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December 15, 2015
Sagar
Malviya, The Economic Times
Mumbai,
15 December 2015
Lifestyle
online retailer Jabong crossed the Rs1,000 crore sales mark in
the year to March, doubling its revenue from a year ago but deep
discounting has led to a nearly threefold increase in the net
loss.
Xerion Retail, which runs Jabong, posted a loss of Rs 43.6 crore on sales of Rs 1082.9 crore, as per a Registrar of Companies filing. A year ago, it had sales of Rs527 crore with a net loss of Rs16.6 crore. Sales of the company, incorporated four years ago, amount to a third that of Shoppers Stop, India’s largest department store chain started 25 years ago.
India’s ecommerce market is set to rise to $103 billion by FY20 from $26 billion now, according to Goldman Sachs. At this stage of evolution, online retailers have to go through years of operating losses, given high initial investments as well as the incentives they provide in the form of discounting to attract consumers online. At the same time, several online retailers are said to be getting more circumspect with discounts as they seek to shore up their balance sheets.
Jabong, which was started in a one-room office at Golf Course Road, Gurgaon, in December 2011 is now part of Global Fashion Group portfolio, a subsidiary of German online business developer Rocket Internet. Both key cofounders Praveen Sinha and Arun Chandra Mohan quit this year amid speculation that the company is on the block. A week ago, Sanjeev Mohanty joined Jabong as CEO and managing director from Italian fashion brand Benetton.
"Jabong is transitioning from a startup to a professionally managed profitable ecommerce business. We are putting together a strong leadership team," he told ET. "Our focus will be on more and more curation, building unique assets and increasing assortment."
High growth and losses are par for the course at ecommerce companies, an expert said.
"There is a management churn issue but it is more difficult to bring losses down if you have to show high growth trajectory," said Devangshu Dutta, chief executive at retail consultancy Third Eyesight. "For Jabong, loss is not a problem as long as they have enough cash on the balance sheet and there is constant product injection in its portfolio to excite consumers."
India’s biggest homegrown ecommerce companies Flipkart and Snapdeal are flush with cash as overseas investors in the two companies look to get a piece of a market that’s set to surge further. Amazon India too has indicated that it may exceed the $2 billion that CEO Jeff Bezos had pledged to spend last year, with sales growing more rapidly than expected. In comparison, Jabong has raised about $100 million from a consortium of investors including Swedish investment giant AB Kinnevik and Rocket Internet.
Myntra, owned by Flipkart, and Jabong were considered the leaders in the fashion category, but Amazon India is gradually getting aggressive with the segment consistently among its top three. During the festive season, Amazon saw its fashion segment grow fivefold from a year ago.
Apart from this, most lifestyle product makers are either shying away from offering heavy discounts for their wares or giving price-offs for old merchandise, something that goes against Jabong’s business model of offering fast fashion or the latest collection.
Hence, the online retailer has launched over a dozen global brands such as Dorothy Perkins, G Star Raw, Tom Tailor and Bugatti Shoes exclusively for India that also helps them earn higher margins. Just two months ago, Jabong helped British brands Topshop and Topman enter Indian market through its platform.
"We are focusing on growing the ‘just-in-time’ marketplace model where we don’t hold inventory risk," said Mohanty. "This is helping us create efficiencies and de-risk a lot of our business, while allowing us to expand the number of vendors and substantially increase the number of products listed on our platform, which now stands at close to 400,000 SKUs (stock-keeping units). We also continue to increase our assortment to offer more choices to visitors on Jabong."
(Published in The Economic Times.)
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December 10, 2015
Bindu D. Menon, The Hindu Businessline
Mumbai, 10 December 2015
Brands riding on Bollywood heartthrob Salman Khan are heaving a sigh of relief with the Bombay High Court overturning his conviction for a 2002 hit-and-run case. Brand watchers point out that the verdict will only increase his standing among brand owners.
In May, a lower court had convicted Khan of culpable homicide and sentenced him to five years in jail for driving over and killing a man sleeping on a pavement. But the appeals judge ruled there was not enough evidence.
Khan tweeted that he accepted the ruling with ‘humility’.
