Written By Sulekha Nair

Getting a celebrity investment in a startup spurs interest from investor/customer interest. At least in the initial days

The most popular way to start up would be to have an idea, funds and then the best heads to run it. Of course not necessarily in that order always. But even if you get the fundamentals right, that will not ensure your startup will be the talked about and known. Having a celebrity to not only endorse but also to put her money in the venture seems to work wonders in the overcrowded startup space.

The latest celebrity to invest in a startup is Bollywood star Alia Bhatt who has taken a minority stake in fashion tech startup StyleCracker. There have been several leading names from the film industry who have invested in startups. One of the bright stories would be Amitabh Bachchan’s investment in JustDial. Bachchan invested just Rs 6.27 lakh in JustDial in 2011. His investment at current market price, assuming his shareholding remains at the same level as earlier, is valued at Rs 3.42 crore. That is a whopping 5368 percent increase. And JustDial is not the only startup that he has invested in.

Not just Bachchan, other celebrities who have worn investors’ mantle include Yuvraj Singh, whose YouWeCan Ventures Technology LLP provides seed funding and angel funding capital ranging from Rs 10 lakh to Rs 25 lakh. Singh is an active investor in the startup sector. Other names that come to mind in the context are Shekhar Kapur and AR Rehman who have invested in Qyuki Digital. Not to mention Sachin Tendulkar, who has invested in several startups.

StyleCracker, in which Bhatt has invested, was founded in 2013 by Dhimaan Shah, a former investment banker and Archana Walavalkar – former fashion editor of Vogue magazine. The startup claims to use advancements in technology to develop The StyleCracker Box – a way to get styled and look great.

So, why are entrepreneurs looking for investment from celebrities?

Firstpost spoke to four startups to find out — Flickstree, in which Sourav Ganguly has invested; Happydemic, in which singer Shaan has a 50 percent stake; Beardo, in which actor Suniel Shetty has invested; and Bag Talk, in which TV star Anita Hassanandani has invested. The co-founders of these startups vouched for the importance a celebrity name lent to their company. Though a celebrity name is not a guarantee of success, there are obvious gains by way of publicity they pointed out.

A celebrity’s name makes the customers more than just curious. It may prompt them to buy the product or service of the startup. They believe successful celebrities don’t lend their name easily to anything unless they are convinced about it.

Paula Mariwala, an alumnus of Stanford University, with over 20 years of entrepreneurial and operational experience with technology companies in the US and in India and is currently partner, Seedfund, says the celebrity angle works initially for a startup provided it is the right fit. For instance, getting Alia Bhatt for a fashion startup or singer Shaan for an entertainment platform.

“The celebrities bring in a value with their association and that opens doors with investors. It works in a glamour-struck country like India irrespective of the celebrity association being financial or adding value as a brand ambassador, for people view these startups differently,” said Mariwala.

In a country like India, where starting up is the new craze (there are 5,200 startups in the country, according to a Nasscom report) and there is a huge crowd vying for investor and customer attention, a celebrity investment is a big bonus for a budding business.

Sourav Ganguly and Flickstree

Sourav Ganguly, cricket legend and former India captain, was piqued in the startup space enough to invest money in a Mumbai-based startup Flickstree, started in 2014. The startup enables people to view films on the go. It also has health and fitness shows, short films — a range of 22 categories at present.

Started by Saurabh Singh, Rahul Jain and Nagender Sangra, the trio approached Ganguly through a common friend and pitched the idea to him. Though it took him six months to be convinced, Ganguly joined the startup as a partner, investor and catalyst. His being associated with the startup led to traffic shooting up 3x to 5x, says Rahul Jain, co-founder. “Visitors to the site know that a celebrity will not lend his name casually to a site. What has worked for us is that in this age of startups where one is launched almost every day, we have been able to differentiate ourselves with Ganguly on our site. It gives credibility to our startup.”

Though the startup has not yet started monetising the venture, it has had investor interest about the business model. “From increasing traffic to even hiring people is not an issue since Ganguly has joined us. Not just that, he attends the monthly board meeting,” says Jain, emphasising Ganguly’s hands-on approach with the startup.

Singer Shaan and Happydemic

In 2016, singer Shaan and his wife, Radhika Mukherjee along with wealth advisor Amar Pandit launched Happydemic, an entertainment platform that connects music lovers and musicians. The platform went live in April 2016.

