Written By Sagar Malviya & Shambhavi Anand, ET Bureau

MUMBAI/NEW DELHI: About two months ago, Future Group founder Kishore Biyani visited China to understand shopping behaviour during Singles Day, the biggest shopping festival in the world’s most populous country.

Biyani was part of the star-studded event that Jack Ma, the founder of Chinese e-commerce giant Alibaba hosted in Shanghai and included guests such as actress Nicole Kidman, singer Pharrell Williams and local celebs for its Singles’ Day sales extravaganza. The next day, Alibaba saw its sales hit new record of $25.3 billion.

Biyani wants to mimic that in India. “While we have launched the Republic day sale more than a decade ago, we have taken inspirations such as bringing celebs for live gaming show on Facebook and opening pop-up stores from Alibaba. The idea is to blend online shopping with offline stores, or O2O, which already accounts for 10% of our sales,” said Biyani, adding that he is targeting sales of over Rs 1,000 crore from the five-day mega discount event during the Republic Day week.

What started as a day-long sale occasion on the 26th of January back in 2006 has become a serious revenue generator for the Future Group, generating roughly 5-7% of its annual sales. The first year also saw a crowd frenzy which forced the company to call the police in to manage the situation.

This year, the retailer will also open Big Bazaar pop-up stores in about 50 cities and localities where it is not present and sell pre-book fast billing pass ahead of the event. Top ecommerce companies such as Amazon India and Flipkart are offering deep discounts in the first online sales event of the year starting Monday.

“When a company talks only about discounts, people will just look for deals. But when discount is combined with excitement and entertainment, it contributes to the sale event. This (Bigbazaar event) will lift it above just a discount mechanism,” said Devangshu Dutta, CEO at Third Eyesight.

Future Group said it plans to reach nearly 30 million customers mainly through a 24-hour live entertainment show on Facebook where about two dozen celebs will participate. It will also announce hourly exclusive offers and coupons to drive store walk-ins.

“The line between online and offline shopping is blurring in today’s retail environment. We are increasingly seeing live videos become an important medium for brands to interact with their consumers. “Sabse Sasta Din” campaign, will be one of the first 24-hour Facebook Live, making it a much bigger campaign this year,” said Pulkit Trivedi, director, Facebook India.

Over the years, brick-and mortar retailers have been investing in omni-channel strategies and experimenting with global models such as flash sales.

Source: economictimes

Written By Alnoor M Peermohamed

The move could mean that many startups would have major tax liabilities as the money they spend on marketing activities will no longer be considered a cost to the company

Consumer technology startups that spend a lot of money on buying customers through discounts and advertising could be in for a rude shock as the Income Tax department could ask them to begin classifying their marketing expenses as capital expenditure.

The move could mean that many startups would have major tax liabilities as the money they spend on marketing activities will no longer be considered a cost to the company. Right now, most consumer tech startups report this expenditure under marketing expenses that are deducted from their revenues, causing them to post losses.

The Economic Times first reported on Monday that Flipkart had lost an appeal against the IT department over the reclassification of marketing expenses and discounting as capital expenditure. The report stated that the IT department’s move could affect all large e-commerce firms in the country as well as startups.

“It’s a significant liability. If the tax department’s stance is taken, essentially marketing and discounting is an investment that goes into building a business and is not an operational cost.

If this happens it is quite likely that e-commerce companies would begin to show some form of profits on their bottom line,” said Devangshu Dutta, Chief Executive at Third Eyesight.

While the extent of tax liabilities will depend on how much a company is spending on marketing and discounting, firms which are operationally profitable could be taxed. Dutta says that in the case of e-commerce firms in India, the amount being spent on marketing could be anywhere between 40 to 60 percent of their revenues.

Flipkart’s main argument against marketing expenditure and discounts being classified as capital expenditure has been that there is no enduring benefit from the money they are spending. For instance, money spent on television advertising does not have any enduring benefits for Flipkart, making it a revenue expenditure and not capital expenditure.

