MxMIndia

Tag: flipkart

  • The India Client Council is a forum where some of India’s leading marketers can listen, inspire and share ideas about the future of marketing

    Facebook announces rollout of India Client Council

    By A Correspondent

     

    Facebook has announced the next step in its efforts to better serve its partners – the India Client Council. Comprised of a diverse group of leading client and agency partners, the India Client Council is a forum where some of India’s leading marketers can listen, inspire and share ideas about the future of marketing.

     

    Sachin Bansal

    “Facebook has been one of the key growth partners for Flipkart and the e-commerce industry at large. As a Council member, I’m really keen on engaging in an open and transparent idea sharing platform with other people in the Indian ecosystem to find ways in which we can grow not just our business, but trade and commerce in general.” – Sachin Bansal, Flipkart

     

    In India and around the world, the rate of people with access to digital services and devices is skyrocketing, and for many here the mobile phone has already become a true lifeline, providing information about market prices, healthcare, banking, employment and entertainment.

     

    This rapid acceleration of mobile presents businesses with unprecedented opportunities to reach their customers, but also new challenges. Facebook is committed to helping businesses navigate this changing landscape, and the Client Council makes our clients and agency partners a key part of this journey.

     

    The India Client Council list comprises Delna Avari – Head of Marketing and Communication Services, Tata Motors; Sam Balsara – Chairman and Managing Director, Madison World; Sachin Bansal – CEO, Flipkart; Mohit Beotra – Head of Brand, Airtel; Sonali Dhawan – Director of Marketing, South Asia, Procter & Gamble India; Sujit Ganguli – Head of Corporate Brand and Communications Group, ICICI Bank; Ashish Kashyak – Founder and CEO, ibibo Group; Heavent Malhotra – Managing Director, Jabong; Daniel Meynen – Marketing Director, RB India; Ronita Mitra – Senior Vice President, Brand and Consumer Insights, Vodafone India; Vishal Sampat – CEO, SMG Convonix; Samir Singh – Executive Director, Hindustan Unilever; Jasmin Sohrabji – Managing Director, India and Southeast Asia, OMG; CVL Srinivas – CEO, GroupM; Vineet Taneja – CEO, Micromax; Sandip Tarkas – President of Customer Strategy, Future Group.

     

  • A Dummy's Guide to breaking a consumer's trust in the brand. Or you could treat it as a guide of what not to do…

    Five ways to break a consumer’s trust in a brand

     

    By Delshad Irani

     

    It’s never been easier for a brand to break up with a consumer than it is today in our authenticity obsessed times where people make themselves up to take a candid morning selfie. No irreconcilable differences, tears or fuss, all one needs is a breach of trust for a separation, if not divorce, to happen. In this age of complete transparency, a non-negotiable expectation people have of their brands, it’s a tweet that breaks the camel’s back. So what’s a little thing like trust? People, nowadays, have tumultuous relationships with brands anyway, so one need not expend too much energy to push them away. To make matters easier, we’ve listed some guaranteed ways to do just that. Now, we’ve left out a few, limited real-estate et al. But liberally use this Dummy’s Guide to breaking a consumer’s trust in the brand. Or treat it as a guide of what not to do. The choice depends entirely on what you want to achieve, dear reader

     

    Keep a Kim Jong-Un like grip on you brand communication.

    Whoever said communication today is a two-way street needs to go back to driving school. Learn a thing or two from the Supreme Leader of the hermit kingdom about keeping adoring fans unconditionally loyal to, and in love with, you. How? Just don’t listen to what common citizens have to say. And yes, especially if the twittering is unflattering. Hush the hashtags and ignore the critics, (Alas, labour camps are not an option here.) In fact, pretend discontent doesn’t exist. Who listens to the educated opinion of influencers and critics, anyway? And there are so very many of them. In fact, not paying any attention to what’s buzzing amongst users has its benefits. American brand DiGiorno Pizza didn’t bother reading beyond #WhyIStayed, a widespread discussion between victims of domestic abuse. That was fairly apparent when DiGiorno tweeted “#WhyIStayed You Had Pizza”.

     

    If you’d like to smash trust, don’t acknowledge the naysayers and customer feedback. Certainly don’t follow in the footsteps of, to take a local example, the food chain Faaso’s, or the etailer Amazon, who move mountains to please customers, keeping lines and tweets open 24/7 and directly addressing those who have publicly expressed their dissatisfaction with service or product.

     

    There’s another way to go about taking total control of the brand’s destiny. Do what Apple did, a brand with fans who possess the kind of dedication Annie Wilkes (the obsessed fan from Stephen King’s Misery) would find hard to match: Force U2’s Songs of Innocence, an album the company paid $100 million for the right to distribute, upon 500 million iPhone and iPad users, whether they like the Irish or not. Even lifelong devotees who write reams of web pages dedicated to extolling the virtues of brand Apple hated the move. It was the best thing that happened to Microsoft since 1984.

     

    Blame the universe for your blunders.

    Never admit one’s shortcomings and mistakes, for, pray tell, what good can come of it? Consider the curious case of an etailer. Just days before Big Billion Day sale, Flipkart went to town allegedly poking fun at Amazon and its chief Jeff Bezos with cheeky hoardings. Not two weeks later, Flipkart’s Diwali super sale brought a section of its shoppers to distressed tears and tweets when the portal failed to keep its promise of giving users the mother of all sales. One incensed arm-chair shopper swore never to buy products on the site again. And she was not alone in taking that pledge.

     

    A textbook case, then, of trust destruction. Or it would have been if the Flipkart co-founders had just shrugged, merely kept mum or given the sort of non-apologetic apology so many CEOs specialise in. Filled with corollaries and dodges like “Sorry if you were upset/offended.” But instead, co-founders Sachin and Binny Bansal stood before the world, asking it to forgive them in a note that was a masterclass in contrition and remorse. What they didn’t specifically ask people to do was to go back filling their flipkarts with goodies – whether required or just powered by a deal too good to ignore. But many formerly irate members of the public did that anyway, touched by this act of public repentance and acknowledgment of failings. To say nothing of the people who bought the goods worth $100 million that Flipkart claims to have sold in one day flat.

     

    Be as authentic as a celebrity’s smile.

    Temporarily latch onto whatever trending topic or cause that has everyone in a fleeting tizzy. Be phoney, pile on and don’t forget to slap your logo on. Green, pink, the colours of the rainbow or feminism, pick your cause. It’s only paint it’ll fade away quickly. Perhaps corruption or hygiene and sanitation are more your cup of tea? Pretend to bleed for the greater good while doing nothing constructive and the yawning gap between your deeds and your insincerely articulated words will cause any vestige of trust to quickly disappear.

     

    Also, one would do well to look at marketers (the whole lot, practically) who try their damndest to fit in, like the Papa who thinks he’s one of the kids. Blinded by the power and influence of millennials, marketers of all ilk have commissioned the best surgeons to make their brands look and seem younger. There’s no better strategy to confuse both old and new users. And yes, get them wondering whether you can be trusted.

     

    Or, one could try to do something that just isn’t in the brand’s DNA. Just imagine now the damage Dove could inflict upon itself if the brand turned away from its “real beauty” positioning and hired a Kardashian or Kapoor to do the talking.

     

    Whatever you do to break trust do not emulate Tata Tea and Lowe Lintas who for over five years have been hard at work awakening the consciousness of the citizenry with Jaago Re moving from mere TV commercials to online and activation programmes that encouraged people in general and women in particular to vote.

     

    Create ads that’ll make the viewer stupider with every passing second.

    Dumbing down a brand’s advertising is a mechanism that has acquired a recent bump up in pace. Just sign on a celebrity that fits the brand like knock-off couture. Stop thinking out-ofthe-box entirely. Stop innovating, really. In fact, take it up a notch.

     

    Look what BlackBerry achieved when they hit the brakes on keeping pace with times, competition and value for the price paid. Even though there are a few hangers-on still, for every BB wielding consumer who refuses to move on, their resolve wavering, there are countless who lost the connection.

     

    Always make promises you know you can’t keep.

