• Saturday , 10 December 2016

Cashback News – Aug 1: Battle for Indian e-commerce domination resembles shark tank

India e-commerce 2It’s a multibillion-dollar e-commerce market and India is the latest battleground for e-commerce global superpowers including Amazon, Alibaba and eBay. The country also has several strong homegrown players including current market leader Flipkart, Snapdeal, Paytm and other e-commerce companies and startups financed by some very deep pocketed global VCs.

As we predicted in our 2015 Cashback Industry Report, India is ripe for consolidation. The startups were built on heavy discounts to grab early market share. Unfortunately, even after five years, profitability is just a dream for most e-commerce companies in India. Venture capital funds are now harder to secure for the expensive and more difficult job of marketing and competing in a congested marketplace.

Amazon has spent more than $2 billion in its first three years of operations and has committed another $3 billion to expand its business. It is now the second largest e-commerce business in India. Alibaba has invested in both Snapdeal and Paytm and is reported to be in the final stages of a comprehensive strategy and potential acquisitions to grab its share of the Indian marketplace.

Just last week, Flipkart subsidiary Myntra acquired fashion marketplace competitor Jabong and now controls an estimated 70% of the fashion marketplace in India. Numerous smaller startups have closed operations and some of the market leaders are laying off staff and trying to control operating costs.

Clouds are on the horizon. The Indian market in the short-term will be driven by three Cs: consolidation, heavy competition and cashflow. If you thought Game of Thrones or the US election are fascinating, stay tuned as we take a look at the e-commerce market in India today and in the future.

How India’s Flipkart snapped up Jabong from under rival Snapdeal’s nose

http://www.dealstreetasia.com/stories/how-flipkart-snapped-up-jabong-from-under-snapdeals-nose-48610/People familiar with the matter said Fixel of Tiger Global Management, Flipkart’s largest investor, pushed the e-commerce marketplace’s executives to go for Jabong. In turn, the Flipkart executives, the people added, were dealing directly with executives at GFG. Senior executives at Jabong fronting the talks with Snapdeal were not even aware of the conversation.

For Flipkart, the acquisition of Jabong will extend its dominance in the fashion space and is seen as a move by the company to preserve its position as India’s No.1 e-commerce marketplace in the face of an onslaught by Amazon India.

“The price was very attractive and Lee was in favour of picking up Jabong. With Jabong, Flipkart will be out of reach for good of Amazon in at least one category. Lee really pushed for the deal,” said one of the people cited above, asking not to be identified.

Fashion, which offers higher margins to online retailers compared with mobile phones and books, is expected to overtake consumer electronics as the largest category at 35% of total online spending by 2020, according to a June report by Google and consulting firm A.T. Kearney. Online retail is expected to surge to $60 billion by then. Via dealstreetasia.com

Flipkart buys online fashion store Jabong in India e-commerce consolidation

JabongMyntra Designs, a unit of India’s Flipkart Internet, has agreed to buy Germany’s Rocket Internet-backed online fashion retailer Jabong for $70 million in cash, as a consolidation wave sweeps across India’s cash-starved e-commerce market.

The acquisition will bolster Flipkart’s position in the online fashion market — the fastest growing category in India — amid intensifying competition from archrival Amazon.com that has been briskly expanding in the south Asian nation. Fashion-focused shopping sites have been mushrooming over the last few years, as a growing population of Indians shop for everything from phones to clothes and accessories on the Internet.

“Fashion and lifestyle is one of the biggest drivers of e-commerce growth in India,” said Binny Bansal, chief executive of Flipkart, India’s largest e-commerce company. “This acquisition is a continuation of the group’s journey to transform commerce in India.” Via asia.nikkei.com

Indian e-commerce market is extremely competitive, unprofitable: Jabong parent GFG

JabongA realisation that it will have to pump in huge amount of capital to stay in the game and a determination to get rid of its highest loss-making subsidiary led Rocket Internet-controlled Global Fashion Group (GFG) to sell off its wholly-owned subsidiary, the Indian online fashion seller Jabong at a paltry $70 million. About two years ago Rocket Internet was bargaining for a valuation of around $1 billion.

