Shambhavi Anand & Rasul Bailay, The Economic Times
New Delhi, 3 August 2015

The stage is set for the next big fight in the online world as new CEOs take the helm at the top fashion ecommerce companies amid mounting challenges of getting customers to buy clothes and accessories without deep discounting.
Over the past few quarters, sales at online fashion companies have slowed as they tried to cut the millions of dollars that went into subsidising products to lure customers with heavy discounting. The change of guard now becomes even more pertinent for growth, analysts said.
Two weeks ago, Flipkart-owned fashion portal Myntra said it hired Ananth Narayanan, a McKinsey India director, as its new chief executive officer to replace Mukesh Bansal, who was named last year as the head of commerce at the country’s largest ecommerce company.

German investor Rocket Internet is preparing management changes at Jabong.com in a bid to lift the performance of the country’s secondlargest online fashion retailer, ET had reported on July 22. CEO Arun Chandra Mohan and managing director Praveen Sinha are likely to be replaced.

"Now, conversations within ecommerce companies are shifting towards making more margins rather than being purely about market acquisition," said Devangshu Dutta, CEO of retail consultancy Third Eyesight. "This will also drive strategies and organisational behaviour that may cause shuffling among senior roles and people."

Reliance Retail recruited Sanjay Mehra, a veteran of 25 years with stints in Gap and Nike, as the chief executive for its fashion and lifestyle ecommerce business. The company is working to bring a host of relatively lesser-known international brands from Europe for its online venture, which will be quite different from its brick-and-mortar fashion business. The Tata Group last year hired Sarvesh Dwivedi as head of lifestyle for its upcoming ecommerce marketplace.

Even though it is a late entrant, Amazon is aggressively ramping up the fashion and lifestyle business. Vikas Purohit, the head of fashion at Amazon.in, has put in place a team, including Vikram Raizada, former CEO of Tara Jewels, and Manish Saksena, ex-chief osperating officer at Tommy Hilfiger India. Fashion designer Narendra Kumar also came on board in 2103 as a creative director to boost Amazon’s portfolio.

The boom in the online fashion segment is such that the Seattle-based ecommerce giant is creating its own private label in the fashion and lifestyle segment, perhaps making India the first country where Amazon has its own private fashion labels.

"Initially ecommerce — in fashion as well — revolved around building the market and was more transaction-based," said Nitin Chhabra, chief executive of Ace Turtle, which has the mandate to bring dozens of foreign brands to sell on Myntra. "As there are too many me-too models currently, the time has come to have differentiating aspects and fashion ecommerce companies will move toward more personalisation and enhance the experience part of it."

Indians bought fashion products worth $559 million online in 2013, according to an April report by venture capital firm Accel Partners, an investor in Flipkart.

Snapdeal has said it is targeting to sell $2 billion worth of fashion and lifestyle products this year through its flagship platform and Exclusively.com, which the New Delhi-based company acquired in February.

In a bid to reach its goal, Snapdeal picked Amit Maheshwari, vice president of its fashion division, as the new chief executive of Exclusively. com, which sells labels from designers, including Rohit Bal, Manish Malhotra and Tarun Tahilani.

Reliance Industries and Tata Group, India’s biggest conglomerates, also want a share of India’s burgeoning online fashion market.

Reliance Retail is planning a big push in the ecommerce segment this year through the rollout of an online fashion store, chairman Mukesh Ambani announced at the Reliance annual general meeting last month.

The Tata Group is seeking to make a mark by enlisting global fashion brands as part of its portfolio, which is expected to debut in the springsummer season next year, according to people familiar with Tata’s plans.

Tata is trying to convince Spain’s Inditex, a partner with Trent, to sell its highly successful Zara brand on its marketplace. Zara is sold only on its own site and not through third-party websites. So if that happens, it would be a first for the Spanish brand.

(Published in The Economic Times.)

KNN Bureau
New Delhi, 1 August 2015

Minister of Industry, Health and Power Government of NCT of Delhi Satyender Jain said Delhi need to have specialised retail shopping zones for different products to enhance the overall shopping experience in the city.

Inaugurating the CII Delhi Retail Summit here on Friday, Jain urged the retailers in Delhi to be more competitive in terms of pricing, which will in turn increase sales for them.

He further stated that the retail in Delhi has a lot of potential, which needs attention in terms of customer satisfaction.

Retail sector in Delhi has potential to grow up to three times even though there is tough competition from the online segment. The city has tremendous scope for growth in the area of health, education and retail sector, he said.

The minister also informed that the state government is planning for infrastructural development to provide competitive price on rental space compared to the neighbouring states to promote retail sector in Delhi.

