Written By Writankar Mukherjee, ET Bureau
KOLKATA: Tata’s has started direct selling to consumers through Tata Cliq in the namesake e-commerce marketplace, converting it into an entity which will become a seller holding inventory and not just run a marketplace. The group has also invested over Rs 300 crore into this entity – its highest ever — to support this expansion of role , two industry executives said.
The executives said this could be termed as an almost last ditch effort to spruce up the three year old e-commerce business since Tata Cliq has largely remained a fringe player in the Indian e-commerce landscape dominated by Walmart-owned Flipkart and Amazon.
Earlier, retailers, brands and other sellers would sell through TataCliq and the platform would earn revenue from it.
The new model may lead to higher sales and faster growth, since as a seller in the platform Tata Cliq is now holding inventory whereby it can directly control price, supplies, delivery and offer discount to consumers, two industry executives said.
As per regulatory filings made by the company to Registrar of Companies and sourced from Veratech Intelligence, Tata Cliq has raised around Rs 313 crore from its promoters – Tata Industries Ltd – this year till now. There has been fresh fund infusion in December and January.
The executives said bulk of this money will help Tata Cliq expand into the inventory model. Tata Cliq has already started trials of direct sales with television and home appliances of top brands like Xiaomi and Voltas, and will expand into other high value and fast moving categories like smartphones to gain volume.
In response to an email, Tata Industries executive director KRS Jamwal said the e-commerce business is experimenting with selectively acquiring head inventory, specifically for enhancing customer experiences, better delivery mechanisms and for enhanced margins. “This does not necessarily imply that we are implementing the inventory model,” he said.
Jamwal said the current infusion of capital is part of routine infusions of capital and will be ongoing. “Unlike a VC funded company, capital is not raised in bulky rounds,” he said.
He said the group is innovating an alternate ecommerce model that will speak to audiences who prioritise trust, brands and new launches as much as value.
An industry executive said Tata Cliq is approaching to sell exclusive models so that it can have a distinct space in the market as a seller and has a long-term target to generate a majority of the platform sales by itself.
Veratech founder Mohit Yadav said the shift to inventory model gives a unique advantage to Tata over Amazon and Flipkart as it is an Indian company and will not be tied down by the stringent foreign direct investment regulations in e-commerce. “It will help Tata leve .
Retail analyst Devangshu Dutta, chief executive officer at consultancy firm Third Eyesight, said just because Tata Cliq is now holding inventory it may not mean that it can easily achieve the scale of Flipkart and Amazon. Flipkart and Amazon have become what they are after years and spending billions of dollars, he said.
“That way, the Tata group is fairly conservative in spending capital and is not oriented towards throwing money at a business just to gain scale. However, holding inventory makes the business more predictable than depending on partners. After all, you don’t have to depend on the partner retailer for product availability, service level and pricing,” said Dutta.
Tatas have been investing money into the e-commerce business. In 2018-19, Tata Industries had invested Rs 292 crore, Rs 224 crore was in FY18 and Rs 172 crore in FY17. However, it’s a fraction of the thousands of crore which Flipkart and Amazon are investing on their India business every year. As per RoC filings, Tata Unistore net losses was Rs 246 crore in 2018-19 while its income was Rs 110 crore.