Friday 29 December 2017

E-commerce industry to grow at 60% in 2018

software providers, Government e-Marketplace, GeM platform, GeM, online marketplace, online vendors, e-commerce, online portal
India’s online shopping industry is estimated to grow at 60 per cent to about $28.5 billion in terms of gross merchandise value (GMV) in 2018, according to a report.
The e-commerce industry is expected to return to high growth next year as large players such as Amazon, Flipkart and Paytm Mall begin to look beyond the 20 million customers who shop online on a monthly basis. Industry analyst RedSeer Consulting pegs the online shopping industry’s growth at 23 per cent to $17.8 billion in 2017.
“Once Flipkart raised money, they began spending aggressively and going after market share growth, prompting Amazon to follow. If you see growth this year, it was much higher in the second half compared to the first half. This strong growth in the second half will be the base for growth next year,” said Anil Kumar, chief executive officer, RedSeer Consulting.
While Flipkart’s growth had slowed due to unavailability of funds in 2016, a bigger detriment to the industry growth was delivered by Snapdeal. The erstwhile number three player saw negative GMV growth, which pulled down the overall industry growth.
Entering 2017, this slow growth hampered the first half of the year, until Flipkart raised $1.4 billion led by Tencent and $2.5 billion from Softbank. Now with sufficient funds, the company is once again turning on the heat and is looking to expand the base of online shoppers in the country.
RedSeer estimates that only 20 million people in the country shop online on a monthly basis. That figure swells to 90 million if we look at the number of people who shop online at least once a year. Beyond this, there’s a base of about 150 million people who are connected to the internet but have not shopped online yet.
“If you ask me, the large e-commerce players will go after this untapped segment of buyers. What will they have to do to bring them online? They’re going to have to improve trust, provide the right value and have the right kind of products listed on their platforms,” adds Kumar.
Going after first-time buyers would supersede the need to get existing customers to buy more frequently in 2018, the contrary of what happened in 2017. While this doesn’t mean that Amazon and Flipkart would stop trying to get repeat customers, the amount of attention and resources spent on it would be far lesser than reaching new customers.
The top online shoppers in India continue to be locked in metros, but if these companies want to reach new customers they will have to invest heavily in logistics, warehousing and coming up with new models. In 2015 and 2016 e-commerce firms solely relied on discounting to get more customers to shop from them, but after experiencing the ills of that model of growth, none are expected to return to that.E-com industry to grow at 60% in 2018

