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September 20, 2022
New Delhi: The launch of online shopping experience by WhatsApp, along with Jio platforms, the holding company for the digital services businesses of Reliance Industries (RIL), will help these companies to take on e-commerce behemoths such as Jeff Bezos-controlled Amazon and Walmart-owned Flipkart.
Experts are of the view that the partnership will give JioMart, the e-commerce platform of RIL, around 48.7 crore WhatsApp users in India. At present, the total annualised active e-commerce users in the country are only 20 crore.
Rohan Agarwal, partner at research firm Redseer, told Business Standard: “WhatsApp is the primary messaging app for most Indians and the partnership shows the level of access JioMart would have to reach out to them.”
He went on add that it would help in expanding the reach of the e-commerce to users who might not be accessing online retail platforms.
To recap, speaking at the 45th AGM of RIL on Monday (August 29), Isha Ambani, director, Reliance Retail Ventures Ltd (RRVL), gave a presentation on placing online grocery orders using Meta-owned WhatsApp and making payments.
In a global first, JioMart on WhatsApp will aid users in India, including first-time online shoppers, to have a new shopping experience in ordering a wide range of groceries on WhatsApp. They will be able to shop via JioMart’s entire grocery catalogue by easily selecting their favourite items. Also, they will be able to add these products to the cart and pay without leaving the WhatsApp chat.
Mark Zuckerberg, founder and chief executive officer (CEO), Meta, said the association with JioMart would enable people to buy groceries from JioMart in a single chat.
Agarwal highlighted that most of the online grocery businesses generate from big cities and this alliance will be an opportunity for small cities and towns.
The financial daily quoted Devangshu Dutta, CEO, Third Eyesight, as saying that the partnership will have a big impact on the entire e-commerce industry.
He told the publication: “Reliance is the largest retailer in the country and with deep pockets. It wants to (tap) not just the big cities but small cities and towns as well. Given the fact that WhatApp is something consumers are comfortable with, and grocery is related to high-frequency purchases, they are firing on all cylinders.”
Dutta added that the crucial thing for both companies to be successful is to create a delivery process that is quick and cost-effective.
Source: timesnownews
admin
September 16, 2022
Over the past five years, legacy players have made a slew of investments in D2C startups.
Marico has acquired men’s grooming brand Beardo, beauty brand Just Herbs and breakfast brand True Elements. Similarly, Emami acquired vegan cosmetics brand Brillare Science and grooming brand The Man Company. It recently picked up a minority stake in nutrition company TruNativ. Colgate-Palmolive and Reckitt both hold minority stakes in Bombay Shaving Company, whereas Wipro Consumer Care has invested in The Ayurveda Company. ITC has invested in baby and mother care brands Mother Sparsh and Mylo.
Devangshu Dutta explained the reasons behind the trend of larger FMCG companies acquiring D2C brands.
admin
August 31, 2022
Isha Ambani, director of Reliance Retail Ventures Ltd, said on August 29 that the company would soon enter the packaged consumer goods segment. Here’s how the move would impact the segment and existing FMCG players.
With this foray, Reliance Retail will be competing with the likes of FMCG behemoths like Hindustan Unilever, Nestle, and Britannia.
Reliance Retail’s announcement on August 29 that it would enter the packaged consumer goods segment has created buzz in the market.
The retail giant’s entry into the so-called Fast-Moving Consumer Goods (FMCG) sector is set to intensify competition as it does in every new industry that its parent, Reliance Industries Ltd (RIL), enters, experts say.
With the venture, Reliance Retail will be competing with FMCG behemoths like Hindustan Unilever, Nestle and Britannia in an industry valued at over $110 billion.
Even so, the company potentially confronts multiple challenges in its intended venture into FMCG.
“The competition intensifies in every segment that Reliance gets into because of their approach of being aggressive and not just in terms of growth. The company also wants to acquire market share very rapidly. The telecom sector was a prime example of this,” said Devangshu Dutta, CEO of retail consulting firm Third Eyesight.
“However, Reliance’s entry into any consumer-facing business has always been a long play,” he added.
The intended entry of Reliance Retail, the retail arm of RIL, into FMCG was announced by Isha Ambani, director of Reliance Retail Ventures, at RIL’s 45th Annual General Meeting (AGM) on August 29.
“I am excited to announce that this year, we will launch our Fast-Moving Consumer Goods business. The objective of this business is to develop and deliver high-quality, affordable products which solve every Indian’s daily needs,” Ambani told shareholders.
