Vivina Vishwanathan, Mint

Mumbai, 3 October 2016

If you are an online shopper, you will find yourself in the midst of the annual festival sales offered by various e-commerce companies. This year, e-commerce companies, such as Flipkart, Amazon and Snapdeal kicked off their annual sales from the first week of October.

Flipkart’s Big Billion Days 2016 began from 2 October and will end on 6 October. Day 1 is for fashion, home d�cor, televisions and home appliances. Day 2 is for mobiles and mobile accessories. Day 3 is for all other electronic items and days 4 and 5 are for the complete range of products.

Amazon’s Great Indian Sale ends on 5 October while Snapdeal’s Unbox Diwali Sale will end on 6 October. ShopClues offers a 10-day sale which ends on 10 October.

Deals and offers

The discounts range between 10% and 70% depending on the product and the website you shop from. Along with this there is an additional cash back offered by banks if you use their debit or credit cards.

For instance, SBI’s debit card holders get an additional discount for buying on Flipkart during the sale period. “SBI’s credit card holders can avail 10% instant discount of up to Rs5,250 during the offer period. This is in addition to discounts given by the merchant,” said Vijay Jasuja, chief executive officer, SBI Cards.

He further said that merchant-offered equated monthly instalments (EMIs) have been a big driver of sales. “We anticipate EMI purchases to contribute significantly to the overall card spends this year too,” said Jasuja. Banks tied up with e-commerce companies expecting more spends.

“Last year, we saw a growth of over 30% in our total credit card spends during the festive season. E-commerce spends rose considerably, upwards of 45% during the same period,” Jasuja added.

Similarly, HDFC Bank Ltd has offers for Amazon customers, while American Express has tied up with Myntra and ShopClues to give additional discounts.

Keep in mind

Experts say that compared to the last 2 years, the discounts are lower this time. “If you notice, the message around discounts and offers has been very subtle and e-commerce companies are now focusing more on sustainability.”

Hence, consumers will, in a way, get less discounts than in the last couple of years,” said Ankur Bisen, senior vice-president, retail and consumer at the retail consultancy Technopak Advisors.

The retailers know that consumers will buy and sensitivity to discounts is lower during the festival season. “There is a large segment that still buys around the festivals and we are seeing overall growth in consumption,” said Devangshu Dutta, chief executive officer, Third Eyesight, a retail consultancy firm.

But to make the most out of what is on offer, shop around. Some companies give additional discounts if you buy through their app. So, you may get instant deals if you download the app and then buy.

Check your internet connectivity to avoid any glitches. Also, by registering with the websites, you can checkout faster.

Using credit cards and debit cards can give you additional discounts. Remember that no e-commerce platform offers additional discount for cash on delivery. Hence, choose the mode of payment wisely. Clean your browsing history as most of the e-commerce firms use algorithms to understand what you need and that could impact the prices.

Happy shopping.

(Published in Mint)

Saritha Rai, Business Standard

Bengaluru, 29 September 2016

Walmart Stores is in advanced discussions to invest as much as $1 billion (Rs 6,647 crore) into Flipkart Online Services, as the two companies battle Amazon in the e-commerce space, according to a person familiar with the matter.

Walmart, the world’s largest retailer, would take a minority stake in Flipkart under the proposed agreement, the person said, asking not to be identified because the matter is private. Final terms of the deal have not been worked out and negotiations are still underway, the person said.

Flipkart’s most recent valuation was about $16 billion (Rs 1.06 lakh crore), according to research firm CB Insights. It is the largest online retailer in India, but its lead has been under assault as Amazon steps up investments in the country. Chief Executive Officer Jeff Bezos said in June he plans to spend another $3 billion (Rs 19,936 crore) in India to gain customers in the fast-growing market.

A deal with Walmart would give Flipkart additional capital to fight back and more expertise in battling the e-commerce pioneer. “If the deal goes through, the competitive intensity between Flipkart and Amazon will shoot up,” said Gautam Chhaochharia, the Mumbai-based head of India research at UBS AG.

