Online marketplaceShopcluesmight be looking for amerger or IPO, but before that happens the etailer is looking boost its customer base through discounts. Its Maha Bharat Diwali Sale began on 20th September and the etailer targeted customers from Tier 2 and 3 cities with massive discounts. All of its major categories reflected offers ranging from 50-80% off.
The company CBO and founder, Radhika Aggarwalsaid,“This year’s Diwali celebrations at ShopClues are bigger and better than ever. In line with our unwavering strategy, this year’s best deals and discounts have been curated keeping the festive needs of ShopClues’ value-driven consumers in mind, a majority of which are from Bharat – the tier 2, 3 and beyond towns.”
Growth through discounts
The primary goal behind this discounting strategy is to gain 75% business growth from September to October. To achieve this, Shopclues is:
Focusing on electronics and accessories, fashion and lifestyle and home and kitchen
Expecting 250 million visits during its Diwali sale
Spending 2.35% of its annual marketing budget
Partnering with banks and online service providers to ensure top discounts (e.g. discounts on use of ICICI net banking, credit and debit cards; Offers on domestic flights booked via Yatra; holiday trips; mobile wallet cash)
Aggarwalmentioned,“We are very excited about the exclusive deals on Electronics and accessories, with price points starting at as low as INR 99. With a unique selection of products, ShopClues’ prime focus is on delivering value at all price points for its consumers.”
She alsoadded,“We have also ramped up our associations with top banks, portals and e-wallets, to enable a seamless and delightful shopping experience for our customers during this Diwali.”
Apart from its special discounts for specific categories, through its Diwali Flea Market, Shopclues is looking to capture the utility segment. Following the concept of itsSunday Flea Market, the Diwali one will have over 10,000 festive utilities and gift products with Rs.29 as their starting price. The products on discount at the Diwali Flea Market will include, diyas, divine idols, lights, kitchen essentials, bedsheets, Bluetooth speakers and selfie sticks,
The Shopclues Diwali Flea Market is expected to commence from 7th October to 10th October. Products ordered from there will be shipped for free, provided 2 or more products are ordered. Also, prepaid orders will receive an exclusive 15% off.
The pursuit of profits
Like its competitors, Shopclues is after profitability as well. In the attempt to reach this goal, Shopclues is trying to become the ultimatedestination for online fashion. So far it’s been banking onnon-branded fashionlabels. However, now the etailer appears to be giving in to the exclusive fashion label trend.
Shopclues recentlyintroducedits first ever fashion wear private label – MEIA. Though this private label the online retailer wants to boost margins of its fashion category. Prior to it, Shopclues introduced Home Berry, an exclusive label, to its home and décor category.
MEIA by Shopclues
Unlike in the private labels acquired by ecommerce biggies, MEIA is an affordable brand from Shopclues. Products under the label have a starting price of Rs.399.
The brand is designed for young women from tier 2 and 3 cities, aged between 18 to 35 years.
Shopclues will sell designer kurtis, clutches, chunky jewellery and watchs under MEIA.
Aggarwalsaid,“Shopclues’ focus has always been filling the need-gap of consumers of tier 2 and tier 3 towns of India. Our total buyer base from these cities is more than 70 percent and the demand for better quality, affordable-designer products is increasing everyday.”
She alsoclaimedthat“In the next few months, we are looking to launch other exclusive labels in men’s fashion, electronics and accessories.”
Products under the new brand were made available from 21st September during the Maha Bharat Diwali Sale. With this brand, the etailer is looking to meet fashion demands of working women in the country. That is a demographic that desires trendy fashion at a pocket-friendly cost.
Traders body CAIT today urged the government to take action action against ecommerce firms like Amazon and Flipkart, alleging they have flouted FDI norms for such players by undertaking retail trading activities.
The Confederation of All India Traders (CAIT) wrote to Union Commerce Minister Suresh Prabhu in this regard, claiming that the companies were indulging in a “blatant violation” of the FDI (foreign direct investment) policy.
“Amazon has declared Great Indian Festival Sale from 21 September to 24 September, 2017 and Flipkart has conducted Big Billion Day Sale from 20-24 September 2017, Snapdeal has announced Unbox Diwali Sale from 20 to 25 September 2017, Jabong Sale from 20 to 24 September 2017, Myntra Sale from 20 to 24 September 2017, Shopclues has announced Maha Bharat Diwali Sale from 20 to 28 September 2017 which is a blatant violation of the guidelines issued by the DIPP,” CAIT alleged.
In its complaint, CAIT said,
“the advertisements issued by them in past days amounts to soliciting retail customers at their portals and influencing the prices and creating an uneven level playing field”.
“Under FDI policy these companies can not undertake retail trading activities but these e-commerce portals being habitual offenders of (the) government policies are circumventing the law and engaged in B2C (business-to- commerce) activities which is prohibited for e-commerce marketplace portals,” CAIT alleged in the complaint to Prabhu.
In its complaint, the traders body demanded that necessary immediate action should be taken against the firms for violation of FDI policy.
“The Confederation of All India Traders has charged Amazon, Flipkart and Snapdeal etc for violation of FDI policy for e-commerce of the Government issued on 29 March, 2016 by Department of Industrial Promotion & Policy, Ministry of Commerce,” the traders body said.
Myntra and Jabong declined to comment, while query sent to others did not elicit any immediate reply.
According to CAIT, as per the FDI policy guidelines, ecommerce portals receiving foreign direct investment can conduct business activities for B2B (business-to-business) business and will not be allowed to undertake B2C (business- to-consumer) business activities.