    After centuries of practice, politicians have mastered the art of promising their constituencies the sky but delivering no more than abject disappointment. Becoming an expert serial promise-breaker doesn’t happen overnight though. But one tries. There are lessons to learn from oral care brands that promise no cavities. Or, for instance, low-cost airlines and telecom brands. Over the years, air-fare and air-time wars have only become bloodier, much to the delight of travellers who salivate at the thought of flying away for the weekend (with data-packs active) at less than the cost of a Chinese smartphone.

     

    Then watch them come crying to the company when they discover a few extra digits in the full-and-final tariff. (It’s them, not you.) Take a customer’s expectations and aspirations to stratospheric heights and then kill the engine to give them an experience damn hard to forget. There’s no better way to end a relationship built on trust.

     

    With additional insights from marketing consultants Harish Bijoor, Nabankar Gupta and Shripad Nadkarni

     

    Source:The Economic Times

    Copyright © 2014, Bennett, Coleman & Co. Ltd. All Rights Reserved

    Licensed to republish

     

  • Backlash on social media even as Flipkart claims of sales of over $100 million in 10 hours

    The Big Sale: Hit or Flop?

     

    By Harsimran Julka & Aditi Shrivastava

     

    Flipkart declared on Monday it had created Indian e-commerce history by clocking $100 million (Rs 600 crore) in sales in just 10 hours of its much-heralded discount sale, but not before its hard-won reputation for customer service excellence suffered knocks amid technical glitches and recriminations from angry buyers disappointed with the pricing and availability of products.

     

    As India’s largest online retailer and the posterboy of its startup boom took pride in successfully seeing through what it termed as an unprecedented event, competitors took advantage of its missteps and cut prices, diverting traffic away from Flipkart on what was supposed to be its big day.

     

    Backlash on Social Media

    “It feels a bit like a boxing bout in which one boxer accidentally knocked himself down before the opponent even entered the ring,” said Kartik Hosanagar, professor of internet commerce at The Wharton School in the United States.

     

    Flipkart’s so-called ‘The Big Billion Day’ is the first time in India that a discount sale of this magnitude has taken place. Modelled after the Black Friday shopping bonanza in the US, Flipkart said its aim is to create an online equivalent for India.

     

    Sachin Bansal, the cofounder and CEO of Flipkart, said he was pleased with the outcome, admitting at the same time that there were surprises and some errors. The company said it sold goods worth $100 million (almost Rs 1 crore every minute) within 10 hours and its site recorded one billion hits. “This was unprecedented. It is an historic day for ecommerce,” the 32-year-old entrepreneur said.

     

    Online sales of goods, while they are growing rapidly, are still a minuscule part of India’s retail sector. Flipkart, Snapdeal, Amazon and others account for just $5 billion in annual sales compared to the retail industry’s size of over $500 billion but projected to grow exponentially.

     

    Flipkart ended up with lot of backlash on social media sites as its system continued to change prices of products during the day. A Delhi-based customer who had paid Rs 27,000 for an LCD TV listed at a pre-discount price of Rs 49,000 was declined purchase as Flipkart said that the product had gone out of stock. “Mean sites for the same product,” the customer wrote on Twitter.

     

    Another customer who wanted to buy an LCD set on Flipkart saw the price change by Rs 10,000 within two hours. Customers were also peeved as Flipkart did not allow cancellations. Many shoppers who encountered better deals or changed their mind after clicking the buy button had no choice left, unlike on other days when cancellations and replacements are allowed.

     

    Flipkart attributed some of the problems to the “largest scale of traffic and customer visits e-commerce has witnessed across the country”, noting that it had got a billion hits on its website. As angry customers took to social media, rivals gained traction. “Amazon was the most trending site on our site on Tuesday,” said Swati Bhargava, CEO of CashKaro, an online cashback site which directs user traffic to sites such as Flipkart, Amazon and Snapdeal.

     

    “People are loving the Amazon discounts which keep on getting bigger and Monday compared to Sunday, making October 6 its biggest day ever in India. The company attributed this to deals every hour and “ensuring the availability of the deals advertised.” Amazon India’s site was redirecting to bigbillionday. com during the day.

     

    Rival Snapdeal, which cocked a snook at Flipkart with an advertisement that sought to make light of its rival’s big day (“For others, it’s a big day. For us today is no different), also did not leave any stone unturned. Its co-founder and CEO Kunal Bahl said Snapdeal had also sold goods worth Rs 1 crore a minute. “The best part of the day: we didn’t really spend much to bring customers to Snapdeal,” Bahl said, in an apparent dig at Flipkart’s advertising blitz that preceded Monday’s sale that, industry watchers say, would have cost the company tens of crores of rupees.

     

    Bansal admitted errors with “a few products and few customers.” These he attributed to mistakes on Sunday night while uploading prices of products and promised to rectify the problem. “it was not intentional at all. We are sorry for that,” he said, adding that the Flipkart team had burnt the midnight oil ahead of the sale. “I slept only 2-3 hours last night. Living on Red Bull.”

     

    Despite the backlash, there was optimism about the future of the ecommerce sector. Experts said that the Flipkart sale and the Diwali bonanza from Amazon and Snapdeal will help change the habits of the Indian consumer used to thronging bazaars and malls during the festival season.

     

    “This looks like a transformational move for ecommerce in India, a tipping point,” said Arvind Singhal, CEO of retail consultancy Technopak.

     

    Source:The Economic Times

    Copyright © 2014, Bennett, Coleman & Co. Ltd. All Rights Reserved

    Licensed to republish

     

     

    Companies accuse e-retailers like Flipkart, Snapdeal, Amazon of devaluing brands and threatening livelihoods

     

    By Writankar Mukherjee & Sagar Malviya

     

    As Flipkart’s discount sale ran into a storm of protests in the virtual world, the company and its ilk of online retailers found little comfort in the real world too.

     

    A parade of big name consumer goods makers and brick-and-mortar retailers took aim at the e-retailer flock of Flipkart, Snapdeal and Amazon, accusing them of devaluing their brands and threatening their livelihoods, further marring a day that was billed as an important milestone in the evolution of the fledgling sector.

     

    LG Electronics, the country’s largest white goods maker, issued a rare advisory on Monday in which it explicitly stated that it had not authorised any e-commerce company, bar its own online store, to sell its products in India and hence it retains the right of not extending additional services, warranties on such products as it does not vouch for their genuineness.

     

    “This is to safeguard our consumers,” a company spokesperson said. Flipkart, however, sought to reassure customers that all products sold on its site were genuine.

     

    Tightening the noose

    “We can assure our customers buying LG, Sony or Canon products on Flipkart.com that they are genuine. Our customers will continue to enjoy the warranty and services extended to all original LG products as always,” a company spokesperson said. But officials at several consumer goods makers, many of which have also had an uneasy relationship with the lot of e-retailers, said they would henceforth tighten the noose on online discounting.

     

    LG’s rival Sony said it will not allow massive online discounting of its wares because it impacts the company’s brand image and accused e-retailers of having violated business arrangements. “The online sale war of Monday was really disappointing and alarming. This is not the way we have agreed to do business as partners,” said Sony India sales head Sunil Nayyar. He said Sony televisions had borne the maximum brunt of discounting and that it had taken a toll on the company’s brand image as customers who brought the same product a day earlier at its correct market price could feel cheated and blame the brand.

     

    “We have decided to handle online discounts now with an iron hand and will ensure Sony is not involved again and there is a fair play for all channels,” he said. The maximum discounts at Monday’s flash sales were for electronic products, notably items such as Apple’s iPhone, iPod and laptops, Sony’s televisions and smartphones, Canon’s cameras, lenses and printers, Samsung’s television, smartphones, refrigerators and washing machines, LG’s televisions, refrigerators, microwave ovens and smartphones, and tablets and computers of Lenovo, Asus, Dell and HP.

     

    Camera maker Canon said it would henceforth ask distributors to have separate sets of products for brick-and-mortar stores and online stores. “We have just reached an agreement with Amazon and Flipkart that while they can sell offline models, they cannot discount it. We hope Monday’s sale is just one-off scenario and will not be repeated,”said Canon India Executive Vice President Alok Bharadwaj, adding that the hefty discounting of its products on online marketplaces was not endorsed by Canon and was also difficult to control.