The deal has potential benefits for Walmart too. Beyond any eventual financial return on its investment, Walmart would gain exposure to India’s expanding e-commerce market and have the opportunity to challenge Amazon on more equal footing than the US.

A spokeswoman for Walmart said she could not immediately provide comment. A Flipkart spokesman said, “It is our policy not to comment on rumours or speculations.”

India is the next big potential retail prize after the US and China, where foreign players have made little progress against Alibaba Group Holding.

India’s online market will expand at an average of 45 per cent annually in the next four years and reach $28 billion (Rs 1.86 lakh crore) by 2020, according to estimates from Kotak Institutional Equities.

Walmart had earlier established a retail joint venture in India with Bharti Group, which runs the country’s largest telecommunications operator Bharti Airtel. But the business failed to take off and Wal-Mart eventually sold its stake to its partner. If a Flipkart deal materialises, Walmart would be able to support its new ally with money and its decades of retail experience.

“With its main competitor Amazon getting aggressive, Flipkart needs a solid partner to bolster its operations with not just capital but also branding, logistics, sourcing and other retail experience, they won’t be able to pull it off with small partners,” said Devangshu Dutta, chief executive officer of the Gurgaon-based retail consultancy Third Eyesight.

Amazon has been gaining with major investments in infrastructure and partnership. The company has committed a total of $5 billion (33,227 crore) to the India market, including the latest pledge from Bezos. “They know how to work against competitor Walmart, they will know what to expect,” Chhaochharia said.

Walmart has been renewing its efforts to battle Amazon online. In August, it agreed to buy Jet.com for about $3.3 billion and put founder Marc Lore in charge of the combined company’s online operations.

A tie up with Flipkart may prompt moves from other competitors in India. Alibaba has been funding Snapdeal.com, the third-largest competitor in Indian e-commerce, and has long considered the country a prime expansion opportunity as it seeks to generate half its revenue from outside China. But with Amazon and Walmart both stepping up investments, Alibaba may have to consider doing the same, either with Snapdeal or on its own.

In Alibaba’s most recent post-earnings conference call, Vice Chairman Joseph Tsai told analysts that India was a prized market where his company has investment in Snapdeal as well as an online payments service and mobile browser. “We’re very well strategically positioned in these emerging markets, and that’s the start of our international activity,” he said at the time.

(Published in Business Standard)

The Economic Times

Until the middle of this year, Noida-based website developer Manusis Technologies worked with about 50 clients a month. The number, the company says, has jumped tenfold since.
Two big deals in July changed the landscape for the nation’s online retail industry, while also offering more business to providers of support services ranging from website development and payment services to logistics.
Flipkart in late July said it raised $1 billion in fresh funding, valuing India’s top e-commerce company at $7 billion. A day after, Amazon, the global No.1, pledged $2 billion of investment in India. While these announcements reiterated the faith global investors have on ecommerce in India, they also led to a rush of investors and entrepreneurs to get a piece of the fastgrowing online retail market.
"We have seen a tremendous increase in the orders coming from the e-commerce industry," said Rajiv Kumar, founder of Manusis Technologies. "Today we are working on 500 clients every month and this has happened mostly after July and August."

The company has since July doubled staff count to 50 to meet new demand, and has rented additional office space.

A bulk of the new entrants into the e-commerce space is small entrepreneurs. One of them, Pooja Parikh, who launched her online jewellery business Azira jewels three months ago, says she wanted to do something of her own. "After the e-commerce giants raised such huge amounts of money, I got a boost and I took the plunge."

Online retail is still a tiny spot in India’s retail market of about $500 billion a year, but is growing at a quick pace. A study by retail consultancy Technopak predicts India’s e-tailing market will reach $32 billion by 2020 from $2.3 billion in 2014.

