There’s lots of news and new developments in Indian e-commerce and online retail, so let’s get right into the latest news. A new Forrester/ASSOCHAM report forecasts e-commerce in India to grow at an annual rate of 51% over the next four years compared with 18% in China and 11% in Japan. VCCEdge estimates more than 1,000 Indian startups will get funding in 2016. Despite growth of 100% or more, year-over-year, most Indian e-commerce companies are burning cash and profitability remains a distant possibility.
A UBS report says e-commerce companies in India should be valued at $17-19 billion, much lower than the current valuation of $25 billion. Recent downgrades by VCs support this position. The Retailers Association of India said online sellers are offering discounts that influence the pricing of goods and it has asked the Indian Enforcement Directorate to investigate. Paytm has signed more than 1,000 brands including Puma, Samsung, Samsonite, Casio and Lakme to feature new online stores on Paytm’s e-commerce platform.
Not to be outdone, FlipKart is also recruiting large international brands such as HP, Samsung, Wildcraft, Puma, Peter England, Bosch, Vu Technologies and @Home for its e-commerce platform. On June 1st, fashion e-commerce retailer Myntra will relaunch its desktop shopping platform after trying mobile-only. E-commerce delivery firm Hey Didi hopes to have more than 5,000 female scooter delivery drivers by year-end, offering loans and financing to prospects.
Report: India Shows Fastest E-Commerce Growth in the World
E-commerce in India is expected to grow at an annual rate of 51 percent over the next four years, the fastest growth rate in the world, according to a new report. The study, from the Associated Chambers of Commerce & Industry of India (ASSOCHAM) and consultancy Forrester, compared the expected growth rate in online sales to other Asian giants like China (18 percent), Japan (11 percent) and South Korea (10 percent). The study attributes the potential for incredible growth to a huge base of 400 million Internet users, along with the fact that 75 percent of them are between the ages of 15 and 34.
“This is expected to be a continuing trend in coming years, given the age distribution in India,” said D.S. Rawat, Secretary General of ASSOCHAM. “It is not surprising to see the growth among categories focused on younger audiences in the last 12 months.”
The report said online travels sites—especially railroad—have seen the biggest gains, along with retail. Branded apparel, accessories, jewelry, gifts and footwear are retail subcategories showing strong growth and do especially well on mobile devices. Currently, m-commerce accounts for 60-to-65 percent of total e-commerce sales. According to the report, industry leaders in India believe that m-commerce could contribute up to 70 per cent of their e-commerce revenues in the coming years. Via cardnotpresent.com
Nearly 1,000 Indian startups to get funded in 2016: VCCEdge
Close to a thousand Indian startups are likely to get funded in 2016, replicating and possibly surpassing last year’s record show, according to the Startup India report by VCCEdge, the data research platform of VCCircle.
The report, which was released at the Techcircle Startup event at Bengaluru on Thursday, forecast the startup funding activity based on the deals run rate in the first three months of 2016 and the historical contribution from the first quarter to the yearly deal volume.
There have already been 255 deals till mid-April this year, the report said. It counted startup funding as those straddling early-to-mid stage venture transactions and included angel, seed, Series A and B venture funding rounds. Via vccircle.com
E-commerce Companies Focusing on Burning Cash than Real Growth. Is it worth the Risk?
E-commerce is positioned as a viable business in India even though companies might take almost a decade to become profitable. While eCommerce companies are reporting growth of more than 100% year on year, the boom is an outcome of relentless advertising spends and deep discounts, resulting in mammoth losses and doubts on their astronomical valuations. E- commerce players are simply in a rush to grab customer eyeballs in the face of mounting competition. The only people that are winning are media and advertising companies, and of course consumers.
An eCommerce business model can be complete only when the companies are able to generate real profits. Unfortunately at present, most of these companies are surviving on private equity money and emphasizing on burning cash than focusing on real growth. No wonder, most of them are not profitable or even close to profitability in the near future. India witnessed its top 22 online commerce startups reporting a 293 per cent growth in losses at Rs 7,884 crore for the financial year ended on March 2015 on combined revenue of Rs 16,199 crore.
