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April 17, 2020
Written By Alnoor Peermohamed, ETtech
More sellers are signing up on e-commerce platforms such as Amazon and Snapdeal, anticipating recovery in offline demand to take longer in view of the nationwide lockdown being extended to May 3.
The government said e-commerce platforms would be allowed to sell both essential and non-essential items starting April 20.
There has been a spike in the number of signups and queries from new sellers in the run-up to and during the lockdown that began from March 24, the online retailers told ET.
“We now have 6 lakh sellers on our marketplace, up from 5.5 lakh in mid-Jan. The new seller registration run rate continues to be robust, with thousands of new sellers registering on our marketplace three weeks into the lockdown,” said an Amazon spokesperson.
Snapdeal also said it had deployed teams to assist new sellers in signing up on its platform, with large business centres such as Ludhiana, Surat and Salem seeing an increased number of signups.
“We are indeed seeing a spike in the number of seller queries with regard to the resumption of business and also new registrations. The government’s announcement of allowing business across all categories is providing independent sellers an accelerated and safe channel to resume their business operations,” said Rajnish Wahi, senior vice president – corporate affairs and communications at Snapdeal.
Walmart-owned Flipkart declined to comment.
A source in the company, however, said it was still too early to determine if there had been an increase in new seller signups.
Industry experts said this could be a stop-gap arrangement for sellers to kickstart businesses immediately.
“The fact is that small businesses are really cash-strapped and if they have to pay salaries to their employees, then they need to earn money,” said Devangshu Dutta, chief executive of retail consulting firm Third Eyesight. “The motivator for these businesses seems to be that they have inventories and e-commerce is a good way to get to the customer who is unable to get out.”
Source: economictimes
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April 15, 2020
The MHA has come up with fresh guidelines allowing e-commerce companies to operate, ensuring strict social distancing without any restriction on their timing and closure, after April 20
Written By Peerzada Abrar, Samreen Ahmad & Neha Alawadhi
The main problems e-commerce firms are facing on the ground include absenteeism of delivery people and difficulties in getting curfew passes
E-commerce companies such as Amazon and Flipkart, and sellers, have reached out to the government seeking clarity on whether they would be allowed to sell non-essential items under the fresh guidelines.
On Wednesday, the Ministry of Home Affairs (MHA) in the fresh guidelines allowed e-commerce companies to operate without any restriction on their working hours from April 20, provided they ensure strict social distancing.
However, some said there were ambiguities that need to be addressed, because while inter-state transportation of non-essentials was allowed, it was not clear whether e-commerce companies would be allowed to sell the products.
“The ambiguity is still there. It doesn’t say that e-commerce players can sell all items including non-essential products on their platforms. A lot of firms are asking the government to provide more clarity,” said a senior official working with an e-commerce firm.
“For instance, a delivery associate might be carrying a TV (phone, laptop) and the police on the ground might seize these items.
”Industry insiders said the main problems firms faced on the ground were absenteeism of delivery personnel and hardship in getting curfew passes, issued by state governments. “You (government) told the delivery staff wages are valid even if you are not coming to work,” said a person. Additionally, passes were issued to those carrying essential services and not to firms per se, the person added. “It is the prerogative of the state to decide what is essential and what is not.
”Experts say there was also no clarity in the guidelines on the nature of non-essentials. “If companies are able to follow all the social distancing and safety protocols stringently, then the chances of getting things up and running are reasonably good. Probably some products that were not specifically listed as essentials but are essential in nature, such as grooming, stationery, home essentials like cleaning and kitchen products, will also be allowed to run now,” said Pinakiranjan Mishra, consumer leader at EY India.
Experts said there was no distinction between essential and non-essential with respect to transportation. “If that works, then all e-commerce firms should be able to work, but it depends on how the guidelines are implemented at the state level. There are red zones as well, where movement is restricted. So, firms will have to liaise at the local level to ensure delivery,” said Devangshu Dutta, chief executive at Third Eyesight, a consulting firm.
Dutta said a lot of backend work was required for companies to keep websites running for non-essentials. For example, content work, including photoshoots, text and data support, was provided by external agencies and the work couldn’t be done from home.
