CashKaro may be profitable in next 18 to 20 months 


December 30, 2016

Shipra Srivastava, Retailer  
New Delhi, 30 December 2016

The Gurgaon-based  cashback  and  coupon website  which has raised Rs 25 crore in its Series A funding round from Kalaari Capital in November 2015, and  a very small amount of investment  from Ratan Tata in January this year, is very close to achieve its break-even.  

In an exclusive conversation with, Rohan Bhargava, Co-founder,, said, “We are very close to our break-even. In fact, we should be profitable in next 18 to 20 months.” The raised funds are being utilised to ramp up marketing, technology and expanding the human resource.  Currently, the company has the human resource of 75 people.  As of now, CashKaro  is earning minimum 10% commission of every transaction that happened via Cashkaro collaborated e-retailer.

The company is scouting for suitable investors to support its future campaigns.  “We would be keen for Series B and C funding from the investors who are sufficiently funded to support us in our future campaigns. We are also looking for expansion in to new countries,” informed Bhargava.

Presently, the company is registering ten to twenty thousand transactions per day, and has tied up close to 1200 online retailers including category leaders like Flipkart, Amazon, Yatra, makemytrip, and so on. The company is in talks with many offline retailers to initiate a programme that would offer an add-on value to customer on existing loyalty programme that is run by the retailer.

Speaking on same Bhargava said, “In next two weeks I will be able to give provide more information on same. We are in talks with many offline retailers.  Again, our offerings will be add-on to existing loyalty programme offered by the retailer.  We would be working with retailer on making customer experience seamless. Our motive is, for customers, the speed of getting the cashback should be great. Same time, the entire exercise should fetch value to retailer. On top of that, the specific needs of the retailer should be addressed.” 

The company is also very bullish on tier 2 expansion. Currently, 40 percent of its traffic comes from small towns. The company is also looking to tap unorganized players (in retail segment) from small towns.

No doubt, affiliate marketing sites like CashKaro can help to maintain a diversity of sources for customer traffic in a cost effective way. In fact, in some cases affiliate traffic may be better as affiliate sites usually already provide some context to the product (for instance, product comparison websites or lifestyle blogs), so the traffic is more of qualified leads.

“Currently, with footfalls and spending being affected by a muted consumer sentiment, cashback deals and coupons can help to create not only traffic, but conversions for brands,” shared Devangshu Dutta, Chief Executive, Third Eyesight.

“However, in the longer term, the business environment for affiliate websites is tougher – over time, with fewer online players to send their traffic to, commissions may be squeezed, margins slabs could be changed, and the period for expiry of a referral may be shortened. Therefore, expanding the offline footprint and deeper penetration into the market is vital for the sustained success of an affiliate marketing player,” he summed up. 

(Published in Retailer)

Grow Up To Find Growth

Devangshu Dutta

December 29, 2016

In 2016, brick-and-mortar modern retailers seemed to have begun recovering their confidence, and cautiously investing in expansion. However, currency shortage has significantly dampened demand at the end of the year. The hangover would continue into the first half of 2017, and consumers could be muted overall on discretionary purchases, including fashion, mobile upgrades and out-of-home dining.

On the other hand, while digital transactions introduce a note of caution (friction) in the consumer’s purchase decision, for e-tailers they do reduce complexity, cash-handling costs and potential returns which could provide significant unexpected wins.

I’ve written about this for years, and don’t tire of reiterating: the retail sector must recognise that shopping is a unified activity for the consumer; physical stores and non-store environments are alternative but complementary channels. Brands can and must use whatever channel mix works for them, and brick-and-mortar retailers need to invest in creating an integrated growth blueprint towards “unified commerce”.

