admin
February 3, 2014
Vaishnavi Bala, Financial Express
Mumbai,
February 3, 2014
It’s
been close to two decades now but Levi Strauss India can’t
seem to get the right fit. The apparel maker is watching its bottom
line — losses in FY13 came in at Rs 161.7 crore — and
is letting go of stores and vendors. In a big overhaul over the
last 18 months, the iconic brand has shed more than 100 vendors
with the base down to just 30, and 40 unviable outlets have also
been shut.
“Price rises coupled with low consumer sentiment thus impacted demand in the marketplace resulting in higher inventories. Additional costs had to be incurred on discounting during the end-of-season sale and on consumer promotions to stimulate demand, significantly impacting profitability of the company. Similar trends were observed across all key listed apparel brands,” the company said in a filing with the Registrar of Companies.
In a competitive market, Levi Strauss wasn’t able to draw customers and was compelled to cut its losses. A director of Levi Strauss India told FE on condition of anonymity, “We have been ruthless in closing unprofitable stores and cutting down on our vendors.”
Clearly, Levi’s, which slugs it out with brands like Lee and Wrangler, hasn’t been a success is the mass segment and has scrapped its Denizen label; it has also phased out Dockers. As a result, revenues were lower by 34% in FY13 at Rs 485 crore in FY13. In the previous year, revenues had risen 24%.
But the Indian subsidiary of the iconic jeans brand isn’t giving up yet. “While we have shut 45 unprofitable stores, we have also set up 70 outlets over the past year,” the director quoted above said. That leaves the chain with some 400 exclusive stores.
The company said in an emailed reply to FE that it does not share any specific details of stores or financials in the country.
When Levi Strauss entered the Indian market in 1994-95, it was served by just a handful of vendors. “Over a period of time, the number of vendors increased since there was more product variety,” said Devangshu Dutta of retail consultancy Third Eyesight.
Bangalore-based Prateek Apparels, which started making jeans for Levi’s eight years ago, supplies roughly 40,000 units a month. “Due to a slow market we have seen some dip in demand and last year our monthly sales dropped to 10,000 units,” said the company’s general manager Shiva Prasad.
The US multinational acknowledged the weakness in the Indian market in its latest annual report. “In Asia, revenues declined due to stiff economic headwinds in the key markets of China and India, and the exit of the Denizen brand. We’ll continue to focus on key emerging markets, focusing on getting our business back on track in China and India,” the company said. About 16% of the company’s revenues comes in from the Asia-Pacific region, with China forming a large chunk of it, followed by India.
With consumer demand slipping in a sluggish economy, retailers are trying to survive by changing the product mix, right-sizing stores or closing down unviable outlets. Like other foreign brands in India, Levi’s is positioned as an aspirational brand but may have to change tack to attract value-conscious customers much the way Marks & Spencer has done.
(Sourced from Financial Express .)
admin
February 2, 2014
Tony
Munroe, Reuters
Mumbai,
February 2, 2014
The
Indian state of Rajasthan has barred foreign direct investment in
supermarkets, an ominous sign for global retailers who covet India’s
vast but fragmented retail sector if the country’s main opposition
Bharatiya Janata Party (BJP) comes to power nationally in upcoming
elections.
The BJP is considered to be more investor-friendly than India’s ruling Congress party but opposes foreign direct investment in supermarkets because of its impact on small shopkeepers. It unseated Congress in Rajasthan’s state elections in December.
The Associated Chambers of Commerce and Industry of India criticized Rajasthan’s policy reversal, made on Friday, saying it would "dent and shake" global investor confidence.
"If one party reverses the decision of its rival dispensation upon change of guards, the policy and political risks for global investors would definitely increase in India, scaring them away," D. S. Rawat, secretary general of ASSOCHAM, said in a statement.
In late 2012, the government of Prime Minister Manmohan Singh opened India’s $500 billion retail industry to foreign operators, allowing companies such as Wal-Mart Stores Inc (WMT.N) and Tesco Plc (TSCO.L) to own majority stakes in Indian chains for the first time.
However, India left it up to individual states to decide whether or not to allow foreign retailers.
So far, fewer than half of India’s 28 states have adopted the policy, making it harder for retailers to exploit economies of scale by setting up sourcing and cold storage networks that could serve stores in contiguous states.
Stringent local sourcing rules and worries that the policy might be overturned have also kept most global supermarket chains on the sidelines.
Polls show the BJP is on track to win the most seats nationally in elections due by May. However, no party is expected to win the 272 seats needed for an outright majority, meaning the biggest party will seek to form a coalition with regional parties.