But the biggest relief is undeniably for the brands he is associated with. According to celebrity management firms and brand consultants, the mass hero has as much as ?200 crore riding on him.
Khan endorses over 10-12 brands including Thums Up, Being Human, Revital, Wheel, reality show Big Boss, men’s innerwear Dixcy Scott and PNG Jeweller.
Film analyst Komal Nahata points that currently there is about Rs. 100 crore riding on his films.
“Salman Khan’s stand is vindicated. His upcoming film Sultan is slated for release in 2016 and has about ?100 crore riding on it. Brands which were previously considering exiting him as a brand ambassador will reconsider their decision.”
According to Shailendra Singh, Jt. MD of Percept India, “Salman’s brand was already flying high. Now it will skyrocket. The emotional connection of the fans, the box office and the brand was hugely backing Salman’s freedom and now they have got it. It is also interesting that it has come at a time when the three Khans (Salman, Shah Rukh and Aamir) are finally getting along.”
Echoing the sentiments, Jagdeep Kapoor, brand guru and founder of Samsika Marketing, noted: “Brand consultants will see how they can cash in only Salman Khan’s appeal to take their brand’s credo forward.”
As per industry sources, brands pay anywhere from Rs. 5 lakh and Rs. 5 crore per endorsement to Salman.
Picky MNC brands
Asked how MNC brands which are picky about their celebrity choices will react to the verdict, Devanghshu Dutta, CEO, Third Eyesight, said: “The arena we are playing in is largely driven by emotions and brands would also reconsider their decision. Indian companies are flexible in their approach but it is MNCs which are picky. Cases will not make a significant improvement in brand ambassador’s selection”.
(Published in The Hindu Businessline.)
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December 8, 2015
Richa
Maheshwari, The Economic Times
Bengaluru,
8 December 2015
Mobile application-only fashion retailer Myntra has tentative plans to roll out offline experience zones in the next 12-18 months, its chief executive Ananth Narayanan said. “We don’t have any immediate plans, but I think next year we will do it. This is something we are debating on,” said Narayanan.
With this development, Myntra will be joining e-commerce companies such as its parent Flipkart, Zivame, Pepperfry and Firstcry which are opening such stores to provide customers with a touch-and-feel experience of products as part of a strategy to stand out among fast mushrooming online sellers.
“The idea is to maximise availability for your target consumers,” said Devangshu Dutta, CEO of Third eyesight. “With these developments, the divide between online and offline is becoming artificial,” he said.
[You may also be interested in reading “The Next New Thing: A Retail Store“]
Myntra has also launched a fashion network for brands and consumers on its mobile app in order to boost its sales and consumer engagement as it inches towards profitability.
“Our overall unit economics are getting closer and closer to profitability. The firm will break even in 2016,” said Narayanan.
The Bengaluru-based company is currently clocking gross merchandise volume at a rate of over $500 million (about Rs 3,335 crore) annually, a growth rate of about 66% over the previous year. It is now trying to get to a GMV runrate of $1 billion (Rs 6,670 crore) by May-June next year. Separately, on the Myntra app platform, brands can now make a page, track their performance on dashboards and create content and start marketing campaigns.
“If they (brands) have a large community, then they don’t have to spend anything. But if you are a small brand and want to build up a community, then you may want to spend money with Myntra,” said Shamik Sharma, chief technology officer at Myntra.
Customers, on the other hand, will be able to view personalised feeds, upload pictures, seek opinions of friends and experts. Recently, Myntra partially relaunched its mobile site to enable social sharing features of the app. According to the company officials, the brand has over 7.6 million active consumers.
According to an April 2014 report by venture capital firm Accel Partners, Indians bought fashion products worth $559 million online in 2013 and the figure may increase to $2.8 billion by 2016. Online retailing in India grew 56% annually between 2009 and 2014. Etailing in India is expected to swell to $6 billion (Rs 37,200 crore) in 2015 from $3.5 billion last year, a recent PwC report said.
[You may also be interested in reading “The Next New Thing: A Retail Store“]
(Published in The Economic Times.)
