Tuesday 24 May 2016

After Alibaba, China’s Tiens group to trigger ecommerce competition

Yet another Chinese company is planning to hit the Indian ecommerce industry. China’s Tiens Group intends to start operations in India by the second half of 2016. The company has already begun the process of setting up outlets in different cities including Kolkata, Mumbai, Guwahati and Hyderabad. Centres in Chandigarh and the North-east are in the anvil.
Kevin Hou, Region President of Tiens South Asia says,
“We plan to sell 3,000 products from the online shopping platform, which would be ready in the second half of the year. Indian customers will be able to buy products from different countries on the platform.”

The Tiens Group

Tiens works through the multi-level marketing or direct marketing technique, selling instant coffee, Chinese herbs and tablets. It was established in 1995, andentered the international market by 1997.
In India, the company intends to compete with Amway and Oriflame; companies that function through the multi-level marketing set-up. Tiens has a solid user base in India, and plans to expand, says Hou,
“The company’s total user base in India is currently 2 million. We plan to take this to 10 million in the next five years.”
The main attraction in India is its potential customer base, says Hou.
“India is a huge market with a 300 million strong middle class hungry for a variety of world class goods and services. At Tiens, we plan to tap the huge Indian market in a big way over the next five years,” he maintains.
The company also plans to work out employment opportunities for local talent.

The Indian charm

Most multi-national companies have made a beeline for India once they have established themselves in their home countries. The obvious reason for this being the fact that Amazon, Alibaba and Tiens find that the country’s dense population and increasing tech-savvy youth translate to a good haul of cash.
Indians are not complaining either. The ecommerce industry as a whole is benefitted with more players, leading to the industry’s growth, and buyers and sellers get more scope and opportunities.

Could limited finances end Indian ecommerce? Are the days of glory nearing an end?

Could it be true? The ecommerce industry is now in trouble! Does this mean we have to revert to conventional trade? But what kind of trouble are we talking about?
Well for starters ecommerce funding is scarcer than ever. Many online marketplaces have been devalued and marked down. Those who once reigned supreme are now questioning their business approach and remodeling their business strategies.
According to a research report by Kotak Institutional Equities, with limited availability of funds, the ecommerce ecosystem in our country has begun adopting much stricter norms for business models. All while focusing on business profitability and consolidations.
The report also said, “We believe this (e-commerce) shake-up may intensify further, leading to the emergence of one or two strong companies within each sub-sector.”

Reduced funding for Online Marketplaces

In March, Flipkart and Snapdeal both experienced devaluation. Investors Morgan Stanley brought down Flipkart’s $15 billion denomination by an alarming 27%, which is $4 billion. By May the marketplace was marked down yet again by two more investors.
Investors pulled their stakes out of Snapdeal too. Rocket Internet’s Global Fashion Group (GFG) was devalued by 67%, while Jabong continues to hold on despite no love in the form of finances from parent company, Rocket Internet. eBay and Quicker are also among those who lost investors.

Troubled Hyper-local Category

The hyper local category is the worst hit in Indian ecommerce. Online grocers and their delivery partners were doing swell last year. But now everyone is betting against them. Many participants in the hyper local segment have either shut down their businesses or brought down the scale of their operations.
Flipkart ended all operations related to Nearby its grocery delivery app. Ola shut down its hyper-local delivery project. PepperTap could no longer take the pressure and decided to change its focus to pure logistics like its parent company. And Roadrunnr, a delivery company merged with Tinyowl, the food ordering app which has recently shut down operations everywhere except Mumbai.

Government Regulations

Government regulations haven’t made things any easier for online sellers. With the introduction of the new FDI ruling, online marketplaces have experienced endless trials. The restrictions regarding dependence on single large sellers and discount offers require etailers to restructure their business models. According to the report, this will necessitate major changes in strategy and it will impact the growth of marketplace sales.

Offline Retailers Taking Advantage of Ecommerce Distress

The current rate of consolidation among ecommerce players may intensify, resulting in the existence of only a few strong players within each category.
On the other hand offline retailers may take advantage of the situation by taking over their ecommerce rivals. Like Titan’s purchase of Caratlane and Future Retail’s acquisition of FabFurnish.
The ecommerce scene is one of pure uncertainty and everyone is questioning their association with it! Where will your online retail business stand in a few days?

Geotagging – Sellers, will you tag along or untag yourself?

