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September 25, 2021
Written By Venkata Susmita Biswas
Why direct selling companies continue to be wary of e-commerce channels
A study by the Indian Direct Selling Association states that the Rs 17,000 crore direct selling industry grew by only 10% in FY21.
The pandemic drove brands across categories to sell on e-commerce platforms and connect with consumers directly. Brands like Cornitos and Bisleri went the D2C way, and carmakers like Hyundai began selling four-wheelers online. From March 2020, direct selling companies enabled individual sellers to accept and fulfill orders online. Modicare, for instance, introduced a chatbot, an instant messaging catalogue, and an online training academy for new sellers. Tupperware created a mechanism through which sellers could share unique links with customers and receive commission on all orders placed using that link. Meanwhile, Amway developed a programme to train direct sellers to create content for social and digital media, and become influencers.
However, these direct selling companies have not yet opened up the e-commerce channel to the end consumer.
A study by the Indian Direct Selling Association states that the Rs 17,000 crore direct selling industry grew by only 10% in FY21. This was a massive drop from 28.2% y-o-y growth in FY20; the industry grew at 12% and 13% in FY19 and FY18, respectively.
The direct selling industry leans heavily on person-to-person interactions and home visits by the seller. It has been attempting to pivot to digital for a couple of years now; this was further accelerated during the pandemic. “Since the pandemic, a majority of lead generation happens virtually. This could be on social media platforms, WhatsApp groups, Facebook Messenger, etc,” informs Frederic Widell, VP and head – South Asia, and MD – India, Oriflame.
Amway India is trying to create an influencer ecosystem through its network of direct sellers. Anshu Budhraja, CEO, Amway India, says these influencers will promote Amway brands to consumers and pave the way for social commerce. The company saw its online sales through individual sellers grow last year — from over 33% before February 2020 to over 70% today, Budhraja says.
Modicare introduced a digital alternative for sellers last year. “My Modicare Shop facilitates our consultants to create microsites on our server to directly engage with their consumers. It allows customers to place direct orders while crediting the business volume directly to the consultants’ account,” informs Samir Modi, founder and MD, Modicare.
No takers for e-commerce
Despite e-commerce adoption growing multifold during the pandemic, direct selling companies are opposed to sellers leveraging e-commerce marketplaces. In 2020, a Delhi High Court judgement allowed e-commerce platforms to list products of direct selling entities, like Amway, Modicare and Oriflame, without any consent before listing the products for sale. Despite this, companies continue to delist sellers who use e-commerce platforms. “We are against this practice and have repeatedly delisted distributors who attempted to unethically sell our products on e-commerce sites,” informs Gautam Bali, MD, Vestige Marketing, and chairman, direct selling council, ASSOCHAM.
Eureka Forbes India, which followed the direct selling model, now retails offline as well as on e-commerce platforms. The company sells everything from vacuum cleaners to air purifiers on e-commerce platforms under its own brand store. Tupperware embraced e-commerce in the second half of 2019, and saw business from these platforms grow more than twofold over the last one year. While 80% of the company’s sales takes place through traditional direct selling, e-commerce now contributes 8% to the company’s overall sales.
These channels don’t have to cannibalise each other, say analysts. “The other retail channels need to be viewed as complementary to the core business,” says Devangshu Dutta, chief executive, Third Eyesight. Brands need to move to channels where their consumers are shopping, say analysts. Younger consumers, especially from the millennial generation, shop on e-commerce platforms and value benefits like 24-hour delivery, no-questions-asked returns, and discounts. “If companies do not follow their shoppers, they will end up losing share of mind,” adds Dutta.
Direct selling companies are wary of e-commerce and D2C channels because they deem direct sellers as “the backbone of the industry”. “Companies do not wish to bypass these seven million individuals by selling to consumers directly,” says Rajat Banerji, VP, Indian Direct Selling Association. Typically, the D2C websites of direct selling companies are used by direct sellers to place orders on behalf of consumers.
Tupperware India MD, Deepak Chhabra, says that the company tackled this conundrum by making its own direct sellers operate on e-commerce platforms and handle the company’s offline exclusive brand stores.
Source: financialexpress
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September 20, 2021
Written By Sharleen Dsouza
Cosmetics and skin care brands have been borrowing from a decades-old affordability play, but for a different reason.