Wednesday 27 December 2017

How Indian E-Commerce Industry Plans to Overcome Existing Challenges in 2018

How Indian E-Commerce Industry Plans to Overcome Existing Challenges in 2018
India's start-up unicorn list sees three e-commerce players marking their spot. They have played an important role in boosting the start-up ecosystem of the country. However, their growth stories are filled with twists and turns. Reports of losses even while they continue to grow, have had many experts question the journey of these start-ups.
The challenges faced by the Indian e-commerce industry are not new. Even then the segment caters to the second largest market in the world. As the players continue to grow, venturing into newer aspects and finding better avenues for customer acquisition, Entrepreneur India spoke to experts about how the sector plans to jump the hurdles that come its way in 2018.
E-commerce currently focuses on two major things for customer experience - offering the lowest prices and fastest shipping. However, factoring in both these elements also makes it difficult for e-commerce players to work towards profitability. Saahil Goel, CEO, and Co-founder, Kraftly, believes that while doing this, entrepreneurs often end up concentrating on a few thousand large distributors and manufacturers who eventually gain success or achieve their goals from online sales. He believes that in this rut, e-commerce players forget about the SMBs who hold an unique and diverse inventory. They could bring their entrepreneurial spirit to commerce and could offer a more direct and cordial customer experience. And that's where they need to focus on in 2018 - build e-commerce by enabling sellers from all available channels.
"There are new demand channels such as Facebook, Google, and Whatsapp that house the next 100M digitally enabled Indian consumers. By enabling long tail sellers to reach these new set of buyers, e-commerce players can create a new wave of trade that currently happens largely through traditional channels," said Goel.
Customer Acquisition With Unique Offerings
The Indian e-commerce users still prefer cash-on-delivery for most orders. But with demonetization and GST has come the increased drive for digital payments. More and more consumers from beyond Tier I and Tier II cities will look at digital transactions for their online orders. Sujayath Ali, CEO and Co-Founder, believes that 2018 will see a higher number of prepaid offers as compared to the previous years. "The overall increase in the prepaid percentage will improve the experience for the customer and will reduce a lot of wastage for ecommerce players. Now, all we need is to be prepared for the transition by providing smooth checkout processes and having better payment processes," said Ali.
But there's more to e-commerce than just the payments. The payment comes right at the end of the user's complete shopping experience, what the user also needs is an easier interface to shop online. Ali believes that they can make the experience better by making it language-agnostic. "A new customer from a rural area should be able to easily understand the offerings, compare the prices and place an order," he said.
Agreeing with Ali, Goel too believes that one of the biggest challenges of e-commerce business is ensuring customer loyalty and driving repeat purchases. Goel goes on to say that e-commerce companies should focus on creating unique experiences for their buyers and offering a core value proposition - either by way of unique inventory, a hyper-personalized buying experience, opening new categories, or by introducing whole new ways of shopping online. "While commoditized-need-based products have dominated a large share of GMV in the last few years, a huge unstructured lifestyle catalogue is yet to be discovered online and will set the trends for shopping in the years to come," he said.
Greater technology could come of use in this subject, believe most experts. Arup Das, Manager Ecommerce, RIVERSONG, said that the e-commerce segment will see more and effective use of Artificial Intelligence. This will help brands to reach out to a targeted audience, with lower bid prices.
Cross-border Business Will Grow
Given that India is the second largest market for e-commerce, globally renowned players have been making their way into the country. This has resulted in a higher competition between foreign players and the homegrown entities. Goel believes that there is also a benefit to this. "Companies can focus on creating a bridge between the massive supply available overseas and the sellers in India," he said. According to him, there are several areas such as logistics, imports, payments and multi-channel marketing that will create win-win opportunities for all stakeholders in inward cross-border trade.

Tuesday 26 December 2017

Ecommerce plays a major role in making India the only market of growing paper consumption


Come New Year, MNM Triplewall Containers, maker of packaging boxes, will set up the third of its series of unique warehouses. The USP — catering to a single customer in a single industry, ecommerce. 

This dedicated warehouse is located next to one belonging to an ecommerce giant, though Manish Gupta, director of the 25-year-old Bengaluru-based firm, shies away from sharing client identity. 

Triplewall’s 10,000-sq feet Hyderabad store opened six months ago — again next to the warehouse of the same ecommerce major — and ships 5 lakh boxes a month. The boxes come in all shapes and sizes — to fit mobile phones, laptops, microwaves, large screen TVs, cricket bats, quilts, pen drives…you name it. “Every product that is shipped by ecommerce has to be repacked, both with paper bills and boxes. We make the boxes,” says Gupta. 

His company supplies 2 million boxes a month to online marketplaces. Another company, Oji India, part of Oji Holdings Corp, a $13-billion Japanese maker of paper products, started operations in India in 2012. From January 2018, Oji India will start making boxes for the ecommerce sector.Major suppliers aside, there are hundreds of smaller players too making boxes for ecommerce. 

Industry estimates suggest Amazon and Flipkart — top two players in the $17-billion ecommerce sector — consume 1,200-1,400 tonnes of paper that goes into making boxes and printing bills. And the future looks bright — “Demand for paper and boxes will grow in tandem with growth of ecommerce,” points out AS Mehta, president, JK Paper. 

Sanjay Singh, divisional chief executive, paperboards and specialty papers, ITC, says, “Even though ecommerce is transacted electronically, it cannot be envisaged without use of paper and paperboard for actual delivery.” Singh affirms that demand is growing rapidly but says it’s difficult to put a figure to it. 

LET’S BOX IT Large suppliers such as ITC and JK Paper do not directly cater to end customers as corrugated boxes need to be customised and sold, a process undertaken by firms such as MNM Triplewall, Coropex (near Jaipur), Shailaja Papers and Oji India. 

For customised boxes, smaller firms buy raw material, kraft paper, from large suppliers such as Ruchira Papers or Astron Paper and Board Mill. (Astron’s public issue closed on December 20). These suppliers, in turn, get imported scrap from Europe and the US and mix it with the locally procured version — crushed and converted to pulp — to make paper board. 

