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November 28, 2021
By Rasul Bailay & Writankar Mukherjee, Economic Times
November 27, 2021
Reliance Retail aims to be one of the world’s top retailers, but for the last couple of years, it has been a buyer, not a seller. It has bought a string of retail brands — from online pharmacy Netmeds and online furniture retailer Urban Ladder to digital lingerie seller Zivame, online grocer MilkBasket and haute couture label Ritu Kumar. The latest acquisition was Sri Lankan lingerie brand Amante.
These acquisitions are crucial cogs in Reliance Retail’s further push into brick-and-mortar and ecommerce, and are part of Mukesh Ambani-led Reliance Industries Ltd (RIL) unit’s larger strategy: To break into the global top ten retailers. India’s largest retailer (by sales as well as by the number of stores) is currently ranked 53rd in the world, according to Deloitte’s Global Powers of Retailing 2021. Reliance Retail reported an annual revenue of $22 billion and a net profit of $750 million for the fiscal year ending March 2021.
At the same time, the company is looking beyond pure retailing. It’s pursuing a larger play to tap into the growing pie of the country’s overall consumption story — from contract manufacturing to distribution of everything from affordable fashion and consumer electronics to grocery products in India’s $850 billion annual retail market that is expected to swell to $1.3 trillion in the next few years. (Reliance did not respond to ET’s questionnaire.)
Analysts say Reliance’s overall plan is to engage India’s burgeoning consumers in its ecosystem one way or the other at any given point of time: shopping in its vast network of physical stores or on JioMart ecommerce platform, using Jio’s mobile or WiFi networks, watching movies on Jio Cinema, paying through Jio wallet so on and so forth that it is dubbed by the petroleum-to-telecommunications conglomerate as “retail plus” strategy.
“Their plan is to weave their products and services so deeply into your life that from morning to evening you are spending time and money on their networks either directly or indirectly,” says a top executive of an online grocery retailer. “Their idea is to constantly keep consumers engaged in a Jio bubble or in a Jio world.” The executive estimates India has a middle class of around 40 crore people. “Even if they succeed in capturing 10% of that wallet share, it is going to be huge,” he says.
That’s the reason Reliance Retail is betting big on business-to-business (B2B) ecommerce, with a digital wholesale marketplace along the lines of Alibaba for products such as smartphones, televisions, garments and grocery items, among other products, according to people aware of the plan. It’s looking to service a whole gamut of retailers in cities and villages.
Reliance has already started distributing its licencee products of Kelvinator- and BPL-branded consumer electronic items and its smartphone JioPhone Next, produced in collaboration with Google, to retailers outside of Reliance’s stable. The company also boasts a whole host of private brands and many of them are making inroads into general trade.
“The market for modern retail and ecommerce put together would be 15-20% in India. The rest 80% is still in the traditional market. If Reliance can make an entry into the traditional market and partner the smaller stores, the opportunity for growth and revenue is much more,” says an industry executive aware of the plans.
“Reliance’s approach is not to be a threat to small stores or merchants, but to be their enabler, provide them merchandise at best wholesale rates, upgrade their stores and even list them on their ecommerce platforms to help them reach newer consumers,” he adds.
Reliance is doing exactly that. Earlier this year, it started supplying Puric InstaSafe-branded FMCG products like soaps, home disinfectants and sanitisers to kiranas in Punjab and West Bengal. It is planning to roll these items nationwide. The company has put in place a marketing team for the first time to push these products. Similarly, B2B portal Ajio Business is selling T-shirts for Rs 79 onwards, a pair of jeans for Rs 220 and shirts for Rs 170 onwards to small businesses. Last quarter, Reliance Retail forayed into the wholesale business of medicines through Netmeds by roping in neighbourhood pharmacies under its B2B initiative.
These are some of the steps in the conglomerate’s bet not just on pure retail play but on end-to-end gameplay in the retail ecosystem, controlling manufacturing, wholesale, supply chain, ecommerce and payments.
To augment its digital wholesale plans, Reliance Retail has already converted its network of cash-and-carry outlets into fulfilment centres.
Analysts say Reliance’s ambitions are long-term and capital intensive and the company is ready for the long haul and to spend. “Reliance’s plan to rope in and aggregate many elements together — retailers, B2B buyers, suppliers, small players — and bring them on board takes time and is a capital-hungry business,” says Devangshu Dutta, chief executive of consulting firm Third Eyesight. “But controlling end-to-end is Reliance’s game plan in any business, including telecom, where it spans the entire value chain of not just providing the mobile network but also a digital interface with consumers.”
In a bid to feed its ambitious consumption plans, Reliance Retail is lapping up stores and warehouses nationwide to service both ecommerce and B2B sales through its “new commerce” omnichannel plans that will also involve legions of kiranas as last-mile delivery agents as well as buyers of Reliance’s products. Reliance Retail, which operates more than 13,000 stores of various formats, plans to open around 5,000 outlets of its Smart Point that would entail a convenience store, a pharmacy, agnostic centre, a telecom services and financial services products outlet all rolled into one across the country.