People want to sell all kinds of stuff online, says Ramesh Khemka, founder of Mumbaibased website developer Digi Shop. "Starting from plants to wall stickers to lamps, everything has buyers and seller in the virtual world." Digi Shop gets about 70 queries every month. Murali K of Eworld, a Chennai website developer, says he too has seen a jump in demand since July.

Ethnic Indian clothes and casual wear are favourite products but unusual products- such as pets – too are being offered online.

Payment gateway, PayU saw the number of its clients swelling 30% post-July to 11,500-odd merchants now. "Online buyers are increasing in numbers, who then want to buy more online which in turn leads to increased sellers," said Nitin Gupta, chief executive of PayU India.

Delhivery, which provides logistics services to the e-commerce industry, agrees. "Our clients have doubled since July of the previous year. And the queries for new business have doubled as compared to January this year," said co-founder Sahil Barua. The Gurgaonbased company recently raised $35 million to expand its network, fulfilment space and technology portfolio. Times Internet, part of The Times Group which publishes The Economic Times, is an investor in Delhivery.

Domain name registration is another area that has seen increased activity in recent times. BigRock, a company which helps businesses register their websites, however only partly credits the e-commerce sector for this. "While we have seen 10-15% growth in domain name registrations in July-August as compared to January-February this year, it would be difficult to attribute the growth entirely to the Flipkart and Amazon announcements," said Shashank Mehrotra, business head at BigRock.

Rajiv Sodhi, managing director and vice president of the local unit of Internet domain registrar and Web-hosting company GoDaddy, says ,"We only expect this to grow as a new generation of startups, entrepreneurs and e-commerce players build their businesses online."

With the huge growth that ecommerce has witnessed in recent times, analysts like Devangshu Dutta, chief executive of consultancy firm Third Eyesight, say there is scope for more players to come in.

But some also warn about the risks the space is fraught with, as only a few may have chances of making it big. They also see consolidation in the sector going forward.

(Published in The Economic Times.)

Nevin John, Business Today

New Delhi, 25 September 2016 

When mall developer Phoenix Mills Co set up the Palladium Mall in 2010, the intention clearly was to position it as a luxury mall. With high-end brands such as Gucci, Tag Heuer, Michael Kors and The Collective setting up stores, the Palladium Mall promised to be the destination for high-end luxury shopping in Mumbai. However, luxury brands today probably occupy just a fraction of the retail space spread over 400,000 sq. ft. In fact, the financial capital of the country is yet to see a luxury mall. The country has just two luxury malls – DLF Emporio in Delhi and The Collection (UB City) in Bangalore.

How long will it take for India to create a luxury high-street like Madison Avenue and Fifth Avenue in New York? It is definitely a distant dream at the moment. Arvind Singhal, Chairman of management consulting firm Technopak, says that India doesn’t have the culture of luxury brands on high streets because of safety and security issues. That’s the reason why most luxury brands in India are housed in the shopping arcades of five-star hotels. The monthly rent of these outlets would be Rs 600 to Rs 1,000 per sq. ft, say industry sources.

With Indians increasingly travelling abroad, their awareness about luxury brands is on the rise. So, luxury shopping logically should happen at least in the metros. This means that luxury malls as a concept should work. So, why does India have just two luxury malls? “The luxury consumers are frequent overseas flyers and they really don’t care about buying here,” points out Rajneesh Mahajan, Executive Director, Inorbit Malls. Indians do indulge in luxury shopping, but it’s mostly overseas as it’s 30-40 per cent cheaper, largely because the import duties on luxury items are very high.

Moreover, luxury shopping in India until recently was fuelled by black money. Sales were affected after the government started monitoring expensive transactions, says Singhal of Technopak. In fact, a bulk of the luxury shoppers, according to a senior luxury branding consultant, prefers shopping for luxury brands in the comfort of their homes in order to avoid paying taxes.