On their part, while e-commerce companies are constrained by FDI policy, they will need to invest more in developing “old economy” strengths – strong product differentiation and distinguishable brands. Fashion, accessories, home decor and other lifestyle products are strong drivers of gross margin for all multi-product retailers, and e-commerce players struggling on the path to profit would focus on these even more, as well as on private labels. They also need to have management teams that are able to cast their minds 3-5 years into the future, while keeping close watch on immediate cash flows. Capital is available, but turning risk-averse. All businesses need to focus on up-skilling their teams, retaining good people, improving processes and adopting technology. In recent years, growth in the retail sector seems to have been driven by a “spray-and-pray” approach, not necessarily management sophistication. Spending like there’s no tomorrow is a sure way to no tomorrow.

In short, 2017 could be the year where the entire retail sector grows up – a lot. We hope.

(This piece was published in The Hindu – Businessline on 29 December 2016).

2016: The year start-ups began their call for protectionism 


December 28, 2016

Alnoor Peermohamed, Business Standard

Bengaluru, 28 December 2016

The year 2016 will go down in history as a tumultuous one for India’s new economy companies that utilise the reach of the Internet to do business. The year started off on a low in terms of funding and valuations of start-ups, carrying over a sentiment of excessiveness from the previous six months.

It was a contrarian 12 months, with every expert under the sun saying that the fundamentals of the market — growing Internet penetration, increasing per capita income, a strong economy compared to a weak global market — remained extremely strong, yet companies riding on this wave were being punished.

This neglect from investors finally culminated when Sachin Bansal and Bhavish Aggarwal, two of the biggest poster boys for India’s start-up ecosystem, passed on the blame to foreign competition which came into the country with pockets full of cash. To their dismay, the red carpet treatment for foreign firms isn’t going anywhere, with Chinese big-daddy Alibaba planning to make an entry soon.

“My concern would be that 2017 may be a resurgence of aggressive pricing and discounting. It’s great for advertising and the media, but from the point of view of the sustainability of business, from the point of view of having a healthy consumer business ecosystem, you need a balanced approach,” said Devangshu Dutta, chief executive of Third Eyesight. “Just purely from a capital availability point of view and ability to spend point of view, Flipkart and Snapdeal would be at a bigger disadvantage.”

The year began with Prime Minister Narendra Modi’s big push for Start-up India with announcements of a fund of funds, incubation centres and promoting local start-ups across the country. But as the year came to a close, Modi’s move to scrap large value currency hit start-ups as business slowed across industries.

However, one bright spot was digital payment companies such as Paytm, Freecharge and Mobikwik which benefitted immensely from the move, with their user bases and the number of transactions on their platform going up in instantly.

Growth in digital payments, considered the backbone of e-commerce globally, could turbocharge the rest of India’s Internet ecosystem. Experts have dubbed 2017 the year of FinTech in India, with the government’s digital push helping grow and giving rise to secondary digital finance companies that deal in lending, helping consumers invest in capital markets and those that offer services to small businesses for handling the day-to-day running digitally.

Going into 2017, it is to be seen if the confidence in India’s start-up space returns. While angel investments have remained strong, the transition to Series A and further rounds needs to pick up steam. Consolidation in sectors such as e-retail, grocery delivery and food tech could give investors more confidence to return.

The focus on the scale will continue, however. “VC’s today are looking at how quickly can you add your first customer, your millionth customer and your 200 millionth customer. India is a volume game, if you do not get your 10 million customers in 6 months time they feel you have lost the game,” said K S Viswanathan, vice president, Industry Initiatives, Nasscom. 

(Published in Business Standard)

For QSRs, India isn’t a quick-fix but a long game

Devangshu Dutta

December 27, 2016

Dominos India

When American fast food standard bearers McDonald’s and Domino’s Pizza stepped into India in the mid-1990s, the market was just ripe enough for take-off.

McDonald’s and later Domino’s Pizza can be credited with not just growing the consumer appetite for fast food but also for fostering an entire food service ecosystem, including fresh produce, baked goods, sauces and condiments, and cold chain technology.

India has been typically difficult for business models driven by scale, replicability and predictability. The customer is price sensitive, operating costs are high and non-compliance of business standards is a frequent occurrence. In this environment, these brands have reinvented the meaning of meals, snacks and treats.

