By increasing the number of products from weavers and manufacturers to 33%, the etailer can reduce its dependency on wholesalers and retailers. This is the expected reality in the next 12 months.
The co-founder and CEO of the online fashion portal, Sujayath Alisaid,“Rather than going to a master weaver or a franchisee or a wholesaler, we want to move completely towards manufacturers, weavers and shoemakers, so it becomes a platform for these people. The idea is to go to the core base. For example, when it comes to silk, we directly go to the weavers in Uppada.”
He also revealed that currently, 20% of the products on the platform come directly from manufacturers and artisans. This has allowed the etailer to offer goods at affordable prices. Removing middlemen from the equation means less cost. However, Voonik still depends on wholesalers and retailers for new products yet to receive feedback from customers.
The ecommerce company has 8,000 active online sellers for whose products it receives 10,000 orders a day. Out of this, 75 % of orders come from beyond the country’s top-10 cities. Most of these orders originate from tier 2 and 3 cities.
Online marketplace,Shopclues, is also banking onaffordable fashionto expand its business. Is this a better way as opposed to high-fashion from private labels on platforms like Myntra and Jabong?
Home-grown ecommerce firmFlipkartrecently confessed about its obsession with innovation, which has also spread to its other entities likeMyntra. This fixation is the driving force behind constantly augmenting customer experience.
Ranjith Boyanapalli, Vice President of Product at Flipkartaffirmed,
“At Flipkart, we’re obsessed with innovating to ensure the best in class customer experience which is the key differentiator that helps Flipkart stay on top. We sift through vast amounts of data and research every day to learn about our customers, listen to them, understand their pain points and alleviate them. Besides, customer focussed group discussions keep happening at Flipkart.”
Flipkart’s past innovations since its inception include cash-on-delivery mode of payment, No Cost EMI, Buy Back scheme, and Product Exchange program. Developing itsartificial intelligencewing is also one such move. These strategies helped Flipkart to differentiate its business from competitors.
Myntra’s innovation – Loyalty Program
Myntra’s thoughts are aligned with its parent company Flipkart. In May this year, the fashion etailer experimented withfull-price sale events, which is first of its kind in this discount-obsessed ecommerce industry.
The company is now planning tolaunch a loyaltyprogram in less than 2 months. The inspiration could be Amazon Prime but Myntra’s CEO says the program won’t be like Prime.
“We are actually thinking of innovating around a loyalty programme, which you should see come out in a month and a half. It won’t be like Prime, but it makes sense to have a loyalty programme. We’ve been working on it for two-three months.”
Myntra’s EORS June 2017 edition ended on a high note as itwitnessed56% growth. With its loyalty program, the etailer hopes that the growth will accelerate even further. WhileFlipkart’s loyalty servicefailed to gain momentum againstAmazon Prime, fashion arm Myntra believes that things would turn out differently for them.
Focus on customer experience and innovation paying off?
According to South Africa-based MNCNaspers’ report, Flipkart is the Indian ecommerce industry’s current leader. Naspers claims that Flipkart’s contribution to the industry’s monthly gross merchandise value (GMV) stands at approximately 57% (March 2017). Naspers is one of Flipkart’s investors and holds 16% stake in the company.
The high GMV contribution could be the result of Flipkart’s obsession with customer experience and innovation. But rival Amazon strongly disagrees with these stats and isn’t buying any of the claims made by Naspers report.
“Based on standardized monthly reports, we know for sure that we are leaders on things that matter to customers and sellers. As there are no credible third-party sources for segment share, we do not comment on speculations.”
Will the real Indian ecommerce leader please stand up?
Online retail giant Amazon.in today announced the launch of its sixth fulfilment Centre (FC) for Mumbai, and its eighth in Maharashtra. The new fulfilment centre is situated in Bhiwandi, and will service more than 13,000 sellers in the Mumbai metropolitan region (MMR).
“Our sellers in Mumbai have grown by 70 per cent in the last year, and our seller base in Maharashtra is now 30,000 and has grown by over a 100 per cent. The new fulfillment centre will empower these small businesses to leverage the digital economy, and reach a wider customer base,” Akhil Saxena, VP, India customer fulfillment, Amazon India told PTI here.
