Month: March 2018

Ola-Uber merger: SoftBank’s in the driver’s seat, but it’s unclear if aggregators are on the same page

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March 30, 2018

So who stands to benefit from an Ola-Uber merger? It is not the customers or the drivers as the monopoly will drain the market off of choices.

Written By Sulekha Nair

Ola shot down claims about talks with Uber, and told the news agency that, “Ola is always actively looking for opportunities to expand its footprint. SoftBank and all other investors are committed to realising this ambition.”

Two analysts Firstpost spoke to were of the opinion that a merger seems unlikely. Two others said it could go through.

Paula Mariwala, Partner, Seedfund and co-founder, Stanford Angels, ruled out the possibility of a merger. She reasoned that both taxi-hailing apps were the fastest growing in the sector that they operate in. “Both face the same issues and have come in the crosshairs of the government.” For instance, they were pulled up for surge-pricing in the NCR during the Delhi government’s implementation of the odd-even car scheme. Mariwala added that there is no need for consolidation, given that there is no other player like Ola and Uber in the Indian ecosystem, referring to their deep pockets.

Another reason cited for a merger not going through is that there is considerable headroom for growth for both players. Kavan Mukhtyar, Partner and Leader – Automotive, PwC India said that when there are leading players in any sector, there isn’t much scope for consolidation. “There is private equity capital that both the players are pursuing and there is expectation of growth.”

Ola has seen an increase in its market share, from 53 percent in July 2017 to 56.2 percent in December 2017, according to market intelligence firm KalaGato. Uber’s market share for the same period slid from 42 percent to 39.6 percent, according to a report in Scroll. But there is still room for growth, especially in Tier 2 and Tier 3 cities, Mukhtyar added.

It’s possible

Ola and Uber have a 95 percent market share in the cab-aggregator space in the subcontinent. In such a scenario, a merger can be explored. Devangshu Dutta, chief executive of management consultancy Third Eyesight said it is logical for companies with a common principal investor to explore collaboration at the very least, if not an outright merger. “This can include sharing of resources and market information such as the spread of demand-and-supply. But, the resultant pricing implications of that may not be positive for consumers. Cartelisation is known to happen in many sectors around the world, and can only be checked when competition is diverse and fragmented, or if there is a strong and well-equipped competitive regulatory authority overseeing the market,” Dutta added.

Given that SoftBank is a key investor in both Ola and Uber, it makes sense to merge and eliminate the level of competition that exists between the two, said Kaushik Madhavan, Director – Automotive & Transportation, MENASA at Frost & Sullivan. Both players have ambitious strategies for organic growth, customer service and footprint. “The biggest question mark is to understand if both players are on the same page when it comes to a merger,” Madhavan added.

But what if a merger does go through? A merger will be subject to regulatory approvals, and in this case it would give the merged entity absolute control of the market, which will not be allowed by the regulator. For starters, consumers will be at a disadvantage owing to a lack of options.

“It is going to be bad for Indian consumers because Uber-Ola will become a monopoly. The Competition Commission of India (CCI) will come into play and may not allow this to take place,” pointed Arvind Singhal of Technopak Advisors. He feels that given the market buzz about a merger, there might be a possibility of integrated back-end operations while the two players run operations under the Ola and Uber brand names. “But that would become a case of monopoly or duo-poly,” pointed out Singhal.

According to media reports, the merger is being driven by SoftBank and is not in the interest of either Ola or Uber. Media reports also indicated that neither Ola nor Uber are keen on a merger. Uber CEO Dara Khosrowshahi has said that the US-headquartered firm will be more focused on organic growth in the markets it operates in. India is already among the top three markets for Uber after the US and Latin America.

So who stands to benefit from an Ola-Uber merger? It is not the customers or the drivers as the monopoly will drain the market off of choices. It appears that the companies themselves are not keen, going by media reports which suggest that only SoftBank is gunning for a merger. So, clearly the ball lies in SoftBank’s court.

Source: firstpost

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Expert insights at Fresh Produce India

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March 26, 2018

Written By John Hey

Devangshu Dutta, founder and CEO of consulting firm Third Eyesight, will keynote this year’s Fresh Produce India on 26-27 April with his expert perspective on the changing landscape of India’s consumer market– and what it means for fresh produce marketers.

With a young, educated population– and an economy tipped to become the world’s third largest by 2030–India’s consumer market is poised for dynamic growth.