Makers of premium cosmetics and skin products have been borrowing from a decades-old affordability playbook—the sachet revolution. But for a different reason.Estee Lauder to Sugar Cosmetics are increasingly coming out with lipsticks and serums to cleansing butters in tiny sizes. More than ever during the pandemic.Selling things in bite-sized helpings isn’t new. Consumer goods makers offer everything from shampoos to chips and cereals…
Source: bqprime
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September 20, 2021
Written By ET Now Digital
Tata UniStore, which owns e-marketplace Tata Cliq, has received Rs 102 crore in two tranches as part of its plans to raise Rs 1,000 crore, as per the latest regulatory filings.
KEY HIGHLIGHTST
The group has infused Rs 5,100 crore so far in two group entities, the highest-ever fund infusion done in a year by the salt-to-software conglomerate
When it comes to ecommerce, Tata is still at a nascent stage compared to its rivals.
Tata Digital has raised the funds from its parent Tata Sons. Tata UniStore is raising capital from its two joint venture promoters — Tata Industries & Trent Ltd.
New Delhi: The Tatas have pumped in Rs 5,025 crore till now this fiscal into its flagship ecommerce entity Tata Digital as the salt-to-software conglomerate plans to roll out the SuperApp and has been taking controlling stakes such as in e-grocer BigBasket and digital health company 1 mg. It has also invested $75 million in fitness company CureFit. The group has infused Rs 5,100 crore so far in two group entities, the highest-ever fund infusion done in a year by the salt-to-software conglomerate in the digital commerce business, the Economic Times mentioned in a report.
Tata UniStore, which owns e-marketplace Tata Cliq, has received Rs 102 crore in two tranches as part of its plans to raise Rs 1,000 crore, as per the latest regulatory filings.
Analysts said this investment signals the Tata group’s intent. “When it comes to ecommerce, Tata is still at a nascent stage compared to its rivals. This recent massive infusion of capital into the company with a commitment of almost $800 million is a declaration of intent by Tatas that they will not be on the sidelines in the ongoing ecommerce war,” the publication quoted as saying Mohit Yadav, founder, business intelligence firm AltInfo.
Co Plans to Scale Up Online Presence
Tata Digital has raised the funds from its parent Tata Sons. Tata UniStore is raising capital from its two joint venture promoters — Tata Industries & Trent Ltd — by issuing unsecured, unlisted, redeemable, optionally convertible debentures on a rights basis, the financial daily mentioned.While Tata Digital did not give any reason behind the funding, Tata UniStore has said in the filings that the infusion will help in “capital expenditure, working capital requirement/operating expenditure and other general corporate purposes of the ecommerce business of the company”.
In FY21, Tata Digital had raised Rs 400 crore while in FY20 it had raised Rs 100 crore from its parent. Tata UniStore had received a funding of Rs 30 crore in FY21, Rs 311 crore in FY20, Rs 292 crore in FY19 and Rs 224 crore in FY18. The group has ambitious plans to expand its presence in the ecommerce business and compete with the likes of Amazon, Walmart-owned Flipkart, and Reliance Industries.
“The Tatas have been fairly conservative in putting capital into businesses like retail and ecommerce until the last couple of years as the market shifted significantly to online shopping. Tata Cliq has been a much smaller player as compared to Amazon, Flipkart or even Reliance for that matter, all of whom have invested significantly higher capital,” the publication quoted as saying Devangshu Dutta, founder of retail consultancy Third Eyesight.
“However, more recently the Tatas decided to focus actively on this segment, including acquisitions and organic investments. Success still depends on multiple factors, since the market is hyper-competitive, with well-established incumbents,” said Dutta.
Source: timesnownews
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September 2, 2021
Written By DEVIKA SINGH
Pune-based Agarwal Business House, the largest franchisee of Crossword Bookstores, acquired the book retail chain from Shoppers Stop this week. It plans to expand the bookstore’s retail footprint and focus on the omnichannel play.
Crossword Bookstore In Panjim (PC: Wikimedia Commons)
Agarwal Business House (ABH) has set an ambitious growth plan for Crossword Bookstores it is acquiring from Shoppers Stop and is optimistic about turning around the loss-making venture despite concerns about the industry-wide decline in sale of books.
The company, while expanding the retail store chain to new geographies including tier-II cities, also plans to push higher from the digital channels.
However, the focus of its strategy to revive the loss-making venture is making it again a book-first brand, Akash Gupta, Managing Director – Agarwal Business House, said.