     

    “Probably, the best way to reduce disruptions like these is deeper engagements with these online marketplaces which we now plan to do.” Lenovo, which had earlier this year urged customers against buying its products from online retailers only to subsequently withdraw its advisory, said it would also have different models for its online and offline sales channels. Lenovo India MD Amar Babu said his company was keen to have fair competition in the marketplace and did not favour one sales channel growing at the expense of another.

     

    The tongue -lashing from the consumer goods biggies on Monday followed a huge brouhaha created by traditional retailers, upset that the hefty discounting by online sites would hurt their business. Brick-and-mortar stores remain the mainstay sales channel for consumer goods brands, but fear that their businesses are threatened by the fast march of online retailers. In categories such as smartphones, online retailers now account for more than a 10% market share, so much so that some new model launches now happen exclusively on these sites. Online retailers also account for 5% of television sales.

     

    As Flipkart’s discount sale and Snapdeal’s riposte captured shoppers’ imagination on Monday, small retailers and trader lobbies said they wanted the government to intervene.

     

    The All India Mobile Retailers’ Association, a new body that claims to represent the interest of around10,000 mobile retailers, said it would approach the government and the Competition Commission of India (CCI) to stop such predatory pricing deals by e-commerce marketplaces.

     

    “The way e-commerce is progressing, several shops may have to shut down, which will jeopardise lakhs of jobs,” said the organisation’s secretary general Dhiraj Malik. He accused e-commerce firms of cartel-like behaviour, discounting products and selling them below cost prices. “This in turn has impacted our sales by 30% and profitability by 60%,” he said.

     

    The Confederation of All India Traders, an umbrella body representing some six crore traders and small retailers, has already written to Commerce Minister Nirmala Sitharaman to stop discounting by online marketplaces. It said discounting by these sites had affected store sales of items such as cosmetics, footwear, apparel, jewellery, watches, electronics, computer hardware and software, mobiles, sports goods, travel luggage and books.

     

    “Since e-commerce firms merely provide a technology platform for sellers who are registered with them and because the ownership of the inventory is not their’s, how can these marketplaces offer discounts?” asked its secretary general Praveen Khandelwal. He said his association would complain to the competition watchdog this week.

     

    Officials at large retail chains, also taken aback at the aggressive discounting offered by online players, said e-retailers not only antagonised brands by selling products at throwaway prices but also affected distributors who might now demand unreasonable margins.

     

    “This event will perhaps now trigger many brands to go against all online channels for spoiling their imagery and pricing strategy,” said the owner of a leading electronics store chain. Vijay Sales managing director Nilesh Gupta said when it comes to appliances and durables, consumers still want the touch and feel factor, especially in smaller cities.”Also, most of the popular products are not sold online and consumers will have to visit stores if they want latest collection,” he said.

     

    Source:The Economic Times

    Copyright © 2014, Bennett, Coleman & Co. Ltd. All Rights Reserved

    Licensed to republish

     

     

     

  • While the overall industry was at $1 billion (Rs 6,000 crore) a couple of years ago, just the top three marketplaces in the country-Flipkart, Snapdeal and Amazon-are estimated to cross $4 billion (Rs 24,000 crore) in sales this fiscal

    Online retailers Flipkart, Amazon etc to woo customers with eye-popping deals this Diwali

    By Radhika P Nair

     

    Online retailers, from biggies such as Flipkart and Amazon to niche players like FabFurnish and Bluestone, have lined up special catalogues, exclusive products, offers, contests and discounts to ensure a cracker of a Diwali season, with an eye on first-time shoppers.

     

    Fashion portal Myntra will offer more than 5,000 new products across top brands like FCUK, UCB, Elle, SuperDry, Biba, FabIndia and Antony Moratto for the first time online, while online marketplace Snapdeal.com is working with brands across categories like fashion, electronics and home products to put together a special Diwali catalogue that will be out in the next few days.

     

    Market leader Flipkart will put up exclusive products and offer heavy discounts while rival Amazon.in may introduce drone delivery in the country, as Diwali season is when most number of Indians try out online shopping for the first time. The four to five weeks until Diwali brings the largest sales spike for online sites.”For online retailers, you can say that the financial cycle is Diwali to Diwali,” said Saurabh Srivastava, director at advisory firm PricewaterhouseCoopers (PwC) India.

     

    “Every project cycle and launch that an etailer works on during the year is geared only towards Diwali.” MrSrivastava said sales jump during this season can be double the regular daily order size. Sandeep Komaravelly, senior vice president of marketing at Snapdeal, said that unlike offline, Diwali momentum does not taper off in online retail after the festival.

     

    “New customers who have tried online shopping for the first time during the festival season continue to do so even afterwards,” he said. No wonder then that portals big and small are going all out to woo new customers, backed by large marketing campaigns.

     

    “For large e-tailers the marketing budgets will be as high as 10% of overall costs,” said PwC’s Mr Srivastava. Even niche jewellery site Bluestone has set aside Rs 6 crore for advertisement and marketing for the festive season. It will launch a consultancy feature for Diwali that will suggest jewellery items based on the user’s face, hair style and likes.

     

    The typical Diwali shopping season starts from third week of September and goes on until Bhai Dooj, two days after Diwali. The online retail industry has grown rapidly in the past few years. While the overall industry was at $1 billion (Rs 6,000 crore) a couple of years ago, just the top three marketplaces in the country-Flipkart, Snapdeal and Amazon-are estimated to cross $4 billion (Rs 24,000 crore) in sales this fiscal.

     

    Ganesh Subramanian, chief operating officer at Bengaluru-based Myntra, which was acquired by Flipkart earlier this year, said it’s setting up a special Diwali store on its site. The company has started a new warehouse in Gurgaon in time for the peak shopping period.

     

    “We expect a lot of interest from tier-II and III cities and towns thanks to mobile. At least one out of two orders will be through mobile,” he said. Myntra is targeting sales of Rs 2,000 crore this fiscal.

     

    Flipkart plans a single-day big-bang sale a few days before Diwali with new and exclusive products at big discounts, said a person with direct knowledge of the site’s Diwali plans. It will also launch exclusive brand partnerships-around one a week-as part of its Diwali line up.

     

    “The company is expecting the largest sales in its seven years of existence,” said the person who did not wish to be identified. Flipkart declined to participate in this story. Samir Kumar, director of category management at Amazon India, said the portal will have exclusive launches and innovative gifting options. Amazon could also do drone deliveries in India during the period, as reported earlier. The company declined to speak on this.

     

    Source:The Economic Times

    Copyright © 2014, Bennett, Coleman & Co. Ltd. All Rights Reserved

    Licensed to republish

     

  • The online bazaar is stuffed full of something 'kart' or something 'deal', a manic copying frenzy thanks to headline grabbing successes of Flipkart and Snapdeal

    Success of Flipkart and Snapdeal spawns name-copying in the e-commerce market

    By Rasul Bailay

     

    You have an e-commerce business model, you have startup funding, you are all fired up, and now you need a name for your company. Take note – the online bazaar is stuffed full of something ‘kart’ or something ‘deal’, a manic copying frenzy thanks to headline grabbing successes of Flipkart and Snapdeal.

     

    There are at least 15 e-commerce sites that have ‘kart’ appended to their name. ‘Deal’ has attracted at least a dozen ventures. So, you have relatively well-known HealthKart and LensKart to relatively less-known e-tailers such as VeggieKart, SafetyKart, Mygreenkart, Metalkart, Bagskart, Jewelskart, Yaari Kart, AssamKart and even a Spritualkart. Just as you have entedeal, freedealsguru, indiasmartdeal, Dealtz, and the very prosaic, Daily Deal.

     

    Ecommerce entrepreneurs are divided over whether such name cloning works. Some like Arun Chandra Mohan are dead set against ‘kart’ or ‘deal’ or ‘for you’, another awfully common online venture naming strategy. Mohan’s venture went online in 2011.