On the occasion, Past Chairman, CII Delhi State Council, and Executive Director, The Bird Group, Ankur Bhatia said with increase in urban population and changing consumer behaviour, Delhi has a lot to look forward in terms of retailing in the city.

He added that the retail development in the city has largely been scattered with numerous small shopping zones mushrooming all across the city which need to be organized through single ownership for better management and experience. He also emphasized the need for organising an annual Delhi Retail Festival.

He also said that retailing continues to be a good business model across the country and also stressed on the need for single ownership of malls for better management.

The summit also witnessed various leading retailers and institutions coming together for a day, including Head, Ambience Mall, Deepti Goel; Managing Director, STARCENTRES, Pranay Sinha; Managing Director and CEO, Bharti Reality, S K Sayal; Chief Executive Officer of Third Eyesight, Devangshu Dutta; Head of Retail, Unitech Group, Munish Baldev; Chief Executive Officer, Select City Walk, Yogeshwar Sharma; Senior Vice President, DLF Luxury Retail & DLF Promenade, Dinaz Madhukar and Chief Executive Officer, The Beer Café, Rahul Singh were among other eminent speakers at the summit.

(Source: KNN Bureau .)

Ravi Teja Sharma & Rasul Bailay, The Economic Times
New Delhi , 29 July 2015

Riding on the back of humongous investments and rising valuations, ecommerce companies and technology startups outpaced IT/ITeS firms for the first time as the biggest office space taker in the country in the first half of the year.
Companies in this segment leased more than 6 million square feet of office space, or over 35% of the total, according to property research firm Knight Frank. Flipkart leased 3 million sq. ft. in Bengaluru with Embassy Office Parks, Amazon took 1.3 million sq. ft. in Bengaluru, Snapdeal 5 lakh sq. ft. in Gurgaon, Housing.com 1.5 lakh sq. ft. in Mumbai and Zomato recently leased 1.2 lakh sq. ft. in Gurgaon.
"The difference between startups of 1999-2000 dotcom boom and now is that this time these startups have raised large sums and business is actually happening. This is propping up the commercial office space market in India at the moment," said Viral Desai, national director – office agency at Knight Frank India.

The ecommerce industry has attracted large amounts of funding over the past few years. Funding in the sector increased to $4.3 billion in 2014 from $800 million in 2013. In the January-June 2015 period, investors have already put in $1.8 billion in ecommerce companies.

Flipkart has so far raised $3.4 billion in the eight years since it was formed, with the latest $700 million infusion valuing it at $15 billion. Amazon is readying a $5 billion war chest for its Indian operations.

Desai said Bengaluru and Gurgaon are where the most action is from these ecommerce and tech startups.

The money raised by ecommerce companies has been deployed essentially in two places, marketing and backend infrastructure, which includes people, said Devangshu Dutta, chief executive officer of retail consultancy Third Eyesight.

"A lot of them have widened their product portfolio and deepened the markets access and their businesses have grown tremendously. So while we may say it is a technology-based business, the execution of the business is dependent on people to a large extent, in terms of product sourcing and in terms of vendor management, supply chain, customer support, etc. With that growth in the team, it is very natural, and it is also an indication of what they expect in terms of future growth," he said.

(Published in The Economic Times.)

Sharan Poovanna, Mint
Bengaluru, 29 July 2015

India’s largest e-commerce firm, Flipkart, has launched 20 stores in 10 cities to let its customers collect the items they ordered online at their convenience, mimicking similar moves from Amazon.com Inc.

The initiative aims to address issues such as unavailability of customers during delivery and restricted entry of delivery boys into IT parks, gated communities and educational institutions.

The stores will also be a centrepiece of Flipkart’s rural expansion strategy and will provide a reliable alternative to door delivery in small towns.

“We also plan to offer several value-added services at these experience zones to enhance customer engagement. Services like instant returns, spot trials, open box deliveries and exclusive product demos will also be rolled out in the near future,” said Neeraj Aggarwal, senior director of delivery operations. Flipkart plans to open 100 such stores by March 2016, he said.

The launch, made in partnership with Flipkart’s logistics partner Ekart, comes after the firm saw more than 80% of shipments picked up through the stores during a six-month pilot programme.

The “click and collect” model is not new. Amazon, which has no physical stores, has installed lockers in places ranging from grocery stores to gas stations in several US locations to hold items ordered online. The move improved customer service as it avoided the need for them to have to wait around for ordered items due to a missed delivery.

