Written By Reghu Balakrishnan

Mumbai: American private equity fund KKR & Co. and Wipro founder Azim Premji’s family office PremjiInvest have joined the race for acquiring fashion hypermarket chain Vishal Mega Mart, two people aware of the development said.

Source: livemint

The food delivery sector is on course to hit $1.5 billion by the end of 2018 and $2.5-3.5 billion by 2021 in GMV terms.

Written By Sulekha Nair

With Swiggy getting $100 million in funds and Zomato $200 million a week ago, the food delivery sector seems to be poised for growth again after a bleak couple of years.

From the latter half of 2015 through to 2016 and also the first half of 2017, a number of food-tech startups shut down. Remember TinyOwl, SpoonJoy, Eatlo among others? But the industry emerged with new learnings on account of several startups shutting down and with improved focus on consumer satisfaction and key geographic areas, said RedSeer Consulting.

Zomato and Swiggy have had steady growth throughout 2017 with improved operations by reducing delivery costs and time and innovations like cloud kitchen, said industry experts. The market has been growing steadily in the last four quarters and the consistent performance by Zomato and Swiggy has led to investor confidence and the investments, they said.

In the latter half of 2017, ride-hailing app Ola (owned by ANI Technologies) decided to get into the food delivery space again, this time around by acquiring German-firm Delivery Hero’s Foodpanda India. The pendulum seemed to be swinging positively since then for the food delivery sector in India.

RedSeer Consulting predicted the food delivery sector is on course to hit $1.5 billion by the end of 2018 and $2.5-3.5 billion by 2021 in GMV terms. The sector valued at $750 million is expected to grow well. The food-tech industry is growing at a 15 percent quarter-on-quarter rate and the players are moving towards self-fleet to have a better overall control on the consumer experience, it said.

Now Swiggy, the food ordering and delivery platform, has raised $100 million in Series F funding, its largest round yet. “With this funding, we will further invest in building differentiated offerings, plugging the white spaces in the ecosystem, and developing our technology while keeping superlative customer experience at the core,” said Sriharsha Majety, CEO, Swiggy.

A week ago, Zomato raised $200 million from Ant Small and Micro Financial Services Group, the Mint reported, valuing the company at about $1.1 billion.

“The amount invested in Swiggy and Zomato is significant and I am sure six months later, there will another similar amount being raised,” said Arvind Singhal, chairman and managing director of Teknopak Advisors. But Singhal predicts that six months later, there will another similar amount of funds being raised. “However, let’s not forget UberEats is also there. There are quite a lot of others too in the game but Swiggy, Zomato and Foodpanda currently lead the pack,” he said.

Is the food delivery sector looking bright again? Looks like the food tech sector is back in vogue, said Paula Mariwala, Partner, Seedfund and Co-Founder, Stanford Angels. With a lot of gunpowder now available in the hands of the major three players in the sector—Foodpanda, Zomato and Swiggy—growth is expected to be exponential. Mariwala is surprised though at the funding that food delivery startups have been getting recently. “I thought people are waiting and watching before investing in the sector. But for sure, the focus is back on profitability. There is a matrix put on profitability. I am sure the funds have been on a caveat. With the kind of funding given, I expect consolidation and focus on unit economics,” she said.

This is a moment for the industry to be more aggressive, said Rohan Agarwal, engagement manager at RedSeer Consulting. It will pan out in two ways. The market will grow beyond the top 5-6 metros and more markets will open up in places like Ahmedabad, Jaipur, Kochi, Chandigarh among others, he said. This will require capital and that is where the funding received by the players will help, he said. “The funding will be utilised in the expansion of the new markets and garnering higher volumes by innovating the model,” Agarwal said.

The three main players in the food delivery sector have now recapitalised and raised money. “Rightfully then, food reviews will be a big bet in India and those who are adept in terms of logistics, technology, etc will lead,” said Singhal. All the three players have technology in place in the context of merchandise and exclusive labels which distinguishes one from the other, he pointed out.

In fact, Zomato and Swiggy have been extensively using data and building cloud kitchen verticals. These are known as mini-kitchens that only service online food delivery where chefs from other partner restaurants can come and cook.

Though having deep pockets will help these players to scale up soon, it will widen the space between the competitors, said Harish HV, partner, Grant Thornton. But what is important is to provide efficiency and reach, he said.

Echoing Harish HV, Devangshu Dutta, chief executive, Third Eyesight, a consulting firm said, in the final analysis what the customer and the restaurant on board any of these food tech platforms are looking for is quick service and promised delivery on time. “If this promise is not delivered, having cloud kitchens or any other technology won’t help.”

Dutta says to call food delivery startups as tech startups is a misnomer. He says that they are basically in the logistics game.

What consumers can look out from the ecosystem is better pricing, variety and a wider choice and better or quicker and reliable delivery. Each food delivery operator will have to offer slightly different merchandise with brands and discount. There may be an overlap of restaurants and kitchens in all three food delivery startups but service will be the differentiator.