     

    And the name? Jabong. Jabong, as everyone knows, has done pretty well for itself, despite being nonkart and non-deal.

     

    But e-entrepreneurs still finding their feet in the tough online marketplace differ. There are startups that say naming ventures ‘kart’ and ‘deal’ will quickly identify them as ecommerce websites.

     

    “Many ecommerce ventures now use the ‘kart’ thing so people can easily understand what they are about,” says Bikash Kalita, cofounder of Guwahati-based AssamKart. com.

     

    AssamKart sells e-books in Assamese as well as English language books written by Assamese authors. “If we had any other name then we would have had to explain ourselves. Since Flipkart, Lenskart, etc, are well known, people know from our name what we are about,” Kalita says.

     

    Aasheesh Mediratta, CEO, Fashionandyou. com, takes a ‘it doesn’t matter’ line. ‘Karts’ and ‘deals’ may give short-term advantage to newbies and irritate the established ‘karts’ and ‘deals’, but what matters over time is service quality, Mediratta argues. “This can divert small share of traffic to such sites. But along with the name, it is the business model, execution and offering which make the brand difficult to be cloned or impacted,” he says.

     

    But what about cases where similar sounding names are a coincidence? Then the less-famous ‘kart’ or ‘deal’ just has to live with it. Peyush Bansal, founder of online eyewear seller Lenskart, says his company had registered the domain name in 2008, “years before Flipkart became famous”.

     

    “Were I naming my company today there’s no way I would pick the same name,” Bansal says, “but now I have no choice because our brand is well known.” This Bansal simply didn’t know that the other Bansals, running the big daddy of all ‘karts’, Flipkart, would one day make it so big.

     

    There’s a darker side to the name cloning story – straight copying and infringement. Last year, Shopclues executives were shocked to discover a site registered in Dubai that not only used Shopclues’ logo but even copied the Gurgaonbased firm’s contents.

     

    “They had completely copied the whole thing. That was copyright infringement more than anything else. They had even copied the management profile by just changing the names,” says Radhika Aggarwal, co-founder of Shopclues.

     

    Aggarwal says there are many cyber squatters in China sitting on cloned names – Shopklues and Shopcluss are among the more inventive ones. “Many times we let it go…but if there is blatant copyright infringement we make sure to send legal notices,” Aggarwal says.

     

    India’s largest fashion and accessories portal Myntra.com had a name problem, too. Its Twitter handle was stolen and then restored and on YouTube, ‘Myntra’ was taken. So, the Bangalorebased company had to settle for Myntra.com for its YouTube account. But at least, Myntra is tougher to name-clone than a kart or a deal.

     

    Source:The Economic Times

    Copyright © 2014, Bennett, Coleman & Co. Ltd. All Rights Reserved

    Licensed to republish

     

  • Narendra Modi government joins hands with Flipkart to boost handloom sector and provide online platform for weavers

    Flipkart to weave magic for Modi govt

    Online retailer Flipkart is all set to provide an online marketing platform to handloom weavers in the country. The Ministry of Textiles on Monday signed an MoU with Flipkart to provide online marketing platform to handloom weavers – an endeavour to boost the handloom sector, empower weavers and boost manufacturing in the country.

     

    Through this exclusive agreement, Flipkart will provide weavers in India online marketing platform, infrastructural support in data analytics and customer acquisition to help them get remunerative prices for their products and scale up their business, the press release said.

     

    Flipkart will provide online marketplace for sale of the products of the weavers/master craftsmen/national awardees/state level awardees and the others as advised by Development Commissioner for Handlooms.

     

    “This kind of a coordinated effort has been planned and executed for the first time with Flipkart for handloom weavers which will bridge the missing linkages of market intelligence, market access and logistics and help the Indian weavers in getting remunerative prices for their products,” the release added.

     

    According to the statement, “Flipkart aims to help weavers make optimal use of the available data to guide entrepreneurs and artisans on areas such as deciding on the right selling price, payment automation, proper packaging, transportation, brand building etc.”

     

    Commenting on the same, Minister of State (Independent Charge) Textiles Santosh Kumar Gangwar said, “The focus of this association should be to help weavers and weaver entrepreneurs to produce products in tune with the buyer requirements and grow significantly so that they may become manufacturers not only at a local but also at a national level.”

     

    Earlier this month, Flipkart signed an MoU with the Ministry of Labour and Employment’s Directorate General of Employment & Training ( DGET), aiming to train at least 5,000 students by December. Flipkart joined hands with the government to train people from semiurban and rural areas and possibly employ them at the company or its business partners.

     

    Source:The Economic Times

    Copyright © 2014, Bennett, Coleman & Co. Ltd. All Rights Reserved

    Licensed to republish

     

  • Flipkart's growing valuation helps staff create enormous wealth in less than a decade

    I-Day Eve Feel-Good: Meet the Flipkart Crorepatis

     

    By Radhika P Nair

     

    About 400 employees with stock options at online retailer Flipkart have hit the ‘crorepati’ jackpot because of the surging valuation of the online retailer.

     

    The bonanza is reminiscent of the times when thousands of employees – among them office assistants, drivers and receptionists – at another Bangalore-based company Infosys hit Esop paydirt. “About 400 of the employees who own a stake have now become crorepatis,” said a person who has direct knowledge of the employee stock option scheme at Flipkart, which received $1 billion (Rs 6,000 crore) in funding last month, valuing it at $7 billion.

     

    About one-fourth of Flipkart’s 7,000 full-time employees own a stake in the company.

     

    At the seniormost level, nearly 20 employees who are at the grade of senior vice-president or above and joined over two years ago are now dollar millionaires, meaning their stock options are worth at least Rs 6 crore on paper. The firm’s stock options get vested over four years. Flipkart declined to provide details for the report.

     

    It is the online retail market leader’s valuation jump that has led to this wealth creation.

     

    In 2012, the company was valued at about $850 million when it raised about $150 million.

     

    In two years, Flipkart’s valuation has grown eight times. For the company’s founders, Esops are a conscious attempt at creating wealth for their employees. “While we are competitive when it comes to salaries, Esops offer the opportunity for wealth and value creation,” said Sachin Bansal, 32, Flipkart’s co-founder and chief executive. “It’s a long-term reward for those who believe in the future of Flipkart.”

     

    After the IT services industry, ecommerce is now the next big opportunity for employees to create wealth, said Anshuman Das, managing partner at Longhouse Consulting, a recruitment firm that works with startups. “The message going out to entrepreneurs is that wealth creation cannot be restricted to just the founders.”

     

    A number of junior employees at Flipkart too hold sizeable stake in the company. This has helped employees like 29-year-old Ambur Iyyappa, a senior manager of customer operations at Flipkart. “I was getting married in 2012 and the buyback allowed me to take care of my wedding expenses,” said the graduate of Annamalai University.

     

    Iyyappa, who sold only a part of his stake at the time of the buyback, declined to reveal how many shares he still holds.

     

    He was the second non-founder employee to join Flipkart in 2008. It was only in 2009, the same year that the company raised its first round of funding of $1 million (over Rs 6 crore) from Accel Partners, that Flipkart started providing Esops.

     

    Fashion e-tailer Myntra, which was acquired by Flipkart in May, allowed employees to sell shares at the time of the acquisition, according to a person with direct knowledge of the deal. The company declined to confirm this. Myntra provides Esops to all its core employees, numbering about 600, in functions such as technology and marketing across all levels.

     

    For existing employees like Iyyappa, Esops provide recognition. “Esops are a motivation for us employees,” said Iyyappa. “It is how the company recognises our work.”

     

    Source:The Economic Times

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  • A $100-billion entity, Flipkart raises $1 bn in funds. Co may be valued at $7 bn. What next for the Bansals?

    Flipkart: Billion-dollar Baby

     

    By Radhika P Nair & Harsimran Julka

     

    What could be the next goal for two entrepreneurs who have just raised $1 billion in a single round of funding? Sachin Bansal and Binny Bansal, who have done just that, have set their sights on making their company a $100-billion entity by valuation in the next few years from $7 billion now.

