Flipkart ropes in Asian manufacturers for its affordable private label products

Back in May, Flipkart had made it clear that private labels would dominate its product offerings during the Big Billion 2017 edition. For the same, the etailer has collaborated with manufacturers from China and other Southeast Asian countries besides home country India. These manufacturers are helping Flipkart to create an affordable range of products for its private labels.

“We already have over 30 segments where SmartBuy is present and we should be able to expand it to close to 40 categories before Big Billion Day sales. This festive season, we are looking to push private labels during sale events, given the way we have ensured quality checks and standard manufacturing practices,” asserted Adarsh Menon, Head – private labels at Flipkart.

We’ll launch products 15% cheaper than competitors, says Flipkart

The push for private labels is going to get even more aggressive once the festive season starts. The Bansals-led company is planning to launch a host of products that would be available at 15% lesser price than the average price of the same products of other sellers/retailers.

Flipkart has joined hands with Sharetronic to develop a range of electronic products, which would be launched under its Smart Buy private label. The Chinese firm has worked with several global brands like Lenovo, Huawei and Toshiba. The manufacturer believes that Flipkart’s wide reach and leadership position would help them to grow their business.

For quality checks, the home-grown marketplace has hired the services of Intertek. Instead of loading the products with all possible features, Flipkart is sticking to the basics.

Menon said,

“For any product, there are ‘must-have’ features and then nice-to-have’ ones. We are focusing on the must-have features first and bringing them at a cheaper price than average market rate. We have partners like Intertek that run multiple levels of strict quality control before we start selling them on Flipkart.”

Private labels equals to more profits for Flipkart

It is not rocket science to figure out why biggies like Flipkart are investing in private labels. After accumulating tons of consumer data and analysing their seller base’s sales patterns, etailers have the power to develop the right products for their buyers.

Own brands would give Flipkart a better control over its inventory and not to forget – high profit margins.

“We are studying customer data intensively; what feature the customer really values in a particular category. Take, for instance, a mixie. The customer values the motor. It doesn’t really matter if the colour is grey or silver. We have tried to double down on features that the customer values in these categories. We are working with quality partners,” sharedMenon.

Big Billion might turn out to be one of the biggest sales events for Flipkart. But would it be the same for its vendors? The ecommerce biggie has been accused of undercutting sellers in the past. After hearing about 15% cheaper products, we don’t think many vendors have a favourable view of Flipkart’s private labels strategy. Sellers, let us know what you think by commenting below.

Snapdeal seeks to stay relevant, reserves Rs.40 cr. for festive promotions

Looks like Snapdeal will be participating in the festive season sales this year. After the merger deal break with Flipkart, the etailer decided to fly solo. Now it is gearing up to capitalize on the biggest shopping season of the year to avoid being wiped out by competition.

Festive season plan & promotion budget

Usually, during the festive season, there is a surge in the sale of:

• Jewellery
• Clothing
• Consumer durables
• Phones
• Vehicles

This Diwali, Snapdeal will be focusing on fashion, general merchandise and electronics, a spokes person for the company said.

Companies usually spend heavily on advertising to drive shoppers their way for ensured sales. As a result, Snapdeal has set aside Rs. 40 crore for its festive season promotions, claimsources aware of its festive season plans.

Promotions will be done through mass media advertising and digital campaigns during this festive period. Outdoor advertising will be take place in key metro cities like Mumbai and Delhi.

The combined contribution of festive season sales is 35-40% of the total annual sales of both online and offline retailers. This peak period usually kicks off during Ganesh Chaturthi and Onam, hits its peak just before and during Diwali, then continues till Christmas and New Year’s.

DIPP grants Urban Ladder single brand retail license

In April, IOS reported that Urban ladder applied to the Department of Industrial Policy and Promotions (DIPP) for permission to become a single brand retailer. In a recent statement, the online furniture company said their application for a single brand retail (SBRT) license was approved by the DIPP.

