Saturday, 5 August 2017

Govt. to ease exporting rules so etailers can sell more

Back in March this year, online exporters claimed there were too many limits. This makes selling globally a complex task. The government has been paying careful attention to complaints from ecommerce exporters because it plans to revamp the export framework governing foreign retail by etailers. This will be part of its National Action Plan for Trade Facilitation. To assist Indian ecommerce entities like Myntra, Snapdeal and others specializing in handicraft and garments with global selling the government is considering measures like:
  • Including a complete switchover to online filing systems
  • Doing away with the cap of Rs.25,000 on a purchase

Easing online retail exporting

In Mumbai, the government has already launched a pilot that will be extended to other customs ports. But, etailers can expect more. A senior finance ministry official said,
“A number of steps have been identified to make it easier for the ecommerce sector to trade.”
Exports carried out through online marketplaces usually depend on couriers and in spite of small packages being shipped, tons of paperwork needs to be filled out and submitted. This makes the whole process cumbersome.
The couriers are aggregators for online retailers. And, with multiple little packages up for delivery, unlike in case of traditional bulk exporting, there is a lot of paperwork required ports. And the forms and documents for each product need to be done separately.
The revised rules may allow – a single submission for all their packages. This can help speed up the trade process.
The official mentioned earlier said, “The idea is to simplify the process and take it online.”He also stated that the Rs.25,000 per package cap may be substantially enhanced to even removed shortly.
This limit is applicable on goods sent through courier companies which lobbied government issues on these issues. Presently, these are being sent out as samples from the handloom and garment sectors. These are eligible for export incentives under the commerce and industry ministry.
Other pressing issues on hand are pending payments and inconsistent charges. Is the government prioritizing ecommerce problems appropriately online sellers?

Ecommerce market to touch Rs 2 lakh cr in FY18: Govt

The ecommerce segment in India is growing and is likely to touch $33 billion this fiscal, the Parliament was informed on Friday. In the 2016-17 fiscal, the online market had grown by 19 per cent, Minister of State for Consumer Affairs C R Chaudhary said in a written reply to the Rajya Sabha.
“India’s ecommerce market is estimated to be $33 billion in the financial year 2017,” he said, quoting industry body NASSCOM’s latest estimates.
On consumer complaints, the minister said that as many as 28,770 complaints were registered against the segment on the National Consumer Helpline (NCH) last fiscal. Around 11,596 complaints were related to non-refund of payment while the rest were about defective products delivery, deficient services and poor quality/fake products, he added.
“The complaints are forwarded to the companies concerned for resolution,” he said.
If consumer complaints are not resolved and if there is no response from the company, then consumers are advised to approach appropriate consumer forum, he added.
At present, there is a three-tier quasi-judicial mechanism in place for redressal of consumer grievances at district, state and national level. To protect consumer interest, he said, the government has made several provisions to strengthen the consumer grievance redressal mechanism in a bill which was introduced in the Lok Sabha in August 2015.

The ugly side of GST in ecommerce, Online Sellers share
The advent of the Goods and Services Tax (GST) gave rise to different scenarios. Customers are happy with post GST discounts. Flipkart and Amazon restarted delivery in Uttar Pradesh, Bihar and Gujarat. And, smartphones and electronics regained their former glory in terms of sales. But, while some celebrated the benefits of GST others endured severe impacts. Marketplaces began banning non-GST compliant sellers and other platforms stopped pre-GST payments to sellers.
On the surface of it all, everyone is for the tax and what it stands for but are online sellers happy with the way GST implementation was executed? Indian Online Seller spoke with every day online sellers for a feel of the actual impact of GST in ecommerce. Here are the results we uncovered with insights from online sellers after a month of GST:
To support their above claims the sellers we interacted with shared the following details with us:
As you can see, GST has affected online sellers in numerous ways. Some say it’s a big mistake others are hopeful to see benefits in time. Which side of GST do you see yourself on? Tell us through your comment below.

Flipkart’s ‘Billion’ brand ready; millions for Snapdeal buyout to stay put?
In June 2017 IOS reported how Flipkart is developing its private brand ‘Billion’ to capture buyers’ attention. The Indian ecommerce leader has launched its brand, which would include items across home appliances and fashion category. Few products such as backpacks, irons, mixer grinders, and cookware have already been launched. A brainchild of co-founder Sachin Bansal, Billion came into existence to fulfil the need of unsatisfied customers.
While explaining the brand’s positioning strategy, Bansal said,
“The brand is positioned as made-in-India and made-for-India both. The made-for-India positioning is that these products are made for Indians’ needs only, not just high-income or low-income Indians, but for all. The made-in-India positioning and constraint is also a conscious choice. We believe that Indian engineering and manufacturing is becoming very efficient and reaching a point where high-quality products can be produced in India.”
Flipkart has partnered with (and plans to keep partnering) with Indian manufacturers to co-create products as they have a better understanding of the market.