According to Kirti Patel, CMD, Astron, there are 250 carton makers with automatic machines and 10,000 with semi-automatic presses. “Ecommerce comprises 12-15% of demand, which was practically non-existent five years ago,” says Patel. Driven by ecommerce growth of around 15% a year, India is the only market where paper consumption is increasing — 6-7% annually. “This is not seen in any other large economy on a sustained basis,” says ITC’s Singh. Paper and carton demand will expand as etailers multiply, concurs Jatinder Singh, chairman, Ruchira. 

For Amazon and Flipkart, the demand for paper has almost doubled in the past three years and will see similar growth in the next three to five years. Flipkart works with 40 carton suppliers and, despite a focus on going paperless, it expects demand for boxes to keep growing. Amazon declined to share supplier details, but its spokesperson says, “We procure cartons from the closest point possible, which helps minimise transport time and costs and grow ancillary industries around our place of business.” 

Paytm, Myntra, Jabong, FreshMenu, BigBasket, Grofers and the innumerable other such firms have seen significant demand uptick for brown bags, boxes, paper. 

packaging, which it shares with carton and paper suppliers to improve quality. Besides, it supports vendors with data analysis, which helps them design for multiple SKUs across 1.6 million products on its marketplace. The customer is not charged for packaging; neither does the marketplace pay. It’s the seller who bears the cost. So, a laptop’s packaging could be Rs 35-40 and a power bank’s around Rs 10. 

Even for bills, white paper is bought by ecommerce companies via resellers. “Ecommerce companies buy separately so we can’t pinpoint demand. But they have contributed significantly to growth. In fact, to cater to billing needs, we introduced A5 paper (half of A4 size) about six months ago,” says Mehta. 

PACK IT UP Proximity to ecommerce warehouses is a key to tap this growing opportunity. Ergo, not all carton suppliers are able to benefit from online shopping. For instance, Delhi-based Shailaja Papers didn’t find it viable due to logistics issues — there’s no ecommerce warehouse close by. On the other hand, for Neemrana-based Coropex, run by Ashok Chaudhary, about one-fourth of box demand comes from ecommerce, doubling from a year ago. Other paper and carton buyers include FMCG, automobiles and electronics companies. For Triplewall, online marketplaces are its second-largest customers after FMCG companies. 

According to IIFL research, the Indian paper market will outpace the global industry. It notes that over FY17-21, industrial paper, recycled fibre-based packaging boards and copier paper segments are expected to witness healthy performance. The packaging boards segment, especially, is expected to post robust volumes on account of increasing demand from ecommerce and FMCG. Kraft paper or cardboard volumes are expected to increase from 4.8 million tonnes in FY17 to 6.7 million tonnes by FY21. 
ITC’s Singh also sees India’s per capita consumption of paper increase from 13 kg to 17 kg in the next few years, though it’s still far below the US and Europe average of 56 kg or Asian average of 22 kg. “Increasing demand for packaging materials such as cartons and envelopes will enhance sectoral prospects,” adds Singh of Ruchira Papers. 

There’s plenty of headroom for paper growth, as ecommerce is less than 4% of the $500-billion retail and more shoppers are coming online. New, ecofriendly packing of online orders may not be far way. As consumption increases (like in the US or Europe), people end up discarding their own weight in packaging every 30-40 days, notes to a Stanford University study. That’s a great outlook for paper box makers — at least till the environmentalists come knocking. 


Paper Companies

Monday 25 December 2017

‘E-commerce market may cross $50 billion mark in 2018’

While 65 per cent of online shoppers are male, 35 per cent are female. File photo
While 65 per cent of online shoppers are male, 35 per cent are female. File photo

In 2017, 82 per cent of shopping queries were made through mobile devices, according to Assocham-Deloitte study.