Second- and third-tier cities across the country are emerging rapidly as income levels rise. Traditional retail channels still control the vast majority of India’s fresh produce sales, but modern retail has begun to gain traction, boosted by recent fiscal reforms. Digital channels are also increasing their influence over what Indian consumers buy, and how.

Dutta, whose specialist management consulting firm focuses on retail and consumer products, will analyse all these changes in the opening session of Fresh Produce India.

Joining him for the ensuing panel discussion will be K Radhakrishan, co-founder of Starquik.com. With an impressive track record in food and grocery retail, Radhakrishan’s latest venture is focused on developing an omnichannel grocery business for Tata aligned to the Star Bazaar store network.

Bringing an international perspective, Filip Fontaine, general manager of Belgian cooperative BelOrta, will explain the growing strategic importance of the Indian market to Belgium as a key export nation, and to the European business at large.

After the opening plenary session, Fresh Produce India Expo kicks off, showcasing a range of products and services for delegates to take in.

Wide-ranging workshops

Running alongside the expo is a programme of special workshop sessions for delegates to choose from. Covering everything from investment models to supply chain technologies, these workshops offer practical solutions and advice on a range of issues.

Apples continue to dominate India’s fresh fruit import market, but a temporary ban on one of the dominant suppliers – China – has opened the way for other exporting countries to capitalise. In the session, ‘New sources for India’s apple market’, Aysel Oguz, export sales manager for major Turkish grower-shipper Anadolu Etap, will discuss what Turkey has to offer the Indian market. Gagan Khosla of importer NGK Trading, which has actively been developing alternative supply sources, will assess the commercial prospects for a range of newer and prospective entrants.

Berries have become big business for the global fresh produce trade, but India remains largely uncharted territory for international players. Parth Karvat of Yupaa Fresh will lead a session exploring the opportunities and challenges to developing the berry category in India. Karvat, whose family has its own berry farms in India, will discuss the development of domestic production, as well as the increasing demand for imported berries. Tracey Burns, export division manager at Freshmax New Zealand, will also deliver a case study on kiwiberries, an exciting new product recently launched onto the Indian market together with local partner Suri Agro Fresh.

Strategic insights

The workshop programme also provides strategic insights and advice. In a session on investment models for India’s horticulture business, Asish Puri, vice-president of Avalon Consulting (part of the Cordence Group), will outline the key trends in India’s food and agribusiness investment landscape. He will be joined by Kushal Agrawal, chief financial officer of venture capital firm Aspada, which has invested in a range of horticulture start-ups, including INI Farms, All Fresh, Leaf, SV Agri and Waycool. Agrawal will discuss the practical process of raising funds, and share the keys to the success of some of the ventures it has invested in

Elsewhere on the programme, Geoff Green, head of Capespan Global Procurement, will lead the session ‘Creating a sustainable future for Indian grapes’. Green, who heads up Capespan’s global grape business, has been visiting India to procure grapes for the last 16 years. He’ll share his vision of how the country can fulfil its potential in international markets by addressing a number of key issues. CEO of Hamburg-headquartered importer Don Limón Andréas Schindler, will also join the session. Sourcing grapes from across the world, Don Limón has also developed commercial imports from India under a grower-empowerment project in recent years.

Expo connection

In addition to taking advantage of the abundant information and insights at the conference, Fresh Produce India delegates get ample time to meet and do business at Fresh Produce India Expo, which is the primary networking arena. A wide range of companies are showcasing their products at Fresh Produce India Expo, which runs from 11:00-19:30 on Day One, and 10:30-14:00 on Day Two.

Source: fruitnet

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Reliance Retail plans to raise Rs 4k crore via rights issue to fund expansion

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March 22, 2018

Written By Sagar Malviya, ET Bureau

Source: economictimes

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Instagram: The small entrepreneur’s hero

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March 20, 2018

As entrepreneurial aspirations go up, aided by an ecosystem that encourages it, small businesses are finding a cozy corner on social media, particularly Instagram, to find takers of their products.

Written By Shinmin Bali

Instagram for Business was rolled out in 2017. The platform has a community of 25 million businesses on its platform as of November, 2017, a majority of which are small businesses.

This number was 15 million in July, 2017. It is important to note that for a large multinational, Instagram might be just a one-stop engagement touchpoint but for much smaller businesses, it is their primary mode of discovery, interaction and retail, all rolled into one.

As of November, 2017, over 80% of accounts on the platform follow a business, while 200 million (of 800 million) users actively visit the profile of a business every day.