“I often wonder what happened to the scores of singers who take part in competition, lose out narrowly and have no career in singing to look forward to. Even the winners are remembered for a short period of one season until the next season throws up a new winner,” Radhika Mukherjee, Co-Founder and Chief Executive, Happydemic, had then said while talking about the reasons for entering the startup sector.

With Shaan’s name associated with the startup, traction for artistes from day one has been steady and growing, said Pandit. Shaan is associated with everything to do with the artists — cutting albums or getting them work in the industry. He even houses them in his apartment at times. So far, 800 artistes have signed up and the company expects to break even this year. Last year, revenues were Rs 1.5 crore and it expects to be profitable this year. “We are confident of having revenues of Rs 6 crores this year,” said Pandit.

Suniel Shetty and Beardo

Beardo, a male grooming brand founded in October 2015 by Ashutosh Valani and Priyank Shah, got the backing of actor-turned-entrepreneur Suniel Shetty in 2016. “We were successful earlier,” said Valani, co-founder, but roping in Shetty gave the brand a big boost. In September 2016, the company crossed a GMV of Rs 120 lakh per month, according to a report in the Hindu BusinessLine. “We are growing 60 percent quarter on quarter,” said Valani.

Anita Hassanandani and Bag Talk

In February 2017, television actress Anita Hassanandani co-founded Bag Talk with husband and investment banker Rohit Reddy and Tushar Jain — owner of High Spirit Commercial Ventures Pvt Ltd (HSCV). HSCV has been into manufacturing and retailing of bags for two decades. Jain and Reddy have invested $600,000 in the venture, besides leveraging office and manufacturing from HSCV.

The startup, which claims to be India’s first online marketplace for curated bags, has an exclusive line of bags made for celebrities available on its site. Besides Hassanandani’s line of handbags, it has roped in TV host, anchor and actor Rannvijay Singh for adventure and travel bags and South African cricketer Jhonty Rhodes for sports range of bags. Rhodes line of bags will be out on Bag Talk this month.

Hassanandani is involved right from the ideation of the bags — she is given the sketches by a design team on board which she goes through and at times tweaks to her choice. From approving samples to the manufacture of the product, she is hands-on, says Reddy.

So far Hassanandani has launched the largest number of bags in 14 designs while Rannvijay has 5 designs and Jhonty Rhodes will come out with two this month. Reddy says that the reason for Hassanandani’s bags being lapped up quickly is primarily because women’s fashion does well and the consumers want the latest accessory to match with their apparel. Around 2,000 of her bags have been sold so far. The startup has clocked over 10,000 orders since its launch, says Reddy.

The Bag Talk hopes to break even in a year’s time and come out with a showroom concept – where customers can look at its products offline and buy it online.

Celebrity connection

Clearly, the startup that ropes in a celebrity who is well-known gets traction unlike any other newbie in the field, says Paritosh Shrivastava, associate vice-president at Venture Catalysts who was briefly associated with a Delhi-based diagnostics and wellness healthcare marketplace, Healthians backed by cricketer Yuvraj Singh. When Singh invested in the startup, the orders increased. “Celebrities add a lot of value and startups associated with them usually do well,” said Shrivastava. When a celebrity gives money and an endorsement, the startup has to rev up on the product/service and development because at stake is the celebrity’s name.

Devangshu Dutta, chief executive of Third Eyesight, a consulting firm focused on retail and consumer products sector, says often a startup may already be well-placed and therefore gets interest from a high profile investor – media, film, music artistes, sports, etc. But there have been failures too despite a celebrity investment. These are not talked about, said Dutta.

The celebrity and the startup have to have a connect, else it may raise eyebrows. “If there is a connect with the celebrity by way of her relevance in the product or service, then it is a believable concept that may get just initial traction,” says Sanchit Vir Gogia, chief analyst, founder and CEO of Greyhound Knowledge Group, a global strategy and transformation research, advisory and consulting group.

“But nothing works beyond the initial hype that the startup will generate because of the celebrity endorsement or investment. As a venture capitalist I would look at the expertise of the company. For instance, if it is a Sequoia-backed venture that has huge experience, I would go for it instead of a celebrity-endorsed or invested startup,” Gogia said.