“How the backend work would be done is also a question that needs to be answered,” he added.
Meanwhile, online retailers are expecting huge demand for products and are reaching out to sellers to keep stock ready to fulfil pending and new orders after April 20, according to sources. Srinivas Mothey, senior vice-president at Paytm Mall, said: “We hope to open most of our categories, including electronics, small appliances, clothing, mobile phones, and accessories, among others,” said Mothey.
“The government has just come out with fresh guidelines. We believe things would be far better by the time we restart full-fledged operations,” said Mothey, when asked about the ambiguity related to the selling of non-essential items.Amazon India said it was evaluating the guidelines and had sought clarifications from the authorities on implementation.
“We are committed to the government’s efforts of ensuring social distancing and delivering products that customers need the most at their homes. The resumption of economic activity from April 20 is a welcome step that would nonetheless depend on unhindered availability of labour,” said an Amazon spokesperson.
Flipkart said it would continue to serve consumers to promote social distancing through its sanitized supply chain.“At this critical juncture, the e-commerce industry can ensure that citizens stay indoors and all their needs are met through home deliveries,” Snapdeal said.
Source: business-standard
Devangshu Dutta
April 7, 2020
Oil shocks, financial market crashes, localised wars and even medical emergencies like SARS pale when compared to the speed and the scale of the mayhem created by SARS-CoV-2. In recent decades the world has become far more interconnected through travel and trade, so the viral disease – medical and economic – now spreads faster than ever. Airlines carrying business and leisure-travellers have also quickly carried the virus. Businesses benefitting from lower costs and global scale are today infected deeply due to the concentration of manufacturing and trade.
A common defensive action worldwide is the lock-down of cities to slow community transmission (something that, ironically, the World Health Organization was denying as late as mid-January). The Indian government implemented a full-scale 3-week national lockdown from March 25. The suddenness of this decision took most businesses by surprise, but quick action to ensure physical distancing was critical.
Clearly consumer businesses are hit hard. If we stay home, many “needs” disappear; among them entertainment, eating out, and buying products related to socializing. Even grocery shopping drops; when you’re not strolling through the supermarket, the attention is focussed on “needs”, not “wants”. A travel ban means no sales at airport and railway kiosks, but also no commute to the airport and station which, in turn means that the businesses that support taxi drivers’ daily needs are hit.
Responses vary, but cash is king! US retailers have wrangled aid and tax breaks of potentially hundreds of billions of dollars, as part of a US$2 trillion stimulus. A British retailer is filing for administration to avoid threats of legal action, and has asked landlords for a 5-month retail holiday. Several western apparel retailers are cancelling orders, even with plaintive appeals from supplier countries such as Bangladesh and India. In India, large corporate retailers are negotiating rental waivers for the lockdown period or longer. Many retailers are bloated with excess inventory and, with lost weeks of sales, have started cancelling orders with their suppliers citing “force majeure”. Marketing spends have been hit. (As an aside, will “viral marketing” ever be the same?)
On the upside are interesting collaborations and shifts emerging. In the USA, Jo-Ann Stores is supplying fabric and materials to be made up into masks and hospital gowns at retailer Nieman Marcus’ alteration facilities. LVMH is converting its French cosmetics factories into hand sanitizer production units for hospitals, and American distilleries are giving away their alcohol-based solutions. In India, hospitality groups are providing quarantine facilities at their empty hotels. Zomato and Swiggy are partnering to deliver orders booked by both online and offline retailers, who are also partnering between themselves, in an unprecedented wave of coopetition. Ecommerce and home delivery models are getting a totally unexpected boost due to quarantine conditions.
Life-after-lockdown won’t go back to “normal”. People will remain concerned about physical exposure and are unlikely to want to spend long periods of time in crowds, so entertainment venues and restaurants will suffer for several weeks or months even after restrictions are lifted, as will malls and large-format stores where families can spend long periods of time.
The second major concern will be income-insecurity for a large portion of the consuming population. The frequency and value of discretionary purchases – offline and online – will remain subdued for months including entertainment, eating-out and ordering-in, fashion, home and lifestyle products, electronics and durables.