AI and Data helped Flipkart to launch Billion

In the past, etailers have collaborated with established brands to launch online-only exclusive products or a range of products meant for a particular online platform. Flipkart’s Billion is a one-of-a-kind initiative launched by any Indian ecommerce player but not the only one if we consider global players. American ecommerce giant Amazon’s label Amazon Basics has expanded into a range of product categories.
But Bansal believes that no one has done it on a large scale like Flipkart. The home-grown etailer’s Artificial Intelligence (AI) wing helped them to develop and launch the ambitious Billion brand.
The executive chairman and co-founder Bansal asserted,
“(Such an initiative) has not been tried at this scale. There are brands that are master brands and which span across many categories. But nobody has tried it at such a breadth in the past. We believe there are two things that are different. One, people haven’t used data at the scale that we’re starting to use. Because in the absence of data, you’re basically limited by human intelligence. What we are experts at is our ability to use data and make sense of it from a customer’s point of view and co-create products with our manufacturing partners for India. That’s the expertise we’re building, which can be applied in multiple areas. One of the reasons why such a brand has not come up is because it’s really hard to do that manually.”

Billion is launched but what about the millions reserved for Snapdeal buyout?

Mystery shrouds the Flipkart-Snapdeal merger deal as conflicting developments emerge on a daily basis.
A few days back there were reports that Snapdeal has accepted Flipkart’s $950 million buyout offer. The only thing pending was minority shareholders’ opinion on the merger term-sheet. All the shareholders were going to vote on Flipkart’s offer in a week’s time.
But as per latest news reports, the merger deal might be called off!
Snapdeal’s spokesperson stated, “No formal communication has been shared with shareholders and no board vote has happened on a proposed deal.”
Company insiders have revealed that Snapdeal’s founders and shareholders were unable to reach consensus and hence Flipkart’s buyout offer might get rejected. A meeting of legal and investment banking team stands cancelled. Besides the difference over payout to major shareholders, Flipkart’s liability clause is the main issue of disagreement.
“The deal is unlikely to happen as there are a lot of differences among shareholders. Flipkart’s condition on getting each shareholder’s approval is next to impossible. Also, Snapdeal founders are not really keen on merging with Flipkart and they want to run Snapdeal as an independent entity,” disclosed a person aware of this development.

Amazon sellers deprived with focus on customers? Meanwhile, etailer investment in India $600mn since January
Amazon is doing well in India as an online marketplace and is well aware of it. The etailer’s CEO and founder Jeff Bezos confirmed that his company will continue to invest in its Indian business. And, since January 2017, the US-based ecommerce company has infused around $600 million (i.e. Rs.3,800 crore) in its Indian business.

Where has Amazon been investing?

The funds it has been pouring into its Indian business are being used to build:
  • A seller base (currently at 200,000)
  • A payments arm (recently obtained pre-paid license for the same)
  • Infrastructure
Nearly half the investment money has gone towards setting up of warehouses and data sorting centres.
Records with the ministry of corporate affairs show that two of its largest investments were spent in the following manner:
  • Amazon Seller Services = Rs.1,680 crore
  • Amazon Data Services = Rs.1,381 crore
Cash pumped in has also be distributed among its payments, wholesale and IT services arms in the country.

Amazon competing with Flipkart’s investments?

The announcement about Amazon’s investments so far come just a while after Flipkartacquired funding of Rs.9,000 crore, courtesy of eBay, Tencent and Microsoft.
Bezos has already stated that his company will be investing $5 billion over the next five years in India.
Earlier this year, Amazon’s Agarwal told Business Standard, We do not really hold ourselves back based on a targeted investment. We will require a lot of investment, as will Indian e-commerce. It is very early and we should be ready to invest for many years.”
Unceasing funding is essential to establish a good hold over the Indian online shoppers, to keep Alibaba and others from swooping in and stealing its Indian market.

Gaining more customers at the cost of sellers?

Increasing the use of its mobile wallet is also on a task on the etailer’s list of things to do. In an attempt to boost the use of its mobile wallet Amazon is offering shoppers a 10% cashback even for items returned.
The offer states: “Select Amazon Pay balance, get 10% extra as refund amount.”
Online sellers believe this move is against their interests of doing business. As it will encourage unnecessary returns.
The online sellers group of over 1,500 vendors, AIOVA said, Amazon is encouraging returns at sellers’ cost and investment. Amazon should give equal incentive to the seller whose stock is being returned.”
Not so long ago, Amazon injected Rs.130 crore in its Indian payment entity. The next phase of its growth plan is to provide unbelievable offers to users. Like the one mentioned above and others like Rs.100 cashback on purchases of more than Rs.700 via Amazon Pay balance, only for first time users.
Amazon claims this is all part of their efforts to improve the online shopping experience. Sriram Jagannathan, Vice President Payments, Amazon India, said, “Our aim is to improve the digital payment experiences for customers buying on our marketplace…We provide offers to customers to try this experience.”
The etailer will be offering financial products too. Could this take focus away from online seller needs on the platform or assist sellers with more sales?