Source: firstpost

Written By Knowledge at Wharton Staff

Is it time to pop the bubbly at Coca-Cola India? After quite a few quarters of decline in volumes, the company seems to be getting its fizz back in the country. At a recent investor call announcing the July-September quarterly results, James Quincey, president and CEO of the Atlanta-based Coca-Cola Company, said: “India returned to growth with volume up 6%, driven by solid performance across the portfolio.” He went on to add: “Our business successfully moved past the recent difficulties related to demonetization and implementation of a goods and services tax during the first half of the year.”

Coca-Cola is India’s largest beverage maker and is estimated to have around 40% share of the country’s branded beverages market. For Coca-Cola overall, India is currently the sixth-largest market after the U.S., Mexico, Japan, Brazil and China. While Quincey’s mandate to his India team — led by T. Krishnakumar, president Coca-Cola India and Southwest Asia — is to move India one notch up in the foreseeable future, his long-term vision is for India to be among the company’s top three markets globally.

In September, in his first visit to India as head of Coca-Cola (he took over the reins of the $42 billion beverage giant in May), Quincey said in a press meet: “We are building the fundamentals of a much bigger business to give the consumers what they want.” Reiterating the company’s global strategy, he added: “We will be guided by what the consumers want …. So, while brand Coca-Cola will be the heart and soul of the company, the company needs to become much bigger by participating in many more categories.”

In the past 15 years, the contribution of carbonated drinks to Coca-Cola’s global revenues has declined from 90% to 70%. By 2025-2030, this is expected to reduce further to 50%. In India, however, carbonated drinks continue to account for a large chunk of the firm’s sales. The new team — the management reshuffle took place nearly a year ago — is now all set to change that. According to Krishnakumar, the management changes were “part of a planned transition process.” Recent appointments, he says, “are in keeping with the company’s approach of creating and leveraging a pool of global Indian talent. The new organization structure is in keeping with economic reforms that have the potential to convert India into a single national market.”

Neeraj Kakkar, cofounder of India’s leading ethnic drinks company Paper Boat and formerly a senior executive at Hindustan Coca-Cola Beverages, Coca-Cola India’s largest bottling arm, notes that Coca-Cola has a “very strong team” in India at present. Says Kakkar: “They have got in some of the best performers from Coca-Cola worldwide. This will result in faster decision making.”

Describing the India scenario, Kakkar points out that it is a high value-for-money market, and consumers are not ready to pay too much of a premium. This impacts profitability. Also, the rural market in India is large and mostly untapped. One key parameter that Coca-Cola needs to focus on for the next few years, he says, is how many new consumers are coming into the fold every quarter. Says Kakkar: “For Coca-Cola to boost its growth it needs to recruit more consumers at the front-end and at a much faster pace than it is doing at present. It needs to bring them into the fold of packaged beverages and then work at moving them up the value chain. One answer to this is product innovation. You have to create new and exciting products which offer high value for money.”

A New Recipe

Krishnakumar has his game plan ready. “The Indian market has tremendous growth potential, and we are working with our bottling partners to leverage this growth,” he says. “We have had a flattish situation possibly for 14-15 months. However, we believe there is serious opportunity that exists simply because we could penetrate a lot more in terms of distribution. We also believe that by expanding our portfolio, we will be recruiting more people into it. And so we are getting into a more segmented portfolio approach.”

According to Krishnakumar, in line with Coca-Cola’s long-term strategy of becoming a “total beverage company,” the India arm, too, is broadening its portfolio across five category clusters. These are sparkling; energy; dairy/juice/plant-based; water/enhanced, water/sports drinks; and ready-to-drink coffee and teas. “The India strategy replicates the global strategy of providing choice. In India, we will localize these choices. You have seen this with the recent launch of our Indian fruit juice-based offerings such as the Minute Maid Mosambi,” he says.

Fruit is one big area of focus for Coca-Cola in India. In June this year, the company announced that along with its partners, it would contribute $1.7 billion to the agri ecosystem of the country over the next five years, spanning the entire supply chain from “grove to glass.” Close to $900 million of this contribution will be towards the procurement of processed fruit pulp and fruit concentrate while the remaining will be invested in creating the required infrastructure including manufacturing lines, juice bottling infrastructure, fruit processing plants and equipment, and agricultural interventions.

“We propose to use fruit products in four ways,” explains Krishnakumar. “One is to develop juices as a category, which is straightforward. The second is that we will be looking at adding fruit to our sparkling products. The third is to introduce newer products in the beverage space. Lastly, we would like to increase the share of our exports to the global Coca-Cola systems that stands at $240 million currently. We are working on all four fronts, which will be a huge 360-degree approach.”