     

     

    Flipkart raises $1 billion in funds, company may be valued at $7 billion

     

    Flipkart has raised the biggest round of funding by an Indian Internet firm, setting the stage for a battle with Amazon for supremacy of the Indian online retail market. Singapore’s sovereign wealth fund GIC became the latest investor to put its faith in India’s largest online retailer by participating in the $1-billion (.`6,000 crore) funding round that values Flipkart at $7 billion.

     

    The Economic Times was the first to report that the Bangalore firm had snagged the massive round of funding. “We were a little kid waiting to grow up. Now we have grown up with this funding,” said Sachin Bansal, the co-founder & CEO. If Flipkart were listed in India, it would count among the 50 most valuable firms with twice the market value of Colgate, which was set up here in 1937.

     

    The funding was led by existing investors Tiger Global and Naspers with participation from Accel Partners, DST Global, Iconiq Capital, Morgan Stanley Investment Management and Sofina. Dragoneer and Vulcan Capital, who first invested in the company last year, did not take part in this round. The seven-year-old company has so far raised over $1.7 billion in risk capital. In May, it sucked in $210 million led by Russian billionaire Yuri Milner’s DST Global a few days after announcing its acquisition of fashion portal Myntra for an estimated $370 million.

     

    Sachin, who has in the past spoken of a US listing in 2015, said an IPO is not on the cards for the next two years.

     

    This funding ensures that Flipkart can now invest in building on the promise they have shown,” said Arvind Singhal, chairman of retail advisory firm Technopak. “I do not think this funding would have caught Amazon by surprise and I am sure Flipkart is not naive to now take competition lightly.” Seattle-headquartered Amazon, which just announced second-quarter loss of $126 million, has become increasingly aggressive in India. In about 13 months it has launched 28 categories of products and has grown to host 8,500 merchants on its platform. On Monday, Amazon announced the opening of five more warehouses, almost doubling its storage capacity to over half-a-million square feet.

     

    The funding will mean more pressure for Delhi-based Snapdeal, which raised over $233 million from investors such as Temasek and Premji Invest earlier this year. Amazon has matched Snapdeal in terms of sales, with the two firms having sold about $600 million (over Rs 3,600 crore) worth of products each, according to multiple people who have direct knowledge of the firms’ financial details. Both could reach $1 billion in sales this fiscal. Flipkart reached this milestone last fiscal.

     

    But Sachin said his focus is solely on Flipkart. “At Flipkart we are not thinking about competition. This funding gives us the opportunity to shape the market in a way that we want,” he said.

     

    Binny Bansal, 31, co-founder and chief operating officer, said logistics as well as payment and mobile technologies will be the areas where Flipkart expects to spend the most. Also getting attention will be small businesses, which Flipkart will handhold and bring online.

     

    Mobile has become a priority area for Flipkart, with over 50% of sales through handheld devices. So are payments, where it could look at acquiring a firm.

     

    Flipkart has previously acquired for depth in product categories and for new technology. This could continue, said experts. “There could be more acquisitions to fill up adjacencies in product or capability. If someone is strong in a segment, they could become an acquisition or merger target,” said Pinakiranjan Mishra, partner and national leader (retail and consumer products) at EY.

     

    Apart from tech buyouts, the company could look at acquisitions in categories such as furniture. Portals such as Pepperfry and Urban Ladder, which raised funding in the past few weeks, are seen as likely targets.

     

    Flipkart’s most recent acquisition, fashion etailer Myntra, has worked out well for them so far. “Fashion is now our largest category accounting for one-third of our sales,” said Sachin. The combined entity claims to now command over 50% of the online fashion market.

     

    Such strategic decisions will become more important now. “This will not make life easier for the company. They will need to show results,” said Technopak’s Singhal.

     

    Source:The Economic Times

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    “We wish to be the first $100 billion internet company from India. Globally there are only five; three from US and two from China. This funding gears us up to achieve that,” said Sachin Bansal, 32, cofounder and chief executive of seven-year-old Flipkart.

     

    For the Bansals, who are not related but were classmates at IIT-Delhi, the journey has been both difficult and fulfilling. When they started out in 2007 as an online retailer of books, the duo marketed their site by personally distributing branded bookmarks outside Bangalore’s iconic Gangarams Book Bureau. The duo had pooled in Rs 2 lakh each and with two computers launched the site from their two-bedroom apartment in Koramangala, a primarily residential locality in Bangalore where the company now has multiple offices.

     

    The Bansals have come a long way since then. Flipkart, which raised $1 billion from a group of investors including Tiger Global, Naspers and Singapore’s GIC, is the largest online retailer in the country. It reached $1 billion in sales last fiscal and, according to sources, is on track to breach the $3 billion mark this fiscal. And Flipkart now has a marketing budget that is in the millions of dollars.

     

    The ability shown by the two Bansals to scale up is what has made then a darling of the investors. When Flipkart hit the billion-dollar-sales milestone in February, its first investor Accel Partners, who invested $1 million in 2009, had called it a validation of its early bet. Subrata Mitra, partner at Accel Partners, said at the time that Sachin and Binny stand out with their ability to set audacious goals and take big risks. “They have proven to be capable to decide between “build vs buy”…and have the utmost ability to attract large investors to the table,” said Mitra.

     

    The success has not changed them much. The duo, who live close to their workplace, walk to work, eat lunch with employees whenever possible and fly and stay budget while travelling. The founders have also turned angel investors backing young startups like product discovery portal Roposo and mobile news app News in Shorts.

     

    The Bansals’ success will inspire other entrepreneurs, said Arvind Singhal, chairman of retail advisory Technopak. “The billion-dollar funding will inspire entrepreneurs to get into ecommerce and investors too will have the confidence to back them,” said Singhal.

     

    The focus now shifts to mobile and logistics for the Bansals. “Mobile will bypass broadband in India,” said Sachin, who was wearing an Android-powered watch at the event where the fund-raising was announced.

     

    Source:The Economic Times

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  • Dutch agency's design on Flipkart’s Private Label wins rave reviews

    Yellow Retail unveils Digiflip Pro for Flipkart

    By a correspondent

     

    Yellow Dress Retail, part of the Brand Dialogue group continues its winning streak in India and has launched flipkart’s latest Digiflip Pro. The tablet is the first from Flipkart’s private label stable and has received good reviews especially for its innovative brand and package design by Yellow Dress Retail.

     

    Yellow Dress Retail’s Marcel Gort said, “The package is ‘the silent salesman as packaging is the only real contact left with your customer apart from the site itself. Yellow Dress Retail provides branded packaging for all private labels under Flipkart and supports the brand in conceptualising and creating private labels in various key categories. This creative collaboration with Flipkart has begun with DigiFlip Pro and we are confident that this will support both the organizations in leaving a lost lasting impact.”

     

    Speaking about the combined project, Willem Woudenberg, Founder & CEO, Brand Dialogue, said, “Flipkart is a market leader in many ways, with Digiflip Pro Flipkart has made sure it beats the herd for now. The look and feel of Digiflip Pro is linked to the Digiflip design in a way, to show that it’s a family. The use of the color orange in both logo designs and the white background is simple yet premium, which is in line with the top A-brands but at the same time it does not lose its own charm.”

     

    Pradeep Dodle, Director – Retail (Tablets), Flipkart added, “We launched our private label brand DigiFlip in mid year 2012 and with DigiFlip pro, we are expanding our offerings. The tablet is in response to the growing demand for quality devices at great prices. To add to its appeal, we are working with the international design firm, Yellow Dress Retail to provide simple yet upmarket packaging for the product. ”

     

    Flipkart has priced the dual-SIM tablet, Digiflip Pro XT712, at an affordable rate of INR 9,999. Digiflip Pro comes backed with additional benefits, where buyers will get shopping benefits worth thousands by shopping from the Flipkart app on the tablet. With 1.3 GHz quad core Cortex A7 process and dual SIM 3G calling features, the tablet will be provided to the customers with an after-sales provision which will be handled through a network of more than 120 service centres across 13 cities including Delhi, Mumbai, Bangalore, Chennai, Kolkata, Chennai and Hyderabad along with the usual Flipkart benefits such as cash-on-delivery and a 30-day replacement policy.

