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February 12, 2016
Tarush Bhalla, Your Story
New Delhi, 12 February 2016
Aditya
Agarwal, 25, lived in a nuclear family in Varanasi. When it was
time for him to leave for his higher studies in Allahabad, he
had one concern: "Once I went for my higher education, I
was always concerned, what if someone in my family got sick, who
would take care of their health needs? Back then I didn’t
have a solution."
His anxiety grew when he moved further away to Delhi in July
2012 to study for his MBA. But, it was there that he was hit by
the e-commerce bug, prompting him to find a solution to deliver
medicines to people’s homes.
While the idea of starting up was successfully seeded, he roped
in his school friend Arpit Sarin, 25, who was already working
on a few social entrepreneurship ideas, to work with him. Aditya
says, “Back then we were job seekers. We didn’t know
we could build a company. So it was a very big opportunity for
us.”
But real inspiration struck in December, that same year, when Aditya and Arpit went on Jagriti Yatra, a train ride across India to shape the entrepreneurs of tomorrow. "We came across all those people who had their own startups and were just like us. They were young with no money and experience, but they did start working on their idea and they ‘did it’. This gave us the confidence. We just knew one thing; there exists a problem that needs to be solved."
From knocking on doors…
The duo launched their product in 2013; today, their platform, Dawailelo, aims to be a complete healthcare solution where medicines are delivered to the doorstep of needy customers. The platform also lists doctors’ details and connects customers to pathology labs to get samples collected and reports delivered conveniently to their homes.
Aditya still remembers the hot summer afternoons when he and Arpit wandered the streets of Varanasi to survey 2,000 households and understand the real problems surrounding the regular supply of medicines.
Today, the platform has served 1,100 unique customers in Varanasi alone, while catering to 500 orders every month from the city, 60 per cent of whom are repeat customers.
Last month, they expanded their operations to Panipat in Haryana. In their first week of operations, they already had 35 unique customers; completing more than 40 deliveries at stretch.
In the next six to eight months, the startup aims to set up shop across six cities in Haryana including Kurukshetra, Karnal, Sonipat, and Haryana.
According to the founders, their main focus is on patients with chronic diseases (diabetes and arthritis), who comprise 85 per cent of their consumer base. These clients have regular prescriptions and require medicines throughout the month.
When asked, the founders say that customers with acute medical conditions (like common cold or diarrhea) don’t form a big chunk of their consumers since their requirement is limited, and they avail Dawailelo’s services only once or twice. Moreover, it is easy for them to source these medicines at a local pharmacy; for chronic patients in Tier II cities, medication isn’t always available in local pharmacies.
Aditya believes that stickiness and loyalty are big factors in their venture’s success in Tier II cities.
…to avenues opening
The firm states that they strictly work on physical prescriptions where the delivery-in-charge will pick up the prescription from the customer and deliver the medicines by the next morning or the same day.
There is also an automated feature built in to the app, which allows customers to get medicines delivered without having to go through the whole process again.
As of now, all transactions are made in cash as it is easier in Tier II cities. Moreover, the firm is also working on the ‘digitalisation of healthcare’ and a ‘cashless’ programme where the requests would either be taken directly from doctors or verified by doctors before delivery, reducing delivery time and giving the option to make payments online.
Although the firm claims that bookings can be made through their app, website or through calling their helpline, the website is not yet functional and is undergoing some final checks before being rolled out.
Further, the firm has a partner pharmacy in every successive 10 km radius, to facilitate better deliveries. When asked why they don’t want to make the platform a marketplace, the co-founders tell us that it would be difficult for them to monitor each and every pharmacy leading to a compromise on trust and quality of the products.
On the revenue front, since Dawailelo follows the bulk model, they are allowed some margin from their partner pharmacies, of which 10 per cent is given to customers in the form of discounts, while the other 10-12 per cent goes to the firm. The average ticket size of each order received is Rs 1,000.
In the future, one can also expect the platform to have details
and information on doctors, helping customers make appointments.
In the coming few months, the firm also plans to roll out their
app on iOs along with their website.
The firm has also already raised capital from angel investors
and is actively looking for their next round of funding.
