admin
March 5, 2015
Sagar
Malviya, The Economic Times
Mumbai,
5 March 2015
Reliance
Industries (RIL) has sought shareholders’ approval to make major
forays into the online retail space to cash in on the boom in
the country’s e-commerce market that is expected to grow four-fold
to almost $70 billion by 2019.
The Mukesh Ambani-run firm included a clause of "operating, establishing, providing and managing e-commerce and m-commerce websites, direct-to-home and mail order services for all categories of products and services, and dealing in all kinds of goods, materials and items in India or in any other part of the world" in a recent notice to its shareholders.
A Reliance Industries spokesman said the activities are closely related to the firm’s initiatives in retailing and digital services which are being implemented through substantial subsidiaries. "This will facilitate creation of value for Reliance shareholders by expanding the scope and breadth of offerings from these two businesses," he said.
The move is part of company chairman Mukesh Ambani’s wider strategy of placing its telecom venture Reliance Jio Infocomm, which is set to launch its 4G mobile and data services this year, at the intersection of "telecom, web and digital commerce" as he mentioned at the company’s AGM last month.
It comes at a time when e-commerce business is growing at a rapid pace in India, with players such as Flipkart, Amazon and Snapdeal luring Indian consumers by offering heavy discounts across products.
According to a joint report by Boston Consulting Group and Retailers Association of India, e-commerce market in the country is expected to quadruple to $60-70 billion, or about 3,72,000-4,34,000 crore, over the next five years. Increasing Internet access through affordable smartphones and efforts by online retailers to develop payment channels such as cash on delivery, mobile wallets and streamlined logistics infrastructure are expected to boost e-commerce growth in the country.
To shore up its nascent e-commerce business, Reliance is expected to reshuffle jobs within the group and not necessarily bring all outsiders. Recently, the group moved Anupama Ahluwalia from Reliance Jio into an expanded role in its retail arm Reliance Retail as chief marketing officer.
At present, Reliance Retail’s online presence is restricted to Reliance Fresh Direct that sells fruits and vegetables and home and personal care products through a virtual store. The company – which operates 2,285 stores across fashion, lifestyle, digital and food segment – dislodged Future Group as the country’s largest retailer by revenues earlier this year.
Experts say its deep pockets and existing retail logistics infrastructure will help Reliance in the e-commerce space.
"While online is a potentially large market, whether Reliance entry could be disruptive is still a question," said Devangshu Dutta, chief executive at retail consultancy Third Eyesight. "The e-commerce sector itself is getting cautious in spending money on marketing and discounting. While the stakes and capital requirement has increased, Reliance has an advantage of having a deep pocket," he said.
Though many retailers in India are struggling with falling store traffic as shoppers make more purchases online, food and grocery retailing still remains predominately insulated.
Yet, several retailers including Future Group and Aditya Birla Retail have either entered or plan to enter e-commerce space, especially when their stores network and warehouse could come handy to cut logistics costs and delivery time.
(Published in The Economic Times.)
admin
March 2, 2015
Varun
Jain, The Economic Times
New
Delhi, 2 March 2015
Want
to cook an exotic dish just the way Sanjeev Kapoor does it? Gurgaon-based
online grocer Meragrocer.com, which launched operations recently
and is endorsed by the celebrity chef, will soon start offering
a solution: you can order chef special recipe packs that contain
all the ingredients in the same quantity that Kapoor uses, along
with detailed cooking instructions.
Online grocers such as Meragrocer.com, BigBasket.com and LocalBanya.com are showcasing food recipes and blogs on their websites and selling all-in-one, do-it-yourself kits to engage the customer. They help the consumer pick the right ingredients at the right quantity at one go, to make their favourite food.
"These initiatives are more about sharing knowledge, ensuring consumer loyalty and creating a high brand recall," says Saurabh Chadha, co-founder and COO of meragrocer.com.
Bengaluru-based BigBasket.com is working on the same lines, too.
The way groceries are consumed have changed, says co-founder Vipul Parekh. Today there is a lot of interest in people wanting to try out new cuisine – once they know the recipe, they want to figure out how to cook it and start looking for ingredients. "We are servicing this need of our customers wherein they can see the recipe and then can buy the whole recipe on our site, instead of buying all the ingredients individually which is a difficult task," he says. "The idea is to give everything in the single box."