Rocket Internet and GFG decided to sell off Jabong despite the fashion portal showing some signs of improvement in terms of unit economics. Its revenue grew 14% to Rs 240 crore in the first three months of this year and it narrowed its operating loss.

When asked, a GFG spokesperson insisted the sale is in line with the firm’s previously stated strategy of accelerating its path to profitability. “The transaction will de-consolidate our highest loss-making operation while delivering capital that can be deployed in high-return opportunities across GFG’s footprint,” she said in an email response. Via vccircle.com

Survival of the fittest — India’s e-commerce firms finally face nature’s oldest rule

Survival of the fittestConsolidation is an inevitable part of any evolving industry and India’s young e-commerce industry is no exception.

Over the past four years, the consumer internet space has had its share of acquisitions, mergers, and shutdowns. Flipkart’s Letsbuy acquisition was probably the first major consolidation, soon to be followed by the likes of Fashionandyou-Urbantouch, Flipkart-Myntra, Snapdeal-FreeCharge, and of course, Myntra (Flipkart)-Jabong now.

While consolidation is a natural part of the evolution of any industry, it also sends out certain signals to those not directly involved. Thus, most of the acquisitions (except redBus by ibibo, FreeCharge by Snapdeal, and Myntra by Flipkart) in the e-commerce space have largely been because of the inability of companies to raise additional capital and weed out competition (steered by FOMO), or because they have been forced by common investors. Tiger Global, a common investor in Letsbuy and Flipkart, is said to have forced the former to merge with the latter while Ola bid for TaxiForSure (TFS) as the SoftBank-backed company didn’t want TFS to lock lips with hyper-funded Uber. Survival of the fittest — India’s e-commerce firms finally face nature’s oldest rule

In a year, Amazon and Alibaba will dominate Indian ecommerce: Vijay Shekhar Sharma

http://economictimes.indiatimes.com/industry/services/retail/in-a-year-amazon-and-alibaba-will-dominate-indian-ecommerce-vijay-shekhar-sharma/articleshow/53037420.cmsThe fight for India’s lucrative ecommerce market will be mainly between Amazon and Alibaba, with the contours of the battle likely to be clearer in about a year, says Vijay Shekhar Sharma, chief executive officer of Paytm, a company backed by the Chinese online retailing giant.

“The ecommerce business and market is reaching maturity of players. The next 6-9 months, it will be decided who the key contenders of the business are. Logically, to fight Amazon, you need the might of a strategic player – that is why it makes a lot of sense for people to align with Alibaba versus a lot of others,” Sharma said, signalling the possible start of consolidation in the Indian ecommerce market.

Paytm, a digital wallet and online retailer backed by Alibaba and its affiliate Ant Financial, is preparing to start a payments bank. It will spin-off its ecommerce platform into a separate company, which will have a new name and brand and the same shareholders as Paytm. It will spin-off its ecommerce platform into a separate company, which will have a new name and brand and the same shareholders as Paytm. It will then look to raise funds or be merged or acquired. The entity will be separate from the company’s payments bank, which will go live around October, pushed back again by a quarter, Sharma said. Via economictimes.indiatimes.com

E-commerce could help create 12 million jobs over 10 years: HSBC

E-commerce IndiaE-commerce in India is expected to see a significant uptrend in the coming days and could lend a helping hand to the country’s job landscape, which needs as many as 80 million new jobs in the next decade, says a report.

“Already employing just under a million Indians, e-commerce could be a new source of service sector jobs,” global financial services major HSBC has said.
Young population, rapid smartphone adoption and a digital payments revolution could support the rise of e-commerce.

Moreover, India is lagging behind China by more than seven years, in terms of Internet penetration and online purchases, e-commerce could experience a similar takeoff. Via timesofindia.indiatimes.com

E-commerce marketplace eBay India claims 100 million product listings

https://yourstory.com/2016/07/ebay-e-commerce/E-commerce marketplace eBay India recently claimed that the shoppers can access over 100 million live product listings on eBay.in and its global easy-buy platform geb.ebay.in across electronics, lifestyle, media and other categories.

