Firstpost
New Delhi, 18 October 2016

Online festival sales and the big billion day sales are presumably happy times for customers going by the units sold claims by online market places. However, they are creating much heartburn for some of the white good manufacturers whose products are being sold at prices below what they are being sold at the company showrooms or at the retailer’s end.

The combined sales of all the three e-commerce entities in the recently concluded five day big billion day sale spectacle was pegged at around Rs 6,500 crore, up 20 percent over the previous year, according a report in The Financial Express.
 
The Bengaluru-headquartered Flipkart pipped its nearest US-based online retail giant Amazon’s Indian arm with 15.5 million units sold against the latter’s 15 million units.

White goods manufacturers are now crying foul at the heavy discounts being offered, according to The Economic Times.

It isn’t that the discounts offered by online marketplaces are really that huge on all the products, says Nilesh Gupta, Managing Director, Vijay Sales, consumer electronics chain. He sees online as a space that creates a market for goods.

“Though consumers check for white goods and electronics online, the purchases are made offline, usually. The prices of the white goods and electronics are not hugely different to impact offline sales or market,” he says.

Consumers don’t make large ticket purchases of white goods periodically, says Gupta. When they do realise that if the product brought online is not being repaired by after-sales service of the company, then consumers will be cautious on buying these items.

It is a myth that is being created by the online marketplaces that they offer ‘discounts’ during festival periods, says Gupta. “It is only offered for select products and not across all product categories. On white goods too, discounts are minimal. I see this discounting by online marketplaces as a disturbance for offline businesses for 3-4 days and then it dies down. The online sales and discounts are a temporary phenomenon,” says Gupta, dismissing the fuss over large-scale discounts and sales bonanza that online marketplaces whip up periodically. “The discounts are hardly much,” he says.

It is worrisome, though, some say that not all white goods sold come with a warranty, while some concur that they are basically clearance sales. Even those who claim that goods sold on the marketplaces are goods which are not in demand are worried over potential loss of reputation for the company. That is one of the reasons why besides the oft-voiced complaint of vendors and retailers associations, white goods manufacturers too are now raising the pitch against discounts offered by online marketplaces.

Companies want to protect the price points at which their products are sold and would not want a marketplace to lower it than what they offer offline. “When the price of a product is knocked down on a marketplace, for instance, it affects the brand’s perception in the consumer’s mind and also at the dealers,” says Devangshu Dutta, Third Eyesight.

Indian rules allow for a Maximum Retail Price (MRP), but since there are no rules yet to take action on anyone who sells below it, they can be sold by marketplaces at below MRP under the guise of discounts and sales, informs an analyst.

Though everyone wants to sell products at ‘exciting’ prices cashing in on festival period sales, aggressive discounts can impact the brand’s credibility with the trade.

The consumer runs the risk of getting a product that does not offer a warranty and the company not willing to do after-sales service. When that happens, the brand’s credibility goes down for the consumer as well.

But some brands do have contracts that do not allow for their products being sold at the contractual price.

For instance, furniture. Godrej Interio has a contract drawn up with online marketplaces which do not allow for the latter to sell their products at a rate below what is stipulated.

“We work with a lot of marketplaces. We deliver the products though it is sold online through a marketplace. Marketplaces do not have an inventory for our products. We don’t encourage a price advantage that goes against any of the channels through which our products are sold,” says Bedraj Tripathy, Marketing Head, Godrej Interio.

The company also does its own checks on marketplaces to ensure that their products are not sold at prices below what has been mandated through the contract.

(Published in Firstpost)

Rashmi Pratap, The Hindu Businessline

Mumbai, 17 October 2016

When Neeraj Kakkar and his team at Paper Boat decided to launch Kanji, a tangy probiotic drink popular in Punjab and Uttar Pradesh, they were surprised to find that the original recipe had been modified due to unavailability of the key ingredient: purple carrot.

With orange and red carrots having taken the Indian market by storm, farmers had virtually stopped cultivating the variety needed to make Kanji. And the substitute was a combination of orange carrots and beetroot.

After an intensive search across geographies, they learnt that purple carrots were being cultivated in southern Turkey. Hector Beverages, the parent company of Paper Boat, imported its seeds in 2014 and began cultivating in Udhagamandalam (formerly Ooty). Now, the first crop is ready, and Hector Beverages is looking to add Kanji to its portfolio by this winter.

“We want to be the reference taste for every beverage we launch. We also believe that if there is something better-tasting than our product, we will stop selling it,” says Kakkar, explaining why he didn’t settle for the carrot-beetroot combination for his Kanji.

And that is one of the pillars of the company’s disruptive business idea, which has helped Paper Boat become the preferred drink for many despite entering a market crowded by the Pepsis and the Cokes, as late as in 2013.