The importance of putting up recipes is to give the customers another way of shopping for grocery. According to Parekh, this is a channel which e-grocers are looking to exploit, and he is looking to build a full-fledged business around it. This trend is fueled also by cooking shows and food channels that are becoming increasingly popular, he says.
Godrej Nature’s Basket, the premium food retailer owned by the Godrej Group which has reportedly acquired online grocer ekstop.com, has a detailed recipe and food blog section. According to chief executive Mohit Khattar, the food blog and food facts section empowers consumers to learn about ingredients from the best in the business, while the recipe section not just shares easy recipes to recreate world food, but also enables customers to order all the ingredients simultaneously.
Devangshu Dutta, chief executive of retail consultancy firm Third Eyesight, says in India grocery is a category that the customer is willing to explore and experiment with. So any retailer, physical or virtual, that can present new product suggestions frequently can also avoid price-based competition and can look at sustaining better margins, he says. "A great vehicle to do this is to present recipe ideas, especially of cuisines that are unfamiliar, that is from other parts of the country, or from other countries. This can help the retailer side-step commoditisation of their product and service offer."
LocalBanya.com relies more on food blogs than recipes to engage with customers. It has also put up content on the website explaining the use of various ingredients which are not common to Indian households. "While we are selling a lot of rare ingredients which many our customers might not have heard of or maybe they do not know their use or the health benefits associated with them, we thought we have the opportunity to create content around them and educate people and at the same time drive our sales," says co-founder and chief operating officer Rashi Choudhary.
(Published in The Economic Times.)
admin
February 26, 2015
Sayantani
Kar, Business Standard
Mumbai,
16 February 2015
When
the million-square-foot mall broke into the concrete jungle in
2007-08, onlookers worried the local markets would find it difficult
to sustain. But the Indian consumer proved to be less brand conscious
than expected. The neighbourhood markets dodged the doomsday predictions,
and continue to coexist. But the destination malls took a toll
on their smaller brethren, especially in heavily-contested catchment
areas.
In the last two years, it has been reported that no less than 30-40 malls have downed shutters. But, even though thrice that number of malls have come up, retail analysts say most lie vacant because they don’t meet the criteria brands have. Standalone brands, anchor stores, restaurants and multiplex chains usually make up the tenant mix. What do brands, then, look for in a malls?
Devangshu Dutta, chief executive, Third Eyesight, a retail consultant, says, "Brands have to weigh whether they can be supported in a catchment area or not. If a rival brand is present, it could mean that it has primed the customer for the second brand’s merchandise." Delhi and Mumbai and their satellite cities have seen malls come up in the same neighbourhood, leaving brands to mull whether to jump ship or straddle both.
There is, of course, the set of hygiene factors. Brands agree that location is the most critical. As is the track record of the developer, its credibility and marketing skills. The layout of the mall, to allow the crowd to circulate evenly, and not get concentrate in certain pockets is important. The tenant mix, parking, accessibility and maintenance become more important as more malls vie for the same audience in larger cities.
Atul Chand, divisional chief executive, ITC Lifestyle Retailing, says, "Outdated malls with tired concepts have lost footfall to new developments. A brand would have to take a call on a transition in order to stay contemporary. Constant reviewing will also help decide whether stores in both can be viable or not."
Sadashiv Nayak, CEO, Big Bazaar, the hypermarket of Future Group, says, "If we have Big Bazaar in a town, say Nagpur, and another mall comes up that we would like to be in, then we turn to our other brands such as Food Bazaar or FBB (fashion store), as these are distinct from each other."
PVR, the leading multiplex chain, recently found one of the malls it was present in, in Mumbai’s suburbs (Mulund), decide to wrap up. Nirmal Lifestyle, a 500,00-square-foot mall, opened in 2003, could not keep up with competition. Sanjay Kumar Bijli, joint MD, PVR, says, "We did well, got a lot of support from the developer. We have no regrets but a competing mall came up in the neighbourhood and the footfalls shifted to it over a period of time. You can’t always help such a scenario. But we have tried to counter it where possible. A case in point being Whitefield in Bangalore. We are in the Phoenix mall and also in VR, coming up next to it. The malls’ positioning is different from each other. Phoenix caters to a large population in the upcoming suburb, while the PVR in VR would have more Gold Class theatres and IMAX."