Reliance is planning to take this format to even tehsils, according to sources. Real estate agents and mall executives say Reliance is scouting for space for supermarkets, fashion outlets and jewellery and footwear stores.
They say Reliance is also planning to enter newer retail formats like a department store chain to compete with Shoppers Stop and Lifestyle. Also in the works is a Sephora-style beauty and cosmetics chain, they say.
“We will focus on expanding our store footprint multifold this year with co-located delivery hubs over the next few years. They will provide a strong network to reach and serve millions of merchants and customers,” Ambani said at the last AGM of shareholders.
Deloitte’s Global Powers of Retailing 2021 report ranked Reliance Retail as the world’s second fastest growing retailer, behind South Korea’s Coupang Corp.
Global financial and tech titans have taken notice of Reliance Retail’s play and pumped billions of dollars into it. Last year, the holding company Reliance Retail Ventures Ltd raised Rs 47,265 crore by selling about 10% stake to some of the biggest names in global private equity, including Silver Lake, KKR, General Atlantic, Abu Dhabi Investment Authority and TPG.
Reliance will continue with its acquisition spree, say analysts. However, Reliance Retail’s largest, the Rs 25,000 crore acquisition of Future Group, is bogged down by Amazon’s opposition to the proposed deal.
(Published in Economic Times)
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November 2, 2021
A healthy retail sector is absolutely vital to a healthy economy. Regulatory clarity and balanced competition are key for the sector’s growth. Third Eyesight’s founder Devangshu Dutta shared his insights on the conflicts and cracks appearing in the Indian retail sector.
Global giants vs India’s domestic retailers: Conflicts explained
This video is an extract from a webinar organised by the Think Change Forum.
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November 1, 2021
Written By Vaishnavi Gupta
D2C brands are taking the traditional retail route to scale up
Analysts say that the move to offline retail makes sense for digital-first brands in categories where experiencing the product is an important driver for purchase
While brands across categories made a beeline for e-commerce during the pandemic, physical retail earned prominence among direct-to-consumer (D2C) brands. Melorra, Plum, Pee Safe and Libas, among others, have been building their offline presence over the past year.
The total retail market in India is estimated to be worth Rs 63 lakh crore, of which 95% buying happens through offline formats, according to Devangshu Dutta, founder, Third Eyesight.
Having started as an online-only brand in 2013, Pee Safe launched its first exclusive store in India in February, 2021. The personal hygiene brand currently operates a store each in Gurugram, Bengaluru and Ahmedabad; and plans to launch 50 offline stores in the next 12 months. “There is a strong demand for personal hygiene and wellness products in the offline market. Hence, opening exclusive outlets is a crucial element of our growth strategy,” says Srijana Bagaria, co-founder and director, Pee Safe. These exclusive brand outlets (EBOs) will be launched through the franchise-owned and franchise-operated (FOFO) model.
Online ethnic wear brand Libas, meanwhile, unveiled two brick-and-mortar stores in New Delhi in September, 2021. The brand has an ambitious target of 200 more stores by 2025 in malls and high streets across metro and tier II cities. A click-and-collect facility will be operational soon, says Sidhant Keshwani, managing director, Libas. “We are aiming for our offline market share to be 25% in the coming two years,” he adds.
The brand offers a range of wedding and occasion wear, as well as ready-to-stitch fabrics exclusively in its offline stores. Soon, it also plans to foray into the kidswear and menswear categories, as well as home décor.
Beauty brand Plum, which has been retailing online since 2014, launched its first store in Mumbai in October, 2021. Plum’s founder and CEO, Shankar Prasad, says the goal is to take the store count to 50 by 2023, and for EBOs to contribute “10-20% of our total sales in two-three years”.
Jewellery brand Melorra extended its presence offline back in December, 2020. “We have been growing 200% year-on-year; we expect to post even stronger numbers this year with the addition of offline stores. We are looking to touch $1 billion in revenue in five years,” says the company’s founder and CEO, Saroja Yeramilli.
A good step?
Analysts say that the move to offline retail makes sense for digital-first brands in categories where experiencing the product is an important driver for purchase. “D2C players have so far done a great job of owning the consumer journey which is largely online. They now see that for the next wave of growth and penetration, they need good representation in a larger set of touchpoints,” says Rachit Mathur, partner and MD, BCG.
However, online is likely to remain the primary revenue stream for these digital-first brands. “Brands such as Lenskart, Nykaa and FirstCry have done a great job in driving strong retail presence and viable productivity, but continue to have a higher bias of online sales,” Mathur notes.
D2C brands could perhaps try a mix of formats for an offline foray, from EBOs to a presence in departmental stores, or even small SIS (shop-in-shop) counters in shopping centres. But brands would need to be cognisant of the fact that consumers behave differently depending on the shopping environment they are in. Hence, the interface, service offering, and even the product mix may have to be tweaked. “Simply bringing in technology into an offline environment just because you are an online-first brand may do nothing to enhance the consumer experience, and may even detract from it,” Dutta says.