Of learnings and impact
Talking about the journey, the co-founders feel it has been a
roller coaster ride, fraught with perils. They say,
There were times when things were not smooth, but the feeling of working on our own startup has given us the strength to fight every obstacle. We have taken coaching classes, raised funds from our close ones to realise our dreams and have started believing that everything happens for good as they take shape.
The duo tells us that it is overwhelming to see the change solutions bring to the lives of customers.“It is so touching to see how a simple solution changes someone’s world. One of our customers’ husbands is a paralytic, whom she cannot leave behind to buy medicines. Today, she saves herself the embarrassment of asking everyone to get her the medicines. Our starting up seems to find meaning through her story.”
YourStory take
There is no doubt that the startup’s decision to function in Tier II cities is an incredible one. The healthcare services market in these cities is still unorganised, with people going by what their neighbours and relatives say, rather than a doctor’s qualification.
Moreover, according to a report from IBEF, Tier II cities are the next demand source of the future, as 70 per cent of the population lives there. This can also be proved by the fact that for bigger healthcare startups like Practo, 30 per cent of the traffic last year was from Tier II and Tier III cities. While raising $37.5 million in Series B in September 2015, Portea is also making its presence felt in Tier II cities. Companies like Gurgaon-based Pluss are also operating in the similar space of on-demand healthcare and wellness deliveries.
The investor interest is also flaring up, (with $276.5 million invested in startups last year) and bigger players pushing to get into these markets
However, a matter of concern for the company should be scale, considering how bigger players with fuller pockets are ramping up their presence in Tier II cities. Moreover, as Dawailelo is in the hyperlocal delivery space, another trouble brewing on Tier II startups is the lack of sufficient funding.
Shan M Hanif, Co-founder of online grocery store Kada, say that despite being the only player in Kerala with Tier II and III focus, raising Series A has been tough. In another story, Devangshu Dutta, Chief Executive at Third Eyesight management consultancy said that over the last year, investors have become skittish about pouring funds into businesses that have no demonstrable path-to-profit.
This explains why Tier I cities are a top-favorite for most healthcare or hyperlocal startups to show traction and profitability in order to attract investments. With such dynamics brewing, we will have to see whether Dawailelo’s expansion to other Tier II cities will really project a scale to attract investments.
(Published in Your Story )
admin
February 11, 2016
Richa
Maheshwari, The Economic Times
Bengaluru,
11 February 2016
Paytm
is tying up with mobile and large appliance retailers to list
their brick-and-mortar stores on its ecommerce platform as part
of its omni-channel strategy.
"We will help these retailers create brand stores on Paytm and enable their offline channel to come online," said Amit Bagaria, associate vice president and mobile and electronics head at the payment wallet to ecommerce company.
With this, shoppers will get to choose the offline store from where they want their product. They will also have the option of either picking up their purchase from the shop or have it delivered.
The Alibaba-backed Paytm has tied up with close to 5,500 stores, including 4,000 brand exclusive mobile stores and 1,500 stores of large appliance retailers. These stores can list their products and selling price on Paytm platform.
"We are first working on the electronics segment since there are a fixed set of SKUs. Soon we will be rolling it out in other categories," said Bagaria.
Rival marketplace Snapdeal is also looking at giving an option to its consumers to buy on the platform and get the item delivered from neighbourhood store or buy it directly from the store through online guidance.
While deep discounting was once a vital ingredient for ecommerce companies to increase footfalls, now they seem to be looking at differentiating themselves with new consumer experiences besides exclusive products and services.
Recently, Flipkart-owned fashion portal Myntra revamped its app interface and made it more Facebook-like wherein brands have their own page, create their own content and can engage with customers.
According to industry experts, brands are struggling to stand out as the online market is flooded with hundreds of options.
Bagaria said many marketers want to use analytics and numbers and accordingly launch newer products. "Hence we will provide them with the data based on their virtual brand store where they can create content and talk about the brand," he said, adding that the company is moving away from flash-sale-model and will work on helping brands connect with their potential customers.
As per a joint report by Boston Consulting Group and Retailers Association of India, more than 400 million customers could potentially be digitally influenced by 2020, accounting for about 25% of total retail spend. Digitally influenced spenders research products and pricing online while purchasing them either offline or online, it said.
Devangshu Dutta, CEO at retail consultancy Third Eyesight
said, "The hybrid model (offline to online) helps ecommerce
companies to co-participate in the business opportunity. The benefit
of having offline retailers on board helps them have distributed
inventory and thereby improve their flexibility of doing business."
