Flipkart-Walmart deal fails; Jabong’s fate hangs in balance

A week back, IOS carried a news report about a possible partnership between Indian ecommerce leader Flipkart and American retail MNC Walmart. But the deal talks have failed according to fresh news reports.  

The retail giant’s plan was to invest around $750 million to $1 billion in exchange of a minority stake in Flipkart. The etailer too was looking to overpower its strongest rival Amazon in the ecommerce war with the help Walmart. But now these plans are not likely to materialize.

Were Flipkart’s inconsistent financial reports the deal-breaker?

Speculation is rife that the deal failed after Walmart conducted an audit and found discrepancy between Flipkart’s actual financial figures and the ones the company communicated to the retailer.

There are no official statements or facts to substantiate this speculation. But the last time when such rumours came out (Jabong’s former executives under scanner for corporate governance violations), it turned out to be true.

Interesting thing to note is that Jabong, which was on-sale for a long time was eventually acquired by Flipkart and not the front-runner Snapdeal. People had then questioned as to why Flipkart was interested in buying a debt-and-violations-ridden company. Now the marketplace itself has not come out clean in an audit conducted by Walmart-PwC.

Also, Flipkart’s chief financial officer Sanjay Baweja too suddenly quit. Some say he was fired, after the audit report came out.

Speaking of Jabong, what’s happening on that front?

It has been 3 months since Flipkart acquired Jabong but it’s still not clear if the fashion etailer would merge with Myntra or Flipkart, would it function separately and would it shut down.

Top executives say that Jabong is presently in its testing phase and its fate entirely depends on the health report of the etailer post the test phase.

“Jabong is currently in a test phase. Is there a need to maintain two separate fashion brands, with Flipkart too looking to sell fashion aggressively? That is being evaluated,” a company executive revealed.

There are also reports that the online marketplace would shut down the newly acquired fashion firm by mid 2017. However Myntra’s CEO Ananth Narayanan has refuted such claims and said that a tech merger between Jabong and Myntra might happen, while both maintain separate identities.

“There are no plans to shut down Jabong. The current Jabong systems are all legacy systems, so in the long term, having the Myntra backend, even if we keep the storefront different, (will help) scale better. In six months from now for sure we will do that,” said Narayanan.

Pepperfry bitten by brand bug; Launches in house modular kitchens brand for higher sales

Brands seem to be the new thing on the online retail block. Myntra’s pushing private brands. Snapdeal rebranded itself and Craftsvilla decided to launch in-house brands this season. All these efforts in name of acquiring sales and reaching profitability.

The online furniture segment is no different. Urban Ladder is also rebranding to bring in more customers and achieve profits. To make sure it isn’t left behind Urban Ladder’s rival Pepperfry also launched a brand.

Mangiamo by Pepperfry

Recently, Pepperfry launched a house brand for modular kitchens called Mangiamo. This is expected to push total sales upwards and boost margins. In one year, this brand is anticipated to account for approximately one-tenth of the marketplace’s house brands business, claims Pepperfry co-founder and chief operating officer, Ashish Shah.

House brands basically comprise of brand names used by a retailer for a specific product line created by the retailer and sold at a low price in comparison to other brand products.

Pepperfry’s Mangiamo has a price tag that ranges from Rs.75,000 to 14.5 lakhs. It is now available in Delhi, Bengaluru, Mumbai and Pune.

The homegrown online furniture company already owns seven private brands – Woodsworth, Mintwud, Casacraft, Amberville, Bohemiana, Mudramark, Mollycoddle and Primorati.

How is Pepperfry achieving this?

Pepperfry has teamed up with Evershine, a Bengaluru-based manufacturer and Rawat Brothers manufactures from Pune to build modular kitchens for its Mangiamo brand.

It has also partnered with businesses that manufacture, design and developed its house brands. These presently account for 40-50% of its entire revenue and makes up around one-third of the units listed on the marketplace.

Homelane is another partner of the company. It specialises in modular furniture services.

Shah says, “There is a nuance to the modular business and you cannot sell a single piece without consulting. If an online company has to do kitchens, it has to have significant muscle on ground. We have 11 studios so far and will have nine more by the end of this year. Customers meet our design consultants here, show us a basic layout and we make suggestions.”

What is the modular kitchen market worth?

In India, the modular kitchen market is expected to be somewhere at about 6,000 crores by 2020 from its current Rs. 2,500 crore position, experts state.

House brands could contribute to varying margins of 30 to 60%. Mangiamo, on the other hand, is expected to bring in at least 40% margins, claims Shah.

