The Delhi police hasarrested four youth on the charges of hackingleading shopping sites includingAmazonandFlipkart. The police areacting on the complaint of Voucha GramIndia, an ecommerce company that runs the websitewww.gyftr.com. Voucha Gram has complained that the website was hacked, and gift vouchers of leading companies including MakeMyTrip, Amazon, Flipkart, Big Bazar, Reliance Digital, Myntra, Yatra, and others have been stolen.Ishwar Singh, deputy commissionerof police (DCP) confirmed,
“The total financial loss to the complainant was assessed to be about Rs. 92 lakh.”
The arrested include Sunny Nehra, Prakhar Aggarwal, Azad Choudhary, and Tejveer Sheoran.Singh explainedhow Nehra went ahead,
“One of his hacker friends informed him that PayU, a leading payment gateway, was suffering from vulnerability and could be tested for data tampering. He started testing it and soon discovered that it was allowing ‘change in parameters on the processing page’, which is data tampering.”
Cyber payments unsafe?
The heist is a blow to both online payment portals like PayU and Paytm, and the government, which has been pushing for a cashless society.Advocate Pavan Duggal, a specialist in cyber laws, confirms this,
“Digital wallets and mobile wallets are extremely unsafe. There are only a couple of Reserve Bank notifications on it. The sector is unregulated; there are no minimum parameters to follow. A majority of the service providers do not focus on cyber security.”
However, companies are quick to their defence.Prashant Susarla, technical head at PayUIndia clarifies,
“PayU protects transaction data integrity by way of check-summing important transaction data exchanged between merchant, PayU and bank. When merchants send data to PayU, they are expected to send a check-sum of the data in the transaction request. In this case, the merchant did not implement the response check-sum test. In such cases, tampering of response data by malicious users will occur, resulting in the merchant facing the repercussions.”
Due diligence is a default activity that everyone should follow. However, when such untoward incidents take place, it exposes the vulnerability of online transactions. The hackers used simple techniques to invade the website. This could happen to anyone. Merchants would do well to employ a good security system on their websites.
American credit card majorMasterCard has announcedthat it will be investing seriously in India. The company is banking on India’s fast-growing ecommerce industry and the recent digitisation drive. Around June last year, the company had stated that it wouldinvest $ 700 – 800 million in Indiaby 2020. Country Head in IndiaPorush Singh had said,
“We are pretty confident of the Indian market, which is why we are looking to make this level of investment. The future is clear. There is a big opportunity (for electronic payments) in India and more technology is going to come.”
The company seems to be following up on the plans Singh had announced.Sam Ahmed, MasterCard’s senior vice-president of marketing / Chief Marketing Officer for Asia Pacific said about the expansion plans,
“India is one of the top priorities in the region. We have increased our investments in India by over 30% in the last two years and we are going to increase it even more.”
‘Mobile is the key’
Ahmed acknowledged the power of mobile and mentioned MasterCard’s interest in ecommerce,
“The investments will also be channelised towards the digital and e-commerce engine giving consumers what they need. We are planning to do this by partnering with small businesses and merchants and outbound travellers.”
He also mentioned that they would be tying up with movie releases and local sporting events to popularise MasterCard.
With credit card companies coming forward to invest in ecommerce and the digital movement, things should get a fillip.
Taxes in online retailare a bit complex with deductions from the state, the central government and the marketplace you sell on.Entry taxwas introduced to ecommerce last year andGSTwill be implemented this year. This all just adds to the confusion. To simplify the deal with taxation on its platform,Snapdealhas attempted to answer a few questions online sellers have about tax class and tax rates. The etailer also explains in an email to online sellers how tax rates on listed products can be changed.
Here’s what the online marketplace discussed in its email to online sellers –
According to Snapdeal, the term tax class refers to a segment of products specified under the VAT schedule of different states. For example, cookware sets sold in Delhi will belong to tax classes like –Utensils_aluminium_and_enamelled, Utensils_stainless_steel,etc.
Tax classes and rates
Tax classes are used to decide the tax rate for products. There may be multiple tax rates for every tax class depending on the state a seller conducts his business from. Tax rates also differ based on product selling price and MRP.
Tax rates of different states
To know the tax rates of different states simply check thecatalogtab on the seller panel. From there select the 3 dots at the top right of the page. Click ontax information panelwhen it shows up in the drop-down menu. Pick the state you want to know the tax rate of, the applicable product type and tax class for the rates for different price slabs.