Isha Ambani was introduced as the leader of the company’s retail business by Mukesh Ambani, her father and Chairman and MD of RIL, at the AGM.
In his speech, Mukesh Ambani also said that he is hopeful of the retail arm emerging as the largest segment within the group.
Private labels
Reliance Retail already has a presence in the FMCG segment in the form of private labels that are sold in the company’s chain stores such as Reliance Smart, Reliance Mart, and its online grocery platform JioMart.
Brands like Good Life, Best Farms, Desi Kitchen, Snac Tac, Yeah!, Safe Lite, Petals, Mothercare and Calcident are some private label FMCG brands that the company sells.
Private labels (including in the fashion and lifestyle segment) contribute 65 percent of the company’s revenue.
According to analysts, the company initially is going to expand its private label offerings and will focus on segments in which it already has a presence.
“The products which it plans to sell range from groceries like pulses and grains, edible oils, flour, dry fruits, spices, pickles, pastes, idli dosa batter, snacks which include biscuits, namkeens and sweets, ready-to-cook meals, ketchup, jams, carbonated drinks, fruit juices, breakfast cereal, oats, muesli, honey, sauces, tea and coffee in the foods space,” said a note by Edelweiss.
In the non-foods space, the company sells products like soaps, shower gels, hand wash, face wash, hair oils, talcum powder, sanitisers, sanitary pads, diapers, toothpaste and toothbrushes, nail enamel, beauty and hair accessories, and daily essentials including deodorants, nail clippers and scissors, the securities firm said.
Edelweiss said it expects Reliance Retail to initially target the commoditised parts of FMCG like pulses and grains, edible oils, flour, dry fruits, spices, pickles, pastes, idli and dosa batter, namkeens, sweets and lower-end detergents.
Potential strategies
Experts indicate that much on the lines of its earlier playbook, Reliance Retail is likely to adopt organic as well as inorganic strategies for growth in the sector.
“Reliance aims to be a dominant player in every segment and, hence, the company, besides organic growth opportunities, is also likely to look out for acquisitions in the space,” said Dutta of Third Eyesight.
Edelweiss also expects Reliance Retail to acquire regional entities and Direct-to-Consumer (D2C) brands and also target unorganised/regional brands in most FMCG segments it enters.
The company, analysts said, will also look at value-play to gain penetration into the categories.
Impact on the competition
According to experts, the move is set to intensify competition in the segment and may have an impact on existing FMCG companies in the near term.
“We don’t expect a big impact on numbers of existing players from a two-three years’ perspective. However, near-term multiples could come under risk for some companies Hindustan Unilever, Britannia, Marico, Adani Wilmar, Godrej Consumer Products, etc. It will not have much impact on Nestle, Colgate, Dabur, ITC,” Edelweiss wrote in its note.
The impact on the industry will depend on the level of aggression Reliance Retail summons in product launches.
Challenges
FMCG is a well-established segment with well-known brands that have a huge distribution network, and cracking the market would be the biggest challenge for Reliance Retail, industry experts suggested.
“It is tough for new players to get shelf space in kirana (grocery stores). Earlier, we have seen some retailers entering the segment but with little success,” Edelweiss said.
“The existing players have decades of loyalty with consumers and relationships with distributors,” it added.
Analysts indicate that even after getting shelf space, new FMCG players have to constantly innovate to stay ahead of the curve.
“A company can offer early-stage incentives, launch offers to retailers to grab the shelf space but then it has to keep reviving that engine constantly, which is not easy,” said Dutta.
Although Reliance Retail has a significant share of modern retail trade through its grocery chains, the company needs to build a multi-tier distribution network, especially in general trade, which commands 80-90 percent of FMCG sales.
Disclosure: MoneyControl is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
admin
June 28, 2022
June 28, 2022
Edited by Surabhi Shaurya, India.com
The blanket ban on single-use plastic items from next month poses a challenge to cool beverages such as Frooti, Real, Tropicana and Maaza. Earlier, beverage company Parle Agro, which owns Frooti and Appy had also urged the government to extend the deadline to implement the ban on plastic straws by six months. For the unversed, the government’s ban on single-use plastics, including plastic straw, is going to be effective from July 1, 2022.
Calling the government’s decision a ‘hasty ban’, Parle Agro had said it will ‘negatively impact’ overall businesses of the industry players in the FMCG (Fast Moving Consumer Goods) and beverage segment. “While Parle Agro endorses the government-led ban on the use of plastic straws, our plea is to postpone the implementation of the injunction by six months,” the company had said in a statement.