He adds, “We do not market house brands differentially on our marketplace. Our business is about democratizing choice for customers. We have always spoken about variety. The new listings in the marketplace will far exceed the private brands. I can empanel many more sellers every month. The idea is to have national brands, regional brands and house brands on our marketplace.”

Since the average ticket size is larger than the average order value, there is a noticeable rise in sales and revenue earned. The average ticket size for furniture is Rs. 3 to 5 lakhs compared to an order value of Rs, 15,000 to Rs, 20,000.

Private labels and house brands trending among etailers

Most etailers choose private labels or house brands in India nowadays like we’ve already discussed. This is especially the case among fashion and lifestyle categories and this is due to the high margins they bring. Myntra claims private brands bring in 25 to 30% business.

Amazon’s fashion category is also including exclusive fashion labels. Zivame the online lingerie store is focusing its brand.

Alibaba Groups Global MD meets Nirmala to discuss ecommerce

Chinese ecommerce major Alibaba Groups Global Managing Director K Guru Gowrappan today met Commerce and Industry Minister Nirmala Sitharaman to explore investment opportunities.

Huge opportunities exist for such big firms to invest in the country’s e-retail sector, an official said.

As per policy, 100 per cent FDI is permitted through automatic route in the marketplace format of ecommerce retailing.

However, foreign direct investment (FDI) has not been permitted in inventory-based model of ecommerce.

Alibaba.com has been operating in India since 2007. The marketplace had around 6 million registered Indian buyers and sellers as of early 2016.

Flipkart Lite contributes to heavy conversions; 70% to be exact!

After putting much time and effort into its Lite mobile variant, Flipkart is beginning to see significant results. The etailer says it has seen a 70% spike in its conversion rate after comparing Flipkart Lite with their previous mobile website in terms of actual purchases. It claims its efforts over the past year helped it get here.

The efforts are far from over

The online marketplace is definitely happy with the outcome of Flipkart Lite. However, it still has plans for an even better interface. The aim behind this project is to make the mobile experience as amazing as the native application revealed Amar Nagaram, vice-president of engineering at Flipkart.

His team is working on making Lite look and feel the same as the native application as well in terms of features. They are currently working on a feature that reads an authentication PIN sent to mobile phones without the need for users to type it in. The etailer calls it SMS capture.

To further develop the interface Flipkart like is working on a few technology-driven aspects. These efforts are intended to improve things for consumers using low-end phones and those in slow network regions.

Nagaram said Flipkart is working on improving load time with a feature it calls accelerated mobile pages.

“Our initial estimation is that it will bring down the load time by almost 70%,” he mentioned.

This feature is used by static news websites and is being implemented by an ecommerce platform for the time. This will be a task as ecommerce portals are very dynamic because product prices, stocks and availability change continuously and quickly.

With regards to the small screen interface, Nagaram said there wasn’t they can do. But they certainly will work on the ease of use.

Where does most of Flipkart’s traffic come from?

Flipkart divides its ecommerce traffic as follows:

• 70% traffic from mobile app
• 15% traffic from desktop website
• 15% traffic from mobile website

The online retail portal also said Flipkart Lite has brought 12% month-on-month traffic growth. It further states that the increase in traffic to Flipkart Lite is not a result of cannibalization but due to the addition of new users to its existing user base.

Last year, Flipkart was planning to follow Myntra with an app-only approach. The company’s ‘Project Shaw’ initiative to go mobile first was led by Punit Soni, the Chief Product Officer. The initiative was looking at shutting down the desktop site last September. But being unaware of how this would affect big ticket categories the etailer put its app-only plans on hold.

Once the etailer develops its mobile features for online buyers will it consider the app-only approach once more? Also, will the etailer look into seller apps and other selling features soon?

Indian Railways devises a warehousing & delivery scheme to aid ecommerce logistics

Limited infrastructure has always been an obstacle to ecommerce in this country. But with the realisation of the potential of this industry various steps are being taken by government bodies to reduce difficulties.

India Post has been aiding online retail in the delivery department for a while now. It has been strengthening ecommerce by taking on product delivery to remote locations in the country. The world’s largest postal network is even piloting same-day delivery to help quicken their logistics.

Another government-owned body willing to help the ecommerce community is India’s Railway Ministry. According to reports, etailers like Snapdeal, Flipkart and Amazon will soon be allowed warehousing and pick up points at different railway stations in the country.

Railway warehousing scheme for ecommerce

To minimise the troubles etailers have with storage, the Railway Ministry is putting together a scheme to lease abandoned buildings and other spaces near railway stations to online retailers, claims a senior official on the Railway Board. The official also states that the non-fare revenue cell of the Board is communicating works of this plan to ecommerce companies.

What to expect?