     

  • It's been doing the rounds for a few weeks now, and it's finally happened. Now what?

    Flipkart buys Myntra. Finally!

     

    By Archana Rai

     

    So, finally Flipkart has bought Myntra, exposing an open secret and sending a not-so-subtle message-to rival Amazon. Despite loud protestations, it is quite clear that the investors, three of whom own shares in both companies, played a big role in seeing this deal through. Bringing together India’s largest online retailer and the country’s hippest fashion portal makes financial sense for the investors, and also strategic sense. The hard part is going to begin now.

     

     

    Flipkart-Myntra deal: The anticipated FDI in e-retail a big driver

     

    By Mehak Chawla

     

    The Indian e-commerce industry has fared pretty well, especially if we consider that there are only about 200 million internet users in India. This number could grow to 500 million by 2015, according to consulting firm McKinsey & Co.

     

    The size of India’s e-commerce market in 2013 was around $13 billion, according to a joint report of KPMG and Internet and Mobile Association of India (IAMAI). The online travel segment contributed over 70 per cent of the total consumer e-commerce transactions last year.

     

    Online retail companies earned revenues of around 139 billion rupees ($2.24 billion) in the financial year that ended on March 31, 2013, according to a Crisil report. Though this is just 0.5 per cent of the total revenues of brick-and-mortar retail companies, online retail sales have been growing much faster. Revenue of e-commerce firms grew by 56 per cent annually between the financial year that ended March 31, 2008, and the year ended March 31, 2013, according to Crisil.

     

    The pressures on e-commerce companies have long been known, be it cost competition with brick and mortar retail or the first mover advantage. And while the Flipkart-Myntra acquisition is surely a step to combat Amazon, the looming FDI regulation could also be a big factor in this deal. Once the 100 per cent FDI in e-commerce comes in, big retailers like Amazon and eBay will be able to follow an inventory-based model, as against the marketplace model they are currently bound to follow.

     

    Currently, global B2C e-commerce firms like Amazon and eBay operate in India as online marketplaces. In this model, these companies do not own any inventory and do not sell any of their own merchandise to Indian shoppers. They offer products from third-party sellers. This model can completely upturn if the 100% FDI in e-retail is to come in. Indigenous products from the likes of Amazon and Walmart (and their own inventories) can change the dynamics of the Indian e-commerce industry like never before. No wonder then, that the home-grown players like Flipkart are upping their ante.

     

    Though the stand of the Modi led government on 100% FDI in retail, especially in e-retail is not yet very clear, chances are that the regulation will go through. According to Vishal Tripathi, Principal Research Analyst, Gartner India, chances are that FDI in e-retail will happen. “Even if they don’t allow 100% FDI investment in retail immediately, chances are they will make the retail environment (including online retail) friendlier. NDA has always leaned towards private enterprises and they are likely to bring business savvy regulations.”

     

    The pressure on the government to pass this regulation is also high with the likes of Walmart lobbying for it and UK based Tesco showing a keen interest in entering the Indian e-commerce space.

     

    When 100 per cent FDI in (online) retail does come in, chances are that we shall see a lot more consolidation happening in the e-commerce space, believes Tripathi. Given the fact that global brands will intensify the competition in an already fiercely competitive e-commerce space, desi ventures are likely to start rolling up their sleeves.

     

    Other than the FDI in retail segment consideration, there are of course other elements that both Flipkart and Myntra were dealing with. The biggest of them being the cost considerations. According to market sources, Flipkart is losing close to Rs 70 crore a month. Myntra on the other hand, is fast losing market as well as mind share to the likes of Jabong.

     

    As a result, the deal seems like a win-win for both the parties because they have several synergies in their processes (and investors) that they can exploit for innovation. “The e-commerce market will be eventually decided by the customer experience. And Flipkart and Myntra have a lot to do in that regard in order to match up to the Amazon experience,” says Tripathi.

     

    Source:The Economic Times

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    Instead of Flipkart and Myntra burning more cash to battle each other and the rest of the lot in the crowded online retail industry, investors now have the comfort of knowing their money will be used to fight the real challenger- Amazon-whose founder Jeff Bezos views India as a key market where he is willing to commit considerable sums of money from his considerably large war chest.

     

    Myntra, which informed observers estimate has been valued at around $370 million, is a strategic fit for Flipkart. As fashion becomes the premier battleground for online portals in India, Myntra with its higher margins from branded apparel, will help bolster Flipkart’s defences.

     

    With a product mix dominated by electronics, books and low-cost apparel, the seven year-old company founded by IIT-Delhi graduates Sachin Bansal and Binny Bansal has demonstrated that it is willing to think different and think big.

     

    Even as talks with Myntra’s Mukesh Bansal started and stalled in recent months, Flipkart has been busy. Inhouse logistics arm eKart now delivers products sold by rivals, while payment gateway PayZippy is being nurtured as a separate business, the first of several technology products the company says it will build.

     

    But these are just good beginnings. So far, Flipkart’s Bansals, who hope to sell everything apart from cars and groceries, have wooed customers with steep discounts that have coloured their books red. To grow faster, they need higher margins that are delivered mostly by products designed in-house.

     

    Myntra will help with its portfolio of private label apparel that enjoy margins of up to 60%, but Flipkart needs more such arrows in its quiver. Private label electronics-as Kindle has done for Amazon-can boost notoriously low margins in the segment. They can also do well by scouting for ideas and products in India’s technology startup space that is throwing up innovations ranging from wearable devices to technology that can automate warehouses and help customers get a feel of the clothes displayed on their portal.

     

    More boldness has to be the calling card for the Bansals, who claim to draw inspiration from Jack Ma’s Alibaba, as they take on Bezos’s challenge on their home turf. Investors who have sunk money into this battle and are banking on Sachin Bansal’s famed “cool temperament” to see them through, will need to ensure he has enough motivation to invest skin in the game.

     

    Bezos owns nearly 18% of Amazon, while Ma’s 8.9% in Alibaba is set to deliver a fortune to the Chinese entrepreneur who has built an empire that spans the gamut from a wholesale portal to an investment platform for online shoppers Flipkart’s Bansals are estimated to together own about a fifth of their company that is now valued at about $ 2.5 billion. With Myntra in the fold, surely they have much to do battle for.

     

    Source:The Economic Times

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  • How Flipkart & Snapdeal are preparing to deal with onslaught from global retailer Amazon

    Ready to take on Amazon

     

    By Rahul Sachitanand

     

    Eleven months ago, India’s e-commerce sector got an ominous warning of a sleeping giant’s rise. Amazon, the $74.5-billion giant, which had been quietly watching the local market grow from $2.5 billion in 2009 to $16 billion in 2013, according to industry lobby Assocham, decided to make an understated entry.

     

    Even as its largest Indian rival, Flipkart, was cruising towards a billion dollars in revenues and another, Snapdeal, was making similar intentions known, Seattle-based Amazon made a low-key foray. It launched in a couple of categories – books and movies and TV shows – with firm plans to take a large bite of a market expected to reach up to $56 billion by 2023. Amazon has been quick off the blocks.

     

    Since its launch in June 2013 (it launched Junglee India, an online comparison engine in 2012), the company has gone from two categories to 24, from zero sellers on its marketplace to around 1,000.

     

    Amazon has been on the move, not only by launching category after category, but pushing the envelope on other fronts. It was the first to launch next day and same day delivery; it innovated by piloting deliveries at HPCL and BPCL outlets and even dropping off packages at small kirana stores in select locations.

     

    “We believe that the growth is at an inflection point and there is tremendous opportunity,” says Amit Agarwal, vice-president and country manager, Amazon India. “India is a large opportunity from a consumer and service standpoint to create differentiation and we were ready when we launched to take advantage of that.”

     

    Amazon is dead serious about the Indian market. It spent nearly $3.5 million on lobbying in 2013, according to filings to the US Senate, including efforts to push through foreign direct investment in retail. In the first quarter of this calendar year it again spent around $1.5 million to press its case.