TESCO IS LONE INVESTOR
Tesco, the world’s third-largest retailer, in December unveiled a relatively modest plan to invest $110 million in Tata Group’s Trent Hypermarket Ltd (TREN.NS) to open stores in the states of Maharashtra and Karnataka.
Maharashtra is home to the Indian financial capital, Mumbai, and is led by a Congress party alliance. Neighbouring Karnataka, where the technology hub of Bangalore is located, is run by a Congress government.
"We have noted the decision of the state government and will bear it in mind as we consider our future plans," a Tesco spokesperson told Reuters.
In October, Wal-Mart, the world’s biggest retailer, walked away from its partnership with India’s Bharti Enterprises to set up retail stores, citing unfriendly regulations. Wal-Mart still runs wholesale outlets in India.
Last month, the newly-elected Aam Aadmi (Common Man) Party government in New Delhi barred foreign supermarkets in the capital.
The Indian economy grew 4.5 percent in the last fiscal year, or less than half its rate in the years before the global financial crisis, and sluggish investment due in part to inconsistent policies has contributed to the slowdown.
"From any investor’s perspective – foreign or domestic – he is looking at how predictable the environment is in the future," said Devangshu Dutta, chief executive officer of Third Eyesight, a retail consultancy.
"The policy framework and the overall environment are not encouraging the foreign investor to take that call," he said.
(Additional reporting by Aditi Shah, Nandita Bose and Prashant Mehra; Editing by Kim Coghill)
(Sourced from Reuters.)
admin
January 28, 2014
Priyanka
Pani, The Hindu Businessline
Mumbai,
January 28, 2014
Oak Lawn Marketing, a subsidiary of Japanese telecom company NTT DoCoMo, is set to enter India’s burgeoning virtual retailing space through a tie-up with TVC Skyshop, which operates in the same segment.
Virtual retailing refers to companies selling products through television or print (magazines and newspapers). India’s virtual retailing market is close to ?2,000 crore and includes players such as TVC Skyshop, Indiatimes, Homeshop18, Shraddha Skyshop, Star CJ and the US-based GuthyRenker.
OLM, a $300-million media and branding company in which NTT DoCoMo
has a 51 per cent stake, is close to ink the deal with TVC Skyshop
in two weeks, after which Indian consumers can get access to “high
quality” Japanese products, said people aware of the development.
The company primarily focuses on home convenience, health and
beauty consumable, fitness and wellness products.
Sources added there will be some major equity infusion by OLM in the coming months. Interestingly, the deal is happening a time when NTT DoCoMo’s investment in India’s telecom space hangs in the balance. The company, which holds a 26 per cent stake in Tata Teleservices, is expected to take a call by March on whether to stay invested or exit Indian venture, according to some reports.
TVC Skyshop Managing Director Vinod Agarwal did not respond to an email sent by Business Line.
TVC Skyshop, which has investments from private equity players such as Samara Capital and Morpheus, currently sells apparels, electronic items and other consumer durables under its own label. After the tie-up, it will sell OLM’s two flagship products – Magic Mattress and Leg Magic.
For the Nagoya-based company, the tie-up will benefit from
understanding the market and the consumer mindset. Besides, there
are regulatory hurdles in terms of foreign direct investment,
said Devangshu Dutta of marketing and consultancy firm Third Eyesight.
“Payment through cards remains a major challenge for the online or virtual retailing industry. Companies like OLM do not have expertise in managing cash on delivery and reverse logistics. Hence, the tie-up will help the company avoid some painful and expensive learning curve that other companies have faced,” he added.
(Sourced from The Hindu Businessline.)
admin
January 27, 2014
Sadhana
Chathurvedula, MINT
Bengaluru, 27 January 2016
When graduate student Anupama Pasumarthy shops online, she says she is always disappointed by the recommendations.
“It’s tough finding clothes (which are always too large) or shoes (which are too small) in my size, and I don’t find stuff that’s similar. I used to shop online but these days I just go to the store when I want to buy something,” the 22-year-old says.
Tech-savvy millennials like Pasumarthy are the demographic that most fashion retailers target, but the problems she faces are all too familiar for anyone who shops online. To help retailers overcome this, start-ups like Stylumia Intelligence Technology Pvt Ltd, which offer artificial intelligence-based solutions for smart visual recommendations, have started to take off.