Source: financialexpress
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October 28, 2021
Written By Sandeep Soni
Technology for MSMEs: The nine-member ONDC advisory council includes R.S. Sharma, CEO, National Health Authority; Infosys’ Nandan Nilekani; CAIT’s Praveen Khandelwal; Adil Zainulbhai, Chairman, QCI; Avaana Capital’s Anjali Bansal, Arvind Gupta, Co-founder & Head, Digital India Foundation; NPCI’s Dilip Asbe; Suresh Sethi, MD & CEO, NSDL and RAI’s Kumar Rajagopalan.
DPIIT in July this year, announcing the advisory council, had said that the ONDC is expected to “digitize the entire value chain, standardize operations, promote inclusion of suppliers, derive efficiencies in logistics and enhance value for consumers.”
Technology for MSMEs: The Modi government’s ambitious Open Network for Digital Commerce (ONDC) project, which seems to replicate what UPI did to banking transactions to commerce now and has been in the works since last year, will be operated and managed by a private non-profit enterprise. In a review meeting for the ONDC project with the commerce minister Piyush Goyal on Tuesday, DPIIT Secretary Anurag Jain and members of the ONDC advisory council suggested setting up of the private entity that would lead the project right and “support SMEs in their digital transformation by developing readymade tools to help existing software applications quickly adapt to the network,” according to a statement by the commerce ministry. Helping small businesses through such tools is, however, one of the roles to be performed by the entity.
“ONDC is essentially a protocol and many technology companies that support or serve MSMEs may need to adopt this protocol. For instance, many traders, retailers, or small businesses might be using a particular billing software from a technology company. Now that billing software provider would need some handholding or tools to get onto the ONDC protocol which is an open network and align their billing software for use on the ONDC protocol. All this will be done by the ONDC team. In short, it will help everybody to get onto the protocol so that smarter digital commerce can happen,” a source privy to the ONDC project told Financial Express Online on anonymity.
The way it might work is that, for example, earlier a small shop owner was using a single software for billing customers at his/her shop but with ONDC, the same software will now be capable of posting whatever stock the shop owner has on the commerce platform, an ERP software provider told Financial Express Online based on the public information on the ONDC project and media reports. “If somebody is making a pickle at his/her house and supplying it to different retailers who have different software, how will the supplier show how much stock they have to fulfill orders at the same time to all retailers? If all of them have the same ONDC protocol then small manufacturers can post what they have to all retailers who can immediately order the product. ONDC will be useful a lot in the business-to-business model as well,” he said.
DPIIT in July this year, announcing the advisory council, had said that the ONDC is expected to “digitize the entire value chain, standardize operations, promote inclusion of suppliers, derive efficiencies in logistics and enhance value for consumers,” as per the ministry’s statement. Essentially, what this would do is turn e-commerce from its current form into an open digital infrastructure, which is highly scalable for sellers and customers to connect with each other, without the barrier of making an effort of switching between two or more marketplaces for a particular product. The departure from the platform-centric approach to an open-source framework is the mainstay here.
“It is a welcome move and we look forward to the support that it will give to various small retailers, small manufacturers, and suppliers,” Kumar Rajagopalan, CEO, Retailers Association of India told Financial Express Online.
Rajagopalan was one of the nine-member advisory council that also include R.S. Sharma, CEO, National Health Authority; Nandan Nilekani, Non-executive Chairman, Infosys; Praveen Khandelwal, Secretary-General, CAIT; Adil Zainulbhai, Chairman, QCI and Capacity Building Commission; Anjali Bansal, Founder & Chairperson, Avaana Capital; Arvind Gupta, Co-founder & Head, Digital India Foundation; Dilip Asbe, MD & CEO, NPCI; and Suresh Sethi, MD & CEO, NSDL.
Comments sought from DPIIT on Tuesday evening for this story weren’t immediately available.
“Currently, there is no official deadline for establishing the non-profit entity. The point is that everybody in the advisory council is putting their might behind developing ONDC as they have been there, done that, and helped the government on various technology fronts. If small retailers and MSMEs, suppliers, etc., do better business, it is good for all of them as well,” the source told Financial Express Online on setting up of the entity.
The new entity suggested to Goyal will be overall responsible for providing the “startup mindset” for ONDC implementation and a “missionary outlook” for developing it “by adopting and building enabling technology and encouraging wide-scale voluntary participation by ecosystem players,” the Commerce Ministry said. The entity would also have to establish the code of conduct and rules for the network “on principles of consumer protection, fair trade and regulatory conformity” and provide “foundational services for managing the network like digital infrastructure for the network, common registry, certification of participants and certifying agencies, grievance redressal, etc.” Further, the entity will also develop and operate reference applications for buyers, sellers and gateway for market activation and priming the network along with partner entities, the ministry said.
Source: financialexpress
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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