     

    Junglee , meanwhile, has emerged to be India’s No. 1 comparison site with over 30 million products, over 1,900 online sellers and over 80,000 local sellers. Even as the global giant goes to battle, its two largest rivals aren’t prepared to be sitting ducks.

     

    Sachin Bansal

    According to industry insiders, the battle is evolving into an Amazon vs Flipkart one, with Snapdeal as a scrappy third rival. Sachin Bansal, CEO and co-founder of Flipkart, has had a firsthand view of Amazon’s global adventure, as a software engineer for the web giant for nearly two years between 2006 and 2007.

     

    It was this stint that convinced him to team up with IIT Delhi batchmate Binny Bansal, to start an online book selling venture in 2007 that began in a rudimentary 800-sq ft office and grew into a billion dollar online hypermarket, with over 100,000 shipments a day for products across some 20 categories. Today, Sachin Bansal is preparing to go to battle with the company he ardently admires.

     

    “We are prepared to take on global rivals,” he says. “We are strongly customer-focused and we believe we have the best logistics, supply chain and technology in the industry.”

     

    This strong focus has helped Flipkart. The company, which has raised $550 million from marquee investors such as Tiger Global and Accel amongst a host of others, started off as an inventory-led e-retailer but transitioned into a full-fledged market place, lining up an assortment of 4,000 sellers in its quest for $1 billion in revenue.

     

    Having reached that landmark (a year before its expectations), Sachin Bansal believes that the next battle will be fought not on computers and broadband connections but over mobile broadband users. “In our next stage of evolution, we want to be recognized not as an e-commerce company, but as an m-commerce company,” he says.

     

    The firm is rapidly adding sellers and expects to rapidly increase this to up to 15,000 sellers in the next year. Flipkart’s switch from an inventory-led company to a market place was hardly trouble-free. The firm struggled with plunging customer satisfaction, quality issues and logistical headaches as it faced up to an exponentially larger business.

     

    More recently, it found itself in hot water for allegedly violating the Foreign Exchange Management Act to the tune of Rs 1,400 crore. While this investigation by the Enforcement Directorate dates back to before April 2013, when it switched to the market place model, Flipkart says it had broken no rules even back then.

     

    With Amazon making its presence felt in the fast-growing Indian market, its largest domestic rivals know they need to act and act decisively. The market has been through several rounds of churn, as VCs initially chased opportunity in the market, only to see many of their investments crash and burn.

     

    According to estimates from NextBigWhat, a website focused on entrepreneurship, 136 e-commerce firms shut shop between November 2012 and April 2013. According to other data from Allegro Capital, an investment banking boutique in Bangalore, 80 per cent of all Indian ecommerce companies are on their last legs, having failed to raise fresh funds.

     

    Between 2010 and 2013, 52 e-commerce firms raised some $700 million in funding, but just 18 of them attracted a follow-up round. In the past year to 18 months, there has been a substantial clear-out in India’s e-commerce space, as investors have been wary of investing in this space, either backing largescale players such as Flipkart or putting smaller amounts into high-margin niche start-ups.

     

    The Other Challenger

    Snapdeal’s co-founder and CEO Kunal Bahl says that with their initial focus – on group buying – the company risked being swept away in this tumult. Instead, Snapdeal pivoted from its early focus to also become perhaps India’s largest marketplace with some 20,000 sellers on its platform. Now, Bahl claims, the firm is on track to clock revenues of $1 billion – within five years of starting up.

     

    “When we launched in the group buying segment, we were the seventh player and in six months there were 50 more rivals jockeying with us,” says Mr Bahl. “We got 70 per cent market share in 14 months and, when we decided to change business strategies, our idea was called ridiculous, stupid and dumb.”

     

    Despite the criticism, the founders of Snapdeal persisted and, backed by funding from the likes of eBay, today claim they are months away from clocking revenues of $1 billion. “Had we run an inventory business, we would have been a distant follower,” says Mr Bahl.

     

    “From being six steps behind in the race, we went to being four steps ahead.” He points out that from an overcrowded market of some 800-1,000 companies in 2011, only a handful survived and Snapdeal’s decision to pivot its business model helped it be one of them. “We have five million products on our site and we’re adding a new product every 30 seconds.”

     

    Mr Bahl wants to face up to Amazon’s might and is confident of putting up a strong fight. Despite the aggression of its domestic rivals, Amazon’s Agarwal is unmoved. “There is significant potential for innovation to improve customer experience,” he contends. “While Indian e-commerce is growing rapidly, it is still in nascent stages. It’s truly Day 1 for e-commerce in India and we are committed to aggressively invest over the long term and relentlessly focus on earning customer trust.”

     

    Rather than building a monopoly in India, he admits there is space for multiple formats and players here. “We are going to relentlessly focus on expanding our selection, bring significant cost savings, provide fast and reliable delivery, and raise the bar for online shopping experiences in India, much like we have done everywhere else in the world,” adds Mr Agarwal.

     

    Despite Amazon’s swagger, Flipkart isn’t easily intimidated – Bansal the CEO is working overtime to keep the fires going. When ET Magazine spoke to him in Bangalore, it was his wedding anniversary and he spoke to this writer in between attending a public function and before getting to other official meetings and calls. “We are constantly thinking of new ways to grow the business,” he says.

     

    “In a few years we want to go from a few thousand sellers to millions of sellers on our platform.” Flipkart can expect some stout competition from Amazon in this race to accumulate sellers. “We offer the most comprehensive suite of options for sellers to grow their business online and make profits in India,” boasts Mr Agarwal of Amazon. He points to solutions such as Fulfilment by Amazon (FBA) service, a pay-as-yougo fulfilment service, as enticements for sellers, wherein Amazon takes care of packing, shipping and delivery of sellers’ products.

     

    “We strive to do the heavy-lifting on their behalf while they focus on their core business functions,” adds Mr Agarwal. Today over 75 per cent of units shipped are FBA. Over 200,000 products are available for next-day delivery on Amazon. Over 60 per cent of existing demands are already eligible for next-day shipping.

     

    Amazon isn’t holding back in its pursuit of both sellers and buyers. Another initiative it is aggressively rolling out is Amazon Easy Ship, an assisted shipping service that makes it easy for sellers to ship products across India. With Easy Ship, after order confirmation, sellers pick and pack the shipment, confirm to Amazon that they are ready to ship and Amazon collects the shipment and ensures that the product is delivered to the customer.

     

    Sellers benefit from low shipping rates, COD and pre-paid orders, scheduled pick-ups, faster delivery and automated shipment tracking. Experts feel that India’s e-commerce industry has reached an inflection point. “Amazon’s entry has bought some urgency and competition into the market,” says Pragya Singh, associate vice-president, Technopak, an advisory firm.

     

    According to her, the arrival of Amazon will likely catalyze a further consolidation in the market, which will see the emergence of three or four large Indian players and a long tail of high-margin speciality players in categories such as apparel, accessories and jewellery.

     

    “With electronic retail accounting for barely 1 per cent of overall organized retail, there is plenty of headroom for growth,” adds Ms Singh. It is this headroom that both Flipkart and Snapdeal are chasing, with varying strategies. Analysts and investors say that Flipkart has built a stronger brand for itself due to its stronger urban reach and positioning, while Snapdeal is stronger in the hinterland.

     

    Flipkart is also the more valuable of the two – it was valued at $1.6 billion in its last round of funding – compared with $400 million for Snapdeal (as in February). Both Flipkart and Snapdeal are bulking up with an eye on the future.

     

    Flipkart’s chief executive Mr Bansal told this writer in a previous interaction at the headquarters in Bangalore that the firm was open to inorganic growth. One such deal may shortly come its way, as it seeks to nail down a protracted deal for Myntra, a provider of fashion and apparel online. While the deal appeared to be progressing on schedule, at least two investors said the Myntra team balked at a final valuation.

     

    To try to have the scale to compete with Amazon, Snapdeal too is keen on inorganic growth. Most recently it acquired Doozton, an online product discovery firm, to expand its presence in apparel and fashion. Previously, it acquired Grabbon, Esportsbuy and Shopo to expand into areas such as sports equipment and Indian handicraft and strengthen its presence as a full-fledged e-commerce market place.