Dutta says, "Brands need to see whether the developer identifies the customer and builds around it. Select Citywalk is doing the best among malls in Saket, Delhi, because it homed in on the South Delhi woman as its customer and actively curates the brands, even culling those that don’t click."
Nayak agrees, "We look whether the mall owner’s wavelength matches our customer-centricity or not." Chand says that a tenant mix with the same target audience, rather than a general mix, helps collectively woo the shopper to the mall.
Nayak says that with standalone stores outnumbering Big Bazaar’s mall stores, the strategy is agnostic of format. Big Bazaar has to be accessible by private vehicles and public transport because of the cross-section of audience, and have smooth movement inside, and have parking, washrooms etc.
Darshana Shah, senior vice-president, marketing and visual merchandising, Hypercity (Shoppers Stop’s hypermarket), says, "The financial viability is a big factor. Besides revenue share, developers also share the capex, especially in tier-II towns. Malls get in trouble when they sign up anchor stores but fail to attract smaller tenants and some of their floors remain empty." Chand reminds that "size matters because it means more categories to keep the consumer engaged, with but doesn’t work without requisite infrastructure."
Veteran retail consultant and founder of Trrain (Trust for Retailers and Retail Associates of India), BS Nagesh, warns brands to not cite e-commerce as an excuse, "Brands have panicked due to e-commerce competition and in malls, they seem to have forgotten the other elements that add up to their experience, and are only saying it is the price and going in for frequent sale. As a result, it has affected them and the malls. We see people in the food-court, so brands need to rethink ways to get them back to their stores. But you can’t devalue the brand just because of online competition. Online sales are around 5 per cent, while modern retail are 8-10 per cent, so why not look at the 85 per cent that is there for the taking."
(Published in Business Standard.)
admin
February 18, 2015
Varun
Jain, The Economic Times
New
Delhi, 18 February 2015
E-tailers
in India are coming up with products and offerings exclusively
for senior citizens, turning their attention to a category of
consumers that they had hitherto ignored in their rush to reach
the growing young population in the country.
Mumbai-based Rahul Upadhyay, whose Seniorshelf.com caters exclusively to senior citizens with mobility aids, toilet safety products and items meant for arthritis patients, said the venture was inspired by a personal experience when he went to visit his parents and then spent three hours looking for a blood pressure machine.
"It was just not available. That is when I realised that there is virtually no retail – online or offline – which is catering to the elderly while they are the most vulnerable ones. Despite having the means, senior citizens in India are mostly left to fend for themselves and in many ways the market has ignored them as a consuming class with needs of their own," said Upadhyay, who was encouraged by the growth of e-commerce business in the country to take the plunge.
A similar situation faced by the promoters of oldisgoldstore.com led to the opening of this south India-based online and offline company, which sells health care products exclusively for the senior citizens.
"There are over 120 million people over the age of 60 in India. That is more than the entire population of most of the countries in the world. With improved health care, more people are living longer and this is increasing the need for home health care as well. This means that there is a significant growing market for e-commerce players in this sector," said Sanjay Dattari, one of the three promoters of oldisgoldstore.com.
New Delhi-based Healthgenie.in, which started about two years ago and is in talks to raise $1 million (about Rs 6.2 crore) in funding, has a category especially for elderly health care. According to Manu Grover, founder of Healthgenie.in, whose family has been into manufacturing of medical devices for 50 years, the health care requirement of a person over the age of 60 years increases drastically.
"Combine this with better life expectancy and we can see the market size increasing and gaining a substantial foothold in the coming five years. But still there are not many e-commerce players in this domain who cater to the elderly," said Grover.
The lack of easy availability offline of the products required by senior citizens also provides a ready opportunity to such ventures. As per Upadhyay’s estimates, the e-commerce market for the elderly is barely 5% of the overall market that is estimated at Rs 10,000 crore.
"Hence there is a huge potential to leverage this gap and enable elderly access products and services regardless of which part of the country they live in," said Upadhyay.
According to Devangshu Dutta, CEO of retail consultancy firm Third Eyesight, products that are targeted at seniors will also be those that are not easily available through other channels, and therefore discounting pressures on the seller are less and the business can make healthier margins. "Provided consistent products, sensible pricing and excellent service, the consumer’s stickiness with the retailer would also be higher," said Dutta.