“It’s going to get hard to differentiate between whether an expenditure made by the company is an enduring expenditure or not. It has to withstand the scrutiny of the court as well in the coming days, but this is going to be a significant issue,” said a legal expert from a reputed law firm who did not want to be named.

He added that if the IT department initiates such a kind of litigation it will have a marked implication on the industry as a whole and not just e-commerce giants such as Flipkart. The major contention of the hearing in the court will be to define what are the attributes of an expenditure to be classified as capital expenditure.

Source: business-standard

Softbank, the single largest investor in Didi Chuxing in China, Ola in India and Grab in Southeast Asia, has backed local players for growth over Uber in each of these markets

Written By Karan Choudhury & Alnoor Peermohamed

A comment made by Rajeev Misra, a board member of Softbank and about to join the Uber board, triggered a strong buzz on Friday that the Travis Kalanick-founded ride hailing firm may step off the pedal in India. Talks of a possible merger between Ola and Uber, with Softbank as the common investor, also did the rounds.

With the formal closing of the $9.3-billion investment, Japanese tech conglomerate Softbank has become the largest shareholder of Uber.

Misra told the Financial Times that Uber would have a faster path to profitability if it returned to its core markets such as the US, Europe, Latin America and Australia. ‘’This is a growth company, this is not just about them cutting their losses,” he said. “Who cares if they lost a billion more or half a billion less?”

Softbank is the single largest investor in Didi Chuxing in China, Ola in India and Grab in Southeast Asia. In each of these markets, Softbank has backed local players for growth over Uber. In fact, Softbank is learnt to be in talks to buy Tiger Global’s stake in Ola.

An Uber India spokesperson dismissed any talk of a merger between Ola and Uber as a baseless speculation. “Our business in India is stronger than ever and we are 100 per cent committed to serving our riders and driver partners in India”, the spokesperson said in a statement. Ola refused to comment on competition.

Uber’s shift to its main markets is likely to reduce the fight with Ola in India that has seen billions of dollars thrown on incentives and discounts to woo drivers and customers on to their respective platforms.

However, over the last one year, both firms have tactically cut incentives and discounts. Yet they are still burning cash.

Bhavish Agarwal, co-founder of Ola, is expected to raise big-ticket funds, estimated around $1 billion more, for expansion as well as newer growth initiatives such as electric vehicles, autos and bicycles.

Ola has projected 2019 as the year to turn profitable. It’s targeting to generate cash profits of over $1 billion by 2021.

It is still not clear whether Softbank would pursue a merger between Ola and Uber, similar to how the dominant Didi Chuxing acquired local stake of Uber in China with a minority stake to the US company. If there is a merger, it could also attract the attention of the Competition Commission of India.

Ola claims market leadership with presence in over 110 cities, covering around two million rides a day, while Uber with presence in 25 cities does around one million daily rides, according to estimates.

Analysts say that India’s taxi sector is seeing a pusback from traditional operators. With lower yields in India, it makes sense for Uber to focus on its higher revenue market, they say.

“To improve financial metrics, it makes sense for Uber to focus on Europe and the US, where the revenue per trip is higher. There is resistance from fleet taxis which believe that Ola and Uber are eating into their business. Those operators are demanding that the ride hailing business should also be included in the regulation,” says Devangshu Dutta, chief executive of Third Eyesight, a consultancy.

“If ride hailing services need to undertake the same level of compliances that fleet taxis do, Uber will find it difficult to make money in a competitive market where yields are low,” he said.

Karnataka, which is among the largest ride hailing markets in India, has brought in a regulation that has fixed minimum and maximum ride hailing fares based on the value of the vehicle, to ensure that drivers are adequately compensated and does not disrupt the traditional taxi market.

Source: business-standard

More to leverage consumers’ spending abilities, existing dealer network

A sanitaryware company is now selling kitchen cooktops and chimneys.

A water purifier brand has launched noodle maker, juicer and bread-making appliances.