Aiding the small stores

Consider an Instagram account, Allure (run by Praachi Tantia). The account has 17,800 followers and sources fashionable clothes from Thailand depending on Tantia’s quality and style specifications. The products are then showcased on the platform; interested parties get in touch with the account and the transaction is completed via Paytm/netbanking or COD (with a Rs 200 charge for the latter).

The ’80s and ’90s were the decades where the desire for imported products was the most pronounced. Not much has changed in terms of demands for those products, but several means of gratification have emerged since. One of the accounts catering to this need, in the world of makeup, is run by Kinnari More who sources her products from the US and the UK for clients that are aware of the highly popular and latest collections in that category. She earns, on an average, Rs 10,000 to Rs 15,000 per month with the Instagram account.

For Instagram businesses such as More’s, the cost of doing business outside of social media may come to be a deterrent, making them unlikely and reluctant to consider scaling up.

Devangshu Dutta, founder and chief executive, Third Eyesight, points out that there needs to be a certain critical mass built by ways of traction and business flowing through (even if it is not being captured in terms of value) for the platform to decide to be an enabler to it.

On social media, as a small business, when you consider monetisation after having achieved awareness and engagement, finding opportunities and tools to monetise on the very same platform is an ideal situation.

“It prevents people from dropping off. The attrition between interest and engagement to actual purchase is significant if you have to move to another medium or channel to make the payment,” Dutta adds.

The issue of scalability

However, for Araa by Avantika, a silver jewellery brand run by Avantika Kumar Agarwal, the motive is to build scale at a sustainable pace. It currently generates a monthly revenue of Rs 8-10 lakh. It has a 20,700 followers on Instagram and a 16,300 followers on Facebook. With manufacturing based out of Pune, a majority of the gemstones used in the products are sourced from Jaipur with some antique collectibles being brought in from Afghanistan and Turkey. The current agenda is to launch an e-commerce model for the brand at the earliest. Next, would be to partner with stores and establish a marketplace for clients to be able to get a touch and feel of the products. Apart from Agarwal herself, the brand has four staff members and a team of six craftsmen for production and manufacturing. To encourage engagement, the brand runs contests and giveaways.

The report titled Global Trade in the Digital Economy: Opportunities for Small Businesses released by FedEx in 2017 finds that globally, 67% of revenue for SMEs is brought in by social commerce. This is followed by mobile commerce at 59%, with e-commerce being in the lead at 80%.

While e-commerce sites grant a wider platform, they remain search dominated which more often than not stems from an actual purchase requirement. Whereas on visual platforms such as Instagram, it allows exposure of a product line developed for a niche audience while simultaneously allowing a higher degree of engagement with the content.

The addition of shoppable pages on Instagram is a start. But a good amount of redirection is still to the brand’s pages.

Source: financialexpress

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Myntra brings EMI down to just Rs 50 in sales push

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March 15, 2018

Written By Shambhavi Anand, ET Bureau

Sellers on both portals claim Myntra is virtually turning Jabong — once a marketplace for exclusive international brands — into a platform for its private labels.

While Myntra declined to respond to an email seeking details about the initiative, a person directly involved in the implementation of the scheme said this has been done to encourage consumers who can buy first and pay later. It will help Myntra compete with brick-andmortar retailers, said another person from the online fashion industry.

The move will likely attract young buyers — below 30 — who are fashion-oriented and have fewer financial responsibilities, said Devangshu Dutta’s of Third Eyesight, a retail consultancy firm. It may help consumers from tier-II and tier-III cities who like to spread their expenses over a period of time, said experts.

The Flipkart-owned company has tied up with HDFC Bank, ICICI Bank, Citi, State Bank of India, Kotak Mahindra Bank, Amex, HSBC and others, which will charge 13% to 15% interest on credit card purchases of selected items that can be paid over three to 24 months.

“This will translate into lower price a customer has to pay each month. Whether it will drive demand remains a question,” Dutta of Third Eyesight said.

India’s fashion retailing is at the threshold of a digital transformation as the number of buyers with internet access increases. Over 10% of the $70 billion Indian fashion market is already digitally influenced and this share is expected to rise fourfold to about $30 billion by 2020.

This number will constitute 60-70% of the total branded apparel market, according to a report by management consulting firm Boston Consulting Group and social networking company Facebook titled, ‘Fashion Forward 2020.’

According to the report, the digital footprint has more than doubled in the past three years and it will expand rapidly as internet penetration is expected to grow 2.5 times by 2020.

Source: economictimes