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November 27, 2015
Sagar
Malviya, The Economic Times
Mumbai,
27 November 2015
Revenue
from online ticketing on Indian Railway Catering and Tourism Corp
crossed the Rs 20,000-crore mark during the year to March 2015,
nearly double the turnover of India’s largest online retailer
Flipkart.
IRCTC generated Rs 20,620 crore, or nearly $3 billion, through online ticket sales in the last financial year, up 34 per cent from a year ago when it sold tickets worth Rs 15,410 crore. But unlike loss-making marketplaces, IRCTC posted profit after tax of Rs 130 crore, up from Rs 72 crore in the previous year.
"Bulk of the sales may be attributed to IRCTC’s rapid growth in e-ticketing which has been due to its interface and setting up of a very robust process. Capacity enhancement was done to book 7,200 tickets per minute as against 2,000 tickets per minute in the existing system," said Sandip Dutta, public relations manager at IRCTC, which set a record in April when it booked 13.4 lakh etickets on a single day. That compares with 27 tickets a day when it began in 2002. In fact, 55 per cent of all rail tickets sold are booked online.
The government-owned portal posted a 19 per cent increase in income at Rs 1,141 crore, which mainly includes service charges on tickets, sales of Rail Neer water, onboard catering services and licence fees from outsourced catering vendors.
This is similar to online marketplaces where sales don’t include actual goods sold but instead count commission from sellers and revenue from advertisements on their ecommerce sites. IRCTC’s combined income from commissions on ticketing, travel and tourism was Rs 670 crore, a tad higher than Flipkart’s turnover of Rs 659 crore earned from shipping fee and selling commission on its ecommerce portal.
By having a monopolistic position, higher web traffic and sales, IRCTC can attract several brands on its portal, feel experts. "A large part of the Indian population trusts IRCTC and brands across consumer, food and tourism can use it to advertise or sell their products on the portal," said Devangshu Dutta, chief executive at retail consultancy Third Eyesight.
Since IRCTC doesn’t compete with any of the online marketplaces
in India, Amazon has partnered the rail portal for two years with
an annual guarantee of Rs 18 crore a year. India’s ecommerce market
is expected to breach the $100-billion mark by FY20, triggered
by increasing internet usage, discounting and investment by online
retailers, according to Goldman Sachs that has revised its previous
estimate. The majority of an upward revision of 27 per cent is
contributed by the e-tail segment, which is estimated to reach
$69 billion by FY20. 
ET View: Expand the IRCTC Menu
There is a huge potential to capitalise on the large and fast-growing cash-flow. The Railways now need to visualise IRCTC as a major-league online retailer, and not merely for rail tickets. IRCTC needs to be positioned as a huge online market place, bringing together buyers and sellers for myriad goods and services. It needs to leverage its expertise in bringing individually ordered food for passengers to provide doorstep delivery for a wide variety of goods and services. The Railways need to explore stock market listing for IRCTC.
(Published in The Economic Times.)
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November 20, 2015
Richa Maheshwari, The Economic Times
Bengaluru, 20 November 2015
Four
years ago, about 500 out of 600 operational handloom silk weavers
in Katoria village of Banka district in Bihar had shut shops amid
a demand slump and dwindling profits. "It was an exceptionally
bad year for us. Many left for Mumbai to look for jobs and youngsters
were not keen on taking forward the legacy," recalls Mohammad
Izzaz, a weaver whose family too had stopped making Banka silk
a year later.
That was then. Today, Izzaz and several other handloom artisans
in his village are back in action, weaving Banka silk sarees and
dress material for the booming ecommerce market. "One and
half years back, on an average, we would earn about Rs 30 per
day. Today it has increased to Rs 300 to Rs 400," says Izzaz,
25, who supplies to Indianroots.com and indianartizans.com.
Currently hundreds of Katoria residents are migrating back to the village and weavers say around 150 otherwise mothballed handlooms have restarted in the last one year.
Similar stories of revival in interest are emerging from traditional handloom clusters across the countrybe it Paithan in Maharashtra or Phulia in West Bengal, both known for their handwoven silk sareeswith ecommerce companies such as Amazon, Flipkart, Snapdeal, Jaypore and Craftsvilla giving them a new lease of life by helping them to reach out to customers all over the country as well as abroad.