While expanding its fruit-based portfolio is largely perceived as a move by Coca-Cola to dilute its “unhealthy” tag, Krishnakumar is quick to defend. “I must first state that none of our beverages is really unhealthy. What we provide is choices for different occasions. Some of our products are meant for indulgence, some for nutrition, while some provide functional benefits. We will play our part in shaping choice but, eventually, it is for the consumers to decide.”

Industry experts believe that expanding its portfolio in India is a smart move by Coca-Cola. They point out that unlike in the U.S., where carbonated drinks are often a substitute for water, in India drinks such as Coca-Cola and Pepsi from rival firm PepsiCo are used more for occasional consumption. Their pricing is considered premium, and these brands fall in the luxury and aspirational category. They also face competition across the country from local cola drinks such as Bovonto (in the southern state of Tamil Nadu), Jayanti Cola (in the northern state of Rajasthan) and Xalta Cola and Campa Cola (New Delhi) that are priced cheaper.

In addition, like in other parts of the world, in India, too, there is a strong move towards healthy alternatives. “Regional players will play on price and undercut Coke. There is also probably the fakes market in rural areas. Besides, there are shrewd local players like Paper Boat, which has a smart ethnic story, and Patanjali Ayurved, which is selling the story of India going back to its roots. Not just price, but credible alternatives for consumption and a slowing fizz drink consumption can make it a tough battle,” says Y.L.R. Moorthi, professor of marketing at the Indian Institute of Management Bangalore.

Pointing to what he sees as “more locally relevant offerings from domestic competition such as Paper Boat,” Devangshu Dutta, chief executive of consulting firm Third Eyesight, suggests: “To succeed in India, and I would say worldwide, Coca-Cola needs to let go of the monolithic approach founded on its past growth in the U.S. and truly engage with the markets of the future and the local consumers’ needs.” Harminder Sahni, founder and managing director of consulting firm Wazir Advisors, adds: “I am certain that Coca-Cola needs to focus beyond carbonated drinks if it wishes to achieve its growth target in India. The general awareness about sugar and carbonated drinks is the major reason for stagnation of the category and hence Coca-Cola’s slower growth. Believing that Indians will consume these drinks as Americans do, just because of westernization of lifestyle and clever advertising, is far-fetched. ”

What Will Work?

Nitin Gupta, professor of marketing at the Institute of Management Technology (IMT) at Hyderabad, feels that unless Coca-Cola “successfully broadens its assortment of products, the goal that CEO Quincey has in mind seems quite ambitious.” According to Gupta, Coca-Cola can probably “fare well” in the dairy/juice/plant-based segment, but other segments like sparkling, energy, water/sports drinks, he says, are currently “too niche” in India and would continue to be so in the near future. Ready-to-drink coffee and teas, he feels, “can be considered, but the competition in this segment is huge, and Coca-Cola’s success with its current offerings has been very limited.” Suggesting that the best bet for Coca-Cola in India could be packaged juices, Gupta says: “The going would be tough for Coca-Cola in the packaged juices market in India, but that’s where the future lies. I feel that this initiative of Cola-Cola, though expensive at the outset, would reap future benefits.”

Kakkar agrees that fruit juice as a category has a lot of potential, but he warns that the ecosystem and the market need to develop. The biggest challenge in the ethnic drinks category, he adds, is lack of scale. He goes on to elaborate: “Take jamun (black plum), for instance. At Paper Boat, we are happy if we source and sell 200 tonnes a year. But for Coca-Cola, it doesn’t make sense to do anything less than 10,000 tonnes to begin with. Otherwise, it will simply get lost in the overall portfolio and will not get the required management attention. But to source jamun at this scale will be a challenge because at present farmers don’t grow so much of it. Of course, just as the ecosystem and the market for mango drinks have developed over the years, it can be done for other fruits also. But it will require time, effort and investment.”

Kakkar sees potential in ready-to-drink tea. He points out that in China and Japan, which have high tea consumption like India, the conversion to packaged tea has been huge; it is one of the biggest categories of packaged beverages. “Some of the highest selling brands in beverages in Japan and China are in packaged tea. I believe that there is a lot of scope for product innovation in tea in India. There is a huge opportunity to move consumers from unpackaged to packaged tea. It’s not that others [like Pepsi Lipton and Nestle] have not tried in India, but it has not worked out so far. I think if Coca-Cola makes the effort, it has the wherewithal to make it work,” he notes.