There are multiple start-ups globally trying to crack visual search. Visual search start-ups help companies enable their users to discover products online, based on photos of objects in the real world. In India, companies like iLenze (which raised $500,000 in funding last year) and SnapShopr (which raised an undisclosed amount of angel funding) offer visual search platforms.
Chennai-based Mad Street Den, which raised $1.5 million in 2015, also offers visual search, but its most used offering is a visual-recommendation engine, which sifts through catalogue data to show relevant recommendations to users.
With e-commerce booming in India, Singapore-based Visenze, whose visual search offering is used by companies like Flipkart, is setting up operations in India to cater to the demand.
Many visual search companies cater to multiple verticals, and have so far concentrated on consumer applications.
Started by former chief operating officer of Myntra, Ganesh Subramanian, and machine learning scientist Ram Prakash, who developed Quillpad, the first machine learning based language input for Indian languages, Stylumia is different. It focuses only on fashion, and using the same core technology, it is looking to help both consumers and businesses make data-driven decisions.
“We are developing a technology which takes natural images, videos, be it Bollywood videos or TV serials, whatever influences fashion, and decipher and extract fashion elements from that,” says Prakash.
The start-up then hopes to use this derived intelligence in two ways – one, to make smarter recommendations to consumers browsing for products and two, to give suggestions to fashion buyers and retailers what to buy and make, based on real world consumer-purchasing data.
Right now, Prakash says that decisions at fashion companies are made based on some analytics, but intelligence based on visual cues is missing.
“They look at the patterns and say this is doing well because this is a red colour T-shirt with a contrast collar, what they cannot do right now is look at the same red colour T-shirts with contrast collars which are not doing well. They do not have a way to see all the relevant data together. That’s another problem that we are trying to solve,” says Prakash.
Stylumia is set to launch its product in the first week of April. It currently has partnerships with retailers (which they it does not want to disclose before the product launch), says chief executive officer Subramanian. For now, it is using a team of four engineers to capture and label data but hope to automate this process very soon.
“There’s a lot of interest among both online and offline retailers in this space. Our aim is to provide the most accurate prediction of demand and our consistency will improve as we work with more retailers and brands and get more and more data,” says Subramanian.
Despite the progress in technology, unless there is an overhaul on the supply-chain side, real impact is difficult to create, says Devangshu Dutta, chief executive officer, Third Eyesight, a New Delhi-based consulting firm.
“Large retailers today are planning several months in advance and are structured in such a way that by and large it takes them several months to respond to any particular trend. Till you can address that, data is just data,” he said.
(Published in Mint)
admin
January 20, 2014
Ankita
Rai, Business Standard
New
Delhi, January 20, 2014
Here’s a small quiz on online versus brick and mortar retailers:
Think about it. For an average consumer, the choice between an offline and an online retailer was a matter of trade-offs. Till now. Even as we write this article many online retailers are moving in to occupy the space that was seen as the exclusive preserve for brick and mortar.
The fact is, e-retailers like Jabong, Myntra and Yebhi have been offering same-day delivery in their home locations for quite some time now. But none of these e-retailers offer a guarantee on such service. So when Amazon shook up the market with its ‘One-Day Delivery’ guarantee for a small additional cost of Rs 99 per order in December 2013, followed by Flipkart’s ‘In-a-Day Guarantee’ at Rs 90 per item, it became clear that the e-commerce battle has moved to last-mile delivery. Just recently, Snapdeal threw its hat into the ring with its ‘Same-Day Express Delivery’ at select locations with Tradus in tow in Delhi/NCR. While Snapdeal offers the service for free, Tradus charges anything between Rs 5 and Rs 25 depending on the distance between the buyer and seller. (For the record, under same-day delivery the product is delivered on the same date. One-day or 24-hour delivery means getting it the next business day.)
Evidently, with increasing competition in e-commerce space, delivery has become an essential factor after price and assortment. That said, charging for services like express delivery, while prevalent in many mature markets, is new in the Indian context. The fact that Amazon and Flipkart are putting a price tag to their delivery promise shows they are confident the service will find takers.
Admittedly, 24-hour-delivery is easier said than done. "The whole promise of e-commerce is convenience and a big part of convenience is fast and reliable delivery," says Amit Agarwal, vice-president and country manager, Amazon India. "The challenge is to provide fast delivery across wide range of stock keeping units across country, not just in select locations," he adds. Here the problem is, to quote Agarwal again, "an e-retailer cannot simply stock all the products as it can lead to redundancy of inventory."