Source: thehindubusinessline

Agriculture: Twenty Years from Now…

Following is a summary of my remarks in an “Agri Panel” at the Global Entrepreneurship Summit earlier today, in response to the question, “What do you think will be game-changing about how we think about agriculture, twenty years from now?”

Soon after the panel moderator sent me this very interesting question a couple of days ago, the first thing I did was to post this question on Twitter, Facebook, and LinkedIn to crowdsource thoughts from my friends. There were nearly two hundred unique responses! They added up to twenty pages of text, without counting the number of pages in the links I received. Overwhelming, isn’t it?

All I am doing now is to simply synthesize those inputs and share with you J

The future of any system is shaped the current aspirations of the key stakeholders. Let’s take a look at the aspirations of the consumers, producers and the society at large…

Consumers want sufficient quantity of food (because we would be nearly nine billion by then, and on average richer than today), that is tasty (although, a friend did say in lighter vein, “since we will have nano-bots in our blood streams, and since our memories could be uploaded on to cloud, maybe we don’t need food and therefore no agriculture; we probably just need some electricity, or batteries, or just a few hours of exposure to sun ;-), is safe (you are all consumers here, don’t you agree that harmful chemicals in food is your topmost concern?), nutritious (scientists say that most of the world is suffering from invisible hunger), and all of these at reasonable prices!

Farmers want higher incomes (as you know, per capita income of farmers around the world, especially in emerging economies, is far lower than the general per capita) with lower risk (weather and disease related production risks, price volatility). Their labour deserves more dignity (as it is, hardly any youth from the next generation wants to be a farmer) and they deserve better quality life (as in, the conveniences and comforts that are common in urban settings).

Society at large would like agriculture to conserve natural resources (water and top soil, for example) and where possible, actually renew them. Agriculture needs to be resilient to climate change (the summer rains and warm winters, extreme climate episodes like heavy downpours on one hand and droughts on the other, etc), and again, where possible, positively impact climate change (sequester carbon, minimize greenhouse gas emissions etc).

An interplay of these different – at times conflicting – aspirations gives rise to three distinct scenarios, all of which will co-exist in twenty years. Let me label them: Farms as Factories, Homes as Farms, and Back to Basics!

Farms as Factories: By using the metaphor of factories, all I am saying is that the consistent quality of output will be produced, crop after crop, by leveraging the evolving technologies – both farming (like seed, nutrients, farm-equipment, agronomy practices etc) and digital (IoT, block chain, hyper-spectral imaging, GPS / GIS etc). A friend called them, “hardware, software, and liveware”). Another friend went to the extent of visualising a self-managing seed! These seeds will analyse the experienced conditions like soil, weather, water etc and invoke the necessary embedded features that would maximize the yield and quality. This may sound like fantasy today, but those of you who are familiar with experiments on seeds with multiple layers of coating in the past may very well say this could be a reality in twenty years!

Homes as Farms: I am sure, you have heard of vertical farming, balcony farming, kitchen gardens and such other names. Once supply chains are established to supply DIY-type mini production units, seeds, nutrients etc to the households, this phenomenon will expand more rapidly. This food is safe without any doubt in the consumer mind, and zero carbon miles! Business Models are also in the works for another kind of service. If you are not adventurous enough to grow crops in your backyard yourself, you can simply let out the space to Service Providers who can grow crops on a BOO model. Besides experts growing the crops in this model, a colony-level kitchen garden is more optimal than a household level garden. And a third model, which is not a ‘home-as-farm’ strictly speaking, is a partnership between a group of, say, five thousand, consumers and a community of, say, five hundred farmers. I know of several such partnerships across cities, built as WhatsApp Groups integrating even the e-commerce functionality.

Back to Basics: Much of today’s ills of agriculture are due to chemical-intensive mono-cropping paradigm. A more sustainable future scenario would be an integrated farming system consisting of polyculture, permaculture, organic compost, bee-keeping, animal husbandry, renewable energy. In fact, I already see some farms where solar energy brings larger revenue than the conventional crops.

As the panel went forward, there were other questions, but for now I am wrapping up this post without covering them.

Source: shivsthirdeye