Amazon India, and Flipkart Beat a New Path to Customers’ Doors

New rules for e-commerce in India framed by the Department of Industrial Policy and Promotion  bar any one merchant on sites such as Amazon, Flipkart or Snapdeal from accounting for 25 percent or more of total sales.

The rules also stipulate that “e-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain a level playing field.” Perhaps, the  “big sale day” strategies are over.

Yet, even before these rules were announced, both Amazon and Flipkart had begun reaching out to customers in small towns, and Tier II and III cities with a new message : trust, convenience and easy returns, which is replacing the discount offerings that these companies have always relied on. With the e-commerce industry set to cross the Rs 3,800 crore mark by the end of this year per the Associated Chambers of Commerce and Industry of India estimates, the online marketplaces are vying for more attention from these towns.

Both companies claim that in trying to widen their base of customers they are focused on converting the older generation into online shoppers. Their ad campaigns – Amazon’s ‘apni dukan‘ (your own shop) and ‘Flipkart matlab bilkul pakka‘ (Flipkart means quality assured) – are geared to capture customers’ trust and loyalty.

The convenience of shopping at home with the option of accepting cash on delivery appeals to consumers in the 18-25 years old category. However, the generation, which is slightly older, is where the opportunity lies. And they need a different story, if they are to be brought online, says Business Standard.

“The Indian e-commerce space is still at a very nascent stage with significant potential for innovation and growth,” said an Amazon India spokesperson. As the new campaigns indicate, nothing will be left to chance when it comes to converting this potential into reality.

April 11, 2016   No Comments

E-commerce Startup ShopClues, India, Valued at $1 Billion

A Series E funding by Nexus Partners, Tiger Global and GIC, the Singapore government’s sovereign wealth fund, has raised the valuation of the e-commerce company ShopClues to $1.1 billion. Headquartered in Gurgaon, India, the company was founded in California’s Silicon Valley in 2011.

ShopClues logo

This new “unicorn valuation” puts ShopClues in the same league as competing Indian e-commerce companies Flipkart and Snapdeal, reports TechCrunch. All three of these companies, as well as Amazon India, offer a wide range of products, but ShopClues is focusing on price-conscious consumers in smaller cities that are often overlooked by online sellers.

“We are targeting the kind of shoppers who are now coming online and who you will see more of this year and next,” co-founder and chief executive officer Sanjay Sethi told TechCrunch.

While keeping margins sustainable, ShopClues is able to offer low prices by serving as a platform for merchants instead of carrying its own inventory. Part of its Series E round will be used to improve its cloud-based e-commerce tools and attract more small businesses. The company currently provides capital loans and logistic and online payment tools.

It expects to hit profitability by the first half of 2017, which is also when Sethi says the company plans to list on the U.S. or Indian stock market.

January 17, 2016   No Comments

Government Infrastructure in Rural Areas to Boost E-Commerce in India

A strategic component of the India’s  National eGovernance Plan consists of setting up Common Services Centers (CSCs). These centers are ICT enabled front end service delivery points at the village level for the delivery of government, financial, social and private sector services in the areas of agriculture, health, education, entertainment, consumer  products, banking, insurance, pension, utility payments, and more. The CSC project has been implemented in a public private partnership framework with a focus on rural entrepreneurship & market mechanisms. 100,000 such centers  have already been set up and the government plans to add another 90,000 by  the end of Q1 2016

E-commerce players usch  Flipkart, Snapdeal, Infibeam and Paytm now intend to  reach remote areas of the country with the delivery and other services. India’s Ministry of Communications and Information Technology wants to connect e-commerce companies with its common service centers in villages to not only help CSCs earn revenue but also generate employment by facilitating development of ancillary industries such as handicrafts, textiles, and others.

Activities at Common Services Centers

Activities at Common Services Centers

Rural India is a large untapped market for consumer and electronics goods for e-commerce. According to a report by AC Nielsen, the consumer sector in rural and semi-urban India will cross $20 billion by 2018 and reach $100 billion by 2025. Many other reports suggest that items such as refrigerators and consumer electronic goods will witness demand growth as the government is investing heavily in rural electrification, reports Business Standard.

For Paytm, an Indian e-commerce shopping company, CSCs provide an opportunity to recruit bankers  in villages and use these centers as payment banks. “The payment bank is going to be one of the initiatives to make sure that villages get quality banking service. We will recruit people from villages to be part of our payment banking teams. They would represent us in rural areas. In fact, what we see is a new level of service where people can request an agent in the vicinity to come and provide banking services at their doorstep,” said Kshitij Sanghi, vice president, Paytm.

A senior executive of Snapdeal, another e-commerce site, said that they had initiated a pilot project to upgrade the skills sets of  rural Indians manning the e-commerce hubs.

Neeru Sharma, co-founder of Infibeam, another online retailer, said, “We have a dedicated customer service team which is training village level entrepreneurs to setup their own stores, list them on different marketplaces at differential pricing. We are also fixing the end supply chain for them.”

December 11, 2015   No Comments

India: Next Hot Stop for Smartphone Makers

“India presents the world’s largest smartphone growth potential for the next 5 years,” Mark Li, senior analyst at Bernstein Research said in a report titled India: The Next China for Smartphones?

India is the world’s third largest smartphone market behind China. In the next 5 years it is projected to more than double its smartphone shipments, overtaking the U.S. to become the world’s second biggest market, reports CNBC.

Smartphone manufacturers have to adapt their selling strategies to the prevailing scenario in India where the market is characterized by low average selling prices, slow technology migration and a high reliance on retail channels.

Samsung is currently the top smartphone vendor in India with a 27.8 percent market share, followed by local manufacturers Micromax, Intex, and Lava with a 15.3 percent, 9.4 percent and 5.4 percent market share, respectively. With the acquisition of Motorola, Lenovo has gained market share in India through its partnership with online marketer Flipkart.

China’s Xiaomi has made headway in the market with its low-price devices. It entered India last July and has a 5 percent share of the market already. The company has announced plans to set up a manufacturing base in the country to meet demand.

July 3, 2015   No Comments

4 Indian Startups in Billion Dollar Club

The Wall Street Journal’s and the Dow Jones VentureSource’s Billion Dollar Club includes startups that venture-capital investors believe are worth at least $1 billion and have raised money in the past three years, and four Indian startups make the list.

Ranked 5th of 73 companies listed is Flipkart Internet Private Ltd., India’s largest e-commerce company by sales valued at $11 billion. Snapdeal, a rival online marketplace, ranks 30th with a value of $2 billion. Online-ad company InMobi, valued at $2.5 billion, and Ola Cabs valued at $1 billion are also included in the club.

India is expected to become home to the world’s second-largest number of startups, after the U.S., in the next couple of years as investors pipe in cash to new companies.

February 27, 2015   No Comments