But more of that later; first the disclaimer: In-a-day guarantee on delivery is currently restricted to select products, to the home-locations of the e-tailers and, in most cases, only on products delivered by their in-house logistics arms. The good news is, all these players are working to expand the service with a wide variety of products and by covering as many pincodes as possible.
Sounds ambitious and begs a few questions: How should an e-tailer plan inventory and move it across the pipeline so that it is delivered to the customer within 24 hours of the order being placed? What are the typical bottlenecks in the process? And last but not the least, can smaller online players afford that sort of investment?
Working backwards
To begin with, there are three key stakeholders in the e-commerce ecosystem: the merchants/vendors, the fulfilment centres/warehouses, and finally the logistics/shipment. E-retailers need to fully integrate each of these elements to keep the delivery promise. Now understand that the first two elements – the merchants/vendors and the fulfilment centres/warehouses – are inextricably linked. How you manage one determines your relationship with the other.
To cut the fulfilment time, e-tailers need to have their inventory close to the customer location. Given that a majority of the e-retailers are moving towards an inventory-less model, this is a tough call. So what Amazon, Flipkart or Snapdeal are doing is shipping products from company-fulfilled sellers. A company-fulfilled seller is a merchant who keeps his products in the e-retailer’s warehouse and takes advantage of the latter’s fulfilment services such as quality checks, packaging and logistics services. But that also means someone in the chain is holding the inventory, which adds to the cost. According to various estimates, warehousing and inventory can add about 20 per cent to the e-retailer’s supply chain.
Again, inventory ageing is a critical issue e-tailers have to grapple with. Many e-commerce companies try to reduce their inventory exposure by opting for the sales-on-return or SOR method. Under SOR, an e-commerce company buys an item from a supplier with the understanding that if the product is not sold within a stipulated time, the supplier will take the item back. "To enable express delivery, e-retailers are exploring the opportunity to work on an SOR basis. This is the essence of a just-in-time production strategy that strives to improve a business’ return on investment by reducing in-process inventory and carrying costs," explains Priyesh Jain, founder, Shopuli.com, a Mumbai-based multi-retail online store.
To minimise inventory holdings, but at the same time retain control of shipment of products, some e-retailers are also stocking products in the vendors’ warehouses. However, most retailers that follow the inventory-led model buy stock in advance. While this ensures higher margins it can also push the e-tailer into the unsold inventory trap – one reason why many e-tailers have moved to the marketplace model over time.
Moving forward
Whatever the business model-be it a managed marketplace, an inventory-led model, or a mix of both-the fulfilment centre has to be structured in such a way that the product is handled to the courier partners with a few hours of the order.
Flipkart, which moved to marketplace last year, mapped the supply-chain extensively to help the delivery partners and sellers pin down the exact location from where a product is shipped and the amount of time it takes for each item to move from one stage of the order process to the next. "We have worked with merchants, vendors and courier partners on optimisation of these processes to reduce timelines, keeping in mind the reliability and overall lead times," says Ravi Vora, senior vice-president, marketing, Flipkart.
Snapdeal, a managed marketplace, is able to offer same-day delivery in Delhi/NCR by training its merchants on the importance of keeping the right stock. "We have to cut significant time at the merchant and the courier level," says Saurabh Goyal, vice-president, supply chain operations, Snapdeal. "Currently we are able to ship 90 per cent of the products in 24 hours, but that 24 hours had to be cut down to fulfilling orders in two hours to enable same-day delivery. Courier boys also need four hours to deliver. That means cutting 50 per cent time at the courier and merchant partner."
"Fast shipping service in a marketplace requires merchants with deep SKUs, which means tying-up with merchant who stock similar products in large quantities," says Sanjay Sethi, co-founder and CEO of Gurgaon-based online marketplace ShopClues, which currently delivers 10 per cent of the order volume the same day in Delhi and NCR.
Gurgaon-based Jabong, which started same-day delivery in July 2012, is able to deliver the product at its home location the same day if order is placed before noon. For cities like Mumbai and Bangalore the cut-off time is 5:00 pm to get the delivery the next day. The service is only for products serviced by JaVas, its logistics arm, which also services other e-commerce companies. Jabong, which operates two models – marketplace and own-inventory – does not provide express shipping for products sold through its marketplace. "We mention on each product if it is provided by a partner or by Jabong. Though Jabong doesn’t gurantee, 70 per cent of the orders are delivered the same day," says Praveen Sinha, co-founder and managing director, Jabong.
Sinha says the biggest pain point for Jabong was the customer verification process. "We realised it was the most time consuming. It was important to arrest fraudulent transactions. So we worked on a system to enable faster telephone and credit card verification. We are able to do it in 10 minutes of the order placement," he adds.