These e-commerce players have tied up with various medical services companies which provide doctors, nursing physiotherapy, diagnostics and equipments at home, to provide a seamless experience for the elderly. One such company, Portea, whose large portion of customer base is the elderly population, is also associated with e-commerce players catering to senior citizens.
(Published in The Economic Times.)
admin
February 5, 2015
Varun
Jain, The Economic Times
New
Delhi, 5 February 2015
India’s North-Eastern states are fast emerging as the drivers of growth for some leading e-commerce companies, which claim double-digit growth in the market after having overcome last-mile delivery challenges.
In this region, where hilly terrain and limited road and flight connectivity have posed hurdles for companies wanting to expand operations, demand for goods online is being fuelled by unavailability of certain products and the deep discounts being offered by e-commerce companies on a host of goods, including branded products.
Snapdeal’s VP – operations, Ashish Chitravanshi, said the North-East region is not only an important market for the company but also has the potential to be at a par with Delhi and Mumbai, in terms of business potential.
“The region is among the fastest-growing markets in the country for us. We have been steadily growing in double digits monthon-month in the North-East markets, with a steady increase in the number of orders from the region,” said Chitravanshi. “As we take our reach deeper into the region we anticipate this number to grow phenomenally.”
While Snapdeal services large parts of the North-Eastern region covering more than 1,100 pin codes, its rival, Flipkart, serves customers in over 80 cities in the region in partnership with logistics players eKart and India Post.
Flipkart has seen healthy growth in the region in recent years and is now scaling up its supply chain capabilities and support facilities to create a seamless shopping experience for customers there, a company spokesperson said, adding that the region has a relatively younger customer base as compared to the rest of the country and categories like apparels, games, music and books are popular.
Similarly, as much as 15% of Fashionandyou’s revenue comes from the North-East, said Manav Narula, its GM for marketing.
Sanjay Sethi, CEO and co-founder of ShopClues.com, said that though the percentage contribution to gross merchandise value(GMV) is in single-digits, the company expects it to grow to 10-12% in the years ahead.
Devangshu Dutta, chief executive of retail consultancy Third Eyesight, said taht due to logistical constraints, managing a network of physical retail points is cumbersome in the North-East, while e-commerce is at a specific advantage in this region, since it allows a virtually unlimited range of product offering to be presented rapidly to the customer at a relatively low cost.
India’s largest fashion e-tailer Myntra established its distribution centre in Guwahati a year ago, followed by a centre in Mizoram’s capital Aizawl. “When we started the Aizawl centre, it showed us 500% jump in sales,” said Ganesh Subramanian, head of new initiatives at Myntra.
For Myntra, a year ago, the North-East region was growing at 1.5 times the overall growth of the company and the business coming from this market is currently in line with the company’s overall growth, Subramanian added.
But it is not just mass e-commerce players who are seeing traction from this region. Specialty and niche players are also in the game to conquer this still untapped region.
Gaurav Singh Kushwaha, founder and CEO, Bluestone.com, an ejewellery company, said the region contributes to about 11% of the company’s revenue. Also, the average selling price from the North-East is higher than the average selling price from other non-metros, he said.
FirstCry.com, a retailer of children’s products that has four service centres in the region, of which the ones in Agartala and Guwhati are owned by the company, plans to add another two distribution centres in Silchar and Shillong in a few months, said founder and CEO, Supam Maheshwari.
The region’s difficult terrain has thwarted efforts to build roads and improve airline connectivity. This, in turn, has hindered growth of offline retail and availability of branded products. “It is the ideal use case for e-commerce where customers are not buying because of discount but because of lack of availability of options and variety” said Kushwaha of BlueStone.
Some e-commerce players see this region as a game changer if the logistical challenges are addressed.
Chitravanshi of Snapdeal explains, “The region forms 8% of India’s landmass and has only 4% of country’s population, which means the population is thinly spread across a largely mountainous area. This certainly presents a logistical challenge in terms of connectivity and cost involved to all e-commerce players.”
Vipul Sharma, director of ecommerce Association of India, feels that the development of IT infrastructure at a faster pace can really turn the tide for the region
(Published in The Economic Times.)