Their growth has set the stage for other international players and also set business aspirational standards for Indian food entrepreneurs and conglomerates alike.

Product experimentation has also been an important part of their success; it keeps excitement in the brand alive and help improve footfall. However, how far a product sustains and whether it becomes a menu staple can’t be predicted accurately. New products also need significant investment in both supply chain and front-of-house changes in standardisation-oriented QSRs, so the new product launch cannot be undertaken lightly. This is one reason these successful QSR formats don’t overhaul their menus drastically but make changes incrementally.

For these market leaders, future scale and deeper penetration is only feasible with higher visit frequency. For growth in middle-income India, they need to become a significantly cost-competitive option to be seen as more than a ‘treat’ or celebration destination.

So, while both McDonald’s and Domino’s Pizza have invested significantly in Indian flavours and menu offerings, perhaps it’s also best for them to reconcile with the fact that there will be a significant part of the consumer’s heart, stomach and wallet that will remain dedicated to indigenous offerings.

In a global environment that’s turning hostile to fast food, India isn’t a quick-fix growth market, but it’s certainly one to stay invested in, for the longer term.

And I have no doubt that as much as these companies aim to change India, over time India will also change them.

(Also published in Brand Wagon, The Financial Express)

eBay India’s sales jump three-fold, but losses mount


December 27, 2016

Richa Maheshwari, The Economic Times
Bengaluru, 27 December 2016

eBay India, one of the earliest online marketplaces in the country, posted a three-fold jump in sales in 2015-16. However, its losses widened to Rs 262 crore in FY16 from Rs 172 crore a year ago despite various costcutting initiatives.

The company posted revenue or income of Rs 392 crore for the fiscal 2015-16, according to its annual filing to the Registrar of Companies. It’s revenue stood at Rs 132 crore in the previous fiscal.

In comparison, Amazon Seller Services’ turnover for the previous fiscal rose 116% to Rs 2,217 crore, while Flipkart Internet’s sales increased 153% to Rs 1,952 crore during the same period.

These numbers are not earnings from actual goods sold on their portals, but transaction and listing fees from sellers and advertising revenue, which form an e-commerce site’s actual income. E-commerce firms charge sellers anything between 5% and 20% of the value of goods as commission.

“eBay is now playing defensive rather than strategic for some time as India is not a priority market for them. They have reconciled themselves as a small player and are now narrowing down their losses,” said Devangshu Dutta, CEO of consultancy firm Third Eyesight. 

“Investments by ecommerce giants Amazon and Flipkart have helped in expanding the footprint of the sector, especially of players with a small base like eBay,” he added.

The company declined to comment. “eBay India is a 100% subsidiary of eBay Inc and as a policy we don’t comment on country-specific financials,” said the official spokesperson of eBay India.

The company is now reducing its workforce in India by laying off engineers and data analytics professionals. Last Month, the company sent across an email to its employees in Bengaluru, saying, “We are also eliminating full time employee (FTE) and additional workforce (AW) roles supporting other domains in Bengaluru.

This is not a cost-cutting decision, rather, it is a decision to focus resources in locations with critical mass.” A copy of the mail seen by ETalso said that eBay will be hiring replacement roles at other locations particularly Shanghai and some in the United States. “A limited number of Bangalore based individuals will be asked to stay on for a transition period or offered relocation to the US.”

San Jose-based eBay bought local auction platform for $55 million (about Rs 344 crore) to enter India in 2004, at a time when online retail was unheard of.

The company, however, lost its earlymover advantage in India to rivals Flipkart, Snapdeal and Amazon as these players took to investing heavily in customer acquisition by offering deep discounts. Last month alone, Amazon invested Rs 2,010 crore in its Indian unit, taking the company’s total investment in Amazon Seller Services to Rs 11,638 crore.

According to a Morgan Stanley Research released early this year, India’s ecommerce market will be pegged at $119 billion by 2020 against the earlier estimate of $102 billion, and the total Indian internet market size (including the online food-aggregation business) will grow to $159 billion from $137 billion.

(Published in The Economic Times)