The saving grace is that for a large portion of India, the Dusshera-Deepavali season and weddings provide a huge boost, and that could still float some boats in the second half of this year. Health and wellness related products and services would also benefit, at least in the short term. So 2020 may not be a complete washout.
So, what now?
Retailers and suppliers both need to start seriously questioning whether they are valuable to their customer or a replaceable commodity, and crystallise the value proposition: what is it that the customer values, and why? Business expansion, rationalised in 2009-10, had also started going haywire recently. It is again time to focus on product line viability and store productivity, and be clear-minded about the units to be retained.
Someone once said, never let a good crisis be wasted.
This is a historical turning point. It should be a time of reflection, reinvention, rejuvenation. It would be a shame if we fail to use it to create new life-patterns, social constructs, business models and economic paradigms.
(This article was published in the Financial Express under the headline “As Consumer businesses take a hard hit, time for retailers to reflect and reinvent”.
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April 6, 2020
Towards the end of last week, at least three such tie-ups were announced
Written By Shubhomoy Sikdar
While such a strategy is not entirely unprecedented, experts see the crisis as an opportunity to focus on each other’s skills
Businesses, much like everything else, continue to reel under the impact of Covid-19 and the resultant preventive lockdown. Tie-ups among brands and corporations operating in seemingly unrelated or even competitive sectors seem to be one way of getting around the supply-chain challenges.
While such a strategy is not entirely unprecedented, experts see the crisis as an opportunity to focus on each other’s skills and customer base to not only create businesses for themselves but also to keep things moving. This is imperative, particularly when supply chain bottlenecks in a curfew-like condition threaten access.
A by-product of this strategy is enhanced brand visibility and the message that it cares for the consumer —something that is expected to linger on even after the crisis subsides.
Towards the end of last week, at least three such tie-ups were announced: Ride-hailing app Uber said that it would deliver essentials for grocery delivery firm BigBasket. Marico joined hands with delivery apps Swiggy and Zomato to enable the consumer to use the platforms of the two rival foodtech companies to access products under the FMCG player’s brand, Saffola. Similarly, ITC partnered with Jubilant FoodWorks, the master franchisee of the Domino’s brand in India, to deliver essential commodities to the consumer’s doorstep.
There are other associations also triggered by the Covid-19 crisis such as Apollo Hospitals’ partnership with budget- and mid-scale hotel chain OYO, Lemon Tree and Ginger Hotels to set up 5,000 isolation rooms.
These are temporary collaborations among players in different businesses. Rewind a little further and we have the case of direct online grocery competitors Amazon, BigBasket and Grofers, with the former’s widespread delivery business clashing with the other two, coming together to give a message of solidarity with the #TogetherForIndia film. The film was created by merging clips containing bytes from delivery executives working with these players along with one by online medicine app Medlife.
So are we waking up to a new era of co-opetition? Or are such steps more tactical in nature? In other words will this kind of cooperation among rivals wither away as the Covid-19 threat subsides? There is no one answer to this —as they say, we look at the same picture but see different things.
According to Ananth Narayanan, CEO and co-founder of Medlife, co-opetition is indeed the mantra of the moment. “When you have certain sectors with a temporary surplus of manpower and others facing a staff shortage, this is the best way to make things work as well as control expenses,” he says.
Ravi Desai, director, mass and brand marketing, Amazon India, weighs in on the larger message. “The organic reach and engagement received for this message is a testimony to the spirit in which the message is being received. There may be delays in deliveries during this time, but people are joining in to recognise the effort and commitment of the heroes on the ground,” he says.
Under normal circumstances — as chief executive officer of retail consultancy Third Eyesight Devangshu Dutta puts it — such tie-ups do not happen easily because the companies are moving in their own directions and a collaborative turn depends on a whole lot of things going right. But a crisis gives such collaboration a certain impetus.
Author and corporate advisor R Gopalakrishnan shares how a crisis led to the coming together of two competitors in the late 1920s and laid the foundation of what is one of the biggest corporations in the world — Unilever. “The British company Lever Brothers making soaps and the Dutch company Margarine Unie manufacturing margarine were not competitors in the marketplace, but were competing for raw material on the supply side. The suppliers of vegetable oils and animal fats needed by both the players saw the competition as an opportunity to drive up prices and both the companies were being exploited. The players decided to go for a co-opetition and merged. Now they could control the raw materials because the vendors found that they were now one huge buyer,” says Gopalakrishnan, who is also a former vice-chairman of Hindustan Unilever and a former director of Tata Sons.