Wazir’s Sahni expects Coca-Cola’s water, juice and dairy products to do much better than other categories. “These are already large and growing, and Coca-Cola can use its research, innovation and branding power to dominate the segments. The other segments are too niche, and India isn’t rich enough yet to have significant volumes in them,” he says.

But even in the growing categories, it may not be all that easy. According to data from Nielsen, from October 2016 to September this year, the share of Coca-Cola’s mango-based brand, Maaza, which is the market leader in the juices, nectars and still drinks category, declined from 35.4% to 33.1%. During the same period, Pepsi’s mango drink Slice fell from 13.9% to 9.6%, while Indian firms Parle Agro and Dabur increased their shares. Parle Agro’s Frooti moved up from 14% to 15.7% and Dabur’s Real brand of mango juice inched up to 9.8% from 9.2%.

In an interview with business daily The Economic Times, Nadia Chauhan, joint managing director at Parle Agro, said: “While we have been extremely aggressive with our overall marketing strategy, we have also worked on building an extremely advanced go-to-market strategy.” Mayank Kumar, marketing head of juices and beverages at Dabur, said: “Our understanding of the Indian palate and preferences has helped us stay ahead of the curve.” Dabur is estimated to have more than 50% share of India’s packaged juices segment.

Meanwhile Coca-Cola’s arch rival, PepsiCo, is also on a similar track of expanding its portfolio. It recently launched two vitamin-fortified flavored drinks. In a recent interview with business daily Business Standard, Vipul Prakash, senior vice-president beverage category at PepsiCo India, said: “Value-added dairy, hydration and juices are the three growing categories now. Any beverage company that wants to be successful has to play in all these three product segments.”

Moving Up the Hierarchy

So, can Krishnakumar achieve Quincey’s target? Sahni of Wazir Advisors thinks that “while it is ambitious, it is achievable…. The challenges are manifold, starting from incumbents to creative startups, but Coca-Cola has many strengths like its distribution muscle, marketing prowess and deep pockets. It can also go inorganic and acquire some of the interesting startups. Further, it has a fantastic brand portfolio across categories and is an innovative company and can create new categories, products and brands.”

Kakkar, too, believes it is “very achievable.” Says he: “The per capita consumption story in India is very low and not yet fully played out. Once that happens, consumers will typically start spending more on non-essentials, and impulse purchases will go up.”

Kakkar points to another aspect. While there is a definite shift away from carbonated drinks towards health and wellness in India, this is primarily among the top 100 million population. For the next 400-500 million, the wellness move is from “unpackaged to packaged beverages.” This, he notes, is a huge market waiting to be tapped. However, he points out that while Coca-Cola has a very strong relationship with the retailers and is very strong in on-the-ground execution — their chillers are very clean, the brands are readily available and the products are placed very well — the category excitement has been missing in the past few years. “For instance, during the 2004-2007 period, the marketing and advertising campaigns captured the attention of the consumers. That has gone missing. They need to bring it back,” Kakkar notes.

Jagdeep Kapoor, chairman and managing director of Samsika Marketing Consultants, feels “the unsaturated nature of the Indian market and aggressive marketing by Coca-Cola” can be a winning formula for the beverage firm. Kapoor was director at Parle Agro, the makers of cola drink Thums Up, from 1989 till 1994. He had a ringside view when Coca-Cola acquired Thums Up in 1993 when it re-entered India after a gap of 17 years. Interestingly, Thums Up continues to be the top cola drink in India.

Kapoor lists four recommendations, which he says could be used to boost the top-line and bottom-line growth of Coca-Cola in India. “First, India is not a ‘soft drink’ market. It is a ‘cold-drink’ market. Refrigeration is going to be a key element in this tropical country, and it needs to be enhanced. Second, the focus on distribution and penetration must be increased. India has 8,100 towns and 650,000 villages…. These need to be penetrated. While visibility and taste are important in a country like India, availability is extremely important. Third, in order to increase sales, the company needs to move consumers from occasional consumption to regular consumption. Fourth, India being a diverse country with various languages and consumption behavioral trends, regional sensitivities need to be crafted into marketing strategies.”