“The focus is going to be back on books and we are going to be a books-first brand catering to the real reader as that’s what consumers expect out of Crossword Bookstores,” he added.
The bookstore chain currently draws about 60 percent of its revenue from book sales and the rest from toys, stationeries, and other accessories. ABH plans to reduce the share of other categories to 30 percent in the next two years while increasing book sales.
ABH, a family-run business, is the largest Shoppers Stop franchise for Crossword Bookstores and operates 40 stores of the brand across the country, more than the parent company’s tally of 26. Including all other franchisees, Crossword Bookstores presently operated 70 stores.
“We have reached a size where we are even bigger than the company in terms of store count. Considering that we have been in this business for the last 20 years, and are passionately involved in the whole book trade, hence, it was a natural transition for us to acquire the brand and take it ahead,” said Gupta.
Founded in 1992 in Mumbai, Crossword Bookstores was acquired by the departmental store chain Shoppers Stop in 2005. The retail chain has been operating in red for a while now and its losses had been piling up year on year. According to the Shoppers Stop Annual report for FY21, the company reported a net loss of Rs 12.91 crore in the financial year 2021 (FY21) as compared to a net loss of Rs 12.45 crore in FY20. The pandemic further hit the business and the company had to close down 12 stores during the year. The sale of the business is part of Shoppers Stop’s strategy to focus on its core business.
The departmental store chain sold the business to ABH at a gross valuation of Rs 41.6 crore. Shoppers Stop will initially divest a 51 percent stake in the retail chain (expected to be completed within 15 days) and another 39 percent in the next 12 months.
The turnaround strategy
Despite Crossword Bookstores’ underperformance over the years which reflects the industry trend, ABH is confident of reviving the business within a year. The company has set out an ambitious chart for the retail chain going ahead which involves foraying into new geographies and building an omnichannel presence.
“We are confident that we will be profitable within a year given our experience of over 20 years in this segment,” said Gupta.
Its dismal performance in the last few years does not faze the new owner, who says “book stores require passion and entrepreneurial structure and cannot be run out of a corporate structure”.
“The most important thing is that it requires people who are passionate about books,” he adds.
Gupta claims that the 40 stores run by them as a franchisee were profitable at EBITA level (earnings before interest, taxes and amortization) as well at the net profit level, and hence, they have the expertise to revive the sinking ship.
Under this strategy, ABH plans to launch about 20-30 stores this year, half of which will be in its current locations while the rest are in tier-II cities. The company will launch these stores in its three formats – flagships stores, brand stores, and express format which are smaller stores of 1,000 square feet.
As part of its digital initiatives, the company plans to increase sales from e-commerce which currently contributes 5 percent to its business.
“We are targeting 10-15 percent from the digital channel in a couple of years,” Gupta said.
The company plans to “build a truly omnichannel experience” for readers.
“Whether consumers visit our store, our website or app, they should get the same Crosswords Bookstores experience,” said Gupta.
Riding into headwinds
Although ABH is optimistic about the newly acquired business, experts said odds were stacked against the company, given the industry-wide trend.
“There are two big trends in the industry. Book reading culture has declined very rapidly as people spend more time on screens. While the number of publishers and books being published has risen in India of late, the business has also moved to the online channel,” said Devangshu Dutta, founder and CEO of Delhi-based retail consultancy Third Eyesight.
Owing to these two trends, the sale of books has declined in recent years. Even large corporations such as Reliance Industries and Future Group tried their hands at the book business but exited quickly. Reliance Industries had introduced its chain of bookstores TimeOut in 2008 but eventually closed down the stores. Future Group, similarly, had experimented with Depot.
Gupta, however, stresses that these businesses failed because of the corporate structure, and a more ‘ hands-on approach’ is needed for books. He cites recent Nielsen data to prove his point about increasing readership.
A survey by Nielsen Book India conducted just after the lockdown was lifted last year showed consumers were spending more time reading books. Both reading and audiobook listening were up, increasing by a substantial seven hours weekly on average to as much as 16 hours per week, according to the survey report.
Dutta agrees. “To make a success out of this business, a brand has to become an authoritative source on the books for the customers. It is about what it can add to the customer experience besides selling books,” he said.
Salespeople, Dutta said, were an important part of this journey and have to be knowledgeable about the books as it is a very “involved purchase”.
Source: moneycontrol