The above mentioned official say, “Presently, we see a huge gap in the market where ecommerce companies are unable to get spaces in the city because the cost is too high.

“We are offering them our abandoned building and other spaces to set up warehouses and pickup points, that too at a cost-effective price,” he further mentions.

This move is expected to:

• Make railways an end-to-end logistics provider
• Monetise railway real estate
• Cut down delivery time for online retailers

The warehouse and pick up points will mainly be in big cities where the demand quick delivery is high.

A win-win situation

The Railway Board believes this scheme will be mutually beneficial to the retail segment of ecommerce and also itself.

KPMG partner Jaijit Bhattacharya says, “Railways offer a cost-effective solution to ecommerce by allowing them to set up pickup points at stations. With this, railways would also become a part of the growing logistics supply chain of white goods, hence getting additional revenues.”

He adds, “It’s a win-win situation for both railways and etailers.”

EY and BCG have been asked to join in and work on the preparation of this scheme, which will soon be announced says the Railway Board official.

Encouraging this scheme

Right now, only India Post uses railway leased spaces. However, with the introduction of this scheme etailers will have access to these storage spaces as well. To encourage them to use the railway network for transportation of parcels, a sweetened deal is being proposed under this arrangement.

Space near small cities will be available to etailers and new-age courier companies too. These locations can be used to set up hubs for efficient and quick product delivery everywhere.

“The companies could have more efficient supply chain once their warehouses and pickup points are in the middle of the cities. They could also set up hubs in small cities through our rail-side warehouses,” the official informs.

In addition to the revenue from warehouse lease, the railways will receive freight revenue too. Currently, 90% of white commodities are moved through roadways. The launch of this scheme by the Railway Ministry could change etailer’s requirements for road transport.

Why you must use more technology in your online sales

The history of sales has changed drastically through the ages, and a few ideas have changed the process forever. When Amazon created the first online store in the 90s, The idea was simple – instead of bringing customers to the store, bring the store to the customers. This meant saving resources on inventory storage and display and more space to showcase a larger inventory size, even the eclectic, niche items.

Soon, online selling took off like wildfire – Amazon expanded from selling books online to other products. ebay developed the same idea to come up with an ‘online garage sale’ concept. Today, online buying and selling is a common phenomenon in every household. We prefer buying online through stores like Flipkart and Snapdeal, rather than going to a physical store.

Of course, looking at the other side of the spectrum, we are also starting to prefer selling online through these stores, rather than from a physical one, right? This is because we get a chance to earn more, by actually investing less. Since our selling process is based on harnessing technology, doesn’t it make sense to intelligently employ technology to improve our sales. Allow us to give you 4 irrefutable reasons that will convince you to employ cutting edge technology in your online sales.

Why Go for technology in your sales process?

1. Technology Helps You Save Time

There are a lot of sales tools available in the market that help you do the more mundane tasks quicker – the best examples are sales and inventory management software. These software automatically collect and format your sales data across multiple channels and store it in one database, saving loads of time. Apart from that, you can purchase tools that specialise in managing and editing your online catalogues. Technology also helps you reduce the processing time on your orders. Your barcodes and shipping labels can be automatically printed a press of a button. This works wonders in saving your inventory dispatching and invoicing time.

2. Technology Increases Efficiency and Reduces Mistakes

Of course, just speeding up your process is not enough. To be successful with your sales you also need to focus on reducing your mistakes. We have seen so many cases where vendors make simple errors like mixing up SKU codes or copying/pasting the wrong product information. Technology at your service again – use automated customer database management systems to track and save all your customer data. It also means having a system that can reduce copy pasting errors and efficiently recalls data when required. Why do it the hard way if you can do it the smart way?

3. Technology Helps You to be More Professional

Like it or not, technology is the way to the future. As an online business owner, professionalism is how you will achieve respect and trustworthiness with the customer and even score brownie points in terms of the all important seller ratings. We recommend using customer relationship management or CRM software, to bring more professionalism in your sales game.

These software are specifically designed to store all the relevant shopping data of a particular customer, from their shopping history to items that they might be interested in. You can then employ the software to have a more personal, customised touch to your service and send timely emails automatically to your customers regarding the status of their purchase. This is a great way of achieving customer loyalty.

4. Technology Helps You Make Smarter Decisions

Using the right technology gives you an incredible amount of analyzable data. You can track your professional online presence and customer interactions on all your sales channels and pull out valuable data such as peak sales timings, location and channel wise sales that go a long way in helping you strategize business for the future. Apart from this, it can help you clear your lines of communication between your customers and your coworkers. While the right inventory management software can give you excellent data and analytics, you could also choose to use more specialised sales analytics tools that delve deeper into your online presence as a seller and match it with the current market trends and patterns.