The digital commerce market in the country is expected to cross USD 50 billion in value by the end of 2018 from the current level of USD 38.5 billion, on the back of a growing internet population and increased online shoppers, says a recent study.
The digital commerce market in India has grown steadily from USD 13.6 billion in 2014 to USD 19.7 billion in 2015, as per a joint study conducted by Assocham and Deloitte. The increasing mobile and internet penetration, m-commerce sales, advanced shipping and payment options, exciting discounts, and the push into new international markets by e-businesses are the major drivers of this unprecedented growth, it said.
Banks and other players in the e-commerce ecosystem are providing a secured online platform to pay effortlessly via payment gateways. However, it pointed out that the Indian e-commerce sector is heavily dependent on the cash on delivery (CoD) mode of payment as it is the most preferred choice for Indian consumers due to lack of trust in online transactions, limited adoption of credit and debit cards, and security concerns, among others.
“More than 50 per cent of online transactions are done on cash on delivery method and it is available across 600 cities and towns of India,” the joint study pointed out.

increase in revenue

On the increase in preference of mobile transactions, the study said one out of three customers currently makes transactions through mobiles in tier-1 and tier-2 cities. In 2017, 82 per cent of shopping queries were made through mobile devices, compared to 76 per cent in 2016, added the study, indicating the increasing mobile transactions.
The survey highlights that 28 per cent of regular shoppers are in 18-25 age group, 42 per cent in 26-35, 28 per cent in 36-45 and 2 per cent in the age group of 45-60. While 65 per cent of online shoppers are male, 35 per cent are female. "The products that were highest sold in 2017 included mobile phones, apparel, food items and jewellery, among others," it said.
As per the study, there would be more than a seven to ten fold increase in revenue generated through e-commerce as compared to last year with all branded apparel, accessories, jewellery, gifts and footwear available at cheaper rates and delivered at the doorstep.

Thursday 21 December 2017

New norm for e-commerce firms to sale products kicks in from Jan 1

The government on Friday said all e-commerce entities will have to display the exact Maximum Retail Price (MRP) of their packaged products such as mobile phones, electronic goods and other consumer durables and non-durable items from January 1 both on the online platform and on the products as well.

They will also need to mention the name of the country where the products are manufactured or assembled. “The e-commerce companies will have to comply with the new rules. They are free to offer discounts. But the declarations have to be transparent for consumers to get the details,” consumer affairs minister Ram Vilas Paswan said on the sidelines of an event marking the National Consumers Day

A ministry official said these norms have been made mandatory after receiving complaints that some of the e-commerce companies don’t show the exact MRP while offering huge discounts to attract consumers. “There are cases of e-commerce companies in mobile phone sector not providing items such as earphone while selling their items. The MRP quoted on the website will have to be mentioned on the packets as well,” he added.

The consumer affairs department has brought in amendments to the Legal Metrology (Packaged Commodities) Rules, which also bans the practice of dual MRP for the same product for all packaged items.

The companies can put barcode or QR code and e-code for net quantity assurance. They are also free to use government initiatives such as Swachh Bharat on the labels of their products.

“We had given have six months time to companies to put things in place. However, after getting representations from industries that they have huge inventories of old labels, we have allowed them to exhaust their stocks by March. The relaxation is only for them. E-commerce companies will have to follow the new norms from January 1,” said consumer affairs secretary AK Srivasatava.

Monday 11 December 2017

DHL's e-commerce logistics arm to start India operations soon

Deutsche Post DHL’s (DPDHL’s) dedicated ecommerce logistics arm is starting operations in India, two people in the know said, as a booming online retail industry, the implementation of goods and services tax and the recently given infrastructure status to the logistics industry promise massive growth potential. 

DHL eCommerce, which has made investments in India since 2014 through parent DPDHL’s Blue Dart Express subsidiary, will now have its own presence here. 

“DHL eCommerce is actively hiring for the top management in its planned India team. The CEO has been hired. Another 4-5 positions have been filled. The company aims to launch its India operations by March,” one of the people said. It hired Reliance Jio Infocomm’s former chief marketing officer, Neeraj Bansal, as the local chief executive. Before Reliance Jio, Bansal was regional sales head at Google. Most recently, he was managing director of India and South Asia at AdParlor. “In India, DHL eCommerce will work with Blue Dart rather than competing with it. There is enough space and segments in the ecommerce industry for them to coexist,” said another person. Both people insisted anonymity. 

Post-ecommerce-parcel is one of the four key divisions of DPDHL, the world’s biggest logistics company. The other three are express, global forwarding and supply chain. DHL is the only major global company to have a dedicated, separate entity for ecommerce logistics. 

