and try-at-home initiatives complements our existing web platform. We are doing 500 home check-ups every day all over India,” says Peyush Bansal, founder, Lenskart.
Similarly, Pepperfry has planned an execution strategy that, he says, can’t be easily replicated by a horizontal. “Horizontals have built businesses on mobiles and fashion [categories]. They can create catalogues easily because the product exists and the brands are well known. For furniture, creating a catalogue is a mammoth task,” says Ashish Shah, CEO and co-founder of Pepperfry, an online furniture retailer.
The good news is that investors are optimistic: They say verticals are here to stay as the purchasing power of the Indian customer is on the rise. Aspirations, ease of multiple shopping options, free home delivery are further fuelling the demand. “Verticals require a critical mass and a certain purchasing power of consumers. The market needs to mature beyond staples… India is getting there. Brands are being built in the space,” says Prashanth Prakash, partner at Accel Partners, a venture capital firm that has invested in firms like Flipkart (horizontal) and verticals like Babyoye (baby products), Bluestone (online jewelry), BookMyShow (movie and event tickets), Myntra (fashion, apparel) and Urbantouch (cosmetics). Prakash, however, has a word of caution. “A player’s ability to give a meaningful experience to the customer is most important,” he says.
This is particularly relevant as verticals in India are not just about products. Services have also emerged as a strong focus, both online and on the mobile. Aggregators like Ola (cab services), Housing.com (real estate), BookMyShow, CarTrade (automobile classifieds) and Policybazaar (insurance) have emerged as front-runners in their categories.
“There was a time when horizontal classifieds gained traction and most dealers concentrated on getting listed. Now in the second phase, verticals are gaining traction. Companies are building deep services. That is bringing more people to their sites,” says Alok Mittal, ex-MD at Canaan Partners, who led the investments in CarTrade and also sits on its board. According to him, the automobile classifieds segment is being identified as the next billion-dollar opportunity. “The used car market is growing faster than the new car market. The margins on used cars are about 5 percent, while on new cars they are zero.”
For verticals, the saying ‘what a needle can do, a sword can’t’ is most appropriate. But, at the same time, if a company’s definition of niche is too broad, it becomes a generalist. And if the definition is too narrow, there is a fear that it may not have an optimally-sized market to cater to. For example, in the furniture space, companies are also offering home furnishing, home décor and kitchen goods—areas within their purview of offering home solutions. Just offering furniture may not be enough —customers buy two to three pieces of furniture a year but need around seven to eight bed sheets annually.
“These are the reasons for my customers to come back to my site. Margins tend to be 30 to 40 percent,” says Ashish Shah of Pepperfry. “Horizontals build on ‘search’. We are built on ‘browse’. I don’t expect customers to enter an exact item in the search bar,” he says. Shah can afford to sound confident. In the US and Europe, home and furniture account for 15-17 percent of overall ecommerce businesses.
Shah says it is imperative for his kind of company to engage with customers on an ongoing basis. One mode of engagement for Pepperfry is through product trials—think cleaning chemicals, housekeeping items, ladders, and light bulbs, among others. These are products that people need on a daily basis and there are high chances of an impulse purchase when they are browsing through the site. “They bring customers to me every month: Fifty-five percent of business happens from repeat customers, 50 percent of traffic is organic,” he says.
Constant upgradation of their offerings, adapting to customer needs and some lucrative surprises will help build brand stickiness. “I think if we don’t spend over 70 percent of our time, effort, mind space on products, two years later, nobody is going to remember us,” says Ashish Goel, founder, Urban Ladder, an online furniture store.
Not surprisingly, verticals—thanks to their niche offerings and positive gross margins—tend to attract acquirers. Globally, Amazon has acquired niche business like Zappos and Diaper.com, two very large verticals. Closer home, Flipkart acquired Myntra to strengthen its position as a fashion retailer. In February, Mahindra & Mahindra, which owns Mom & Me, one of the country’s largest chains of offline stores for baby and infant products, acquired Nest Childcare Services, which runs ecommerce site Babyoye.com.
Two weeks ago, online marketplace Snapdeal acquired Exclusively.com, an online retailer of premium and luxury fashion, for an undisclosed amount. Snapdeal is looking to touch $2 billion in gross merchandise value in the fashion category this year.
There are multiple acquirers present now, says Shah of NVP India. Global firms like Alibaba and Amazon are keenly looking at options here as well, he adds.
In India, ecommerce has largely seen consolidation through mergers between common VC-backed ventures—and typically in the same line of business. “You can’t have three grocery chains online,” says Rahul Chowdhri, partner, Helion Venture Partners, a VC firm. “People will remember only one name. And consolidation of the ‘Myntra getting acquired by Flipkart’ kind will take a few more years. All category leaders are still scaling up.”