Leading ecommerce firms have already tied up with nearly 7,000 weavers to sell their products on their platforms and the number is growing keeping with rising demand.
Amazon India, which launched a craft store before its festive sales last month, has enlisted about 90 weavers and recorded a threefold surge in demand during the festive season, its category leader Mayank Shivam said.
India accounts for 95% of the world’s handwoven fabrics and, according to the textile ministry’s estimates, handloom weaving provides employment to more than 4.3 million weavers and allied workers in the country.
But, with powerlooms and branded products sweeping the consumer markets with cheaper products and newer designs, the handloom industry has been going downhill over the years, forcing many weavers in several traditional handloom hubs to migrate to other regions and professions to earn their livelihood. According to a labour ministry report, employment in the handloom/powerloom sector declined by 11,000 as of March 2015 from a year earlier.
With the entry of ecommerce players, artisans can hope for a revival in their fortunes as they get direct access to consumers around the world and that too without having to deal with middlemen.
In June, Snapdeal partnered with Himachal Pradesh government to launch a ‘special ecommerce zone’ to facilitate sale of local handicraft and other products while Flipkart has launched ‘India Art House’ to push traditional fashion.
Mumbai-based Craftsvilla, which has around 150 artisans supplying art and craft to them, is working towards creating its own private label where base-level weavers and artisans will make products exclusively for them. "A lot of the traditional handwoven designs have become old-fashioned," said Manoj Gupta, founder of Craftsvilla. "We need to contemporise it for our young shoppers. Thus, we are hiring NIFT designers to become the voice of ethnic designs," he said.
The online industry is not only helping weavers expand nationally but they are also proving a window of opportunity to sell their products in the global market. That means the sellers don’t necessarily depend on seasonality.
Rahul Narvekar, CEO of Indianroots.com, said the portal gets most of its orders from abroad, adding that it sold a handwoven stole worth Rs 19 lakh in Malaysia a few months back.
Manish Ramakant, a weaver of Paithani silk sarees, said his business has grown by 40% last year on the back of online orders from abroad. "Demand for Paithani sarees is the highest during the wedding season; rest of the months, we remained unemployed. However, online international orders now ensures work round the clock today," he said.
With the newfound markets and vigour, Ramakant, 39, has now ventured into home decor and has started interacting with buyers and designers through Whatsapp.
Experts point out that ecommerce players help handloom weavers overcome their biggest challenge: easy and quality access to consumers.
At present handloom products are mostly sold through central and state government emporiums. "The emporiums, run by bureaucrats, are not well maintained. Hence, there is hardly any good retail outlet for artisans," said Arvind Singhal, chairman and managing director of consultancy firm Technopak.
Devangshu Dutta, CEO of retail consultancy firm Third Eyesight, said the government should get out of retail business. "Business is not a government’s job. Its job is to run the country," he said. "The supplier, distributor and the consumer make an ecosystem. Hence, this has to be individual and business-led. I think the government should get out of the way."
Also, with most ecommerce players dealing directly with traditional weavers, artisans are earning better margins that would otherwise go to middlemen.
"I was affected by middlemen. Now, for the past one-and-half years I have been working directly with designers and online companies. I have cut down nearly 60% of middlemen," said Asif Ansari who makes Maheshwari sarees. This has helped the weaver from Maheshwar in Madhya Pradesh improve his margin to 35%-40% from earlier 15%-20%.
However, the world of ecommerce is not without any tension for
handloom weavers. Fear of duplication and lack of awareness among
consumers are among the main issues weavers face in the online
retail space. This sometimes force them to cut down their margins.
What is applicable to Katoria’s Banka silk weavers is applicable to any other industry or trade facing challenges of demand. One of the problems facing many quality traditional sectors is the absence of information about such products, especially luxury or niche items as well as non-traditional art and craft. This is where online retail, which doubles as shop and catalogue, can be helpful. If online companies resurrect traditional sari production, they can certainly do the same for artwork and handicrafts that need to find their markets which are probably just waiting ‘to be told’ that they are there to be procured.
(Published in The Economic Times.)