In comparison, Amazon.in, which has the highest percentage of shipments so far, lists over 65 million products, while Flipkart stocks about 40 million products and Snapdeal lists over 35 million products.

In order to keep up with the evolving demands of the online shopper in India, eBay India has invested in deepening and diversifying its product range, through the small and medium entrepreneurs in India or by bringing in supply from across the globe. Via yourstory.com

Is Loyalty Service Like ‘Amazon Prime’ A Game Changer For Indian E-Commerce?

Amazon PrimeRetail giant Amazon’s plans to launch its subscription service ‘Amazon Prime’ across 100 Indian cities, has put its head-to-head with Flipkart’s ‘Flipkart First’, which also offers a similar service.

For an introductory annual subscription fee of Rs 499 ($7.47), Amazon Prime will allow members same-day, morning or scheduled delivery on over 10,000 products, in addition to providing access to Amazon Video when that launches. Flipkart First, also offers a similar subscription-based service for Rs 500 ($7.49) annually.

India’s online marketplace has been a battleground among major rivals such as Amazon and private equity-backed Flipkart and Snapdeal. However, despite the rapid growth in Internet use and a huge potential for further growth, many e-commerce companies in India are struggling to raise fresh capital from investors, who are demanding more focus on growing sales and profitability. According to Mint report, for the first time in years, online retail sales in April were lower than sales in December. Via huffingtonpost.in

Jeff Bezos says Amazon’s India team is inventing at a torrid pace, Prime Video to have original local content

http://economictimes.indiatimes.com/industry/services/retail/jeff-bezos-says-amazons-india-team-is-inventing-at-a-torrid-pace-prime-video-to-have-original-local-content/articleshow/53465936.cmsIndia was the only market that Jeff Bezos wanted to talk about even as the US-based technology giant Amazon reported a record-high quarterly profit for the third consecutive quarter, making him the third richest man in the world. In the quarterly released with the results, Amazon founder & CEO said that “team in India is inventing at a torrid pace, and we’re very grateful to our Indian customers for their welcoming response.”

“It’s been a busy few months for Amazon around the world, and particularly in India — where we launched a new AWS Region, introduced Prime with unlimited free shipping, and announced that Prime Video is coming soon, offering Prime members in India exclusive access to Amazon Original Series and Movies — including original content featuring top Indian creators and talent,” added Bezos.

The statement comes after an action packed last two months for Amazon in India, which started with Bezos announcing plans to increase investment in India to $5 billion from $2 billion. After that its cloud business, Amazon Web Services, opened cloud region in Mumbai by opening data centres, allowing it to target Indian companies required to hold their data in the country. Via economictimes.indiatimes.com

Flipkart gets a breather as Fidelity marks it up

flipkartAfter a string of six successive markdowns, Indian e-commerce giant Flipkart has received a welcome break from American mutual fund company Fidelity Investments.

The US-based company’s Fidelity Rutland Square Trust II fund has hiked the value of its shares in the company. According to filings with the Securities and Exchange Commission, the mutual fund marked up the value of the shares by 2.8% to $84.29 apiece at the end of May from $82 three months earlier.

The development was first reported by The Indian Express. The marking up comes two months after Fidelity lowered the value of Flipkart shares it owns by almost 40% to $82 apiece as of 29 February 2016 from $135.8 in August last year. Via vccircle.com

India: Flipkart valuation shrinks as T Rowe Price dilutes stake yet again

http://www.dealstreetasia.com/stories/flipkart-valuation-shrinks-as-t-rowe-price-dilutes-stake-yet-again-48994/Flipkart Ltd was devalued for the second time this month with T Rowe Price, a global investment management firm, shedding the value of its holding in the company to $96.29 per share, a 20 per cent erosion, according to a filing made to the US Securities and Exchange Commission (SEC), for the quarter ended June.