CAIT Secretary General Praveen Khandelwal said that by inserting big advertisements in the media, the companies are attempting to address consumers directly which is a contravention of the FDI guidelines.
“They (ecommerce firms named) do not have ownership of the inventory of the products purported to be sold on their technology platform, how can they offer discounts or discounted prices on the products for which they are not the owners-questioned trade leaders,” Khandelwal claimed.
Ecommerce companies could see a cash burn of up to USD 400 million during this years festive sales, compared to about USD 200-250 million last year, research firm RedSeer Consulting today said.
The cash burn for the e-tailing industry, which has deep-pocketed investors like SoftBank and Alibaba backing players, is forecast to reach up to USD 370-400 million this year on a expected gross merchandise value (GMV) of USD 1.5- 1.7 billion.
Last year, the cash burn stood at about USD 200-250 million on a gross GMV of USD 1.05 billion, it added.
GMV is a term used in online retailing to indicate total sales value of merchandise sold through the marketplace over a certain period of time.
The report said that it is expected that there would be an increase in discounting spends and supply chain expenses as a percentage of GMV when compared to last year.
It added that with the latest funding firepower, market leader Flipkart would most likely increase discounting spends to acquire new customers as well as to gain momentum over rival Amazon (which is also expected to raise its spending).
Also, Paytm, with its recent focus on its Paytm Mall business, is most likely to increase its cashback spends to gain traction during the sale, it said.
“As e-tailers focus on an offering better than ever discounts and also offering a faster than ever delivery experience, including to Tier 2+ cities, this year will see a significant growth in cash burn year-on-year,” RedSeer Consulting CEO Anil Kumar said.
Advertising expenses, RedSeer said, will either remain same or decrease compared to the last years festive sale.
Ecommerce players, including Flipkart, Amazon, Paytm and ShopClues are holding festive sales on their platform currently, offering deals and discounts to customers across categories like fashion, electronics and household items. These offers not only increase sales volume for the players but also help the companies get new customers onboard their platform.
Pepperfryis constantly on the hunt for innovative ways to boost sales. Before itsplan to go offline, the online retailer launched itsown brandto get a bite of the modular kitchen market. Now the etailer will take on new competitors apart from Urban Ladder in order to push its sales some more and strengthen its customer base. The online furniture platform is ready to offer its productsfor rent.
This service will be available only in Mumbai, Delhi, Bangalore, Pune, Gurgaon, Hyderabad, Noida, Ahmedabad and Chennai. In six months time, more cities like Cochin and Chandigarh will be included.
“Pepperfry customers typically range between the age group of 28 years and 60 years. This move (to launch rentals) will help us increase relevance in the age group of 22-28 years who we can then convert to customers on an on-going basis,”Ambareesh Murty, Pepperfry CEOsaidtrying to explain the logic behind this move.
“We expect to rent a lot of beds, wardrobes, book cases, etc. These are more functional requirements,”heclaimed.
Rental market a risky for business?
From $900 million in 2016, the value of the furniture and homeware market I expected to hit $1.1 billion in 2017, based on its 36% year on year growth,saidForrester Research. The rental market within this segment is minuscule and according to experts in the industry the rental market will take a while to grow to a substantial size.
“Furniture rentals is not a big market but it helps create volume. This is a channel for customer acquisition and enables conversion over a period of time,” senior forecast analyst at Forrester Research, Satish Meenapointed out.
He alsosaid,“Companies are still figuring out how to optimise the (rentals) space. While it is good to have more players, it will take some more time before the pie can really increase.”
By diving into the rental furniture business, Pepperfry will have to compete with other like Furlenco, Rentomojo, CityFurnish and other businesses. Furlenco is a top player in this field. Its average ticket size is Rs. 3,000. The company is also looking to breakeven by March 2018.
In terms of sales, Pepperfry manages an approximate order value of Rs.18,000 and claims to possess a user base of around 4 million. Under its rental service section, it will offer 1,200 units out of its 14,000 SKUs. It will also offer free delivery and assembly service to patrons.
Does Pepperfry have an edge over competitors?
What the etailer has over its rental furniture competitors is its ability to provide a low-use price on its furniture pieces.
Murtystated,“Currently our returns and cancellations form 2.5% and rentals will include a portion of the returns. It will help us manage the entire supply chain including reversing cancellations and so it integrates very well into our business.”
In addition to low-rent charges, the etailer will also use slow SKUs and offline inventory as rental pieces. This will contribute to 15-20% of its rental revenue each month.
Murtymentioned,“The potential conversion to sales is high. I think we will have close to 95% conversion to our buying customers when they come of age. We will be profitable in 12-15 months, or by FY19-end if our growth trajectory continues.”
To grow storage space further, Amazon India is working ondeals withwhite-goods manufacturers and retail chains to develop FCs TV, refrigerator and OTGs buyers, through its marketplace.
The idea here is to use stores for delivery after goods are ordered on Amazon.This is expected to obtain the US-based etailer supremacy in the appliance category.
The company will upload product descriptions and unboxing videos of different consumer electronics products to limit the lack of touch and feel. The ecommerce platform may also open offline experience zones, for exclusive brands only, Amazon India director (category management – large appliances), Kaveesh Chawlasaid.
Headded,“We are trying to get offline shoppers of consumer electronics to buy online by overcoming all the barriers to become the largest ecommerce seller in these segments. We have set up our own studio to shoot and upload product videos and are also asking the brands to provide videos to demystify technical terms and demonstrate the product online.”
Chawla mentioned further that tie-ups with retail shops or regional retailers to:
Reduce delivery time
12 FCs have already been set up and more are likely to come along if regional demand increases.