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May 17, 2019
Metro which entered India in 2003 has initially opened huge wholesale store in the range of 1,00,000 sq.ft but have lately cut down the size of their new stores to half. Another new entrant in this space LOTS Wholesale Solutions which has around 1,00,000 sq.ft stores in Thailand has decided not to open stores bigger than 40,000-50,000 sq.ft in India.
Written By Varun Jain
According to Devangshu Dutta, chief executive of retail consultancy Third Eyesight, the stores and wholesale clubs in the west are supported by higher consumer incomes and a larger demand base, they hold a larger number of SKUs, are built on cheaper real estate and have superior road access to the stores. Consumers there drive longer distances, and buy more during each visit, he said.
“Conversely, in India, the economics are very different – incomes are lower, purchases are smaller and more frequent, and these rules apply even to B2B business. By contrast, real estate in India is expensive and large land parcels are hard to come by. So smaller stores would allow the companies to penetrate deeper into the market, and would possibly be economically more viable,” said Dutta.
Lots Wholesale Solutions believes that flexibility with the choice of real estate is key to faster expansion in India.
“There are more than 12 million retailers and about 13 million HoReCa organisations in India, which shows the country has a huge potential and we can grow enormously by being close to them. With the format of our small stores, we will be able to penetrate in the market and serve our customers better,” said Tanit Chearavanont, Managing Director, Lots Wholesale Solutions.
“By opening stores closer to the catchment markets we have been able to reap benefits of greater traction and repeat purchases by our members. To ensure proximity to customers we have to be flexible with the choice of real estate, not always will you get a big box in city center locations,” said Chearavanont. The company opened its first store in India last year and said that it will invest more than Rs 1,000 crore in India in five years to open its wholesale outlets across the northern region. The company’s immediate plan is to open 15 stores in the first three years.
Source: retail
admin
May 15, 2019
Consumer durable retailers see approximately seven percent of their revenue come from the sale of private label products
Written By Sharleen Dsouza
Koryo and Vise may not be a buyer’s first choice for an air conditioner or a television but electronics retail chains are increasingly betting on such private labels to draw customers. Being cheaper, they boost sales. But that’s not the only reason.Such brands offer low net margins for sellers of appliances and televisions but serve two purposes. They help convert enquiries into sales for consumers who find products from bigger estab…
Source: bqprime
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May 14, 2019
Written By Nishant Sharma
Solimo, Symbol, Myx, Vedaka and Presto.You may have bought products from these brands on Amazon India. But what you may have missed is that these, and many other labels, are owned by Amazon Inc. itself.The world’s largest online retailer brought its AmazonBasics label to India in 2015. It launched another brand Solimo, offering home appliances and household items, the same year. The company now sells 10,000 products, including clothi…
Source: bqprime
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April 30, 2019
Written By PRIYANKA PANI
As Mukesh Ambani-led Reliance Retail, the retail arm of Reliance Industries, gears to enter e-commerce in the next few months, the key question is whether it can disrupt the market the way Reliance Jio did in telecom.
Reliance already has a presence in the online segment with its fashion portal Ajio.com and Reliancetrends.com which compete with fashion e-tailers Myntra, Jabong and Koovs. Soon, it will launch a consolidated e-commerce platform to take on Amazon.in and Walmart-owned Flipkart.com that currently sell everything from vegetables to large home appliances.
However, Amazon and Flipkart are marketplaces and not e-tailers governed by FDI rules.
Late entrant
Reliance might enter the segment as a pure-play online retailer since it is an Indian company and has no external investors. While experts believe that Reliance — which currently owns the largest network of offline retail stores across categories selling vegetables, grocery, electronics, jewellery, fashion and appliances — can have an edge over existing players who depend largely on third-party sellers, it is unlikely to make much of a difference to customers as Amazon and Flipkart already control about 90 per cent of the total e-commerce market.
“We understand that Reliance can afford to offer massive discounts in its e-commerce business, but that is not a sustainable leadership strategy since Amazon and Flipkart have essentially acquired most of the market share, using aggressive discounting,” said Devangshu Dutta, Founder of consultancy firm Third Eyesight.
On whether Reliance will do to e-commerce what it did with telecom, Dutta said that the telecom market was constrained by high prices when Reliance launched its mobile business and Reliance actually expanded the market hugely with handsets, calls and data at lowest rates. “But retail is not the same story. In shopping, there is no price barrier to market explosion,” Dutta said.