Source: firstpost

Written By Deepti Govind

Bengaluru: Wholesale retailer Metro Cash and Carry Pvt. Ltd, plans to aggressively promote its own brands to the hotels, restaurants and cafés (HORECA) industry, its fastest-growing customer base, as it targets doubling of revenue contribution from in-house labels.

Source: livemint

Written By Sagar Malviya & Shambhavi Anand, ET Bureau

MUMBAI/NEW DELHI: About two months ago, Future Group founder Kishore Biyani visited China to understand shopping behaviour during Singles Day, the biggest shopping festival in the world’s most populous country.

Biyani was part of the star-studded event that Jack Ma, the founder of Chinese e-commerce giant Alibaba hosted in Shanghai and included guests such as actress Nicole Kidman, singer Pharrell Williams and local celebs for its Singles’ Day sales extravaganza. The next day, Alibaba saw its sales hit new record of $25.3 billion.

Biyani wants to mimic that in India. “While we have launched the Republic day sale more than a decade ago, we have taken inspirations such as bringing celebs for live gaming show on Facebook and opening pop-up stores from Alibaba. The idea is to blend online shopping with offline stores, or O2O, which already accounts for 10% of our sales,” said Biyani, adding that he is targeting sales of over Rs 1,000 crore from the five-day mega discount event during the Republic Day week.

What started as a day-long sale occasion on the 26th of January back in 2006 has become a serious revenue generator for the Future Group, generating roughly 5-7% of its annual sales. The first year also saw a crowd frenzy which forced the company to call the police in to manage the situation.

This year, the retailer will also open Big Bazaar pop-up stores in about 50 cities and localities where it is not present and sell pre-book fast billing pass ahead of the event. Top ecommerce companies such as Amazon India and Flipkart are offering deep discounts in the first online sales event of the year starting Monday.

“When a company talks only about discounts, people will just look for deals. But when discount is combined with excitement and entertainment, it contributes to the sale event. This (Bigbazaar event) will lift it above just a discount mechanism,” said Devangshu Dutta, CEO at Third Eyesight.

Future Group said it plans to reach nearly 30 million customers mainly through a 24-hour live entertainment show on Facebook where about two dozen celebs will participate. It will also announce hourly exclusive offers and coupons to drive store walk-ins.

“The line between online and offline shopping is blurring in today’s retail environment. We are increasingly seeing live videos become an important medium for brands to interact with their consumers. “Sabse Sasta Din” campaign, will be one of the first 24-hour Facebook Live, making it a much bigger campaign this year,” said Pulkit Trivedi, director, Facebook India.

Over the years, brick-and mortar retailers have been investing in omni-channel strategies and experimenting with global models such as flash sales.

Source: economictimes

Written By Alnoor M Peermohamed

The move could mean that many startups would have major tax liabilities as the money they spend on marketing activities will no longer be considered a cost to the company

Consumer technology startups that spend a lot of money on buying customers through discounts and advertising could be in for a rude shock as the Income Tax department could ask them to begin classifying their marketing expenses as capital expenditure.

The move could mean that many startups would have major tax liabilities as the money they spend on marketing activities will no longer be considered a cost to the company. Right now, most consumer tech startups report this expenditure under marketing expenses that are deducted from their revenues, causing them to post losses.

The Economic Times first reported on Monday that Flipkart had lost an appeal against the IT department over the reclassification of marketing expenses and discounting as capital expenditure. The report stated that the IT department’s move could affect all large e-commerce firms in the country as well as startups.

“It’s a significant liability. If the tax department’s stance is taken, essentially marketing and discounting is an investment that goes into building a business and is not an operational cost.

If this happens it is quite likely that e-commerce companies would begin to show some form of profits on their bottom line,” said Devangshu Dutta, Chief Executive at Third Eyesight.

While the extent of tax liabilities will depend on how much a company is spending on marketing and discounting, firms which are operationally profitable could be taxed. Dutta says that in the case of e-commerce firms in India, the amount being spent on marketing could be anywhere between 40 to 60 percent of their revenues.

Flipkart’s main argument against marketing expenditure and discounts being classified as capital expenditure has been that there is no enduring benefit from the money they are spending. For instance, money spent on television advertising does not have any enduring benefits for Flipkart, making it a revenue expenditure and not capital expenditure.

“It’s going to get hard to differentiate between whether an expenditure made by the company is an enduring expenditure or not. It has to withstand the scrutiny of the court as well in the coming days, but this is going to be a significant issue,” said a legal expert from a reputed law firm who did not want to be named.

He added that if the IT department initiates such a kind of litigation it will have a marked implication on the industry as a whole and not just e-commerce giants such as Flipkart. The major contention of the hearing in the court will be to define what are the attributes of an expenditure to be classified as capital expenditure.

Source: business-standard