The first 20 Flipkart “experience” stores will be opened across 20 cities—Bengaluru, Mysore, Ahmedabad, Delhi, Kolkata, Pune, Vellore, Gurgaon, Vadodora and Surat. They will service only Flipkart customers and not those of its Myntra unit. They will be about 500-1,000 sq. ft in size, 70% of which will be used to store goods.

A host of other online chains have also been keen to have some sort of physical presence. FabFurnish, PepperFry, Caratlane and LensKart, among others, already offer offline touchpoints as part of customer engagement efforts.

The trend is here to stay, said Devangshu Dutta, chief executive of retail consultancy Third Eyesight. He expects firms to continue trying to find the right mix of online and physical presence as they look to provide a seamless customer experience.

“Some products are better handled in the physical environment,” said Dutta.

(Published in Mint.)

Soumonty Kanungo, Daily News & Analysis (DNA)

Mumbai, 20 July 2015

Buying an anti-ageing or anti-wrinkle cream online is no longer an urban phenomenon. A growing number of women from smaller towns are busy placing orders for such products these days, thanks to the increasing rural penetration of e-commerce companies.

If e-retailers are to be believed, customers from tier-3 and tier-4 towns and beyond are growing aspirational and on their shopping lists are products like microwave ovens, dishwashers and high-tech smart phones.

Sridhar Gundaiah, founder and CEO, StoreKing, a Bangalore-based assisted e-commerce company having a large rural and semi-rural target base, told dna, "Around 70% of the country’s $600 billion retail market is in rural belt. People in small towns and villages too are aspirational and have spending power, though the consumption pattern could be different."

The company, which came up with a hybrid model to reach out to rural areas with poor internet connectivity, sells about 100 of anti-ageing creams per day and 100 of microwave ovens per week. Gundaiah said another fast selling product is smartphones, which includes iphones as well.

Expensive smart phones in areas with low net connectivity? Gundaiah says they are mainly purchased for the sake of a good camera. "They want a phone with a good image and video recording option," he said.

Another best selling items are garments. Harish Bijoor, brand-expert & CEO, Harish Bijoor Consults Inc., said, "Rural folk are very excited about two things today – garments of every kind and the mobile phone. Expect this to deepen to adjacent categories very fast."

Thanks to its population and economic development, the small towns and rural India offer a huge growth opportunity which marketers cannot afford to overlook.

Devangshu Dutta, chief executive, Third Eyesight, said, "Rural markets are enormous in terms of population, but there is a supply-side gap in terms of retail stores, brand mix and product range available. E-tailers can expand outreach and create demand among customers who are otherwise under-served."

Ankur Bisen, senior vice-president, retail & consumer products division of Technopak, said, "Nearly 50% of the country’s retail of $589 billion comes from rural India. Right now, the penetration of e-commerce in rural India is zero. So the market opportunity is nearly $300 billion."

In reality, the relevance and fit of the e-commerce model of business, is best attuned for rural markets, feels Bijoor. "Rural people have the money and desire, but are distanced from markets physically. E-commerce can bridge this gap and deliver. The model needs to be tweaked a bit though," he said.

To tap this potential, most players in the e-commerce space are trying to enter the rural market. However, logistics being a challenge, most of these companies have been able to reach out only till tier III and IV towns, which are different from the actual rural markets.

Bisen of Technopak pointed out that rural is defined as clusters where more than 50% of the households depend on agriculture as the primary source of income. Bijoor also said, "Rural is deeper still, tier 3-6, and then R1 to R6. E-commerce can go up to R1 and R2. Beyond that, it is unviable to reach."

The logistic challenge is the main reason why the vast rural market is still under-served by e-commerce companies. Gundaiah of StoreKing said the last mile reach is a challenge and thus cracking it through assisted e-commerce route, where a customer goes to a kiosk, place order and then collects it, is the best way. StoreKing has developed its own logistic network as a third-party courier will never reach a rural market.

Assisted e-commerce, according to Bisen, is a thought in the right direction because it takes care of user experience, customer literacy and helps the customer to overcome many barriers retailed to technology, device, and language, etc. "Such out of the box thinking can only enable initiation of e-commerce in rural India. A cookie cutter urban approach for rural markets will not cut ice," he said.

To bridge the gap, leading online marketplace player Snapdeal is also actively assessing partnerships opportunities in logistics space. The company is betting big on the rural opportunities as well.

According to Dutta of Third Eyesight, to service the demand created by webstore, a cost-effective fulfillment infrastructure is required. "The government-run India Post, with its countrywide delivery capability, has been pitched at various times as a potential delivery partner, but has its own challenges and restrictions," he said.

(Published in DNA.)