The company is now valued at $10.3 billion. The Economic Times first reported the development. However, another mutual fund investor Fidelity increased the value of its Flipkart shares by 3 per cent to $84.29, valuing the company at about $9 billion the report said.

Tiger Global-backed Flipkart was valued at $15 billion when it last raised funds in May last year. At that time, it was a clear market leader in the Indian e-commerce segment, ahead of the India unit of Amazon.com Inc and Snapdeal (Jasper Infotech Pvt. Ltd). Via dealstreetasia.com

Kumar Rajagopalan: Architect of retailers’ fightback against ecommerce companies

http://economictimes.indiatimes.com/industry/services/retail/kumar-rajagopalan-architect-of-retailers-fightback-against-ecommerce-companies/articleshow/53329692.cmsThe autumn of 2014 is seen by many as a watershed moment in Indian retailing industry when ecommerce giants such as Flipkart and Amazon, with billions of foreign money in their kitties, offered deep discounts in their Diwali sales, not seen in the country before, and within a matter of days they recorded hundreds of millions in sale. The development stunned brick-and-mortar retailers as it affected their crucial festive season sale, but it also brought together traditional retailers to fight for their survival.

“Definitely ecommerce has been a rallying point (for offline retailers) as we have been advocating for creating a level-playing field for the industry,” said J Suresh, CEO at Arvind Lifestyle Brands. The fight between traditional retailers and ecommerce companies also brought RAI CEO Rajagopalan — a trained chartered accountant — into the limelight.

A former Shoppers StopBSE -0.51 % veteran and ex-IBM executive, Rajagopalan is considered by many as one of the architects of brick-and-mortar’s fight back against ecommerce. In that process, Rajagopalan, along with other key members, converted the once sleepy RAI into one of the most active lobby groups in the country, nudging the government to ultimately come up with rules that barred ecommerce marketplaces from influencing retail prices directly or indirectly. “Our issue has been for a level playing field and it has never been offline vs online,” said BS Nagesh, former MD of Shoppers Stop. Via economictimes.indiatimes.com

E-commerce troubles: CXO salaries lose steam

moneySalaries at the CXO level seem to be deflating. From a peak of about Rs 4 crore ($600K) annually for new hires at top level, compensation is now down to about Rs 2.5 crore ($376K) and lower, according to executive search companies. Plus, a bigger proportion of this is linked to performance. Salary increases for new hires, meanwhile, have slumped to 8-20 per cent in the last few months from 50-60 per cent in the glory years.

Not just that, many who got swept up during the boom of 2014 and 2015 are getting back to lower-paying but stable jobs, headhunters said, at half their previous salaries in some instances.

The surge had been fueled by the e-commerce boom and companies such as Infosys and Soft-Bank handing out hefty paychecks in a competitive market, said headhunters like Heidrick & Struggles, GlobalHunt, Hunt Partners, Head Hunters and Michael Page. GlobalHunt was involved in several CXO-level appointments in 2014 and 2015 at pay of Rs 2-4 crore ($300K-$600K), excluding stock options and other variables. Via timesofindia.indiatimes.com

Flipkart to lay off 700-1000 employees

Flipkart layoffs

E-commerce major Flipkart will be laying off 700 to 1000 employees after they failed to meet the bar of the annual performance evaluation.

According to Flipkart, which just paid $70 million to acquire fashion e-tailer Jabong, the cleanup is a part of the process to make Flipkart a lean organisation, The Economic Times reported, quoting Flipkart senior management on the basis of anonymity.

Flipkart said that while their top performers are awarded handsomely, the one who don’t meet the performance bar are mentored, and over time, if the change isn’t satisfactory, “they are encouraged to seek opportunities outside the company where their skills can be better utilised,” a spokesperson of the e-commerce firm said. Via dnaindia.com

Turbulent times for e-commerce in India

Watch for e-commerce turbulence to continue in India. Cashback Industry News will continue with our updates and insight on the latest developments. Join us and get your free industry news M-W-F in your inbox by subscribing at the top of the page.

Related Posts

Comments are closed.