Recently,IOSinformed you about a potentialmerger and acquisition deal between Alibaba and Shopclues. The Indian marketplace, Shopclues, could help China’sAlibabaclimb up the ecommerce ladder quickly. But the foreigner has stakes in other Indian online marketplaces too. These are promising online retail entities as well, that could boost Alibaba to a leader position in no time.
Paytm Alibaba’s gateway to Indian ecommerce?
One97 Communications Pvt. Ltd. has set up a separate account forPaytm Ecommerce Private Limited. This wayPaytm, can maintain its ecommerce business effectively. At the same time many are considering it to be a step towardseasing Alibaba’s entry into Indian ecommerce.
According to sources, Alibaba Group Holding may pick up a major stake in One97 Communications’ ecommerce business.
Those familiar with Paytm’s business separation plansrevealedthat the objective behind all of this is to raise greater investments from Alibaba for Paytm’s ecommerce company. Larger investments are also expected from SoftBank Group Corp, a Japanese technology firm with 32% stake in Alibaba.
At the moment, founder and CEO of Paytm, Vijay Shekar Sharma is the largest stakeholder, say Mint reports. Alibaba’s stakes in One97 will be transferred over to its ecommerce business. Along with financial-services arm, Ant Financial, Alibaba owns nearly 41% stake in One97.
“Vijay Shekar Sharma has 51% stake in the payments business because the payment bank license was issued in his name and 49% of the stake will be held by One97. Alibaba’s stake in One97 Communications will be transferred to the Paytm ecommerce.” a sourceclaimed.
Paytm’s business split a good idea?
In the start, Paytm’s plan was to keep both its payment business and marketplace business on the same platform. This way customers from the payment business could be directed towards its ecommerce platform. Things changed however, when the ecommerce business became complex and making money from it was getting difficult, the above sourcesconfirmed.
In July, Paytm leveled up its performance with Rs. 2,000 crore as GMV at a group level. As a result, it is becoming the third largest consumer internet company right after Flipkart and Amazon. The marketplace business alone accounted for about Rs.250-300 crore, but the payments business drew in nearly Rs.500-600 crore, in July.
Online sellers constantly talk aboutonline product returns, how they are on the rise and how they keep eating into their profits. If it were possible to interact with online shoppers, sellers claim online retail would be much easier on them.
In an email, Snapdeal alerted its online sellers that continuous attempts to enhance the seller experience, have resulted in a new buyer-seller message feature. Buyers can use it to interact with sellers regarding partial deliveries, non-delivery of freebies and so on.
Sellers can use this feature to minimise returns and replacements by addressing customer concerns. Any buyer misconceptions and doubts can be clarified. This way the buyer is fully informed and untrue expectations of the product are corrected thereby curbing returns.
How to activate the Buyer Seller Message feature?
On theSnapdeal seller zone app, merchants can activate the message feature by:
Clicking “Profiles & Setting” on the navigation menu.
Switching on “Receive Buyer Message”.
For theSnapdeal seller panel, online vendors can activate the message feature by:
Clicking the :Security Settings” option on the drop-down menu at the top right corner of the dashboard page.
Switching on “Receive Buyer Message”.
This is a very easy to use feature from Snapdeal that the seller controls. It can be switched on as mentioned above and switched off as well.
Terms of operation
Snapdeal informs online sellers through theSnapdeal training academy, that only a buyer can initiate a chat with the seller. That too, only after the product has been delivered to him. Messages sent will be product specific.
Sellers must reply to the buyer within 24 hours. If not return or replacement will be initiated. The message status will change to not replied and the matter will be escalated. Then the Snapdeal customer experience team will contact the buyer to confirm the return or replacement request.
If the buyer and seller reach a consensus, the seller must click the resolve button, which will provide the buyer with an option on his screen prompting him to accept or reject the solution reached. If the buyer rejects the resolution, it will be sent to Snapdeal’s customer experience.
Have you tried out Snapdeal’s Buyer Seller Message feature? What was your experience with the service?
In what can only appear to be tough luck for third party services in ecommerce, leading players are gradually bringing down their dependence on the former. Flipkart is reducing its reliance on affiliate programs and turning its attention to other apps. Amazon has altogether closed down its association with third party service providers. Snapdeal has cut its commission to its affiliates by a drastic 40-50%.
The pressure to produce tangible financial results is influencing this trend.
Quality is what rakes in the money, not quantity
Experts also feel that moving away from cashback is prudent. Vikas Choudhury, MD of AIMIA India, a loyalty and analytics consultancy, opines,
“Cashback is nothing but discounting and appeals to the deal-hunting buyers. It is the opposite of loyalty”.