Amul Urges Environment Ministry to Postpone Ban
Besides, leading dairy firm Amul has urged the environment ministry to postpone the ban imposed on plastic straw by one year due to lack of adequate availability of paper straws in the domestic as well as international markets. “We have written a letter to Environment Secretary on the proposed ban on single use plastic straw,” Gujarat Cooperative Milk Marketing Federation (GCMMF) MD R S Sodhi had said last month.
GCMMF markets its milk and other dairy products under Amul brand. “The plastic straw in our butter milk and lassi is attached to tetra pack. It is part of primary packaging. So we have urged the Environment Ministry to include it as part of Extended Producer Responsibility (EPR) and recycling,” Sodhi said.
Amul needs 10-12 lakh plastic straws daily. Besides, Sodhi said, the company has urged the ministry to provide local industry one year to set up dedicated facilities for producing paper straws. “Paper straws are not available in domestic market. We don’t have capacity. We are not getting paper straws in international market,” he added.
Why Are Beverage Makers Worried?
To ensure a smooth transition to environment-friendly options like the paper of PLA straws, non-alcoholic beverage makers would require at least 6-8 months.
Parle Agro said that India produces and sells around 6 billion packs of paper-based beverage cartons with integrated plastic straws per annum. The available capacity to provide alternatives like biodegradable PLA straws or paper straws by a local Indian manufacturer is 1.3 million units per day, which is much less than the actual requirement.
“Packaging companies will need to invest in the right infrastructure to accommodate the changes which will require time to ensure the alternative is appropriate and cost-effective, especially during inflationary times,” the company said in a statement, adding that currently, there is no local manufacturer who can accommodate the demand.”
How Will Ban Impact The Sale Of Cold Beverages
The supply chain of beverages sold in small tetra packs will be disrupted with the blanket ban. Moreover, the beverage makers might have to incur heavy import and logistics costs as they import paper straws to replace plastic straws.
Speaking to Moneycontrol, Devangshu Dutta, CEO of retail consulting firm Third Eyesight said, “The companies have to look at alternative solutions, which may increase the costs. It will be challenging for the companies to pass on the increase in cost to the consumer as it may dampen demand, especially given the fact that these products are priced at low price points to target a certain consumer cohort.”
Full list of items to be banned from July 1:
admin
April 24, 2022
Written By Devika Singh
The Enforcement Directorate (ED) on April 19 accused Amway India of running a “multi-level marketing (MLM) scam” and attached its assets worth Rs 757.77 crore. This is not the first time that Amway India has been accused of running a ‘pyramid scheme’. Read on to understand how direct selling is different from pyramid schemes and why has the ED attached Amway India’s assets?
The direct selling industry is again under the regulatory scanner in India with the Enforcement Directorate’s (ED) move to attach the assets of the Indian unit of US-based direct selling company, Amway. The ED has accused the company of running a “multi-level marketing (MLM) scam” and attached its assets worth Rs 757.77 crore.
According to an ED statement, the attached property includes Amway India’s land and factory building at Dindigul district in Tamil Nadu, plant and machinery vehicles, bank accounts and fixed deposits.
“Immovable and movable properties worth Rs 411.83 crore and bank balances of Rs 345.94 crore from 36 different accounts belonging to Amway attached,” the ED said. The seizures, the ED said, have been made under the Prevention of Money Laundering Act (PMLA).
This is not the first time that Amway India has been accused of running a ‘pyramid scheme’. The company faced accusations on similar lines in the US in the 1970s and has been under government scrutiny in Karnataka and Kerala in the past. In fact, in 2013, Kerala police arrested then Amway India chief William Scott Pinckney and its directors, accusing them of running a pyramid scheme.
Direct selling has come under scrutiny time and again, as over the years, consumers have been duped by fake sellers hawking defective products and services in the garb of direct selling. To discourage such schemes, the government had proposed a draft policy last year, which aims at regulating the direct selling market segment.
Read on to understand what is direct selling, why the ED attached Amway India’s assets, what is Amway’s stand on the issue, how is direct selling different from pyramid schemes, and what are government regulations around direct selling in India?
What is direct selling?
Direct selling firms deploy agents who buy products from the company and then directly reach out and sell to consumers at their homes or other places instead of through a retail format like a store. The direct selling entity and the agent share the profits made through the sale of products. According to industry estimates, there are about 60 lakh agents in the country, who pursue direct selling as a means of earning additional income.