Logistics is the biggest pain point and money guzzler for ecommerce players. Getting a product from point A to point B within a stipulated time frame in a good condition requires a lot of money and thorough planning. Add to that multiple attempts of delivery, cash-on-delivery payment method, reverse logistics and entry barriers in selected States of India.
That’s why great efforts are taken to reduce turnaround time & cost for shipment delivery with the help of technology. One such tech aid is Geotagging.

Geotagging simplified

When deconstructed geotagging means – attaching geographical information tag to various data, sources and places, be it images, videos, websites, social media updates, stores or marketing campaigns to identify & record location. The purpose is to find location-specific information quickly.
You must have seen geotagged images, posts, reviews and information about ‘nearby’ places/things on social media platforms such as Facebook, Twitter, Vine and Instagram. For example: A quick search for ‘Taj Mahal Agra’ on Facebook, and Instagram takes you to the location’s ‘pin icon’ and you get to see all posts (image, video, check-ins, reviews) related to Taj Mahal.

How geotagging helps online marketplaces?

Ecommerce players Flipkart and Paytm use the technical geotagging algorithm to save money on logistics. How? In one of his interviews, Paytm’s VP of Logistics, Sudhanshu Gupta explained how geotagging is helping the marketplace to reduce the delivery time.
Gupta said,
“We are currently using geotagging which helps us to identify sellers closest to the buyers’ location… We currently have around 15 delivery partners and would be adding more in the coming days. We don’t decide on which seller is going to deliver the product. That is the decision of the sellers in a marketplace… We now also have 16 fulfillment centers in top tier 1, and tier 2 cities, so that the shipment is always being shipped from the closest possible location to the customer.”
This is how it works – Etailers have developed algorithms that identifies vendors or warehouse location, which is nearest to the buyer. This is to ensure that distance as well as delivery time is reduced. Less distance means ecommerce players/sellers have to spend less on logistics. Less delivery time means buyers won’t cancel order due to long wait. It all leads to timely delivery, less returns, and low logistics & reverse logistics cost.
Another advantage of geotagging is tracking ‘missing’ package and detect fraud claims by customers. In Amazon.ca’s seller central forum, someone posted that how/what should he reply to a buyer who mailed him ‘where’s my stuff?’ after 3 months of the delivering date.
To this one of the vendors suggested, “The post office can look up the “geo Location” which is where the postal worker was standing exactly when they scanned the package as delivered.” This will help to pull out the delivery information of where the package was scanned as delivered and identify if the buyer’s claim of ‘missing product’ is true or false.
In short, marketplaces use this technology to:
  • Spot sellers closest to the delivery location
  • Reduce delivery time
  • Reduce order cancellations & returns rate
  • Delivery-confirmation by scanning the package while handing over the order
Even India Post recently geotagged around 1.5 lakh post offices for the first time so that people can easily locate the nearest post office, and get to know all service related information.

Sellers’ take: Anti – geotagging

With terms like ‘less cost’, ‘less returns’ attached to geotagging, it was easy to assume that all sellers must be happy with online marketplaces’ technological initiative. After all, sellers are unhappy about heavy returns. But surprisingly (or not so), all sellers aren’t happy.
A disgruntled seller Kidsworldco wrote on vendors’ forum AIOVA, “Issue with geotagging sales r going very low due to this … any suggestions for it.”
Another seller Mahendra wrote,
“Geotagging seems to be one of the worst technical algorithm ever invented by any eCommerce company in the world. By bringing in something like geo, flipkart is actually killing the whole idea of ecommerce. ecommerce does not look for boundaries, it can only win & grow when people can buy stuff which is either not available at their location or is available for a higher price tag. Geo is killing the original USP of ecommerce.”
Both the sellers are implying that due to geotag, their sales have dropped. Although, there are others who hold an opposing viewpoint.