The disruption

Paperboat created a new category of branded ethnic-flavoured drinks when it burst on the scene, and its packaging too set it apart from the crowd.

Devangshu Dutta, chief executive at retail consultancy Third Eyesight, says Paper Boat’s innovative products and packaging have been a force of ‘creative disruption’, and the company has been able to back that up with distribution.

“Paper Boat’s traditional Indian flavours and its differentiated packaging give it a unique look at retail stores. The company has clearly gone after market share and taken a penetrative approach. Whichever geography they choose, they are going after it very aggressively. It is clear that they want to be a deeply penetrated mainstream product,” he says.

But making a mark wasn’t easy. Retailers were wary of stocking the products, fearing they wouldn’t be sold. And that’s when Paper Boat’s deployed its second disruptive strategy: a no-questions-asked return policy. “We gave our retailers the freshest of products and refunded them in full in case of returns,” says Kakkar.

Most large companies, in contrast, only refund a percentage of the money. But Paper Boat’s ‘insurance’ cover on returns ensured that its Aam Panna, Gol Gappa and Aam Ras beverages adorned every retailer’s shelf.

The third pillar of Paper Boat’s success has been customer-centricity: it sources the best quality raw materials from across the country. “We have invested in quality function. Our aim is to be better than MNCs because being equal to them has no meaning,” says Kakkar.

Another factor, which Kakkar believes has worked well for the brand, is its communication strategy. “Be it communication on TV or social media, we have followed the same distinctive tone of nostalgia and innocence. Once you speak the same language, people remember you better.”

The stories that the brand narrated were reminiscent of the way IndiGo airlines lovingly created stories for its Airwiches (sandwiches on air). Tellingly, Paper Boat beverages are served on board IndiGo, bringing two great storytellers together at 30,000 feet.

Paper Boat relies heavily on digital marketing, and its digital campaigns are as funky as the brand. On Instagram, it tells its brand story using creative doodles, videos and photographs, cleverly using two puppies named Hector and Beverages to add fun to the storytelling.

“We are digital first and mass media second. We use the cheapest way to reach out to people,” says Kakkar.

The challenge

But according to Harish Bijoor, CEO of the Bengaluru-based brand consultancy that goes by his name, “Paper Boat’s communication is good, interesting and different, but it is niche — and that is a negative.”

“Niche marketing is good as an early entry strategy, but if a brand wants to appeal to a slightly larger mass, which has the money, it cannot remain niche,” he says.

Today, ethnic flavour drinks have a nearly 50 per cent share of the Rs2,000-crore juices category. Already, other brands – Dabur Hajmola, Cocofly – are emerging, with ethnic flavours similar to Paper Boat’s. Copy-cats typically eat into the market share of the incumbent. Going forward, Paper Boat may have to reach out to a larger audience in a tone familiar to them.

Dabur’s Hajmola Yoodley is surprisingly capturing public imagination. It’s seen more on modern trade shelves (which is not surprising, given Dabur’s FMCG distribution strength) and is piggybacking on the familiar Hajmola brand, which helps with customer connect.

Dutta believes that Paper Boat’s geographic footprint can grow over time, as has been the case with some other players. “They have an adequate presence in certain geographies and they are not as strong in some others just like many other FMCG brands. I think it is a matter of time before they expand,” he adds.

Paper Boat, meanwhile, is also keeping a close tab on costs. It replaced tetra packs with a flexi pouch that uses just 8gm of plastic as against 25gm for a pet bottle, making it cheaper by at least 50 per cent. “Even transportation costs go down with this packaging,” Kakkar points out.

And profitability, he says, is not a concern. “Ours is not a cash-burn business. We continue to invest in growth and advertising (at the cost of profitability),” Kakkar adds.

For now, the company has settled down to a strategy of having some year-long products like Chilli Guava or Aam Panna and other temporary launches once a year like Thandai during Holi, Panakam during Ram Navmi and Kanji for two months in winter.

So far, Paper Boat seems to have got its mix right. Its ability to continue to juice out success from its differentiated strategies will, however, be tested over the next few years.

(With inputs from Chitra Narayanan)

(Published in The Hindu Businessline)

Madhav Chanchani, The Economic Times
Bengaluru, 17 October 2016

FirstCry founder Supam Maheshwari is one of the only entrepreneurs in the online-retail space who was also running a business during the 1999 2000 dotcom bubble, which has perhaps helped him chart a different course from his peers. His company started adding offline stores in 2012 when omni-channel was not the buzzword, FirstCry is based out of Pune and not startup hotspots of Bengaluru or Delhi, and he has also been able to spin off a logistics business.

And on Saturday , Maheshwari pulled off a unique transaction where his company acquired Mahindra BabyOye in a stock deal and also secured an investment from the $18-billion conglomerate. By consolidating its largest competitor, the 42-year-old Maheshwari will now be the CEO of by far the largest baby and mothercare retailer in India, both online and offline.