All in all, there are so many tools out in the market for you to employ in your online sales business. Your job is to choose wisely and decide which tools you want and which you don’t

Urban Ladder shifts focus to quality and customer experience with rebranding exercise – sets sights on profits

Leading furniture online retailer Urban Ladder has big plans. It plans to move away from its marketplace model and establish itself as a brand. Towards this end, it has applied for a single-brand retail license.

Ashish Goel, co-founder and CEO explains the company’s two-pronged approach, “One piece is partnering with product brands which are operating in the broader space that we are operating. The other is point of sale partnerships with retail stores.”

What’s on the agenda

The company plans to take the following steps in its rebranding:

• Three experience centres in Bangalore in the next few months,
• Pop-up stores (temporary stores),
• Alliances with furniture stores (where the company has its own stalls),
• A new logo and a new tagline ‘Let’s create’, and
• Reducing the number of products sold to 3,000 to 3,500 in the coming year.

Sanjay Gupta, chief marketing officer explains the reasoning behind ‘Let’s create’, “The idea is to convey the message that Urban ladder will bring back the joy of creating, starting with your homes. We call it Let’s Create, where we create homes that reflect the consumer as an individual.”

On the experience centres, Goel said, “We think of offline stores as brand experience stores, with a 3,000-5,000 sq ft format. Each of these should deliver distinctive revenue profiles.”

On its way to the top

Urban Ladder already has its store on Amazon and Flipkart. Goel said, “Multiple customer segment identification is the key. Somebody else can own the distribution channel—for instance, Amazon and Flipkart.”

The company had already announced its intentions to attain profitability through customer engagement. Urban Ladder counts Ratan Tata, Sequioa Capital, and Kalaari Capital among its investors.

Goel said, “The only thing that we will do over the next three years is, improve access while keeping the brand vision, quality and customer service controlled in-house.”

Ecommerce companies are increasingly coming up with physical stores. The intentions are to capture non-tech-savvy shoppers, reach out to smaller towns and rural areas and widen their footprint.

Prime Minister’s Office attempts to resolve Etailer complaints about taxes & restrictive policies

By 2020, the ecommerce industry will be raking in the big bucks. A NASSCOM report stated the country’s online shopping segment will take up 2/3rd of the ecommerce market by then. Morgan Stanly said the country’s ecommerce market will be at $119 billion in 2020.

Etailers are looking forward to this and so is the government. The Indian government sees potential in this segment of business. It believes ecommerce can create more jobs for small time entrepreneurs who find traditional business to expensive to initiate and manage. And the best way to start an ecommerce business is by selling on online marketplaces. But, when issues arise plans for the future come to a grinding halt.

Addressing ecommerce complaints

On Thursday, online different issues pertaining to ecommerce companies were addressed. Top officials met at the Prime Minister’s Office (PMO) and discussed complaints etailers have about current rules and how they are too restrictive. Also, the pending drafting of a long-term plan for employment generation sector by NITI Aayog committee was discussed.

A government official who attended the meeting revealed, “There are a number of issues confronting the sector, including foreign investment, taxation.”He continued saying, “The idea was to take a stock.”

Under the NITI Aayog chief executive officer, Amitabh Kant, the government already established a committee to review ecommerce company issues and ecommerce policies. But the PMO got involved in the matter when ecommerce players went to numerous departments several issues due to the non-existence of a single regulatory body or nodal ministry.

What issues were discussed during the meeting at the PMO?

The issues raised included: like marketplace curbs, taxation and offline-online conflicts.

Taxation

Taxation has become a main problem area for online marketplaces. Inter-state government taxes being the major restrictive problem they have to deal with. States like Gujarat, Bihar, Assam and Rajasthan have implemented entry taxes on goods coming from other states. Some also plan to impose VAT in addition to service tax imposed by the Central government. In Uttar Pradesh and other states consumers must file declarations with the VAT department in the state for purchases exceeding Rs. 5,000

Etailers say they are merely facilitators and should only have to pay service tax.

Foreign direct investment policy

The FDI policy laid down by the Department of Industrial Policy and Promotion (DIPP) in March, was discussed. The policy framework aims to level the playing field between online and offline businesses. But to do this it prevents price influence through discounts and a single seller on an online marketplace from making more than 25% sales.

A report must be submitted in a month’s time by the NITI Aayog committee. The report must spell out a framework and provide predictability to overall sectoral policy.

The NITI Aayog committee is expected to submit its report in a month’s time, spelling out a clear framework and bringing about predictability in the overall sectoral policy.

Does this mean Indian ecommerce is one step closer to forming a regulatory body?