More recently and closer home, there were reports of automobile company Mahindra and Mahindra initiating talks with Ashok Leyland, Renault and Hyundai to supply its electric powertrain to these peers given the recent policy push towards electrification.
It is also not unusual for industry bodies to talk in one voice whenever such crisis happens — be it the auto industry demanding relaxation in the wake of BS-VI compliance orders or the broadcast industry in the wake of tariff revision almost a year ago or the plastic manufacturers during talks of a ban on single-use plastics. However, in the current situation, co-opetition assumes a different significance, believes Harish Bijoor, brand guru and founder, Harish Bijoor Consults Inc.
“The instances of co-opetition we see today is a model pushed to the fore to create a positive image for the industry of doorstep delivery. Under the circumstances, the delivery-at-doorstep business itself is going to be viewed with some degree of consumer trepidation. It is important for the industry to stand together and make the right noises,” he says.
Siddharth Shekhar Singh, an associate professor of marketing at the Indian School of Business, Hyderabad and Mohali, offers a slightly different perspective as he links with this the coming together of online and offline. “The situation has presented the online players an opportunity to get rid of a villanised image for they have been accused of predatory marketing practices and artificially reducing prices. So together they are trying to balance that in the public perception conveying that online has its own uses.”
And you don’t always need a crisis for competitors to come together or take a relook at existing arrangements. Take Procter & Gamble (P&G) and Walmart. The two came together for data sharing and collaboration in 1987 to share sales data in real time, lower certain costs for both. This whole “taking up an association to the next level” is said to be the outcome of a somewhat unscheduled, canoe-trip meeting between Walmart founder, the late Sam Walton, and corporate living legend Lou Pritchett, who was then a vice-president with P&G. “In those days, we desperately needed Procter & Gamble’ products, whereas they could have gotten along just fine without us,” Walton recounted in his autobiographical Sam Walton: Made in America.
Source: business-standard
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March 25, 2020
T. Surendar, The Morning Context
25 March 2020
Standing on the porch of the Grand Hyatt Hotel in Mumbai suburbs, Diwakar Vaish, co-founder of Noida-based AgVa Healthcare, was trying to catch the attention of software industry executives. This is at the annual conference hosted by IT trade body Nasscom. Vaish’s stall was a side-show for startups to exhibit digital technologies in the healthcare sector.
On a cool, breezy February day, the atmosphere was nothing as grim you would expect in a hospital emergency ward. Vaish’s rig, comprising an iPad-like device on a short steel column mounted on wheels with dangling wires, was a cost-effective version of a ventilator used in critical care. There wasn’t much excitement about his solution, as few executives really understood the medical problem he aimed to solve.
Today, a robotic engineer by training, Vaish is super busy.
It is not easy to get him on the phone, as AgVa’s ventilator is suddenly in demand from all parts of the country. The company is running three shifts fulfilling orders, which have been pouring in since it became apparent that Indian hospitals did not have enough ventilators for patients rendered ill by the novel coronavirus.
Unwittingly, the need for ventilators has once again drawn attention to India’s medical devices industry or the lack of it. So much so that Anand Mahindra, chairman of the $17 billion Mahindra group, which has interests in automobiles, software and resorts, said that he was finding ways to manufacture ventilators in his factories. It isn’t easy putting together a ventilator, not when you are racing against time, but Mahindra is a hardy businessman with deep pockets, and maybe, just maybe, he will succeed.
In many ways, the Indian medical devices industry is an anomaly. India has a space programme, a nuclear programme, it is among the few countries that has developed patented medicines and a low cost version of anything from power turbines to trucks but when it comes to medical equipment, it fares poorly.
India is also the biggest supplier of FDA-approved drugs to the US, the biggest pharmaceutical market in the world. Even as the Indian market for medical equipment has grown at double-digit rates in the last five years to Rs 1 lakh crore, two-thirds of its needs are met by foreign companies such as Philips, GE Healthcare, Siemens and Abbott.