(Published in The Economic Times)
admin
February 10, 2016
Richa Maheshwari, The Economic
Times
Bengaluru, 10 February 2016
Snapdeal
has integrated Redbus, Zomato and Cleartrip inventory in its mobile
application as a pilot that will help customers book bus tickets,
flight tickets, hotel tickets and food directly from the application.
This
association gives Cleartrip, Zomato and RedBus access to Snapdeal’s
user base. In return, Snapdeal will earn a commission for each booking
made through its platform. Air ticket is a large gross merchandise
value (GMV) category, while food ordering is a high frequency category.
“Horizontals are looking at monetising their user base with a
focus on GMV and repeat use cases. As funding environment becomes
tougher, growth in these metrics will stand out,” said a Snapdeal
investor requesting anonymity. When contacted, Snapdeal declined
comment.
Last year, CEO Kunal Bahl had told ET that the
company will surpass Flipkart in terms of GMV by March, 2016. “Whatever
their (Flipkart’s) numbers are, we will be ahead of them by March
(2016),” he had said.
Recently, the company tied up with real
estate developers such as TVS Emerald, Provident Housing and Runwal
Group to launch real estate and financial services on its website,
which boosts the company’s GMV. The commission received on such
transactions is not clear. GMV is the overall sales by merchants on an
ecommerce platform, without factoring discounts, out of which an
etailer gets 5-20% as margin on an average. Cleartrip, Zomato and
Redbus refused comment on queries sent by ET.
According
to experts, ecommerce players are now experimenting ways to monetise
traffic through non-inventory based models. “These are service oriented
offerings, which won’t take up any extra cost in terms of physical
space and, hence, these players will make better margin out of it,”
said Devangshu Dutta, CEO at retail consultancy firm Third Eyesight.
Snapdeal
rival, Paytm, is also building a travel marketplace on its platform.
The Alibaba-backed company had started selling hotel and bus tickets on
the platform a few months back. “To provide everything on their
platform, ecommerce players are now encroaching ideas,” said an
investor.
“Flipkart, Snapdeal and Amazon are going the Paytm
way of launching wallets and two years back, Paytm, a payments company,
started tapping the ecommerce space.”
(Published in The Economic Times)
admin
February 5, 2016
Athira
A. Nair, Yourstory
Bengaluru,
5 February 2016
Till
a couple of years ago, the idea of hyperlocal services in Tier
II cities would have been unthinkable. The whole point of hyperlocal
services is instant gratification. A comparatively slower pace
of life, poor Internet penetration, and a reluctance to adapt
technology were expected to be roadblocks for such services. But
the startup boom that India has witnessed over the past few years
has ensured that some daring entrepreneurs have ventured into
these untapped markets beyond the metros.
Of course, this does not mean that they have had a smooth ride.
The biggies who entered Tier II cities have had to remodel themselves,
while local startups are struggling to find funding for scaling.
Then, there were other setbacks. Online grocery app Grofers pulled
out of nine cities– Ludhiana, Bhopal, Kochi, Coimbatore,
Vishakapataman, Mysore, Bhubaneshwar, Nashik, and Rajkot –
in January 2016 due to lower-than-expected uptake. A few weeks
ago, restaurant discovery and food ordering platform Zomato also
shut down its online ordering service in four Tier II cities –
Lucknow, Kochi, Coimbatore, and Indore – owing to the small
market there. Understanding the market and devising strategies
for each city have proved essential for the survival of these
players – whether it is in online groceries, or logistics,
or tech-based service providers.
Tier II has its own advantages…
An undeniable advantage in Tier II cities is that the market
is unorganised compared to Tier I cities. But B2B logistics will
grow regardless of who runs the consumer-facing show. Puneet Chauhan,
Business Development Manager at Bangalore-based logistics startup
Parcelled, says: “The Tier II market is untapped except for
in FMCG. Of course, logistics is always in demand in metros and
Tier II cities, but customers are very loyal in Tier II cities.”
Parcelled gets about 10,000 orders via B2B and B2C logistics services
from the four Tier II cities they serve in. They provide intercity
and intra-city services for their clients, which include e-commerce
majors like Flipkart, Jabong, Zivame, Lenskart, and Paytm.