According to Kapoor, the five beverages clusters are “a sensible portfolio of categories.” He says: “Each of these categories has tremendous potential for growth, but care needs to be taken to appropriately use segmentation and positioning for each of them.” Moorthi adds another note of caution: With all of its initiatives, Coca-Cola might be able to offer an interesting story in India. But, he adds, “it is unlikely that the company will have a walk over. The market will get them to slog for every rupee.”

Source: knowledge.wharton.upenn

Written By Shambhavi Anand, ET Bureau

NEW DELHI: Amazon’s online food retail venture, which was expected to start during Diwali, is getting delayed as the company needs to keep this separate from its marketplace, which functions as a platform to connect sellers with buyers, said people with knowledge of the matter. Food is the only segment where it’s allowed to sell directly to consumers.

The Seattle-based firm is the first global company to seek and get government nod to sell food made and packaged in India directly to consumers. India allowed 100% foreign ownership in food retail last year to promote local farm produce. Amazon and other foreign retailers are not allowed to sell any nonfood items directly to consumers.

The government has asked Amazon to keep the food and the marketplace businesses at arm’s length from each other with separate offices, inventories and accounting systems. An Amazon India spokesperson declined to comment. “We have not announced any dates or details about our approval for food retail licence and we cannot comment on future plans,” said the spokesperson.

Amazon plans to invest $500 million in India over five years to sell third-party and its own private-label food articles, sourced and packaged locally.

The warehouses that Amazon uses are leased to Amazon Seller Services Pvt., some of which need to be moved to Amazon Retail India Pvt. as part of the segregation. In some cases, lease agreements will have to be signed with both entities, said one of the persons cited above. The company will also have to get Food Safety and Standards Authority of India (FSSAI) licensing, the person added.

The move is being keenly watched as it’s expected to trigger a price war with organised brick and-mortar retailers and online grocery companies, given the US company’s aggressive strategy.

It currently offers food products in some Indian cities through Amazon Pantry from third-party sellers. It also offers same-day grocery delivery on its Amazon Now app through a tie-up with retailers such as Big Bazaar and Hypercity in some cities.

Amazon debuted its first private grocery label in the US last year with products including coffee and baby food. Private label items are sold exclusively through Prime membership in the US and are priced lower than other popular brands. As it expands the grocery business in its home country, it will also open offline Amazon Go stores that will offer customers a checkout-free experience through technology.

The timing of the opening will be determined by Amazon’s ambition, said Devangshu Dutta, chief executive of retail consultant Third Eyesight.

“It depends on what scale the company is planning to launch at,” he said. “If it is a big-bang launch, then the vendor base has to be ready because the backend is already there as Amazon runs Pantry, assuming they don’t get into perishable categories.”

Source: economictimes

Written By Sharleen Dsouza

Billionaire Radhakishan Damani just entered Jeff Bezos’ turf.

His supermarket chain D-Mart is running a pilot that allows customers to order online, and have everything from staples to shampoos either delivered at neighbourhood kiosks free or at their doorstep for a fee. India’s most valued retailer has set up 40 such booths in Mumbai.

We have started a pilot run in a small part of Mumbai and will expand after understanding consumer response to this service. Neville Noronha, Managing Director, Avenue Supermarts Told BloombergQuint While it’s a pilot, D-Mart’s scale could be a big advantage when rolled out across its network of 140 outlets in 10 states. Damani is betting on the ‘everyday low prices’ model that made him a billion

While it’s a pilot, D-Mart’s scale could be a big advantage when rolled out across its network of 140 outlets in 10 states. Damani is betting on the ‘everyday low prices’ model that made him a billionaire in a blockbuster initial public offering of Avenue Supermarts Ltd. in March. Shares have since gained nearly fourfold.

It’s also what Amazon is trying in Seattle to compete with Wal-Mart with its “click-and-collect” kiosks. That followed its $13.7-billion Whole Foods buyout, aimed at disrupting the brick-and-mortar grocers in the U.S. The American online giant has similar plans for India, having got clearance to invest $500 million in food retail. D-Mart joins Flipkart that resumed online grocery sales to counter

D-Mart’s kiosks are located at places where the supermarket chain doesn’t have outlets. Customers can pick up products ordered online—both through the app and the website—at the booths. For home delivery, they will have to pay 3 percent of the bill or Rs 49, whichever is higher. “This is D-Mart’s way of capturing an extra share of its existing customers’ wallet,” Devangshu Dutta, chief executive

It’s an experiment all retailers are trying to increase their turnover. Also, if a delivery cost is involved, it becomes a deterrent for the consumer to shop online,” said Arvind Singhal, chairman of retail consultant Technopak Advisors. Also, D-Mart is not an aspirational brand, he said.