‘A game-changer’
N Chandramouli, CEO of research advisory firm TRA, said, “Reliance is definitely going to be a game-changer in the online retail business in India as it has an integrated approach, which is unparalleled across the world due to its network, offline retail, songs and Jio TV to provide an overall customer experience.”
He added that majority of Jio customers are low ARPU rurban (rural+urban) users and are a largely untapped market for many e-commerce players. If it manages to make the last mile delivery to the customer smooth, it will be able to build their trust and grab a share of the e-commerce space.
Earlier this year, the company had announced acquisition of a logistics company called Grab-a-Grub and is likely to make a few more. Reliance Retail, with a revenue of more than ₹100,000 crore, is likely to optimise the company-owned supermarkets, hypermarkets, and wholesale and kirana stores to make a significant mark in the e-commerce space that is likely to touch $84 billion by 2021. The company is already piloting its B2B e-commerce venture for sellers in Telangana.
Inventory-led models
“There is definitely space for another large player in the e-commerce segment,” said Anil Kumar, CEO of Redseer Consulting, adding that Reliance initially is likely to launch a marketplace and then slowly turn inventory-led by creating complex back-end structures/companies for a more sustainable model.
He further said that players like Amazon and Flipkart might look like marketplaces, but are actually running as inventory-led models, where they can standardise the products and keep prices under their control, a feature that marketplace lacks which leads to bad customer experience.
Source: thehindubusinessline
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April 27, 2019
Written By Aditi Shrivastava, ETtech
Nearly three months after Amazon.com Inc said India’s revised foreign investment rules
would hurt both customers as well as sellers, the e-commerce giant indicated the impact had been minimal in the first quarter of the year, although the claim could not be independently verified in the absence of India-specific revenue or sales data.
While the new rules effective February 1 caused a few days of downtime in certain categories, the overall impact on sales was minimal, Amazon told investors in a conference call after announcing its first quarter results on Thursday.
“We did make some changes to our structure to stay in compliance with all regulations. There were a few days of downtime for some of our selection. But for the full quarter, the impact was minimal,” chief financial officer Brian Olsavsky said.
Amazon’s profit more than doubled in the first quarter to $3.6 billion on sales of $59.7 billion, with its international business growing 9% to $16 billion. More importantly, however, losses in its international business went down significantly to $90 million from $622 million a year earlier, giving it better headroom to invest in cash-burn intensive emerging markets like India.
“We’re in compliance and very, very happy with the progress of the business in India,” Olsavsky said during the earnings call.
Amazon’s India rival Flipkart, majority owned by Walmart Inc, also told ET recently that the company had not seen any impact with the new regulations kicking in. “We have not seen any issues. We have always embraced the regulatory framework,” Flipkart CEO Kalyan Krishnamurthy said in an interview to this paper.
The positive comment came despite a warning to investors by Walmart in its 2019 annual report.
The US retailer said “regulatory constraints, such as regulation of product and service offerings including regulatory restrictions on ecommerce offerings in international markets, such as India” could negatively impact its operating results.
Amazon and Flipkart have controlled customer experience by keeping their inventory on online marketplaces under check, experts said, adding that both the ecommerce behemoths would rather work around the regulatory changes than tweak this fundamental philosophy.
“Regulatory frameworks have been worked around earlier as well,” said Devangshu Dutta, chief executive at consulting firm Third Eyesight, which tracks the retail and consumer product ecosystem.
Any public statement by these entities has an element of perception management, Dutta said, adding both Amazon and Flipkart would find a way to cover their margins in the long run even if there is a short term negative impact.
In December, the government took a series of measures to tighten the norms for e-commerce companies, barring them from selling products of the entities in which they have a stake. The altered norms also restricted them from mandating any seller to sell products exclusively on their respective platforms. The new rules kicked in from February 1.
Amazon divested a part of its holdings in large online seller entities, Cloudtail and Appario, to comply with the changed rules, while Flipkart created a layer of business-to-business entities to act as intermediaries between its wholesale arm and prominent sellers on its platform.
Amazon and Walmart remain optimistic about India’s ecommerce opportunity despite the tightened rules and the entry of Mukesh Ambani-owned Reliance Industries into the e-commerce marketplace later this year. While Amazon has committed $5.5 billion for its India operations, Walmart last year invested $16 billion to acquire 77% stake in Flipkart.
Source: economictimes
