We’ve got a news roundup of new developments in cashback, e-commerce, retail and mobile in India where the boom shows no signs of fading. Panelists at Techcircle Summit say profitability can only be achieved by cutting discounts. Economic Times of India reports retail store profits at their highest point in four years. Amazon has invested $291.4 million in new capital in its India operations. The proposed $50 billion pay increase for civil servants is expected to propel e-commerce revenues according to a report in Deal Street Asia. Forbes India published its 30 under 30 list of super achievers, many in technology.
Financial reports for e-commerce companies showed a lot of red ink. Online fashion retailer Myntra grew revenue by 78% to $113.8 million in 2015 but losses jumped four times to $63.7 million. Jabong had revenue of $154.9 million with lower losses of $6.5 million. Grocery delivery startup BigBasket grew revenue by 2.5 times to $26.2 million with losses of $9.0 million.
Meanwhile, Zomato reported it reached profitability and six of its 18 local markets but did not publicly release actual financials. Investor Rakesh Jhunjhunwala said successful global companies are built on cash flow not investor money. In a demonstration of growing consumer power in India, LeTV Le 1s, sold 95,000 phones in just 20 seconds during a flash sales promotion.
E-tailers must focus on profitability, cut discounts: Panelists at Techcircle summit
Indian e-commerce ventures must shift their focus from revenue expansion to profitability and cut back on discounts to sustain their businesses for the long-term, top investors and entrepreneurs said at the Techcircle India Ecommerce Summit 2016 on Wednesday.
Panelists who took part in various discussions on the first day of the two-day event also advised entrepreneurs to develop products and services that solve real problems rather than spending all the money they raise from investors on marketing and advertising….
“Good brands are never built on discounts,” said Prashant Gupta, president and CEO at abof.com, the fashion e-commerce venture of the diversified Aditya Birla group. “If customers wait for discounts to come back, there is a problem.” Via vccircle.com
Brick-and-mortar retail stores in revival mode as online sellers avoid deep discounts
Brick-and-mortar retail looks to be in revival mode as online sellers eschew deep discounts to shore up finances. Same-store sales rose to their highest in four years in the October-December quarter on the back of aggressive promotions and strong demand for fresh merchandise.
“The competition intensity has no doubt reduced vis-a-vis online,” said Future Group CEO Kishore Biyani. “This is just the beginning of their downfall since the ecommerce model of discounting was never there to stay.” Via economictimes.indiatimes.com
Amazon invests Rs 1,980 crore ($291.4 M) more in its Indian unit to beef up services
Amazon has invested Rs 1,980 crore ($291.4 million) in its Indian unit, its second major capital infusion in a little over a month, as it steps up the pace of activity in the competitive online retail industry. This latest investment in Amazon Seller Services, made on January 28, according to filings with the ministry of corporate affairs, is the largest single infusion of capital by Amazon in India and follows the Rs 1,696 crore ($249.6 million) invested in December 2015.
“We are very pleased with the growth momentum we are witnessing in India,” said a representative for Amazon India in response to an ET query on the investment. Ever since Jeff Bezos took the fight to Flipkart in July 2014 by revealing plans to invest $2 billion in Amazon’s India set-up, the firm has steadily poured in money. Via economictimes.indiatimes.com
E-commerce startups’ opportunity: $50b pay hike by Indian govt
For e-commerce players and their investors, 2016 might turn out to be a better year than the past. The last time the Indian government increased salaries for its employees was in 2008, when Flipkart was still operating out of a house in Bangalore and sold only books.
It is now valued at $15 billion. And has competitors like Snapdeal and Amazon India, who are locked in an intense battle for marketshare. For them, and other players such as Jabong and Shopclues, the upcoming government pay hike would be a great opportunity to raise the number and value of transactions. Via dealstreetasia.com
Meet the cool kids who made it to Forbes Indias 30 under 30 list
Following the Forbes list of 30 under 30 list of young achievers that was announced last month where 45 Indians found a mention, Forbes India revealed its own 30 under 30 list today, featuring who they described as the cool kids.