Becoming India’s most loved brand

Ashish Goel, CEO of Urban Ladder said, “The SBRT licence is a huge vote of confidence and encouragement from the government to young, Indian companies like ours. Creating a nurturing ecosystem for entrepreneurs is beneficial for business, customers, and the country.”

This licence is also going to allow Urban Ladder to:

• Convert current online sellers into contract manufacturers
• Fulfil its ambition to be a global furniture retailer
• Offer more flexibility when it comes to designs and product sourcing
• Allow more control over the supply chain for healthy inventory
• Enable digital transactions without the need for third-party sellers

Goel further claimed that, “This licence helps us at Urban Ladder build a brand that can pursue its ambitions as well as help shape the economy impactfully. It will give us the necessary push in becoming India’s most loved consumer brand.”

Expansion and profitability

While the furniture etailer waited for approval from the DIPP, it coaxed investors for funds. It also revealed its plans for physical stores and wound up three warehouses as part of its plan for profitability. Urban Ladder even signed up to sell on Amazon and Flipkart for improved visibility. Almost a year ago, the etailer planned on touching profitability in 2 years. Well, it’s one year down but there are no such signs of it speeding towards profits.

Hopefully, its offline approach paired with its single brand strategy will lead the way to the big bucks for the online furniture retailer.

Ecommerce firms’ annual sales from each vendor capped at 25%

Ecommerce players like Flipkart and Amazon will not be allowed to market more than 25 per cent of its annual sales coming from one vendor, the government on Monday clarified. The government had earlier mandated 25 per cent maximum sales from a single vendor but had not specified the period for computation of sales.

“An ecommerce entity will not permit more than 25 per cent of the sales value on financial year basis affected through its marketplace from one vendor or their group companies,” the Department of Industrial Policy and Promotion (DIPP) said in its consolidated FDI policy circular, released here.

An official, who did not wish to be named, said that this provision encourage e-market players to sell goods from different vendors.

The DIPP in a tweet stated that restriction of 25 per cent on sales of one vendor through a marketplace are to be computed on financial year basis. In the foreign direct investment (FDI) circular, the DIPP has also included the definition of ‘competent authority’ to grant government approval for foreign investment.

It said the authority means the concerned administrative ministry/ department empowered to grant government approval for foreign investment under the extant FDI policy and FEMA (Foreign Exchange Management Act) Regulations. As the foreign investment promotion board has been abolished, the respective ministries have been authorised to approve foreign investment proposals.

Further, the government clarifies that conversion of an LLP (limited liability partnership firms) into a company and vice-versa is permitted under automatic route for sectors where 100 per cent FDI is allowed.

The DIPP, which deals with FDI related matters, compiles all policies related to foreign investment regime into a single document to make it simple and easy for investors to understand.

Ecommerce companies’ unclear policies invite maximum consumer complaints

Ecommerce companies are often in the news for breaking the sales, investment, profits, and losses record. But they are also breaking the ‘most complained’ record, thanks to their obscure procedures and policies.

The Quality Council of India (QCI) analysed the consumer grievances submitted to the Centre and prepared an extensive report. From digital TV set top-box companies’ bad connection to Air India’s poor service, the government received many complaints. According to news reports, consumers complained the most about the Indian ecommerce companies to the Centre.

Customers complained about ecommerce companies’:

• Unclear guidelines for quality check of the products

• Lack of standardisation of refund

• Delivery and exchange policy

• No regulation on pricing and discount

• Poor customer service

Not too long ago, the National Consumer Helpline released a report that stated that Snapdeal and Flipkart received the most complaints as far as ecommerce companies are concerned. The same consumer body said that consumers registered 28,000 complaints against online marketplaces in 5 months.

Would etailers be named and shamed?

After working on the report, QCI believes that naming and shaming the ecommerce companies would be the best solution.  Another suggestion is to introduce a real-time grievance forwarding system that would connect etailers and the government. This would ensure that the complaints are addressed in an efficient and quicker manner.