However, considering the country’s projected GDP growth and rise in disposable incomes, mall developers are hopeful that the luxury market will also evolve. Retail industry consultants say that the Mukesh Ambani-controlled Reliance Industries plans to enter the luxury mall space either in Mumbai or Delhi. There were also reports that Mumbai-based Oberoi Realty and Maker Group were looking to build luxury malls in the city. But there is no clarity on when these will happen, if ever.

With growth of legitimate wealth in the country, Singhal of Technopak is optimistic about a robust luxury mall culture in the country. Still, setting up luxury malls isn’t going to be easy in an emerging economy like India. The cost of construction of a luxury mall is almost three times more than a regular mall, and while the returns are also higher, the fact remains that most Indians prefer doing luxury shopping abroad. It takes three to five years to build a luxury mall and the average cost for overall development (excluding the land cost) in Mumbai and Delhi is in the range of Rs 7,000-9,000 per sq. ft, compared with Rs 4,000-5,000 a sq. ft for a normal mall, say real estate developers. The rental for a luxury mall ranges from Rs 500 to Rs 1,500 a sq. ft per month, while regular malls charge much lower.

Devangshu Dutta, CEO of Third Eyesight, says that developers have to ensure a holistic experience for customers at luxury malls. “The collections should be the latest and the service should be ultra-premium. Pricing should be competitive, considering the higher import duty on luxury products.” The difficulty is in finding real estate at an ultra-posh locality for building the mall, he adds.

Today, most luxury stores in a mall like Palladium in Mumbai often look deserted. Clearly, given the challenges, developers will definitely think twice before launching luxury malls. 

(Published in Business Today)

Ankita Rai, Financial Express
New Delhi, 25 September 2016

The upcoming festive season has e-tailers gearing up with a unique strategy: That of focusing on premium services to build up the momentum. The coming festive season is no longer just about discounts and deals, but also about which player succeeds in roping in the maximum customers towards its platform. 

No wonder that the launch of Amazon Prime in July saw similar competitive offerings from both Flipkart and Snapdeal, aimed at improving customer stickiness and reducing re-acquisition costs for lapsed customers. But remember that Flipkart First was the first mover in India in the premium loyalty services space, which didn’t find many takers.

By launching Amazon Prime ahead of the festive season, with a free 60-day trial, Amazon is looking to convince shoppers to try its premium membership programme. The reason: Customers who choose to subscribe to Prime at the end of the trial period will stay with the retailer beyond the Diwali sale. Also, it generates valuable customer data, which it can use to attract customers back. Industry experts think what works for Amazon in the US and other markets may not be true for India, at least for now, as Indians are still used to the idea of free shipping.

“For discount hunters, subscription doesn’t work. However, over the last two years, a premium segment of online shoppers has emerged, which appreciates good experiences and is ready to pay for them,” says Mrigank Gutgutia, engagement manager, RedSeer Consulting. “The premium one-day and two-day deliveries are around 5-10% of the total orders in e-commerce and a subscription service like Amazon Prime is likely to be restricted to this small subset of online shoppers — possibly only the top 5%.”

However, there is a catch here. “In India, the number of customers who subscribe to such services will be small, but the value per customer will be high,” points out Devangshu Dutta, chief executive, Third Eyesight.

Globally, subscription-based e-commerce services offer the customer increased value in one or multiple forms such as faster deliveries, assured availability, free content, etc, and charge the customer a fixed annual fee for the same. But Flipkart Assured and Snapdeal Gold are offering such services for free, with no aim of monetising them later. “Customer acquisition is expensive. Hence, a business needs to retain its existing customers to drive profitability,” says Pankaj Gupta, senior practice head, consumer and retail, Tata Strategic Management Group.

However, no matter how attractive the proposition of ‘free and fast’ shipping, it is not sustainable in the long run. As of now, customers see it as a freebie. “The free and fast shipping proposition seems more of a reaction to competitive pressure. At the end of the day, you also have to make sure the consumer stays with you,” says Pragya Singh, vice-president at retail consultancy Technopak.

(Published in Financial Express)