The new centre is spread across 90,000 square feet, and offers more than 3 lakh cubic feet of storage space. This takes the total storage space of Amazon to 2.5 million cubic feet. In 2017, Amazon.in has said it will have 41 operational fulfilment centres in 13 states across the country with a combined storage space of close to 13 million cubic feet.
When asked about the impending Goods and Services Tax (GST), Saxena said that the company is providing full support to its sellers to gear up for the tax reform. Amazon has committed an investments to the tune of USD 5 billion in the country.
Its chief Jeff Bezos has reiterated the company will “keep investing and growing in India” after his meeting with Prime Minister Narendra Modi, yesterday.
By mid-2018, Urban Ladder expects to collect $25-27 million as funds to cover its offline furniture foray. InFebruary, the etailer raised Rs.100 core from investors like, Kalaari Capital, SAIF Partners, Steadview Capital and Sequoia Capital. It has raised a total of $98 million as funds so far. The new funds will be used to expand its offline retail business which will commence in the first of July, 2017,mentionedUrban Ladder co-founder and COO, Rajiv Srivatsa.
Hesaid,“We would like to raise another $25-$27 million in funding that would be the last round of money we may raise before profitability. The money will be utilised to fasten our offline retail rollout and expect to become profitable within two years.”
Will investor purse strings loosen enough to match Urban Ladder’s requirements?
In July 2016, IOSreportedabout how formerJabongexecutives are under scanner for corporate governance violations. At the centre of these violations was Jabong’s logistics arm GoJavas, in which Snapdeal had a majority stake of about 50%.
Snapdeal sold these shares to Pigeon Express thatacquired GoJavasin August 2016. The online marketplace hadhold on tothe logistics company’s shares for a long time but sold it off in order to get rid of bad investments and clean its slate.
The complainant is Krishna Mohan Chaudhary, the director of Snapdeal’s legal team. And the GoJavas promoters mentioned in the FIR are Abhijeet Singh, Praveen Sinha (co-founder of Jabong), Randhir Singh and Ashish Chaudhary.
“The complainant was induced into buying shares of Quickdel from Quickdel and Randhir Singh and Praveen Sinha. The complainant acquired 49.99% shareholding in Quickdel by paying an amount of Rs 119.99 crore to Randhir Singh and Praveen Sinha and Rs 237.27 crore to Quickdel.”
Snapdeal has accused the ex-promoters of:
Criminal breach of trust
Criminal misappropriation of funds
Pigeon Express too has contributed to the list of complaints.
“We added our list of additional complaints to the one filed by Snapdeal in December 2016. We wanted to inform the government of the discrepancies we noticed during the due diligence of the company and after takeover. We are not sure why this was not done earlier by Snapdeal,” a senior manager from Pigeon Expressdisclosed.
Is this side-effect of the due diligence process related to Snapdeal-Flipkart merger?
“Of course, the smaller shareholders are not happy since they want a larger exit payout—but they have no power to hold up the deal. The sale will go through irrespective of whether the smaller investors are on board or not.”
So it looks like thatSnapdeal’smajor concern at the moment is cleaning up its financial report, rather than appeasing small shareholders. It might explain the reason behind filing a FIR against former GoJavas executives after dilly-dallying it.
The diligence process is turning out to be difficult than expected for Flipkart, which is why the Flipkart-Snapdeal merger is taking so long to materialize.
What’s interesting is that many had raised concerns over Snapdeal’s interest in buying GoJavas and Jabong last year as they were entities full of red flags. But out of nowhere Flipkart acquired Jabong, which was under scanner at the time of acquisition. Now both the Indian etailers are negotiating sales talks, for which Snapdeal’s books are being scanned by Flipkart, including GoJavas investments and FreeCharge.
Online retailer Myntra today said 1.3 million customers placed orders for 4.2 million products during its three-day End of Reason (EOR) sale, helping sales register 56 per cent growth over last years edition.
The sale number includes those of Jabong, which was acquired by Myntra in July last year for USD 70 million. “The sixth edition of EOR sale has by far been the biggest along with Jabongs participation. EOR sale has enabled us to expand our base,” Ananth Narayanan, CEO of Myntra and Jabong, said in a statement.