Sellers’ take: Pro- geotagging

Kush Agarwal, President of Uber Urban, Raghuvir Lifestyle Pvt Ltd believes that geotagging is a great move by Flipkart. He agrees that while the number of orders has reduced, return to origin (RTO) and losses has also dropped.
He shared with Indian Online Seller,
“For sellers who are working for other brands, they may feel that geotagging has reduced their sales as they are not getting orders of far off places. But in turn, they are not seeing that returns, delivery time has reduced due to which money rotation is faster. Earlier order used to come but it would get cancelled before delivery as customer wouldn’t wait, or it would take too long to get delivered, which would affect the payment cycle. Because of geo, websites are reducing their losses of reverse shipment, packing material etc.”
Agarwal emphasizes the fact that it isn’t feasible to take orders from other far-off places if the chances of cancellations are high.
However, less sales is a very valid concern as raised by sellers, Kidsworldco and Mahendra. To handle this issue, Agarwal suggests,
“Such sellers should think smart and appoint distributors of their products in areas which are giving them good orders. This will increase sales, as product will be live from many locations. A plan B will always be open if a seller account is disabled by marketplaces, or when external uncontrollable factors like strikes, riots etc disrupt courier pick-ups.”
He shared a personal experience with IOS about the time when there was a strike in Ahmedabad, Gujarat due to Patel quota agitation and pick-up services by courier companies were badly affected. “I as a brand owner was not at all worried about sales, as all clicks and orders landed on by ecom distributors who were based in various parts of the country. This gave me a good look on my balance sheet,” says Agarwal exultantly.
Backing ecommerce company Flipkart and Paytm’s decision to introduce geotagging, Agarwal adds,
“If I was owner of a marketplace, I would implement more policies like geotagging which could reduce my logistic cost per delivered product.”
So here you go sellers, two opposing views on the same thing. Which one do you agree with? Which one would you rather pick – fewer orders & less returns or more orders & high returns?
Do you think that in the garb of geotagging, marketplaces are promoting Product Listings Ads or sellers who have opted for their fulfillment services? Or do you think that it is a genuine and helpful endeavor to help sellers and themselves? Let us know through your comments.

Local artisans scared to sell online? Quick look at Benarasi Saree project

Online retail is a fickle business at times, especially with no questions asked returns policies involved. It is a lucrative means of business these days but online selling does have uncertainties that could destroy you.
Handicraft is an age old trade in India. Their beautiful designs and intriguing features make them attractive to many buyers. The thing about handicraft though, it involves hours of labor, experience and expensive quality materials. This increases costs and having them returned means more costs to bear.

The Banarasi Saree Project – What lead to Banarasi Saree Bazaar?

The whole idea behind Banarasi Saree Bazaar was to allow weavers from Varanasi to market their products directly instead of depending on exploitative middlemen. The textile ministry launched this pilot project in 2014, in association with leading ecommerce retailers for the weavers of Varanasi. Less than two years into the project and already those involved were vowing never to take up ecommerce ever again.
Returns are part of online selling, but why has it left such a sour taste in the mouth of so many?

Reasons why Banarasi Saree Bazaar Failed

# Reason one – Deceitful Buyers

Mohammed Aslam, an award winning weaver from Prime Minister Narendra Modi’s Varanasi consultancy, decided to take up ecommerce. A few months into his business and the losses began to pile up. Aslam couriered Banarasi sarees to a client in Mumbai. The shipment was worth about Rs. 30,000. The client requested to return the products, but what Aslam received were cheap knock offs!
Aslam’s not the only weaver in this predicament. Other weavers who were part of the Banarasi saree project also faced similar if not the same difficulties. Some received frequent product returns and in most cases the returned products were used or replaced with cheaper versions of the actual product.
Devious consumers took advantage of the 7 day return policy, managing to wreck businesses and livelihoods. When sarees are returned, the consumer usually says it’s because the product received does not match the product displayed online, in terms of color and design, says Aslam.

# Reason two – No guarantee of safe product returns

Products being returned is part and parcel of ecommerce. What artisans and craftsmen don’t want to endure is the loss or damage of their goods due to returns. There is no way one can guarantee the products will come back, that too safely! All a seller can do is trust that buyer will do the right thing.

# Reason three – The first experience was a negative experience

A negative experience right at the start can dishearten a seller, especially if they put everything into their trade. Some may say, “So you failed once, why not try again?” In this case trying again will only mean more rogue buyers taking you for a ride. Also if you want to sell online you cannot revoke the consumer’s right to return the product. How else will you get takers for your goods? A Rs. 30,000 order does not mean you’ll earn that much, in online retail it sometimes means you could lose Rs. 30,000.

# Reason four – Ecommerce is latent with uncertainties

Silk saree and home furnishing manufacturer, Maqbool Hassan  gave up on ecommerce because of the risks it comes with. Hand woven goods are custom-made and labor intensive, making them expensive. The sale of these goods is very different from products like mobile phones and other electronics. With handicrafts each consumer has different expectations, which means they have more reasons to return these products.
Sarfuddin Ansari another weaver specializes in the making of brocades and scarves has also given up on ecommerce because of the time and effort it takes to create a unique handmade masterpiece, (worth Rs. 8,000 to 1 lakh). It isn’t easy to meet delivery deadlines is a weaver falls ill, he says.