K Ganesh, serial entrepreneur and promoter-founder of Portea Medical and BigBasket.com, says verticals do have the potential of going public but Indian regulations regarding profitability may come in the way. “IPOs are still about five years away. In the meantime, you will see a lot of trade sales and mergers and acquisitions at great valuations,” he says. Ganesh says in the next three years, India will see 20 companies in the $1 billion range and 100 companies in the $200 million to $1 billion range. “It’s absolutely possible.”
While the economics of verticals make sense, these companies have their own issues. Over the last 18 months, the play in ecommerce product retail has been all about marketing and customer acquisition. “The cost of acquiring customers has ballooned and stickiness is quite low, so most of the previous customers have to be re-acquired like the new ones. With an average acquisition costing about Rs 500-1,000 per customer, you’re losing money on every transaction in low-value products,” says Devangshu Dutta, CEO, Third Eyesight, a retail consultancy.
Also, a few companies like Bluegape, an online merchandise portal, and Koolkart shut shop as they did not get enough traction. Access to capital is also often an issue.
For BookMyShow, payments continue to be a problem and it is planning to focus on that. “Talent acquisition is another area that we are looking at,” says founder and CEO Ashish Hemrajani. To that end, BookMyShow did a talent drive in association with Accel Partners at the IIMs, ISB and other B-schools.
All said and done, the lure of the verticals and aggregators is here to stay. As Anil Joshi, partner, Unicorn India Venture, an investment fund, puts it, “For smaller investors, verticals are the only option.”
(Published in Forbes India.)
admin
March 6, 2015
Saran Poovanna, The New Indian Express
Bengaluru, 6 March 2015
The
turbocharged e-commerce in India may be staring at its second
round of consolidation with heightened Mergers & Acquisition
(M&A) activity in this space. According to experts, the trend
of M&A is set to grow by leaps and bounds.
“Any acquisition or merger will continue to remain good
for the ecosystem if it creates significant value. Together, with
distinct focus segments on supply and demand, we can continue
to grow the market faster,” Anand Subramanian, Director,
Marketing Communications at Ola Cabs told Express.
Ola acquired TaxiForSure for over $200 million in March 2015.
In the ‘first round’ of consolidation, homegrown Flipkart
bought fashion e-tailer Myntra for around `2,000 crore. Since
then there have been many such acquisitions by e-commerce players.
Even big companies like Infosys are looking for a piece of the
startup pie.
Global consultancy firm PwC has estimated that the sector is expected to grow from $16.4 billion today to over $22 billion by 2015.
The Economic Survey 2014-15 pegged this sector’s growth at 50 per cent in the next 5 years.
“Consolidation is part of the sector and we will see more in the coming days,” said Sangeeta Gupta, Senior Vice-President, Nasscom.
“Consolidation or acquisition by bigger players would help smaller companies with scale,” she said adding this would facilitate a mature market.
E-commerce companies have raised over $4 billion private funding, which have been used for expanding presence and scope and even acquisitions.
Stating that there are two main factors responsible for this, Devangshu Dutta, CEO of retail consultancy, Third Eyesight said that one is that of a push from investors and the other is of acquiring differential capabilities.
“Its faster to acquire a company with a specific capability,” he said and added that if a company waits to build capability organically, then visibility and market opportunity can start to decline.
“Growth can be organic or inorganic,” Anand said and added, “ Inorganic growth in such cases helps leverage strengths that have been built by brands over time.”
On if niche product or technology companies can continue to work without being acquired, Dutta said that this was possible in the long term only.
“In the short term, the environment is tough for niche products companies to sustain themselves,” he said.
(Published in The New Indian Express.)
admin
March 5, 2015
Sagar
Malviya, The Economic Times
Mumbai,
5 March 2015
Reliance
Industries (RIL) has sought shareholders’ approval to make major
forays into the online retail space to cash in on the boom in
the country’s e-commerce market that is expected to grow four-fold
to almost $70 billion by 2019.
The Mukesh Ambani-run firm included a clause of "operating, establishing, providing and managing e-commerce and m-commerce websites, direct-to-home and mail order services for all categories of products and services, and dealing in all kinds of goods, materials and items in India or in any other part of the world" in a recent notice to its shareholders.
A Reliance Industries spokesman said the activities are closely related to the firm’s initiatives in retailing and digital services which are being implemented through substantial subsidiaries. "This will facilitate creation of value for Reliance shareholders by expanding the scope and breadth of offerings from these two businesses," he said.
The move is part of company chairman Mukesh Ambani’s wider strategy of placing its telecom venture Reliance Jio Infocomm, which is set to launch its 4G mobile and data services this year, at the intersection of "telecom, web and digital commerce" as he mentioned at the company’s AGM last month.