Studies have indicated that if resources spent on acquiring new customers are reduced, it has a significant impact on profits. Which explains why companies are aggressively looking to retaining a loyal bunch of customers.
Cashbacks not helping parent sites
Just a few months back, all the leading commerce players were digging cashbacks big time.
“Cashback acts as a benefit for the user and eventually helps ecommerce players to gain traction, spearhead their new customer acquisition model and do more business at reduced costs,” claimed Swati Bhargava, co-founder of Cashkaro.com, a cashback site.
However, the tide is changing. Amit Chaudhary, co-founder of Lenskart says,
“Till last year we were working with 15 affiliate partners. We now work with fewer partners who have better capability of buying inventory, provide quality traffic and are doing better customer segmentation,” indicating that the thrust is now on finding and retaining long-term customers.
Rohan Bhargava, co-founder of Cashkaro.com admits, “Niche sites such as 1mg and Healthkart have increased commissions.”
Paytm was hoping to beat the biggies with its festive cash backs, but has now turned to other options like billing, mobile recharge and ticketing. Some cashback companies may cling to hope, however, the focus is clearly on more lucrative options to make money.
Under its ‘Growth Capital’initiative launched in July last year, Flipkart has given outloans worth Rs. 125 croreto over 800 sellers over the last one year.
The main aim of this initiative was to offer financial assistance to sellers across the country with minimum documentation and in less time. And according to Flipkart, many vendors on the platform has benefitted from it.
“Unavailability of finance is one of the major barriers for the growth of small businesses in both online and offline space. The programme addresses that issue and facilitates our sellers by helping them connect with trusted lenders in the industry,”saidAnil Goteti, Head of Marketplace at Flipkart.
Highlights of the Growth Capital lending program
Flipkart partnered with State Bank of India, Axis Bank Ltd, Bajaj Finserv, Yes Bank Ltd, LendingKart and three other financial institutions
Offers collateral-free loans at 11.4% interest rate
Received over 3000 applications within the first few months of the launch
Maximum adoption among vendors selling mobile phones, other electronics, fashion and fashion accessories
More loans up for grabs ahead of festive season
The etailer is expecting to hit the Rs. 200 crore mark by disbursing Rs 75 crore of loans more by the end of the upcoming festive season.
“Considering the success of the programme and increasing demand for the initiative, we are estimating this to hit the Rs.200 crore mark by the end of this festive season. We are also planning to launch promotional offers with our lenders for the festive season in the following two months. This will definitely enable our sellers to grow their business and provide quality products to millions of customers shopping on the platform,”sharedGoteti.
Jekyll and Hyde mode of Flipkart
Through initiatives like Growth Capital, Flipkart is sending out a message that it wants to assist sellers in growing their business and increase its seller base. On the other hand, by partnering with few selected vendorsand adopting an inventory-based model, the etailer is also alienating its 90,000 sellers.
It’s great that Flipkart wants to helps SMEs by offering financial assistance. But what about sellers that are reeling under huge debt burden because of the marketplace’sskewed policies andunethical practices? Will there be any initiative from Flipkart’s end that will work towards correcting its unfair policies?
FromFlipkarttoSnapdeal, fromMyntratoJabong, everyone has been talking about ‘touching profitability soon’ for nearly 3 years. The ‘profitability dream’ has become a running joke of sorts because ecommerce companies end up setting a new deadline with new promises and new estimates thrown in ever year afterfailing to meetthe previous one.
But NDTV’s ecommerce venture Indianroots (launched in July 2013) made news everywhere after itachieved break even in just 8 months! It caught everyone’s attention since the Indian etail industry was/is yet to find a ‘profitable’ success story.
This is why it came as a surprise when Indian Online Seller (IOS) received messages/emails from sellers about not being paid by Indianroots for over a year. Why a company that made a record of breaking even at an early stage of its life cycle, isn’t paying sellers now?
New name, same story
The story of hapless sellers is the same; just the ecommerce company’s name is different.
“Around a year ago we connected with Indianroots.com (E-commerce venture by NDTV). Now we are not getting payments from them. Amount is around 25000, which is too big for a middle class person. The credit period as per agreement was 45 days, but its more than 250 days as of now,” writes Vinit Jain of Blissta Clothing in his email to IOS.
“First they were not replying to our mails and phones. Then I called them repeatedly and then they told us to pay in 2nd week of May, but did not. Then they told 2nd week of July, but now they are saying 2nd week of August. They are not following agreement. They are just holding and using our funds. Even after being a big brand like NDTV, they are just cheating.”