Over the past year, valuations of privately held eCommerce companies have jumped up 4-5 times or more because of the investors’ FOMO (fear of missing out). However, many analysts and investors, who are themselves structuring the valuations, have now started questioning the fabricated valuations attached to eCommerce in general. UBS analysts estimate that eCommerce companies in India should be valued at $17-19 billion, much lower than the current implied valuation of $25 billion. Via iamwire.com
Retailers seek ED probe into alleged violation of online marketplace model by Amazon, Paytm and Flipkart
The Retailers Association of India said online sellers are offering discounts that influence the pricing of goods, which is a violation of the model.
According to a press note issued on March 29 by the Department of Industrial Policy and Promotion (DIPP), a marketplace-based model of e-commerce means providing of an IT platform by an e-commerce entity on a digital and electronic network to act as a facilitator between the buyer and the seller. Via economictimes.indiatimes.com
Paytm signs up 1000 brands including Puma, Samsung to open online stores
Paytm said it has tied up with more than 1,000 brands including Puma, Samsung, Samsonite, Casio and Lakme to enable them to open their online stores on its ecommerce platform.
“True power of online platforms is in connecting sellers and brands directly with the end customers. The platform that we have created for brands gives them complete control of their online presence,” Amit Bagaria, vice-president at Paytm, said on Sunday.
The announcement comes a week after top ecommerce player Flipkart said it is wooing some of the most-popular electronic and apparel brands including HP, Wildcraft, Peter England, Bosch and @Home with a new offering that allows them to create ‘stores’ on its digital marketplace. Via economictimes.indiatimes.com
Flipkart to allow big brands like Samsung, Puma to create exclusive ‘stores’ on the digital marketplace
Flipkart is wooing some of the most-popular electronic and apparel brands with a new offering that allows them to create exclusive “stores” on the digital marketplace of India’s largest online retailer.
These stores, launched in April on the Flipkart mobile app with a desktop launch expected later, help top brands target customers and drive sales by using data and analysis provided by Flipkart, as the Bengaluru- based company accelerates the process of driving revenue and trimming expenses to retain its leadership in the fiercely competitive online retail market.
“The response till now has been encouraging,” said Surojit Chatterjee, Surojit Chatterjee, Senior Vice President and Head Consumer Experience & Growth at Flipkart about the initiative that has already found customers in the form of HP, Samsung, Wildcraft, Puma, Peter England, Bosch, Vu Technologies and @Home.
As a part of this initiative, Flipkart will create a self-service analytics platform called ‘Brand Hub’ where companies can target specific customer pools based on products. They can display products to specific customers based on parameters such as gender or the income bracket. In turn, customers can follow particular brands and be alerted when collections are updated. Via economictimes.indiatimes.com
Myntra to be back on desktops from June 1 to drive growth
“We have been humble enough to realise and listen to our customers’ needs and hence, we are relaunching the desktop version on June 1,” said Ananth Narayanan, CEO of Myntra. “This will help us bring back customers, help women shop more on different screens and suit our newly launched furnishing and jewellery categories,” he added.
Experts say this step will help the ecommerce company minimise losses without making additional investment. “In such tough market conditions where funds are drying up, this will easily take care of around 10-15% sales growth and help them stay away from the red line,” said an ex-Myntra executive. The Bengaluru-based company is chasing profitability in this financial year. Via economictimes.indiatimes.com
Hey Didi in expansion mode, plans to have 5,000 women scooter drivers this year
Further, the boot-strapped startup run by Revathi Roy who herself started running a cab to understand the market as a woman, is also looking to enter the two-wheeler cab services for ferrying passengers, but is waiting for the government ease certain regulations.
The company has also partnered with Mahindra Finance for easy financing of two-wheelers for its women employees. Mahindra is also providing free scooters to Hey Didi in Mumbai at present. Via economictimes.indiatimes.com
More e-commerce news ahead
Later this week, we’ll have e-commerce updates on the US and EU. We’ll also have market updates on Amazon and Walmart. You can get these weekday morning news updates from around the globe in your mailbox by subscribing at the top of this newsletter.