How to change tax rates of listed products?
Select thecatalogtab for the options to change the tax rate for your single product or multiple products.
1 –Click on thecatalogtab on the seller panel. Then select the SUPC for which you want to update the tax class.
2 –Check the current tax rate and tax class on the update card.
3 –Go to the edit option and pick the correct tax class for your product.
4 –Select from the available product tax classes and update your tax rate.
1 –Click on thecatalogtab on the seller panel, then select the three dots on the top right of the page.
2 –Pick update tax class from the menu.
3 –Download the tax class mapping sheet
4 –In the downloaded sheet select the correct tax class for your SUPCs and upload this sheet
Correcting tax rates against product tax class
For this you must raise a dispute through thetax information panelunder thecatalogtab. When raising the dispute, the tax class name, current tax rate in the system and proposed tax rate must be mentioned. To support your claim you are also required to submit a relevant government circular/ notification to support your claim.
Can a new tax class be created if a relevant one is not found?
As per Snapdeal’s email, you can create a new tax class is the relevant one cannot be found for your product. Again for this, a dispute must be raised through theinformation panelunder thecatalogtab. A picture of your product along with the product type under which you are selling must be mentioned. Also, a relevant notification from the State or Central government must be provided.
Online marketplaces saw a dip in sales last year due to theintroduction of 100% foreign direct investment. which forced them to limit discounts anddemonetisation, which brought down their COD orders. The road has been rough for etailers, but with the dawn of 2017 they expect better outcomes.
The difficulties of 2016 haven’t stopped etailers from hosting sales. In fact,Amazonjust completed its 3 day Great Indian Sale from the 20th to the 22nd of January. Thesale encouraged more from Tier III cities to buyfrom Amazon. As a result, the foreign etailer sawa 200% rise in growth.
Just a day after Amazon,Flipkartlaunched its own three-day Republic sale from the 24th to the 26th of January. The etailer said it wouldn’t be spending much on above the line or ATL advertising on TV and in print.
The first reason being its conscious decision to rationalise spending.
The second is the fact that Amazon’s sale already helped push their topline because they have more attractive offers.
A director at Flipkart, Smrithi Ravichandransaid, “Because of the sale by rival marketplace, we saw a surge of 2.5 times on our platform over regular days for specific categories such as large electronics like TV, washing machine and smartwatches in the gadgets category between January 20-22. We flashed a few good discounts on this during the sale period.”
During the Republic Day sale, discounts will be available for categories like mobiles, lifestyle categories and women’s apparel. Flipkart’s in-house brand Flipkart Smart Buy and brands introduced during Diwali are participating in the sale, Smrithiadded.
Flipkart reduces spends on marketing
Flipkart is making losses like other marketplaces and one of the reasons for this was its heavy expenditure on advertising. However, this time round the marketplace has cut down this expense. Smrithistatedthat the online marketplace spent far less on promotions. In fact, it concentrated more on social media promotions and digital promotions compared to ATL ads.
She mentioned,“We spent one-fourth on marketing as compared to rivals during the Big Billion Days sale. We are focused on ensuring how can we spend less on this and pass on the benefits to the consumers.”
Snapdeal, the distant third in the Indian ecommerce market is looking to raise fresh funds, according toreports. Buzz is that the etailer is in the middle of fund negotiation with its existing investor SoftBank Group.
It’s worth noting that Snapdeal would raise funds at a lower valuation of $3-4 billion, compared to the last year’s valuation of $6.5 billion. Softbank haddevaluedSnapdeal in November 2016.
Although, the online marketplace has denied that they are in the market looking for money. The company spokespersonsaid,
“We are well capitalized and we are not engaged in any active financing discussions.”
Snapdeal’s FY 2015-16losses increased by 125%to touch Rs 2,960 crore. While most ecommerce biggies, be itAmazonorFlipkartare reeling under heavy losses, but they have at least something going for them.
But in the case of Snapdeal, the etailer is waybehindin the ecommerce race and has lost considerable amount of market share to American ecommerce giantAmazonand Indian playerShopclues. On top of it, the ecommerce investment market is going through a slowdown. Investors are a little wary of putting money in companies that guzzle funds without giving healthy returns.
Maybe that’s why Snapdeal had to decrease its value. The Kunal Bahl-led company is also looking to raise money from other existing investors such as Kalaari Capital, Foxconn Technology Group, Nexus Venture Partners, and Alibaba Group.
According to reports, the online marketplace is also considering selling a part of its digital payments armFreecharge.