Tradus, on the other hand, leverages the ready stock at traditional offline retailers to offer same-day delivery. Says Mudit Khosla, CEO, Tradus, "To launch our express service, we went on a drive to enroll real world sellers/retailers who have ready stock. Hundreds of such sellers have been trained to deliver nearly a lakh different products the same day." Orders received by sellers from select markets in New Delhi like Chandni Chowk, Nehru Place etc are picked up by delivery teams by afternoon and delivered to buyers the same day. Tradus has also invested in technology to ascertain the location of the buyer and calculate the distance between each buyer and the seller to arrive at an accurate delivery fee and time required for delivery.
Bangalore-based e-retailer Myntra, which has two warehouses in Bangalore and Delhi, delivers half of its shipment within 24 hours in these cities. To enable this, Myntra uses advanced queuing algorithms, which reduces the time an order comes and the time it goes to the shipment company. It has also invested in remote handheld devices at the warehouse level. "Nobody moves around with papers to pick up goods these days," says Ganesh Subramanian, chief operating officer, Myntra. "Everybody in the warehouse receives orders on their remote handheld devices, which automatically tells the location and the availability of the product in the warehouse. On an average, there is a 50 per cent reduction in fulfilment time at the warehouse and in shipment. So we can process an order in two hours against the average of four hours," he adds.
Many e-commerce-focused logistics players are also offering inventory management and warehousing solutions to enable express shipping. For instance, some merchants and marketplace players use the warehouses of delivery company Delhivery to stock products. The logistics company currently has three fulfilment centres in Delhi, Bangalore and Mumbai. "Delhivery provides a unique solution to clients to enable 24-hour delivery," says Nikhil Agarwal, vice-president, fulfilment at Delhivery. "There is full integration with the seller – the product is already in our warehouse before the customer buys it. We use tablets and mobile apps to help quick pick-up if the stock is not in our warehouses. For cash on delivery we are able to return the cash to the client (the e-tailer) within 24 hours."
Outbound traffic
Inbound and outbound logistics alone can add 40-50 per cent to the e-tailer’s total supply chain cost. So getting it right figures high on their agenda. Most e-retailers offering in-a-day or same-day delivery service – such as, Amazon, Flipkart, Jabong and Myntra – do it through their in-house logistics arms, while some others like Snapdeal and ShopClues have roped in third-party courier partners (3PLs).
Everyone agrees the easiest way to handle this is to have your own logistic arm. Jabong’s same-day deliveries are handled by its logistics arm JaVas. Myntra uses its own logistics arm Vector E-commerce to handle two-thirds of its product shipping. Amazon says it is able to cover slightly less than 50 per cent of the customer demand under its ‘One-Day Delivery’ guarantee because it has been able to replicate its global logistics solutions in India. Marketplace major Snapdeal uses services of 3PLs for all its deliveries, including the same-day ones.
While routine shipments are typically done on a first-in-first-out basis, in the case of urgent shipments e-retailers often have to press additional resources into service. "This additional cost should be seen as a customer acquisition cost," says Devangshu Dutta, CEO, Third Eyesight. "Till year before last, crores of rupees were spent on advertising; if you look at the last six months e-commerce firms haven’t spent very much. Some of that cost is getting shifted to alternative means of customer acquisition like in-a-day delivery," Dutta adds.
As you can see, the advantages are blurring between online and offline retail. Same-day delivery is certainly the Holy Grail, though it involves an awful lot of homework and investments.
To make it a sustainable business strategy and put down the costs, the key point is to invest in robotics and technology. Take the Amazon’s model in the US. In March 2012 Amazon purchased Kiva Systems, a specialised maker of robots that services warehouses. We can already imagine Amazon’s warehouses: robots going from bin to bin picking out and picking up products to the shipping department. This process should bring down Amazon’s cost of shipping in a noticeable way and speed it up as well. By using automation at the e-retailers’ fulfilment centers, you can improve how you pick, pack and stow.
Analysts also say, it is still not viable for the smaller online retailers who probably can’t compete with the big dogs on speed. What should they do? Work on their overall value proposition perhaps and look out for services that can add to the shipping experience. Not easy, but must-do.
5 STEPS TO SAME-DAY DELIVERY
To execute same-day-delivery e-retailers need to take a cross-functional
approach that involves thoughtful planning, IT investments and
close ties with transportation partners.
HERE ARE SOME KEY STEPS:
(Sourced from Business Standard.)
