Cashback Industry – July 15: E-commerce battle brewing in India

Cashback Industry – July 15: E-commerce battle brewing in India

- in E-Commerce, Slider

India e-commerce still growing There’s tons of e-commerce business being done in India but storm clouds are growing on the horizon amidst profitability challenges, intense competition, deep discounting, a growing shortage of new VC money and rising costs. In short, the startups and disruptors like Flipkart, Snapdeal and Paytm are about to be disrupted by a few big global players – Amazon and Alibaba. The Indian e-commerce market is huge but who will be left standing by the end of next year?

Vijay Shekhar Sharma says Amazon and Alibaba will dominate India e-commerce within a year. E-commerce hits the wall and Snapdeal is hit the hardest. Flipkart grew sales from $1 billion to $4 billion last year while Snapdeal sales fell 50%. According to the RedSeer E-tailing Leadership Index (ELI), Flipkart with a score of 91 was most popular e-commerce company, closely followed by Amazon with 87.

Flipkart looks ready to raise $1 billion in new capital. Watch for e-commerce mergers and acquisitions starting with Jabong which will reduce the number of brands available online to around 1,500 from 2,500. Some analysts are wondering if Snapdeal will die a slow, painful death or merge or get acquired. While e-commerce is still strong, some investors are pouring money into new shopping malls. Flipkart’s CTO Peeyush Ranjan doesn’t believe that Amazon’s Alexa voice technology will work in India because the market is different than the US.

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

“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 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.

India’s ecommerce battle lines are already being drawn. Amazon, the world’s largest online retailer, said last month it will invest an additional $3 billion (over Rs 20,000 crore) in India, raising the stakes after having spent about $2 billion. The announcement came as existing biggies such as Flipkart and Snapdeal face additional pressure to raise fresh funds, when money is harder to find than before and the government has written up rules that bar platforms from offering deep discounts and cash-backs.

Alibaba plans to directly enter India’s online retail market, which Goldman Sachs projects will more than treble to $36 billion in 2016-17 from $11 billion in 2014-15. Alibaba Group Holding’s 40% share in Paytm gives the Chinese ecommerce giant a strong foothold in India to begin with. However, it also holds a 4% share in Snapdeal. Via

Indian e-commerce industry’s growth comes to a halt, Snapdeal worst hit numerous headlines of a cash crunch hitting major Indian e-commerce companies, and their valuations being questioned, is a revelation not too many people are talking about. Indian e-commerce was emblematic of frenetic growth until very recently, but the last six to eight months have seen the industry come to a grinding halt, making it an inflection point for all the players involved.

TOI accessed and analysed data for top e-tailers, which revealed that the online retail market stagnated between May 2015 and 2016 in terms of the value of goods sold. While in May last year, the e-commerce biggies clocked a gross merchandise value, or GMV, run rate of $9 billion, that number has only inched up to about $10 billion at the end of May this year, translating into an 11% annual growth. In December last year, the total GMV run rate had reached $10.5 billion on the back of the festive season, which typically sees a rush of discounting from all e-tailers.

GMV is overall sales on an online marketplace, excluding discounts and returns which are an integral part of the e-commerce market.

The data gleaned from primary research and vetted by multiple stakeholders in the industry indicated that Flipkart , the country’s largest online retail player, has seen its GMV run rate stall at about $4 billion for almost a year, while an aggressive Amazon has gone from clocking $1 billion to $2.7 billion in gross sales. However, Amazon’s operations in India only began three years ago and it’s been gaining ground on a smaller base. What’s worth noting is that Flipkart notched up a 400% growth the year before, when it’s GMV zoomed from $1 billion to $4 billion, post which the numbers have gone flat. Via

Crashing Evaluations And Tortured Employees. The Indian Startup Love Story Has Suddenly Frozen Over

India e-commerce crashing After an explosive boom, startups have suddenly imploded. Valuations are being questioned, large scale layoffs are in motion, and no matter what you measure, the numbers don’t look good. Looking at the leaders of the Indian startup space, the ecommerce players, the last 6-8 months have seen the industry come to a grinding halt.

Last year (May 2015) saw India’s e-commerce biggies clock a gross merchandise value, or GMV of $9 billion. That’s just increased to $10 billion at the end of May this year – a feeble 11% growth. To put that in perspective, it had reached in December $10.5 billion due to the festive season sales.

Flipkart and Snapdeal
Last year, Flipkart had a 400% growth with its GMV zooming from $1 billion to $4 billion. Soon after, the numbers went flat. Snapdeal on the other hand saw an almost 50% knock-down in sales numbers after similar highs it touched exactly a year ago. GMV is how companies define “rapid growth” that allows them to quote billion dollar valuations. Via 

Flipkart remains India’s most popular e-commerce brand

India e-commerceFlipkart is still India’s most popular e-commerce brand, though arch-rival Amazon India is nipping at its heels after racing past Snapdeal in the quarter ended March, a survey found.

According to the RedSeer E-tailing Leadership Index (ELI), Flipkart with a score of 91 was marginally ahead of Amazon at 87, while Snapdeal came in a distant third at 60. The index, which will be published on a quarterly basis in Mint, is compiled by research and advisory firm RedSeer Management Consulting, which specializes in e-commerce market research.

RedSeer surveyed some 3,000 online shoppers in 30 cities, tracking prices of more than 600 mobile phones across India’s top five e-commerce firms, which include Paytm and Shopclues. Via

An insight into business model of Flipkart is one of the top 3 unicorns from India in the online selling space. It is the second most preferred websites by the people who look for shopping online in India. According to ComScore and Amazon claims, Flipkart lost its number one position to Amazon. In this article we try to briefly analyse the Flipkart model and perhaps find answers to some of its nagging growth issues. Before we do that a little background of the ecommerce giant. 