Sellers too have similar complaints against ecommerce companies. Be it the poor seller support service or regulations on pricing and discount, vendors too are trying to get their issues addressed. Online sellers have been demanding for Ecommerce Regulator and have floated a petition for the same. In July this year, vendors expressed their unhappiness with Commerce Ministry’s response to marketplaces’ payment settlement issues.

Would naming and shaming ecommerce companies work? And would Indian sellers’ woes ever get heard?

Pepperfry to keep expanding offline till it clocks sales of Rs. 5000cr. by 2020

The year 2020 will be one of major change for Indian online retail. Growth is the main expectation whether it is ecommerce fashion curators, online grocers, online sellers or online shopping in general. The same is with online furniture company Pepperfry.

The top online furniture and home products etailer is pushing its offline network further through exclusive units. This is all part of its strategy to meet its sales turnover goal of exceeding its present Rs.1000 crore sale by Rs.5000 crore in 2020.

Pepperfry CEO and founder Ambareesh Murty said, “We have grown four times over the previous year and we account for 65 per cent share of the online furniture market in the country.”

The expansion plan

1. Building seller base with experts

Pepperfry has more than 10,000 sellers. But, the ecommerce company wants to onboard craftsmen from Kerala like coir manufacturers. The etailer is also thinking of expanding its product portfolio.

“We plan to sell flooring materials soon,” Murty said.

2. More exclusive units

The number of exclusive units it calls studios will also increase. These studios offer customers a physical feel of products and expert advice. These physical studios help improve Pepperfry’s visibility in offline retail. Currently, it has 21 studios with a brand new one at Kochi.

According to the Pepperfry CEO, “We plan to raise the number of studios to 50 by the end of this fiscal through owned and on franchisee basis.”

3. Expansion in smaller towns

Once it is satisfied with its offline network in metros, Pepperfry will move into smaller towns for a wider reach. After Kochi, it will enter Coimbatore, Vizag in South India. South India is the biggest market for the online store, claimed Murty, with Bangalore being the first city with the highest demand, followed by Chennai and then Kochi.

Government e-Marketplace’s revamped website and app will be ready for business by 2018

After being in the pilot mode for over a year, Government e-Marketplace (GeM) would be ready to officially enter the Indian ecommerce space in its full form by the first half of 2018. Work has begun on revamping the online portal as well as the mobile application and the plan is to get it ready in the next six months.

About GeM

The portal was launched by the current Indian government in August 2016 to create a one-stop Government eMarketplace (GeM). The main objective was to facilitate online procurement of common use goods & services needed by various government departments, organizations and PSUs. It is the only ecommerce platform that caters to governments demands.

“GeM represents our government’s firm commitment to bring greater transparency and efficiency in public procurement,” stated Commerce Minister Nirmala Sitharaman.

GeM’s facts:

• It provides the tools of e-bidding, reverse e-auction and demand aggregation to facilitate the government users achieve the best value for their money
• It has partnered with 7,913 buyer organizations and 24,148 sellers
• With 101,674 products under 850 product categories, GeM has done transactions worth Rs. 1,000 crore so far
• MOU with 9 States for procurement including Gujarat, Andhra Pradesh, Telangana, Puducherry
• Top product categories on the platform are computers, writing and printing paper, projectors and supplies, computer printers, office machines

“The estimated procurement that government does is around Rs. 2 lakh crore for general goods and services and GeM has projected a savings of about 25%. The cost savings is due to the transparency, competitive setup for sellers and the choice that buyers get,” revealed an official.

The revamped version

After the face-lift, an UPI-based payment solution would be integrated with the app and new services would be added to the online portal. The new features would work towards making the transactions as transparent and authentic as possible. Right from offering assistance to sellers during order fulfilment to allowing buyers to track their orders, GeM would have features like any modern ecommerce platform.

A government official shared,

“In the next six months, around 82 new services such as cloud services, unskilled and skilled manpower service, child care services, facility management, IT services and security related services will be added to the platform. As of now, only 4 services are listed on the platform which will scale up to 20 next month.”