Import domination is all pervasive extending to even non-critical but common equipment like sonography machines, dentistry chairs and diagnostic equipment. Less than five Indian companies had revenue of more than Rs 500 crore a year and 90% were classified as small scale, with annual revenue less than Rs 10 crore. The biggest player in the domestic market is the Rs 1,300 crore Mumbai-based Transasia Bio-Medicals, which makes in vitro diagnostic solutions that are exported to Western markets too.
“For a long time, the government was the biggest buyer of medical equipment and they always preferred imported equipment. That meant that it was not lucrative for local entrepreneurs to invest their capital in the sector,” says G.S.K. Velu, managing director of Trivitron Healthcare, which makes and exports imaging equipment.
The proliferation of private hospitals in the last two decades also did not change things much. With well-entrenched foreign players and a liberal import duty structure to make available the best facilities in India, there were few local companies of scale who could invest big money to fend off competition. AgVa’s ventilators were priced at a fifth of the ones sold by the foreign competitors, yet it couldn’t make inroads into big hospitals. “It’s almost as if our cost was our barrier to sell. Being critical equipment, customers had a lot of inertia to even place test orders,” says Vaish.
Thanks to meagre domestic manufacturing. India also could not set standards of equipment specifications to suit the local needs. It had to tweak its own equipment standards to fall in line with those of foreign manufacturers. For example, in the US, defibrillators used to restore heartbeats by giving shock to patients had to last at least two shock cycles. But, in India, since access to hospitals and medical care was not as easy. patients arrive long after they have suffered heart attacks and Indian doctors use defibrillators for even 10 cycles at a time.
The local standards did not specify this need and as a result many imported defibrillators were not of much use in Indian conditions. “We still don’t have an act to regulate medical devices and it falls under the drugs category. Everything is still borrowed from the West,” says Aniruddha Atre, co-founder and director of Pune-based Jeevtronics Pvt. Ltd, which makes the world’s first hand-cranked defibrillator.
Trivitron’s Velu says that the share of locally produced medical equipment will increase within the next decade. This will be a combination of help from the government which will enforce more domestic manufacturing by overseas firms and increased entrepreneurship.
There is also a view that more global manufacturing will come to India, as firms de-risk their strategy of manufacturing everything in China. “In the past, when labour costs went up in the Chinese west coast, Indian garment companies were beneficiaries of increased orders even though other countries like Bangladesh and Vietnam too got a big share of it. The availability of labour and ability to scale up operations is something global players look for and to that extent India will always be an important outsourcing destination,” said Devangshu Dutta, managing partner at consultancy firm Third Eyesight.
The trend started even before the COVID-19 pandemic as companies in the US began to brace themselves for a trade war with China. For example, a US-based company has started sourcing Indian tyres at a 10-15% premium as it wants to diversify its risk from China. “India has witnessed a surge in mobile phone manufacturing. This is bound to increase the ecosystem in electronic manufacturing which in turn create ecosystems for industries like medical equipment,” says Sharad Verma, senior partner who oversees industrials at Boston Consulting Group.
The timing is also right for increase in local manufacturing, argues Verma. One of the important criteria for that is viable domestic consumption. It’s happened time and again in sectors like automobiles, mobile phones and more recently in manufacture of metro bogies after domestic consumption has reached a scale where it makes sense for companies to set up manufacturing facilities. “The industry is no longer small and the incidence of medical technology will only go up from here making it viable for even foreign companies to look at a manufacturing set up in India,” says Verma.
It will be interesting to see how it all plays out. The sector, so far, hasn’t seen much by way of private equity or venture investment. The most prominent one was an investment by a Morgan Stanley fund and Samara Capital in Surat-based Sahajanand Medical Technologies and Fidelity Growth Partners’s investment in Trivitron. But starting 2014, a government fund run by the Biotechnology Industry Research Assistance Council-incubated several companies who are slowly bringing their products to market. As some of these products hit home, especially in the wake of COVID-19, the action is definitely bound to pick up.
(published in The Morning Context)