During the sale (held between June 24-26), the company registered 183 per cent rise in traffic over base line and 1.3 million customers participating, he added.
Last year, the July sale saw participation from nine lakh customers.
Also, 3.5 lakh customers shopped on Myntra for the first time during the sale, and 4.2 million products were sold by the end of EOR sale, Narayanan said.
Since the etailer must file returns under GST, sellers on its ecommerce platform will also be affected. As a result, Shopclues it trying to get over five lakh sellers registered under the new tax.
Preparing MSMEs for GST
In anearlier reportabout GST hassles for smaller sellers, the Shopclues’ Arun Goel, mentioned that the company was ready for GST, but wasn’t sure if its sellers were. The ecommerce company has already migrated to a framework that supports GST requirements. Internal IT and billing systems have also been upgraded. It has tied up with third party logistic partners to allow efficient implementation of GST in logistical operations including first and last mile delivery.
But, most of the sellers on its platform are MSMEs from tier 2, 3 and 4 cities. And, these are not registered under GST. Without registration, sellers will face issues in selling with the marketplace. This has encouraged the etailer to launch a GST registration service for sellers to register and acquire GTIN number.
Utkarsh Birader, VP – Products Shopclues,said,“With more than half a million merchants, ShopClues has the largest merchant base in India. To educate SME’s (including non-Shopclues merchants) on GST compliance, we are organising seller summit in tier II, III and IV cities under our merchant empowerment initiative – Saarthi. In these camps, we have created special sessions on GST registrations and compliance and answering all doubts and queries of the merchant community.”
The company will enable sellers to use its merchant portal for –
Filing GST returns
This should enable merchants to continue their online businesses without any form of disruption.
Birader alsomentionedthat,“ShopClues is also organizing weekly webinars under Shopclues University programme where merchants can get their queries clarified from internal GST experts. Merchants can also contact on our merchant support hotline no 01244669777 to understand GST implications specific to their businesses.”
The GST compliance feature from Shopclues is also available to sellers using its Point of Sale (PoS) facility, ‘REACH’ in offline retail. ‘REACH’ is a GST ready PoS for offline stores which allow digital payments. Thereby, allowing the etailer to promote both cashless transactions and GST.
Besides getting sellers ready forGSTthroughtie-ups with tax expertsorpre-GST sales, marketplaces are also busy readying themselves to meetGST requirements.Flipkarthas informed sellers on its platform via email (last week) that from5.00 a.m. June 26, 2017, its customer invoice number format will change, as per GST mandate.
The company has generated a 16 character invoice number for all new orders. It will represent the following format –
But, could the negative effects of GST be graver than expected for online sellers?
1% TCS problematic for vendors
Under the new tax sellers will have topay 1% TCSupfront. This will affect smaller sellers since their working capital will be blocked as input tax credit. This will make it tougher for small vendors to function online under GST, claims partner and national leader of indirect tax at PwC India, Pratik Jain. He alsomentionedthat,
“ Ideally, TCS should be at a very nominal rate. The 1% TCS puts pressure on players in the SME segment from a cash-flow standpoint.”
GST compliance will be much easier for big sellers like Amazon’s Cloudtail and Flipkart’s WS Retail, since they only need to shift from the VAT system to GST. Smaller players, on the other hand, will have to:
Non-compliant small sellers to hurt ecommerce industry?
Industry estimates claim that the GMV (gross merchandise value) of the ecommerce industry is around $15-20 billion per year. And, around 20-30% of this amount is contributed by small vendors in the industry. They specialise in categories like fashion, handicrafts and household supplies. So, their non-compliance with GST is expected to hit the online retail industry hard.
The CTO and co-founder of Instamojo, Aditya Senguptasaid,“Sellers who drive the larger share of the volume have already registered but some sellers from the SME segment will pull back in immediate effect to the GST implementation, but the impact will not last too long.”
Collaboration with tax experts
Amazon India’s GM and director, Gopal Pillaisaid,“Through regular interactions with our sellers, we observed that a lot of them were concerned about nuances of GST. Thus, we partnered with ClearTax to help them file and reconcile their tax returns conveniently and transition seamlessly through GST.”