While speaking about the mobile app which hasn’t been updated since October 2016, the official said,

“Along with the official launch of the platform after the completion of the pilot phase, we will introduce the revamped mobile version… Since we have already integrated with many banks and are in talks with a number of other banks, it will be easier for us to integrate with the UPI gateway.”

The ambitious plans for GeM include:

• Offering logistics service to sellers
• Introduce features such as catalogue management, product categorisation, contract management and refund/rejection policy
• Using analytics to predict trends and projections for products & services
• Better grading system of sellers and products
• Real-time tracking of products

IFFCO to focus on ecommerce platform for rural areas

The Indian Farmer Fertiliser Cooperative (IFFCO) today said it has signed an agreement with CSC e-Governance Services India (CSC-SPV) to provide ecommerce services to villages.

This will be done through digital initiative of IFFCO, Indian Cooperative Digital Platform (ICDP), the fertiliser cooperative said in a release here.

As part of the agreement, all products and service offerings of IFFCO and group companies will be displayed on CSC ecommerce web portal.

Village Level Entrepreneurs (VLEs) will accept the orders from farmers for agri-inputs and other services.

Once significant quantity (truckload or certain minimum amount) of orders are aggregated, VLEs will place order on CSC Portal and remit payment, the release said.

“This will further simplify the process of providing agriculture inputs to farmers. This platform will encourage the farmers to effectively use digital technology,” IFFCO Managing Director U S Awasthi said.

Flipkart lost the chance to become GST Suvidha Provider due to Rs. 2 crore paid-up capital clause

In May 2017, IOS reported that Flipkart has applied for GST Suvidha licence to offer tax benefits to sellers. But the Indian ecommerce leader lost that opportunity because it couldn’t meet the pre-decided condition laid out by the GST body.

Flipkart missed the GSP boat

By becoming a GST Suvidha Provider (GSP), Flipkart wanted to gain direct access to the GST Network (GSTN). It had many advantages and compliance would have been much easier if the etailer had got the licence.

However, in order to get the GSP license, applicants had to fulfil one condition – minimum paid-up capital of Rs. 2 crore. Flipkart failed on this front. The online marketplace’s paid up capital is Rs 48.43 lakh, as per MCA filings. Besides Flipkart, 38 companies were found ineligible for not meeting the minimum paid-up capital mark.

A Flipkart representative said, “There are some procedural matter to be clarified, we shall be reapplying for GSP shortly.” Would the recent investment by Softbank increase Flipkart’s chances to grab GSP?

There were few applicants that missed the chance in spite of meeting the Rs. 2 crore mark and the average turnover requirement.  It was because the number of years that the company has been in business/registered also played an important role.

What is GST Suvidha Provider (GSP)?

As of now, there are 34 GST Suvidha Providers that were selected by Goods and Services Tax Network (GSTN).  TCS, Reliance, and Ernst & Young are few of the selected providers.

GSTN defines GSP as:

“The GST System is going to have a G2B portal for taxpayers to access the GST Systems, however, that would not be the only way for interacting with the GST system as the taxpayer via his choice of third party applications, which will provide all user interfaces and convenience via desktop, mobile, other interfaces, will be able to interact with the GST system. The third party applications will connect with GST system via secure GST System APIs. All such applications are expected to be developed by third party service providers who have been given a generic name, GST Suvidha Provider or GSP.

The GSPs are envisaged to provide innovative and convenient methods to taxpayers and other stakeholders in interacting with the GST Systems from registration of entity to uploading of invoice details to filing of returns. Thus there will be two sets of interactions, one between the App user and the GSP and the second between the GSP and the GST System. It is envisaged that App provider and GSP could be the same entity. Another version could where data in required format directly goes to GSP-GST Server.”

Source: http://www.gstn.org/

GSTN believes that as the new GST regime evolves, GST Suvidha Providers (GSP) would play a very important and strategic role. Their aim is to keep GSP eco system as open, transparent and participative as possible to encourage enterprises and entrepreneurs.