The direct selling industry, as per estimates, is pegged at Rs 10,000 crore in India, and has been growing at 12-13 percent per annum over the last five years. Experts say multi-vitamins, and home care and personal care products are the top-selling categories through this channel.
Beside Amway, companies such as Avon, Oriflame, Modicare and Tupperware operate in the direct selling segment. Some of these companies have been in India for decades now.
What is pyramid scheme and how is it different from direct selling?
Pyramid schemes are defined as a form of investment in which a paying participant recruits further participants and gets rewarded for it. Over the years, consumers have been duped by fake sellers hawking defective products and services in the garb of direct selling, often bringing the direct selling industry too, under scrutiny.
“Pyramid scheme is a scam to make money for a few people and it is based on selling an empty promise, multiplying it through recruiting people,” said Devangshu Dutta, CEO of retail consultancy Third Eyesight.
However, he added, it has to collapse somewhere because you are selling a product or service that does not exist.
“As opposed to that, in direct selling, the companies are selling products and at the end of it there is a tangible exchange of goods or services. So, even if you have downline distributors, as long as at the end of it the customer is getting something of value, then it’s not really a pyramid scheme,” he added.
Why has ED attached Amway India’s assets?
According to the ED’s press statement, Amway India runs a multi-level-marketing scheme or pyramid scheme, which “induces the common gullible public to join as members of the company and purchase products at exorbitant prices.”
The ED said the prices of most Amway products are “exorbitant as compared to the alternative popular products of reputed manufacturers available in the open market”. The new members, who are asked by the company to join it, are not buying the products to be used by themselves, but to become rich by becoming members as showcased by the upline members, said ED.
“The reality is that the commissions received by the upline members contribute enormously to the hike in prices of the products,” the ED said.
And this, indicated the ED, makes Amway’s operations similar to a pyramid scheme, where new members are recruited by existing members with claims of amassing wealth and becoming rich.
The agency claimed that between FY2003 and FY2022, Amway collected Rs 27,562 crore, of which it paid commissions worth Rs 7,588 crore to affiliate members and distributors in the United States and India.
What is Amway’s stand on the issue?
Amway, however, claims that it does not offer any incentives to new members to join the company and the members are only paid once they make a transaction or sell the product, and hence they are not operating a pyramid scheme.
The company has released a statement saying that the action of the authorities is with regard to the investigation dating back to 2011 and since then Amway has been co-operating with the department and has shared all information as sought from Amway from time to time. Amway said it will continue to cooperate with the government authorities for a fair, legal, and logical conclusion of the outstanding issues.
“As the matter is sub judice, we do not wish to comment further. We request you to exercise caution, considering a misleading impression about our business also affects the livelihood of over 5.5 lakh direct sellers in the country,” it said in a statement to media.
In an conversation last year with Moneycontrol, Amway India CEO Anshu Budhraja had said that Amway India does not charge any registration fee to its agents.
“There are no charges for joining Amway business. Further, to ensure that the customers have a satisfying experience with Amway, our products are backed by a money-back guarantee for 100 percent satisfaction of use,” Budhraja had said.
What are the regulations around direct selling?
The government last year included Direct Selling under the Consumer Protection Act (Direct Selling) Rules, 2021. These new rules prohibit direct selling companies from charging registration fees from their agents, and bars them from charging their agents for the cost of demonstration to prospective buyers.
The rules also forbid direct sellers from engaging in pyramid and money circulation schemes. The rules mandate that the companies operating in the segment would have to appoint a Chief Compliance Officer, a Grievance Redressal Officer, and a Nodal Contact Person. The companies would also need to be registered with the Department for Promotion of Industry and Internal Trade and must have an office in India.
They would also be mandated to maintain a website with all relevant information.
“Every direct selling entity shall establish a mechanism for filing of complaints by consumers through its offices, branches and direct sellers through a person, post, telephone, e-mail, and website,” as per the regulation.
“Every direct selling entity shall establish a mechanism for filing of complaints by consumers through its offices, branches and direct sellers through a person, post, telephone, e-mail, and website,” as per the regulation.
It adds: “Every direct selling entity shall ensure that such registration number is displayed prominently to its users in a clear and accessible manner on its website and each invoice issued for each transaction.”
In addition, such companies would have to maintain a record of direct sellers working with them, including their ID proof, address proof, email ID, and other contact information.
Source: moneycontrol