In terms of finances, rival Flipkart is alsonot in a good place. The Bansals-led company has been trying to get capital for a long time with no luck. Constantdevaluationsare also making matters worse for Flipkart.
Only Amazon has sufficient funds, thanks to itsrichparent company. But in terms of revenue and market share,FlipkartandAmazonlead the ecommerce market, whereas Snapdeal makes only brief appearances.
Would fresh funds help Snapdeal? Or money is not the real issue? We hope founder Kunal Bahl has the answers.
Online marketplaceAlibabawill soon be joining the Indian online retail industry. It has alreadyacquired its first office in Indiabut keeps us guessing about how it will enter Indian ecommerce. As China’s largest ecommerce company, it is raking in even bigger bucks these days. So much so the etailer hasincreased its projection of revenue growthfrom 48% to 53% for fiscal 2017. This brightens things up for investors in spite of the deceleration of the county’s economy which is holding back Alibaba from its true ecommerce potential
Amazon’s growth in revenue despite economic slowdown
The Chinese online marketplace benefited big from its Singles’ Day sale in November. It obtained a greater online advertising share from rivals like Baidu Inc. And, in the December quarter, it saw more than a double in cloud computing sales.
However, as transactions slow down, Alibaba is still generating more revenue. How you ask? Well, the etailer sells its merchants promotion services to attract more consumers and is expanding its entertainment arm similar to Netflix.
Ray Zhao, a Shenzhen-based analyst at Guotai Junan Securities Co.said,“The growth is mostly coming from the strong performance in Alibaba’s digital entertainment platforms, its ability to make money from cloud computing. Investors will have a huge reaction to the revenue forecast raise.”
Alibaba’s new focuses
Alibaba wants to concentrate on globalisation this year, said Daniel Zhang, chief executive officer. In the US the etailer wants to get on board at least a million small sellers.
Most of the company’s revenue comes from China at the moment and the etailer plans on penetrating deeper into its rural regions too.
It is also purchasing Hollywood content to boost its digital media division that is currently making losses.
Alibaba is also planning to merge the online and offline retail worlds for expansion with thepurchase of Intime Retail
The company wants to offer more targeted marketing strategies for brands through big data and cloud computing services and one-stop solutions with its shopping sites and video streaming,saidJulia Pan, a Shanghai-based analyst at UOB Kay Hian.
Alibaba has many goals for this year, can weexprctits entry into India to be another one of its goals for 2017?
Like a stick of butter in a hot pan, like an ice-cube kept out in the hot sun, Flipkart’s top management is melting fast.
In January 2017 alone, the Indian etailer has lost seven of its senior managers. Besides thefiveearlier this month,two new got addedto the list this week. They are Hari Vasudev and Ashish Agrawal, both SVP, Engineering at Flipkart.
These recent exits have left many senior positions vacant, with only handful of people includingthe new CEOKalyan Krishnamurthy to manoeuvre the shaky boat. The remaining head honchos have to manage its advertising, logistics, marketplace, fashion arms, and other units, while also keeping an eye on growth and funds.
A manager from one of the companies that has invested in Flipkartsaid,
“The latest reshuffle at Flipkart is good for the company—it needed someone at the helm who could inject some financial discipline into the ranks and also help pave the way for a proper exit for all investors a few years down the line.”
Valuation goes further down
Krishnamurthy, ex-employee of Flipkart’s investor Tiger Global took control of the online marketplace at the beginning of this year by replacing co-founder Binny Bansal. Devaluationstriggeredthis CEO switch, according to industry experts.
But the stock of devaluations has not yet finished.
As per Fidelity Investments’ regulatory filing, the mutualfund company marked down Flipkart’svalue by 36% in November 2016. This brings down the Indian etailer’s valuation at $5.58 billion.
In the recent times,Morgan Stanley,T Rowe Price,Vanguard,Fidelity and Valicare few other investors that has decreased the value of Flipkart’s shares.
Chaos or clearing out the clutter?
As we can see, things are not looking up for Flipkart right now. Losing trust of investors and top mangers is not a positive sign. The CEO has been served too much on his plate and the pile is only growing.
It seems that the next funding round forFlipkartwould be a down-round. But would they be able to raise sufficient funds to compete with cash-richAmazon? And would they be able to fill the unoccupied positions before it’s too late?
Ecommerce is changing everyday, and sometimes by the minute. So many new ideas and developments everyday, becomes hard to keep track.