However, in the B2C business, the one factor that boosts hyper
local services in Tier II cities is the growth of the city, bringing
in a more urbane tech savvy population. Kerala’s capital
city Thiruvananthapuram had the first IT park in the country,
yet it has no shopping malls. Shan M Hanif, Co-founder of online
grocery store Kada, says: “The techie population must feel
a bit lazy after a hectic week at work; but since there are not
a lot of options for outings, they do grocery shopping on some
weekends. However, they prefer ordering online on weekdays.”
Coincidentally, Hubli – a Tier II city and the largest after
Bangalore in Karnataka – has also seen hyperlocal startups
mushrooming. The city is awaiting an international airport; yet
labour is 70 per cent cheaper than Bangalore. Three-month old
startup Freshboxx – which delivers organic fruits and vegetables
to the customers’ doorstep – has had the advantage of
a cheaper labour force too. Founder Rohan Kulkarni says: “We
could move to metro cities too, but there are many hyperlocal
startups already. I first want to move to other Tier II cities
– namely Belgaum, Dharwad and Karwar – and then Goa,
where nothing is really cultivated.”
…and disadvantages
Despite the growth in industry and economy, startups in Tier
II cities still face basic problems. Devangshu Dutta, Chief Executive
at Third Eyesight management consultancy, says: “Smaller
cities often lack the demand concentration that is needed to create
a critical mass, which can over time provide the foundation to
build a profitable business. It’s a long runway of growth
(rather than a rocket-launch), as consumer demand grows across
the country over the next decade, and online transactions become
more common.”
According to Saurabh Kumar, Co-founder of online grocer Grofers,
although Tier II cities have potential, it will take time to grow
to accommodate multiple players. “Currently, it is in a nascent
stage as people still prefer to go shopping themselves. We might
go back [to Tier II cities] after some time; but even then, it
is not likely that the customer behaviour will change to shop
only online or only go out,” he says. Incidentally, Zomato
had also said that they would re-launch in the cities where they
have shut down “when the time is right.” He added that
the assortment of products is important in getting the customers’
attention. Grofers is now standardising their inventory, with
their merchants ensuring separate stock in every city.
The key to the success of these services, of course, is customers
being willing to shop online. Tanutejas Saraswat, CEO and Co-founder
at ShopKirana, Indore’s first e-grocery portal, says: “The
change of behaviour among customers was difficult to bring about.
But since expenses are generally low here, we are able to provide
lower prices with no losses.” Curiously, Fresboxx gets orders
on their website with payments made in Bangalore for delivery
in Hubli. “People who live in metros get it done for their
family in Hubli. About 250 orders out of 600 in a month comes
in this category,” says Rohan.
But for long-term success, Devangshu says hyperlocal web platforms
need to rapidly build critical mass, not only on the consumer
side but also in terms of merchant-recruitment. “Both these
are expensive and resource-intensive, which few companies can
manage together, while also building fulfilment capabilities that
are cost-efficient,” he adds.
Marketing strategies: to each one’s own
In hyperlocal services, marketing strategies depends on each city’s
consumer behaviour. According to Big Basket Co-founder Hari Menon,
it is a matter of convenience vs assortment. He says: “In
Tier II cities, people are looking forward to going out –
including grocery shopping. The convenience factor does not work
there. So what can drive online grocery service is a range of
items that they have to go outside the city to buy.” Hari
believes that Tier II residents are quite aspirational, and money
is not a constraint for them. Big Basket’s express delivery
service, which delivers in an hour in Tier I cities, is not available
in Tier II cities. Their best performing Tier II city –Mysore-
gets 150 orders daily.
Additionally, while the primary mode of marketing in metros is
newspaper ads and hoardings, direct interaction with customers
would work better in Tier II cities, says Saurabh. For making
even the lower income classes comfortable with the idea of buying
online, vernacular content will help. In fact, Freshboxx is now
building its app, which will be available in Kannada, Hindi, and
English.
However, e-commerce’s major attraction –discounts-
may not work in grocery and food tech. For instance, in Kerala,
customers seldom care about discounts. Shan of Kada says: “They
look for the best quality and customer service. Localisation is
essential here as the online buzz is not as great as it is in
metros.”
For logistics player Parcelled, marketing is not a headache.