# Reason five – Returns are not feasible in this industry

Handmade sarees and other hand woven goods are part of the cottage industry. When weavers spend so much just to create beautiful sarees, shipping the product to and from customers is not feasible and is an absolute waste of time. They’d rather have consumers personally come and look at their products before buying, if online retailers cannot provide safety and security for their products.

The Potential of the Industry

The potential of the handloom industry is ever growing. Yes people may be using power-looms to make sarees, but the value of hand crafted sarees is not lost. Many are going back to old weaving techniques that did not involve modern technology. The present Prime Minister wants to connect local weavers to the international market through the internet, according to his campaign promises back in 2014.
Many others have participated in attempts to improve the plight of local craftsmen, Recently International online marketplace Amazon partnered with India’s textile ministry to promote handlooms and empower weavers. Paytm launched a ten crore project to promote “make in India” products like handicrafts.eBay is also expected to join the textile ministry as well, in order to empower locals.

New Projects Focused on Local Weavers in Ecommerce

According to Nitesh Dhawan, the assistant commissioner, of Handloom and Textile Industries in the Varanasi region, the government will appoint marketing and merchandise executives to assist weavers in online selling.
He also said that right now a new initiative called Varanasi Mega handloom Cluster scheme would be launched soon. Under the scheme a designer will be responsible for designing a plan and will also manage and market the weaver’s products. This will enable them to concentrate on production more and less on selling.
But without security against theft and damage of goods, weavers find it difficult to see the benefits of online selling.

Jabong realigns its positioning; low margins out, premium brands in

Troubled fashion etailer Jabong is getting ready to cut its losses and revive growth. The online retailer is getting rid of all low-margin products & non-performing private labels and will instead focus on high-end fashion brands.
The newly minted CEO of Jabong, Sanjeev Mohanty clarified,
“We had spread ourselves too thin and now we are shrinking our portfolio. We are sharpening our positioning and opting out of lower price point brands and labels.”

Realigning their brand positioning

Jabong offered a host of fashion & lifestyle products on its portal including several in-house brands. But the company will now focus on nearly 200-300 premium brands with high-margins. The main aim is to create a new identity and channelize funds to increase revenue, rather than accumulating losses.
Mohanty said,
“We are looking at 40% of the market, which is Rs 750 and above, with focus on the upper mid-priced market to premium and super premium.”

Strategies to cut losses

The rumour about Jabong being sold is refusing to die down. The etailer is trying hard to survive amidst the heavy losses and highly competitive ecommerce industry.
One such effort from their end was reducing discounts, which worked as the company managed to bring down losses. Funds were injected too, but lowervaluation and sales is making it difficult for the etailer to stay steady in the storm.
Will the new strategy to focus on premium brands and distance itself from the low-margin products work for Jabong?
Sreedhar Prasad, Partner at KPMG feels,
“It is good to consolidate the brand portfolio using analytics and understanding of customer preferences. This could even help in a clear value proposition to the customers. Brands need to provide either revenues or margins or variety to the platform.”
Other online fashion stores such as Myntra, Voonik, and Koovs are expanding aggressively. Ecommerce giants Amazon, Flipkart and Snapdeal are there too to give stiff competition to pure fashion etailers. How will Jabong fight in the challenging external and internal environment? Will the hard work pay-off or will they be forced to shut shop?

Online shopping more popular among consumers: Survey

Online shopping is more popular among consumers with 80 per cent of buyers preferring to shop over the Internet instead of visiting different stores to purchase their favourite products, according to a new survey.
The study undertaken jointly by Yahoo and Mindshare analyses the shopping behaviour of customers to reveal that 31 per cent shoppers opt for online shopping in order to save the time and effort that might be spent on physically going to stores to buy the same products.
About 28 per cent customers are driven to buy online due to the availability of discounts and promotions while the convenience to shop anywhere, anytime attracts the remaining 21 per cent, it said.
The study also highlights how more and more customers are taking to mobile phones to make online purchases as compared to other electronic devices.
“The ecommerce landscape in India is perhaps the most dynamic in the world, largely due to the rapidly evolving mobile ecosystem. This research highlights the role of mobile from the top of funnel to the bottom and how it varies across product categories. It will help us develop sharper, more connected communication strategies for brands,” M A Parthasarathy, Chief Product Officer, Mindshare South Asia said.
According to the survey, majority of consumers use only mobile devices while making purchases related to apparels, electronic devices, baby and pet care products.
Most purchases made online over mobile phones tend to be regular or impulsive buys rather than expensive ones, the study claims.
Over 90 per cent of the consumers use mobile devices for quick and frequent purchases of travel, music and movies, contrary to 36 per cent who purchase high consideration products like insurance on their PC or laptop.
About 30 per cent people prefer buying products of personal hygiene from the store itself.
The study also provides marketers with insights on India, to sharpen their digital and mobile commerce initiatives and build a strong mobile strategy.
“The study shows that the consumer path-to-purchase is turning more complex and nonlinear, with mobile at the center of this evolution. As mobile devices become more important in the consumers last mile of purchase decision, brands need to build targeted, more seamless shopping experience across all channels to strengthen sales and acquire new customers,” Francis Che, Head of Insights, APAC, Yahoo said.
For those who continue to prefer in-store shopping, major detractors include non-authentic goods, unreliable delivery and lack of quality control.