We bring to you a curated digest of ecommerce developments/happenings around the world, compiled from various publications across the Internet.
Amazon increases capacity in the US
Amazon is increasing its capacity to deliver in the USA by a rate of knots. They’ve just announced the opening of three new Fulfilment Centres this month alone. That comes on top of the 26 US Fulfilment Centres they opened in 2016. The new 1.2m sq ft premises in Maryland will employ 700. It’s about an hour from Philadelphia and Baltimore in a town called North East.
Australian Online Retailers Need to be Extra Vigilant
Thirty-nine of the world’s top 250 retailers now operate in Australia, up two from last year. Australian retailers are warned to be extra vigilant, with international retailers set to enter our retail market further in 2017, according to Deloitte’s 2016 Global Powers of Retailing report.
China’s Alibaba reports a 54% increase in revenue in Q3
Alibaba Group Holding Ltd. reported a 54% year-over-year increase in revenue in its fiscal third quarter ended Dec. 31 as China’s mostly mobile shoppers continued to flock to its giant online marketplaces, Taobao and Tmall. A highlight of the quarter was the $17.4 billion worth of purchases on Alibaba’s shopping portals on Nov. 11, the annualSingles’ Dayonline shopping extravaganza in China, with 82% of purchases coming from mobile devices.
Amazon undercharged for four months and will send new bills for the balance
We’ve seen a copy of an email from Amazon suggesting that between 8th of September 2016 and the 11th of January 2017 the wrong fees were charged for items sold in the Electronics Accessories Categories. Amazon’s Seller Referral Fees for that category should be 12%, but we understand they were incorrectly charged at just 7% for four months. Amazon have been billing the correct 12% from the 12th of January 2017. This means that sellers may have been undercharged by 5% on all their sales for four months and three days.
Chinese customers set the pace for global e-commerce – can you keep up?
Anew reportfrom Accenture and AliResearch, Alibaba Group’s research arm, forecasts that by 2020, more than 900 million people around the world will be international online shoppers, and the biggest market will be China. Over 200 million Chinese consumers are expected to be cross-border shopping within five years, with a transaction volume of imported goods purchased online reaching $245 billion.
Amazon India’s on-demand delivery service ‘Amazon Now’ is ready totravel to new cities.
The etailer’s online grocery service ‘Kirana Now’ wasrechristenedas ‘Amazon Now’ in early 2016. In the trial period the service wasavailableonly in Bengaluru. It was gradually extended to selected pin-codes in Delhi-NCR, Mumbai and Hyderabad. In 2017,AmazonIndia is planning to add more pin-codes and cities besides the four existing ones.
Saurabh Srivastava, Director – Category Management, Consumables and FMCG at Amazonsaid,
“AmazonNow app has witnessed an amazing uptake by customers in Bengaluru and this overwhelming response prompted us to expand the offering to other cities like Hyderabad, Delhi and Mumbai in the last few months. We now cover at least 80% of customer demand in each city We will be expanding our reach to service more pin codes in the next few months. We will always continue to innovate on customers’ behalf to constantly enhance their shopping experience.”
Amazon has unreal expectations from the Indian ecommerce market?
The US-based ecommerce firm is on an expansion spree in India. Expanding its 2-hour delivery service is one of the many moves taken by Amazon to dig deeper into the Indian ecommerce market.
In the recent times, the etailerexpandedits office space, opened new fulfilment centres andlocalizedits sellerservices. To do all that and more, Amazon spent Rs. 7000 crore in 2016, which the etailer called long-terminvestments.
But according to industry watchers, Amazon isdreaming way too big. India’s ecommerce market is expected to become world’s2nd-largest by 2034. Yet, it is too early to predict, experts believe.
“Companies often bet big when there’s a race for “winner takes it all” and there’s fear of missing out; there’s this sense that, if you don’t bet big, you’ll be doomed. It’ll take at least another 10-15 years for India to build the kind of depth with transacting users to come close to China and, provided, the GDP grows between 7-10% annually during that period. So in the short run, everyone has overestimated the potential of India’s Internet market. (But) for Amazon in the long run of a 20-year horizon, $10-15 billion of investment is nothing,”saidRutvik Doshi, Inventus Capital Partners.
Based on the estimates, Amazon has poured millions into its India business and has managed to dilute home-grown etailersFlipkartandSnapdeal’smarket share. But would it pay off? The American etailer’s deep pockets have managed to trouble other ecommerce biggies but would it help to generate long-term revenue?