The list is a mixture of expected faces and a few new ones. It’s certainly not as exhaustive as the original list, but the list, in its third year now doesn’t fail to pack a punch. Explaining their choices, Forbes put out an article, saying “These young men and women not only fill us with admiration but also, to borrow an acronym from their generation, major FOMO (fear of missing out—yes, that’s a thing). Via businessinsider.in
Myntra’s Revenue Jumps 78%, But Losses Surge by 4X
Myntra is owned and operated by Myntra Designs Private Limited. The company reported a revenue growth of 78%, its revenue stood at INR 773 crores ($113.8M) in FY 14-15 vis-à-vis INR 433 crores ($63.7M) in FY 13-14.
The losses surged more than four folds from INR 173 crores ($25.5M) in FY 13-14 to INR 740 crores ($108.9M) in FY 14-15. In comparison, Jabong had reported a revenue of INR 1083 crores ($159.4M) with a loss of INR 44 crores ($6.5M) in the same period. Via tofler.in
BigBasket Revenue at INR 178 crores ($26.2M) in FY 14-15; Losses at INR 61 crores ($9.0M)
Hyperlocal grocery delivery startup BigBasket saw a 2.5 times growth in its revenue in FY 14-15 as its revenue figures reached INR 178 crores ($26.2 million).
BigBasket, which is owned and operated by Supermarket Grocery Supplies Private Limited, was founded by Hari Menon, V.S. Sudhakar, Vipul Parekh and Abhinay Choudhari in October 2011. It is an online grocery store that operates through the website and mobile app and provides home delivery in on-time and flexible delivery time slots. Via tofler.in
Most global companies built on cash flows, not on investors’ money: Rakesh Jhunjhunwala
Ace investor Rakesh Jhunjhunwala says ecommerce companies are attracting too much investment without any meaningful retail disruption and is extremely bearish on the business model of existing online companies.
Kishore Biyani of the Future Group predicted “many closures” of online retailers, while Flipkart founder Sachin Bansal defended his model of business, saying profitability is in sight and the trend of discounting will continue, as the country’s top investors and retailers debated online versus offline prospects of India’s retail markets at an event.
“Most of the big companies globally have been built from the profit of cash flow and not investors’ money. I would like to see online companies with a profitable model and there isn’t any. I will believe in it when they sell at an economic price,” Jhunjhunwala said at the Retail Leadership Summit. Via economictimes.indiatimes.com
Zomato becomes profitable in six markets including India
After a tremulous period towards the end of last year, restaurant listings and services startup Zomato Media Pvt Ltd has achieved operational break-even in six markets such as India, Middle East (UAE, Lebanon and Qatar) and Southeast Asia (Philippines and Indonesia).
This makes Zomato the first Indian ecommerce unicorn to become profitable in the home market. Unicorn is a new-age tag meant for startups sporting a $1 billion valuation. Zomato did not disclose the revenue numbers.
“We have more than doubled our revenue year on year for the last few years and are going to post some great growth numbers this year as well. We are profitable in six of the 18 markets,” Deepinder Goyal, co-founder and CEO of Zomato, said in a press statement. Via vccircle.com
95,000 LeTV Le 1s sold out in 20 seconds; Over 1 million registrations
LeTV Le 1s, the most in-demand phone in India currently, sold 95,000 pieces in just 20 seconds as part of its second flash sales in India. The total number of phones sold has reached 1.5 lakh (150,000) in a matter of eight days — arguably the highest every tally of phones being sold in such a short time in India.
The 90,000 units have come as a reassurance to fans that the brand is here to stay and supply the demand, instead of stopping its sales after selling 100,000 units. Meanwhile, registrations for the phone have increased by around 1 lakh in a few hours to total 1.03 mln, by far the highest in India ever. Via rtn.asia
Next week’s Cashback News lineup?
That’s a wrap for this week’s news. Next week we will be looking at where venture capital money is going in SE Asia, US retail news updates, Latin America developments and much more. If you like what you’re reading, get more news you can use in your inbox Monday to Friday by subscribing at the top of this page.