     

    “We are accelerating before takeoff,” says Mr Bahl of Snapdeal. “E-commerce is going to be a $100-billion industry in the next 10 or 15 years and we need to stay nimble and scrappy and pick our battles.” Even as both companies add muscle to their businesses inorganically, the real scale may come the hard way – from adding new categories and products to their baskets.

     

    For example, Flipkart has rolled out a range of furniture and wants to expand its presence in white goods. Snapdeal too is constantly ramping up several categories – including some unexpected ones such as car tyres where it is seeing strong sales.

     

    “People are buying sets of four tyres worth Rs 40,000-50,000 online,” says Mr Bahl. It also stocks 600 types of air-conditioners, 300 varieties of refrigerators and 400 water coolers from an assortment of sellers. Ms Singh of Technopak thinks that the e-commerce industry is graduating from one where companies are relentlessly chasing consumers to the next phase, where companies focus on value-added services such as supply chain and logistics and on how to retain customers, rather than spend precious money on lassoing new ones.

     

    Having been beaten to the punch by Amazon, Flipkart and Snapdeal are both hoping to make up for lost time with their competing offerings on this front. “Value-added services will be the next big battle in India’s e-commerce market,” says Mr Bansal of Flipkart. The firm, which launched eKart, its in-house logistics arm around a year ago, is now preparing to offer its services to third parties.

     

    Even as Flipkart, Snapdeal and the rest of India’s e-commerce industry fortify themselves against Amazon, the multinational behemoth is setting itself to face the onslaught. “We are committed to the India market and we continue to invent and invest on behalf of customers,” says Mr Agarwal of Amazon India.\

     

    “With Amazon.in, we endeavour to build the most trusted and convenient shopping experience.” With revenues north of $200 million, according to industry estimates, Amazon India may have already laid down a daunting gauntlet for its Indian rivals.

     

    Source:The Economic Times

    Copyright © 2014, Bennett, Coleman & Co. Ltd. All Rights Reserved

    Licensed to republish

     

  • Amazon lures online retailers from Indian rivals Flipkart and Snapdeal expanding range for same-day delivery

    It’s Amazon v/s Flipkart & Snapdeal

     

    By Radhika P Nair & Aditi Shrivastava

     

    Amazon India is casting a snare to draw more small merchants into its fold as it battles India’s top online retailers Flipkart and Snapdeal for supremacy in the country’s booming ecommerce industry. Beginning Wednesday, merchants can sell their wares on the same day they register on Amazon’s portal compared with the nearly two weeks it takes on competing platforms.

     

    The world’s largest online retailer is also expanding the range of products that will be delivered to customers within a day, displaying the trademark aggression that marks its global operations nearly 10 months after launching services in India.

     

    “A few thousand sellers have already registered for the new service,” said Amit Deshpande, a director and general manager at Amazon India who said the company already has a roster of 4,000 sellers.

     

    These moves, coming days after the company launched a high-voltage advertisement campaign including television spots during the current edition of the Indian Premier League, is aimed at getting the largest number of merchants and the widest variety of products for Amazon customers.

     

    “Amazon is moving from first gear to fourth,” said Arvind Singhal, chairman of retail advisory Technopak. “They have the basics in place.”

     

    Amazon is Trend-Setter

    Market leader Flipkart, which just reached the milestone of $1 billion (over Rs 6,000 crore) in sales, also has about 4,000 sellers on its marketplace. But it follows an invite-only model to sign on sellers which is more time-consuming.

     

    “Even though I am already a seller on Flipkart, if I need to add a new category it will take about two weeks to start selling,” said Eshan Arif, 24, co-founder of Bengaluru-based music and movie merchandise store Hysteria. For a first-time registration it takes about three weeks from signing up to a live listing. Flipkart declined to comment for the article.

     

    Industry estimates peg Amazon India’s sales at over $200 million (Rs 1,200 crore) although the company declined to share sales numbers. At current growth rates, Amazon is capable of clocking sales of $1 billion (Rs 6,000 crore) by the end of March 2016.

     

    This will make Amazon the first online retailer in India to reach the magic number within three years of launch. Flipkart, which reached the milestone in March this year, took seven years. Snapdeal, launched in 2010, expects to reach $1 billion in sales this year.

     

    Snapdeal did not respond to email queries. Merchants who do business with all the top Indian portals said Amazon has taken a lead in categories including books and watches and is set to duplicate it in jewellery and baby care.

     

    The company’s latest delivery service, ‘easy ship’, will allow sellers to ask for a product to be picked up and shipped by Amazon. It will also provide cash-on-delivery for these sellers’ orders, an option so far available only to those who stocked products with Amazon. The service, which has 400 sellers already registered, will be available in 30 cities to start with.

     

    “We now have a complete suite of services for sellers which will help them sell more and make more money,” said Mr Deshpande, who has been with the company since 2010.

     

    This is just the latest in a string of initiatives from the Seattle-based company that is stirring up the Indian online retail industry estimated at $3 billion (over 18,200 crore).

     

    Last December, Amazon launched in-a-day delivery service forcing Flipkart and Snapdeal to follow suit. Flipkart and Amazon also launched their Apple iPhone and iPad applications within a day of each other. “Amazon is forcing Flipkart to push ahead with its customer and seller services,” said Ashish Jhalani, head of advisory services firm eTailing India. In Delhi and Mumbai, Amazon.in is piloting pick-up services where customers can pick up their orders from In & Out stores located at BPCL petrol stations.

     

    “Amazon is pretty much the trendsetter,” said Mahesh Murthy, founding partner at early stage venture fund Seedfund. “When Amazon started charging for delivery, Flipkart did the same.” Industry experts said Amazon India has done right by first focusing on backend processes instead of blindly chasing customers upon entry. “They built the logistics network, warehouses and built up a large selection of products that is helping them win customers now,” said Technopak’s Singhal.

     

    The company now has about 1.5 crore products listed on its site and two warehouses, each measuring over 150,000 square feet, in Mumbai and Bengaluru.

     

    Earlier this month, Flipkart said it had millions of products across 21 categories and 40 sub-categories. At peak times, the Bangalore-based company ships 1.3 lakh products a day.

     

    Amazon said its strong backend infrastructure is helping it scale up fast. “When we decide on areas of focus, we always work backwards from the customer,” said Mr Deshpande of Amazon.in. “Selection, delivery experience, logistics, payments and website experience are areas we are super-focused on.”

     

    Customers are taking note. “I used to buy books from Flipkart, but now I buy from Amazon.in as I see better variety there and it is the same price if not cheaper than Flipkart,” said Shradha Patnaik, 24, a communications professional who lives in Delhi.

     

    Merchants too are happy with their experience on the site. “Margin cut at Amazon is about 6-7%, compared with 10-12% at Flipkart,” said Hysteria’s Arif.

     

    While these indicate that Amazon is chipping away at the fortress that Flipkart has built, overtaking the market leader will take some doing.

     

    While prices in categories such as books are similar or Amazon.in is cheaper, in areas such as mobiles and tablets, Flipkart is cheaper in most models and brands. Flipkart is able to do this as WS Retail, a seller on Flipkart, is its subsidiary and gets most of its inventory directly from brands.

     

    “Flipkart’s WS Retail also buys outright from us and accounts for about 80% of our volume on Flipkart,” said Vivek Prabhakar, co-founder of design merchandise firm Chumbak, for whom online sites account for 18% of overall sales.

     

    Experts too believe that Flipkart has been able to fight back, for now. “Flipkart has the people and has built processes and technology. They are fighting back powerfully,” said eTailing’s Jhalani.

     

    Many believe the battle will only truly begin when Amazon.in launches apparel. Flipkart is believed to be in talks to acquire rival fashion portal Myntra to shore up its defences.

     

    Amazon, which launched other fashion categories lately, the most recent being shoes, is expected to launch apparel in the first two weeks of May.

     

    Source:The Economic Times

    Copyright © 2014, Bennett, Coleman & Co. Ltd. All Rights Reserved

    Licensed to republish