“India is an important and strategic market for DHL and we will continue to invest and transform our logistics presence to keep up with the growth momentum we see. We are constantly looking for ways to grow our service offerings for our customers, and will be happy to share details when new developments arise,” said a company spokesperson. 

DPDHL's plans can be seen as part of its efforts to step up business in this segment — its fastest growing — outside of the company’s stronghold in Europe. 

“Ecommerce activities were stepped up outside of Europe, in part through logistics centres in the United States, Mexico and India and through last-mile delivery in Thailand,” DPDHL said in its earnings release for 2016. 

The ecommerce industry in India is estimated to grow at a compounded annual growth rate of 30% to $200 billion by 2026 in terms of gross merchandise value (GMV), according to a recent report by Morgan Stanley. GMV is the total value of goods sold. 

Efficient logistics, supply-chain management and transportation are key to the success of the ecommerce industry. 

Logistics companies in India are expanding their ecommerce arms fast to cater to the growing demand and in some years aim to exponentially grow their revenue from this segment. 

The firms are also facing tough competition from ecommerce giants such as Amazon and Alibaba that are spending billions in setting up their own logistics and supply chain network. 

Two government moves this year are expected to give a fillip to the logistics industry. 

The government made a historic tax overhaul from July 1 that replaces several indirect tax heads, including countervailing duty, special additional duty of customs, excise duty, service tax, central sales tax, value-added tax, octroi and state cesses with one tax on goods and services. 

The government also conferred infrastructure status to the logistics sector on November 21, which means any more investment in infrastructure — like warehouses and cold-chain storage — would get cheaper financing from banks. 

The Bonn-based group posted revenue of €57.3 billion, of which post-ecommerce-parcel contributed the biggest chunk at €16.8 billion. The division was also the highest contributor to earnings before taxes, even as ecommerce revenue grew at the fastest at 12.5%. 

The group is planning a four-year investment of more than €250 million in India, its biggest bet yet on the world’s fastest growing major economy, CEO Frank Appel had told ET in an interview earlier this year. 

Appel had said the investment would be made in various tranches and in all its four business segments. 

Monday 4 December 2017

India Submits Formal Document Opposing Ecommerce Talks At WTO

India has for the first time submitted a formal document opposing any negotiations on ecommerce at the World Trade Organisation (WTO) to be held next week in Buenos Aires.
Quoting an undisclosed official close to the development, an ET reportstated, “We didn’t have an official stand in writing. Now, India has clearly stated its consistent stand that it is not in favour of doing anything beyond the work programme.”
The country has said that it would “continue the work under the Work Programme on electronic commerce based on the existing mandate and guidelines”, referring to the programme on ecommerce adopted by the WTO countries in 1998.
India has maintained that ecommerce per se may be good for development but it may not be wise enough to begin talks since many countries don’t fully understand the implications of negotiating binding rules.
India’s submission comes ahead of the key ministerial conference of the WTO next week where it is expected to face pressure from many countries to begin talks to open cross-border digital trade.
Ecommerce entered the WTO in 1998, when member countries agreed not to impose customs duties on electronic transmissions. That moratorium has been extended periodically. But since last year, many countries have made submissions on various aspects of digital trade such as cross-border data flows, server localisation, technology transfer, source code, consumer protection, intellectual property rights and trade facilitation aspects of ecommerce.
So while the US last year made a proposal on ecommerce prohibiting digital customs duties, enabling cross-border data flows, promoting a free and open Internet and preventing localisation barriers, China wants easier norms for goods ordered over the Internet but physically delivered. Similarly, the European Union, Japan, Korea, Pakistan, Nigeria and Singapore too want outcomes in ecommerce disciplines.
Thus few countries are pushing to secure a mandate to initiate comprehensive negotiations on ecommerce. In the run-up to the WTO conference next week, some countries want to convert this temporary moratorium on customs duty on electronic transmissions into a permanent one. As per an undisclosed official, this could result in loss of revenue as more products and services get delivered through electronic transmissions. Additionally, absence of customs duty could adversely impact the domestic manufacturing sector. As per a recent report by Morgan Stanley, the ecommerce market in India is poised to reach $200 Bn by 2026, expanding at a compound annual growth rate of 30%. According to data provided in the report, the country is currently home to 100 Mn online shoppers, a figure which will see 50% increase in the nine years.