Founded in 2007 by Sachin Bansal and Binny Bansal , Flipkart is an e-commerce company which is registered in Singapore and has its headquarter in Bangalore (India). Initially the company was an online bookstore which has now come of age and operates through a complex structure of business with 20 million products across 70+ categories at its disposal.

Flipkart to raise $1 Billion
After years of raising millions of dollars to tap into the expanding online market in India, Flipkart targets to pick up more investment. The company is about to raise up to $1 billion for funding its business and seize competition from the global giant Amazon and the local rival Snapdeal. Via

Jabong buzz: M&As to be the next trend in Indian e-commerce space

JabongIn India’s e-commerce industry, it isn’t just the customers who are scouting for deals. Online fashion retailer Jabong is the latest industry player said to be shopping around the idea of a merger. According to The Economic Times, the Rocket Internet-backed company is in talks with several competitors, including China’s Alibaba Group, Kishore Biyani-led Future Group, and Myntra, which is owned by Flipkart. Snapdeal and Aditya Birla Group also may make a bid for Jabong, according to a report in the newspaper Mint.

“We, unfortunately, cannot comment on market rumours and speculative reports,” Sanjeev Mohanty, CEO and managing director of Jabong, said in a statement. “As we have said earlier we are always open to engaging with strategic partners in our local markets to build a strong alliance and fully capitalise the business to profitability.”

The buzz about Jabong’s acquisition is not new. Back in November 2014, press reports suggested that Amazon was in talks to acquire the company for $1.2 billion as it looked to counter Flipkart’s acquisition of Myntra. But the talks reportedly failed because the two companies could not reach a consensus on Jabong’s valuation. Via

After government’s ban on discounts, online retailers exploring new strategies to woo customers Apri l 1, the government ‘s Department of Industrial Policy and Promotion (DIPP) banned discounts by online marketplaces. Online platforms could no longer use cash to subsidise products or offer deep discounts. Suddenly, Jabong discovered that the data was going to be extremely useful. Digging into the data and putting to use algorithms, the company began to offer what people actually buy instead of carpet bombing them with an excess of items.

Sanjeev Mohanty, CEO, Jabong, cites the example of selling shorts in summer. “We will now focus on selling the top 25 options of shorts from top 30 brands which would have 750 options, instead of peppering the site with 100 options from top 300 brands and have consumers filter and hunt through 3,000-5,000 options of shorts. That’s how top department stores behave.”

Jabong has since reduced the number of of brands available online to around 1,500 from 2,500. The number of genuine shoppers — who actually buy — has risen. Conversion rate, a measure of the number of people who buy something from every 100 visitors, has jumped from 1.7% to 2.12%. Via

Snapdeal vs Flipkart vs Amazon: In India’s e-commerce war, will Snapdeal die a slow, painful death? (AMZN) June 8, American e-commerce major Amazon announced an additional $3 billion investment in India, making clear its intention to dominate the Indian market and posing a massive challenge for the country’s homegrown e-commerce companies, among which Snapdeal could be hurt the most.
The Gurgaon-based firm lags Flipkart on most metrics, and currently has Amazon India ( nipping at its heels for the second position in an overcrowded market.

Launched in 2010 by Wharton graduate Kunal Bahl and IIT-Delhi alumnus Rohit Bansal, Snapdeal has around 300,000 sellers and delivers in over 6,000 cities and towns in India. In March 2016, its gross merchandise value (GMV, or the total worth of merchandise sold through a marketplace) stood at around $4 billion.

The company is backed by Japan’s SoftBank, the Alibaba Group, Taiwan’s Foxconn Technology Group, American e-commerce firm eBay and Tata Sons chairman emeritus Ratan Tata, besides venture capital and private equity investors such as BlackRock, Nexus Venture Partners, Intel Capital, and Kalaari Capital.

“Snapdeal has been having an identity crisis for the last couple of years.” Despite such strong backers, Snapdeal is increasingly losing relevance among customers and needs to find its unique selling proposition (USP) soon. Via

E-commerce booming in India in India has been booming and online giants like Amazon (AMZN.O) are spending big bucks on the world’s fastest growing major economy. Yet some investors are pouring money into retail mainstays of a bygone era – shopping malls.

Private equity investors like Blackstone (BX.N) and Rothschild-backed Xander Group are looking for malls in India, betting that people will flock to stores as more foreign brands open and online retailers ease their aggressive discounting.

Indian malls, which are evolving from ramshackle collections of stores to modern plazas complete with air conditioning and family entertainment centres, are seen as a gateway to brands that a growing middle class aspires to own.

The rise of the mall in India, at a time when many in the United States are becoming debt-ridden white elephants, has been helped by a flurry of new regulations that are encouraging investors to take a fresh look at traditional retail. Via

Flipkart CTO: Amazon’s Alexa wouldn’t work in India chief technical officer Peeyush Ranjan doesn’t believe that Alexa, the voice-assistant that powers Amazon’s Echo devices, “as it is will work in India,” the executive said on stage at VentureBeat’s MobileBeat conference.

“The problems that we see over here [in the U.S.] are not what we see in India,” said Ranjan. “The real challenge we’re going to have to solve is bigger than Alexa.”

India’s ecommerce market is expected to be worth nearly $120 billion by 2020, according to Morgan Stanley, however, companies like Flipkart and Amazon face significant obstacles in the country, including the wide variety of spoken languages, power outages, connectivity issues, and lacking delivery infrastructure, said Ranjan. Via

Amazon Prime Analysis Ahead

That wraps up a busy week of e-commerce and cashback industry news. On Monday, we’ll have an in-depth analysis of Amazon’s Prime Day promotion and its competitors’ responses and results. Don’t miss it! Enjoy your weekend.

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