It comes at a time when e-commerce business is growing at a rapid pace in India, with players such as Flipkart, Amazon and Snapdeal luring Indian consumers by offering heavy discounts across products.
According to a joint report by Boston Consulting Group and Retailers Association of India, e-commerce market in the country is expected to quadruple to $60-70 billion, or about 3,72,000-4,34,000 crore, over the next five years. Increasing Internet access through affordable smartphones and efforts by online retailers to develop payment channels such as cash on delivery, mobile wallets and streamlined logistics infrastructure are expected to boost e-commerce growth in the country.
To shore up its nascent e-commerce business, Reliance is expected to reshuffle jobs within the group and not necessarily bring all outsiders. Recently, the group moved Anupama Ahluwalia from Reliance Jio into an expanded role in its retail arm Reliance Retail as chief marketing officer.
At present, Reliance Retail’s online presence is restricted to Reliance Fresh Direct that sells fruits and vegetables and home and personal care products through a virtual store. The company – which operates 2,285 stores across fashion, lifestyle, digital and food segment – dislodged Future Group as the country’s largest retailer by revenues earlier this year.
Experts say its deep pockets and existing retail logistics infrastructure will help Reliance in the e-commerce space.
"While online is a potentially large market, whether Reliance entry could be disruptive is still a question," said Devangshu Dutta, chief executive at retail consultancy Third Eyesight. "The e-commerce sector itself is getting cautious in spending money on marketing and discounting. While the stakes and capital requirement has increased, Reliance has an advantage of having a deep pocket," he said.
Though many retailers in India are struggling with falling store traffic as shoppers make more purchases online, food and grocery retailing still remains predominately insulated.
Yet, several retailers including Future Group and Aditya Birla Retail have either entered or plan to enter e-commerce space, especially when their stores network and warehouse could come handy to cut logistics costs and delivery time.
(Published in The Economic Times.)
admin
March 2, 2015
Varun
Jain, The Economic Times
New
Delhi, 2 March 2015
Want
to cook an exotic dish just the way Sanjeev Kapoor does it? Gurgaon-based
online grocer Meragrocer.com, which launched operations recently
and is endorsed by the celebrity chef, will soon start offering
a solution: you can order chef special recipe packs that contain
all the ingredients in the same quantity that Kapoor uses, along
with detailed cooking instructions.
Online grocers such as Meragrocer.com, BigBasket.com and LocalBanya.com are showcasing food recipes and blogs on their websites and selling all-in-one, do-it-yourself kits to engage the customer. They help the consumer pick the right ingredients at the right quantity at one go, to make their favourite food.
"These initiatives are more about sharing knowledge, ensuring consumer loyalty and creating a high brand recall," says Saurabh Chadha, co-founder and COO of meragrocer.com.
Bengaluru-based BigBasket.com is working on the same lines, too.
The way groceries are consumed have changed, says co-founder Vipul Parekh. Today there is a lot of interest in people wanting to try out new cuisine – once they know the recipe, they want to figure out how to cook it and start looking for ingredients. "We are servicing this need of our customers wherein they can see the recipe and then can buy the whole recipe on our site, instead of buying all the ingredients individually which is a difficult task," he says. "The idea is to give everything in the single box."
The importance of putting up recipes is to give the customers another way of shopping for grocery. According to Parekh, this is a channel which e-grocers are looking to exploit, and he is looking to build a full-fledged business around it. This trend is fueled also by cooking shows and food channels that are becoming increasingly popular, he says.
Godrej Nature’s Basket, the premium food retailer owned by the Godrej Group which has reportedly acquired online grocer ekstop.com, has a detailed recipe and food blog section. According to chief executive Mohit Khattar, the food blog and food facts section empowers consumers to learn about ingredients from the best in the business, while the recipe section not just shares easy recipes to recreate world food, but also enables customers to order all the ingredients simultaneously.
Devangshu Dutta, chief executive of retail consultancy firm Third Eyesight, says in India grocery is a category that the customer is willing to explore and experiment with. So any retailer, physical or virtual, that can present new product suggestions frequently can also avoid price-based competition and can look at sustaining better margins, he says. "A great vehicle to do this is to present recipe ideas, especially of cuisines that are unfamiliar, that is from other parts of the country, or from other countries. This can help the retailer side-step commoditisation of their product and service offer."
LocalBanya.com relies more on food blogs than recipes to engage with customers. It has also put up content on the website explaining the use of various ingredients which are not common to Indian households. "While we are selling a lot of rare ingredients which many our customers might not have heard of or maybe they do not know their use or the health benefits associated with them, we thought we have the opportunity to create content around them and educate people and at the same time drive our sales," says co-founder and chief operating officer Rashi Choudhary.
(Published in The Economic Times.)