Another seller, Jayesh Lakhani too been trying to get his pending dues of Rs. 3, 00,000 from Indianroots for the last 8 months.
Besides delaying payments and being non-responsive, some sellers have also alleged that the etailer is extremely careless while handling their inventory.
An online seller, identified as Bibaar gave the site a poor rating of 1/5 andwrotein its review,
“After our event was over at their website, we asked them to return our collection. When we received it, we found 2 pieces worth Rs.1400/- each missing from it. When we enquired about it and also told them to compare the number of products in “vendor product sheet” & the invoice that they have sent us; then they told us that they have searched the whole warehouse but couldn’t find it.”
The decline from premium products to weak service
Right from the beginning, Indianroots positioningwas‘we pitch ‘Indian sensibility products’ for the global Indian.’ The company claimed to offer handcrafted and handmade designer-wear and artisan products minus any freebies and discounts. No COD, no 1-2 day delivery promise, unlike other ecommerce sites.
Buyers were willing to wait for 3-4 weeks, as Indianroots bursted onto the ecommerce scene with a promise of premium products and premium service. Although, the firm’s reviews on various sites tell a different story.
Bad customer service, late delivery, poor quality/mismatched products, incorrect information, over-priced products and complicated return/refund process are some of the thingscustomers statedabout their shopping experience at Indianroots.
“I would never again order from Indianroots and it is the most unprofessional and inconsiderate online company I have come across… There is no real apology from Indianroots and the staff are simply unable to understand the inconvenience they have caused. There is no offer for vouchers or further discounts or even a REAL apology from the manager. There is no willingness to correct their mistakes or even retain the customers, it’s almost like they simply do not care…”saida buyer Yajna P.
However, we did notice that Indianroots’ representative at least replied to most of the customers’ reviews, updates, and comments. But comments and reviews left by sellers received no response. Check the below image. The company executive replied to first and third review (customers) but skipped the second one (vendor).
Surprising? Not so much! This is how most ecommerce firms treat its sellers.
Indianroots funding and losses
Delay in payments is an obvious indicator that Indianroots is in financial trouble. The company’s last funding round was in May 2015 when itraised $5 millionfrom Jaipur-based investor, KJS Group.
NDTV’s TV venture has been losing money for years. The commercial broadcasting television network launched its ecommerce arm Indianroots andGadget 360with an aim to reduce its financial woes.
It did help initially as NDTV Ethnic Retail’s revenue, which runs Indianroots, increased year-on-year and thefirm’s GMVwitnessed an 8-fold increase between FY 14 and FY 15.
But the losses are increasing too year-on-year. Indianroots reported aloss of Rs 4.5 croreloss in quarter 1 of FY15, aloss of Rs. 6.02crore in quarter 3 of FY15 and aloss of Rs 9.01 crorein quarter 1 of FY17.
While cash burn and ecommerce goes hand-in-hand, can NDTV afford to run loss-making side ventures along with losing crores in its core business as well?
IOS got in touch with NDTV Ethnic Retail’s Founder & MD Shyatto Raha and Vendor Relations Manager Shivender Jamwal to understand the reason behind delay in payments. But they did not respond to our emails/messages seeking comment.
Indianroots and Askme’s stars match?
Are you wondering, what is the connection between NDTV’s Indianroots and Getit Infomedia’s Askme?
The connection is Malaysian firm Astro.
Unless you are just back from Mars, you probably heard about Askmeshutting down. And the company isblamingits biggest investor Astro, which owns around 95% in Askme Group.
In September 2014, Astro Malaysia hadinvested$5 million in Indianroots in Series B round of founding. The Malaysian firm had invested $40 million in NDTV Lifestyle in 2010 for 49% stake.
Rajya Sabha MP Subramanian Swamy recently wrote to Ministry of Corporate Affairs regarding Askme-Astro issue. In his letter addressed to Tapan Ray, he wrote,
“I urge you to intervene and ask the directors of the askme.com/Getit Infoservices not to proceed with winding up their company and throw out of work about 4,000 employees, but instead that government should consider to assist askme.com to buy out the 98.5% shareholding of Astro Overseas Ltd of Malaysia. As you know Astro Overseas Ltd. is already under a cloud both in the NDTV scam and more importantly in the Aircel Maxis scam in which I am the party in the Supreme Court that is monitoring the case.”
It’s common knowledge thatAstro’s India investmentshaven’t been great. Will Indianroots join the list of Astro’s failed business ventures too? Is this the reason why sellers aren’t being paid their dues? Will it meet the same fate as that of Askme?