“His ability to think strategic and macro, and suddenly go deep micro is something very unique,” said Sudhir Sethi, chairman of IDG Ventures India, which invested in the company in 2012. “He is extremely comfortable with extremely comfortable with uncertainty, and charting out a new path which has not been done before.” Players in the online commerce market will now keenly watch Maheshwari, who unwinds by playing squash on weekends and spending time with family, as he integrates the offline operations of Mahindra BabyOye and FirstCry to build an omni-channel play.

“There is no divide between on line and offline channels, as from a customer’s point of view it’s retail,” said Devangshu Dutta, CEO at retail consultancy firm Third Eyesight.

“Omni channel holds potential over the long term and companies need a management team which understands the business.”

But the going has not always been so smooth for Maheshwari, a mechanical engineer from Delhi College of Engineering and MBA from IIM-Ahmedabad, who knows he has his task cut out. He started his first company , eLearning startup Brainvisa Technologies, in March 2000 which raised `3 crore from Infinity Ventures 3-4 months before the dotcom bubble burst. The business started as a customer facing online test preparation play but had to pivot to a business-to-business model. After running the business as CEO for over seven years, it was acquired by Indecomm Global in 2007 for $16 million where he also saw impact on corporate business of Lehman Brothers brankruptcy. “You become richer by experience, there is no shortcut to it. Importance of cash, running a business in a cost-efficient way and building that culture internally is very important,” said Maheshwari about his Brainvisa experience.

Maheshwari said that he has applied these lessons at FirstCry , which he founded in 2010 with Brainvisa colleague Amitava Saha. He was also the first online retailer to start adding online stores in 2012, a trend which has been followed by several vertical etailers now. And in 2012, he also launched a logistics business to fulfil its own orders. XpressBees, which is now run by Saha, started taking third-party orders in 2015 and raised `85 crore in funding after spinning off from FirstCry. But along the way, he has also taken some tough calls, like shutting down the personal care products selling business Goodlife in 2013 admist funding winter in ecommerce space.

People who have worked closely with him say Maheshwari is a tough taskmaster, and great at spotting opportunities which will help him expand his business, even if they don’t fall into conventional methods.

“He is very driven and committed to the cause of the business,” said early-stage fund India Quotient’s Anand Lunia, who was a cofounder at Brainvisa. “He does not think theoretically and gets stuck to a particular notion of strategy , which is what most startups do.”

(Published in The Economic Times)

P. Karunya Rao of Zee Business in conversation with Devangshu Dutta, Chief Executive, Third Eyesight and Narayan Devanathan, Group Executive & Strategy Officer, Dentsu India, about festive discounts, the evolution of ecommerce and retail business in India.

Promit Mukherjee and Supantha Mukherjee, Reuters/Yahoo
Mumbai, 4 October 2016

India’s two largest e-commerce players are looking to use the country’s biggest festive sales season this week to bolster their valuations as they seek fresh capital and look to fend off Amazon’s growing inroads into the domestic market.

For India’s Flipkart and Snapdeal, strong sales during India’s equivalent of the U.S. Black Friday sales could give both companies some leverage in their current push for investment.

With private equity money flows drying up and Amazon.com pledging $5 billion investment to gain ground in India, local e-commerce vendors will be looking to use this season’s numbers to show investors their ability to drive sales.

Flipkart is currently in talks with retail giant Wal-Mart Stores and a strong showing of sales during this week could give it more negotiating leverage. Snapdeal is also preparing to raise fresh capital to defend its turf.

The high stakes battle between Flipkart’s Big Billion Day sales bonanza, Amazon’s Great Indian Festival sale and Snapdeal’s own initiative dubbed the Unbox Diwali Sale, means employees at all three players are working marathon hours to meet stiff sales targets.

“Our teams are working around the clock during Big Billion Days,” said a spokesperson for Flipkart, adding that many are camping out in office for the week, and working 14-18 hour days in a bid to keep up with frenzied demand.

All three companies say their sales seasons have so far been successful, but did not comment on how the sales momentum is stacking up against their own internal targets.

Flipkart says it sold 2.25 million units in the first 12 hours of its 5-day sale, which kicked off on Sunday.

Its closest competitor Amazon India said it sold 1.5 million units in the first 12 hours of its sale that began on Saturday. Amazon said its first day of sales was three times higher than the corresponding first day sales last year while second day sales were five times higher.

Snapdeal said more than 2 million users logged in on the first hour of its sales, leading to more than 180 orders per second at launch.

“With companies under pressure to make money, they don’t want to let the opportunity go to a competitor…but you can’t keep burning cash by offering huge discounts,” said Devangshu Dutta, chief executive of retail consultancy Third Eyesight.

(Published in Yahoo)