Online grocery shopping in India is relatively small; it will take a while before anyone cracks the code.

Source: bqprime

Written By Ratna Bhushan & Chaitali Chakravarty, ET Bureau

NEW DELHI: Top Indian retailers are furious at Amazon over what they see as ambush marketing — inside their own stores no less. Amazon has said the exercise was part of normal promotional activities.

The India arm of the American online giant bundled its gift coupons with products of ITC, Nestle and Coca-Cola being sold on the shelves of large organised retail chains such as Big Bazaar, Hyper-City, Star Bazaar, D-Mart, Walmart-owned Best Price Modern Wholesale, Big-Basket and others. Not anymore it seems — the brick-and-mortar retailers are removing the items as they see this as a move by Amazon to acquire their customers.

“We will not allow ambush marketing at any cost,” said Kishore Biyani, founder of Future Group, the country’s largest brick-and-mortar retail network. “We have started removing such products from the shelves and told brands not to supply us packs that have any promotional tie-up with a rival retailer.”
Packs of brands such as ITC’s Yippee Noodles, Nestle’s KitKat chocolate and Coca-Cola’s Sprite and Fanta soft drinks are among the brands that are, or were, being retailed at offline stores along with Amazon gift coupons. D-Mart chief executive Neville Noronha described the move as being “below the belt.” He added: “Principally, the brands should have spoken to us. Amazon is using us as a channel to acquire customers without any agreement with us. We’ve communicated our point of view to the brands.”

Amazon founder Jeff Bezos has pledged to pump $5 billion into India and has said it will continue to invest and grow in the country. It’s now focused on selling food and grocery online with deals and promotions and has earmarked $500 million for this after the government allowed foreign direct investment in the retailing of such items, provided they are made and packaged in India.

The marketplace said the exercise was part of its promotion. “Amazon regularly runs various kinds of promotional activities with sellers and brand partners in keeping with its vision to make online commerce a part of everyday life,” a company spokesperson said in an email.

FMCG Cos Neutral
The consumer goods companies adopted a neutral tone. Nestle said: “We value our relationship with all our trade partners and collaborate with them for our promotions. In the recent KitKat promotion, there are some operational issues and we are in touch with our partners.”

A spokesperson for ITC, which makes a host of packaged foods and grocery products including biscuits, noodles, frozen foods, soaps and deodorants, said: “Like every FMCG (fast-moving consumer goods) company, we run different consumer promotion schemes across multiple products from time to time to benefit consumers and promote the sale of our offerings. Currently, there are 38 promotion schemes across multiple products.” There was no response from Coca-Cola.

Rakesh Biyani, joint managing director of Future Retail, said it was disappointing that large companies like Amazon were directly incentivising consumers with currency/money, which is equivalent to indirect participation in pricing. He said such marketplaces aren’t allowed to do this. “The act of promoting a specific distribution channel through a cash incentive on products sold through traditional distribution is not good for the growth of the industry,” he said. “Small traders and retailers will be significantly impacted from a promotion, which is incentivising consumers to shop in a competing channel.”

Analysts said the episode reflected the intense competition.

Not a new practice
Globally, companies have long engaged in cross-channel promotions and ambush marketing, consulting firm Third Eyesight chief executive Devangshu Dutta said. Such practices may not be unethical unless specified in the contract.

“Having said that, offline retailers are fully within their rights to return the packs they take objection to,” he said. “Finally, smaller retailers which contribute the much bigger segment of sales may not be able to take a stand which the bigger, organised ones are taking.”

This is not the first time Amazon and brick-and-mortar retailers have been engaged in a bitter battle over discounting and pricing strategies.

Large e-commerce players, which are known to burn cash to acquire customers, have been frequently alleged to indulge in predatory pricing by offline retailers. In the middle of last year, the government had issued guidelines on marketplaces aimed at putting an end to deep discounts offered by online platforms, a move that brick-and-mortar retailers said levelled the playing field.

While online penetration of food and grocery penetration is still less than 1%, Morgan Stanley expects this to become the fastest-growing online category, expanding at a compounded annual growth rate of 141% by 2020 and contributing $15 billion, or12.5%, of overall retail sales.

Source: economictimes