Puneet says: “Our customers are not comfortable with apps;
so our marketing channel is the good old telephone. In addition,
we let them choose a convenient time for last mile deliveries
and reverse pick up – even on Sundays – in Tier I and
Tier II cities.” The best performance among its Tier II cities
is in Surat, which boasts of large-scale textile industry.
Funding troubles
The one big trouble bothering all the hyper local startups focused
on Tier II cities is the lack of sufficient funding. Kada aims
to focus on Tier-II and Tier-III cities, with an initial plan
to expand in Kollam, Kochi, Thrissur and Calicut – since
these cities require lesser investment and personnel, and then
other South Indian states. But despite being the only player in
the sector in Kerala, raising series A has been a hard task for
them. Shan says: “They need more traction; so we are launching
some new deals by March, and building on our tech-side too. Hopefully,
they will see the potential then. We already get about 1,800 orders
a month.”
Rohan of Freshboxx also says that they are now struggling in a
non-responsive market, and hence are outsourcing each order for
cost cutting. “We need serious funding to scale up in Tier
II and Tier III cities,” he says. Being a pioneer in the
field, Rohan hopes, will give them an advantage. “We are
the only player here providing fresh, germ-free fruits and vegetables.
We have even educated our farmers on this,” he says. He claims
that cost of customer acquisition is zero, and 90 per cent are
repeat customers.
It is a classic tale of survival of the best, it seems. “Over the last year or so, investors have turned skittish about pouring in funds into businesses that have no demonstrable path-to-profit,” says Devangshu. He adds that most of the current hyperlocal providers won’t survive, unless they change their business models. Customer re-acquisition also cost a lot, he says. “Discounts may not get loyalty – quick, reliable delivery will.”
(Published in Yourstory)
admin
February 2, 2016
The
Economic Times
Mumbai, 2 February 2016
Aditya Birla Retail reported a 15% increase in its sales for the last financial year but it continues to pile up losses, according to latest available numbers.
The retail arm of the Aditya Birla Group posted Rs 2,893-crore sales for the year ended March 2015 and its losses reduced 5% year-on-year at Rs 571 crore, according to the company’s filings with the Registrar of Companies last week.
The firm’s accumulated losses stood at nearly Rs 5,320 crore
after eight years of operations.
Experts said gestation period in the highly competitive food and grocery retailing could be long and depends on expansion. “Consumers in this segment can be quite fickle and Aditya Birla Retail (ABRL) has been through several iterations in its retail model to make it work,” said Devangshu Dutta, chief executive at retail consultancy Third Eyesight.
“While losses have come down as a percentage of sales, they still have to find balance in terms of store location and margin mix,” he said.
ABRL closed FY15 with 482 ‘More’ branded supermarkets and 16
hypermarkets, covering about 2 million square feet of retail space.
The group entered retail space in 2007 after it acquired Trinethra Retail, which it merged with ABRL two years ago.
A year ago, the group restructured its retail business by carving
out the apparelmaking Madura Fashion and Lifestyle division from
Aditya Birla Nuvo Ltd (ABNL) and merging it with listed loss-making
Pantaloon Fashion and Retail Ltd. This created the country’s largest
branded apparel company by sales and number of stores. While it
was widely speculated that Birla would bring its loss-making supermarket
format ‘More’ under the new entity, the company said it had no
such plans. Unlike food and grocery retailing that operates on
wafer-thin margins, apparel retailing is a lucrative business
with margins as high as 30%.
However, ABRL is gradually reducing its store-level profitability.
Loss before interest, tax, depreciation and amortisation at Rs
163.96 crore during FY15 was 30% less than the previous year.
Ruchi Sally, director at retail consultancy Elargir Solutions,
pointed out that several of ‘More’ stores “are in small towns
where being profitable takes a bit longer”. Also, the market
in top cities are highly competitive with D’Mart, Reliance and
Future Group holding most of the market share, she said.
Retail baron Kishore Biyani’s Future Group last year merged its
retail business with Bharti Retail to create one of the biggest
supermarket chains with Rs 15,000 crore turnover. Mukesh Ambani’s
Reliance Retail had reported profit before depreciation interest
and taxes of Rs 784 crore last fiscal on revenues of Rs 17,640
crore.
(Published in The Economic Times)