What are Snapdeal’s top selling products? Do men spend more on grooming?

From men’s fairness creams to selfie sticks, from exam books to sarees, Snapdeal recently released the surprising shopping trends for the year 2015.

Demand for convertible laptops & tablets grew manifold

The sales of 2-in-1 computers – laptops & tablets multiplied by 5 times compared to 2014. Less power consumptions, long battery life and sim compatibility are said to be reasons for this 5X growth.
  • Acer, Dell and Micromax were the most popular brands in 2015
  • 80% of the demand came from non-metropolitan cities

Mobile phones remain top-selling category

Nothing beats the popularity of mobile phones & accessories when it comes to online retail. Same was the case with Snapdeal, where the top selling products of 2015 were smartphones and feature phones.
Here are some notable stats:
  • Bangalore, Chennai, Hyderabad, Kolkata and Mumbai were the top 5 cities for feature phones
  • Cover & cases by sellers Bomcase, Grafins, Molife, and Koloredge were top phone accessories
  • Selfie sticks sold like hot cakes in tier-2 cities like Rajkot, Thane, Patiala, Nagpur, Nashik, Mysore and Ranchi
  • Huge demand for regional language phone operating systems was observed in Maharashtra, Tamil Nadu, Karnataka, Andhra Pradesh and West Bengal
  • Micromax, Coolpad and InFocus were the top smartphone brands in tier 2 & 3 cities and small towns
  • Hitech, Micromax, Zen, Videocon and Forme were the top selling feature phones

Men spent more on personal grooming than women

This revelation comes as a surprise as the common belief is that women spend more on personal grooming products. Thanks to the privacy that online shops offer, men splurged on personal care products in 2015, according to Snapdeal.
Below is the category’s performance report:
  • Make-up category saw a growth of 700%
  • The growth rate of men’s electronic grooming tools was 20% more than women’s
  • Men bought 3 times more perfume than women
  • Demand for men’s fairness creams was high in Maharashtra, Karnataka, Uttar Pradesh, Delhi and West Bengal
  • The top selling women’s personal hygiene products were sanitary pads and hair removal products

Buyers getting fitness conscious

Courtesy of the growing crop of health-conscious people, Snapdeal earned a lot of moolah from fitness equipment and accessories category. The marketplace revealed:
  • Gross sales of fitness bands increased 10-fold in 2015 compared to 2014
  • Sales of fitness equipment climbed 3-fold
  • High air pollution pushed sales of air masks
  • Top 5 cities for fitness category were Bangalore, Delhi, Mumbai, Hyderabad, and Chennai
  • Sales of air-fryer increased 4-fold
  • Highest selling products were Home Gym Sets, Ab Excercisers, Sauna Belts, Exercise Cycles and Abdominal Care Twisters.

Saree ruled in fashion category

Besides electronics, there’s always a huge demand for apparel and fashion products on online shopping sites. Snapdeal revealed that the humble saree was the highest selling product on the platform after smartphones.
  • Demand for sarees from sellers based in Surat, Ahmedabad, Bangalore, Mysore and Chennai was the highest
  • Georgette, art silk and cotton sarees were hot selling items of 2015
  • 40% of the shoppers who bought sarees from the portal were new buyers
Demand for competitive exam books spiked up by 300% due to exam fever. While Eastern India contributed 36% to the qualifying exam book sales, non-metro cities contributed 78% to the sales of job qualifying exam prep books.
So dear online sellers, please make note of these shopping trends to understand the kind of product categories, specific items and brands that sell the most on online marketplaces.