India’s largest domestic e-commerce company is trailing Amazon on its home turf.
As of April 2018, Amazon’s share of the Indian e-commerce market had shrunk to 44%, down from around 50% at the start of the year. Despite the decline, Amazon still retained a slight edge over Flipkart’s 40%.
“Amazon India has been quietly expanding its footprint through diversified offerings that encompass multiple services, providing consumers with lower prices at higher scale,” Brian Chaitoff, director of insights at New York-based market research firm 7Park Data, told Quartz.
Its annual membership scheme, Amazon Prime, which includestwo-day delivery, video streaming, music streaming, and more for just Rs999 ($15), has won over large segments of price-sensitive Indian consumers. Amazon also leads in terms of monthly active users (MAU). In April 2018, the Jeff Bezos-led company’s MAU growth rate stood at 40%—Flipkart’s was at 30%.
“Part of the app usage growth is related to the entry of Indian mobile operator, Reliance Jio, and data price wars that lowered data costs, driving a higher value proposition for Amazon Prime Video to Prime members,” Chaitoff said.
Among video-watching Indians, who spent around 93% of their stream-time on local-language content, Amazon’s loaded library is a hit. Earlier this year, the Seattle-based firm debuted in India’s music-streaming market, once again boasting of a vast catalogue.
Given its successes, Amazon’s bullishness about the Indian e-tail sectordoes not come as a surprise.
“Internet penetration in India is still relatively low compared to developed countries, which creates long-term opportunities for Amazon,” Chaitoff said. “A country with over a billion population and a growing middle class is exactly where Amazon needs to focus in order to maintain its global momentum.”
But the verdict on its rivalry with Flipkart isn’t out yet, since Amazon’s homegrown rival is closing the gap, according to this data. At the start of 2018, the US firm claimed 50% of the market share while the Indian company had a mere 33%. Four months on, there’s only a four-percentage-point difference between the two. Flipkart is reportedly trumping Amazon in crucial segments like mobile phones and apparel and fashion, other research has found.
There is little that separates the two competitors, depending on what data you look at. On one hand, some surveys show consumers searching for Amazon more often than they do for Flipkart, thinking the American e-tailer offers a better shopping experience. Others show them trusting Flipkart more.
E-commerce major Amazon India today said it will increase its storage capacity this year by 1.5 times to 20 million cubic feet, over 13.5 million cubic feet last year, to fulfil the rapidly expanding demand.
E-commerce major Amazon India today said it will increase its storage capacity this year by 1.5 times to 20 million cubic feet, over 13.5 million cubic feet last year, to fulfil the rapidly expanding demand. The company also announced its plans to add five fulfillment centres (FCs) in Bengaluru, Mumbai, Delhi, Vijayawada and Kolkata this year, which will add four million cubic feet storage capacity. “With the addition of five new FCs, Amazon.in now has 67 FC in 13 states, with a total storage capacity of over 20 million cubic feet,” it said in a statement.
The e-commerce firm had recently announced six FCs for the large appliances and furniture category and another 15 FCs to support the AmazonNow business. Till last year, the company had 41 FCs, with a storage capacity of 13.5 million cubic feet. All of these FCs will be fully operational before the festive season of 2018, it said.
The company said over 40 million products are ready for immediate shipping at present through the network of FCs in India, and this selection will only increase with the expanding FC footprint. “With the addition of this expanded infrastructure, we will be able to offer an even better Prime experience to our customers,” Amazon India vice-president customer fulfillment Akhil Saxena said.
How will the synergy between India’s largest unicornFlipkart and US retail giantWalmart benefit both parties beyond the obvious goals?
Much has been said about Walmart’s purchase of Flipkart, but let’s get some basic facts out first. For Flipkart, this is a strategic sellout. Investors need exit; they had to look for a buyer at some point. For Walmart, this is a long-awaited entry into retail in India, after succeeding in other Asian markets like China and Japan.
Although Walmart has been present in India for about 20 years now, as a B2B (wholesale) player, Foreign Direct Investment (FDI) regulations restrict Walmart from doing B2C business in India. (The Department of Industrial Policy and Promotion (DIPP) allows 100 percent FDI under automatic route in marketplace model of ecommerce, while FDI is not permitted in the inventory-based model of ecommerce Walmart follows.)
After having established itself as the world’s largest retailer, Walmart wants to bite a chunk of the Indian retail market worth $670 billion, of which etail is $20 billion (and expected to touch 60 percent this year). Holding Flipkart’s hands, Walmart will surely expand the ecommerce market in India.
Of course, there is the undeniable effect of Amazon, the only company which has posed a strong rivalry to Walmart in the US and Flipkart in India. But this new alliance does more than fight Amazon, which has got 35 percent market share in India in five years.
Flipkart has a lot to learn from Walmart in terms of work culture and operations, while Walmart –being the veteran that it is – can take a leaf or two out of Flipkart’s book in innovation.
Flipkart’s extravagance and Walmart’s frugality
Consistently efficient operation is Walmart’s key to offering low prices to the customers. In fact, their Every-Day-Low-Pricing (EDLP) strategy is a result of efficient methods in sourcing, supply chain, and front-end operations. The company has the same motto internally too.
While Flipkart likes its luxuries, be it swanky offices or pay packages to fresh graduates, Walmart executives still fly economy class. It has only been a few months since Walmart made its minimum wage $11 per hour, following protests about the meager pay to their employees.
According to this article, researchers at some policy institutes have speculated that each Walmart associate does the job of 1.5 to 1.75 employees of a rival. It has also been said that Walmart staff are expected to keep costs at a minimum, even for heating and cooling of the buildings. In fact, after its acquisition, Walmart banned Jet.com employees from drinking at office, which was allowed at the startup till then.
Walmart’s main principle is to provide the cheapest possible prices to customers, and they go extra miles for that. Even the Walmart big box stores are minimalistic, saving costs for the company, which in turn benefits the customer.
In India, the next 100 million customers to come online will be the middle class, who check price labels before buying. Flipkart will benefit greatly by following conservative-minded Walmart’s dictum.
No good news for sellers
On the one hand, Flipkart will now have access to more categories and better quality products, thanks to a better pool of sellers from Walmart. But the 1.5 lakh existing sellers on Flipkart are a bit wary of the Walmart entry, as the 56-year-old company is infamous in the US for constantly pushing suppliers to cut prices.
Like many industry observers who feel that Indian ecommerce has practically become a war between American titans, online sellers are also concerned how this synergy will work out in pricing.
According to an online seller active on both Amazon India and Flipkart, Amazon being a US entity, their rules and regulations are set in Seattle already. “But Flipkart understands India better. They change rules according to how the ecosystem is evolving. But Walmart enters with the same US mentality. Flipkart will soon become like Amazon,” says this worried seller.
A major factor bothering the online seller community is discounts. To be clear though, Walmart does not give discounts; they have EDLP: their MRPs are just lower than competitors’. Walmart makes it happen with a diligently engineered supply chain with lower costs in operations, salary, transport, packaging, etc.
Arvind Singhal, chairman of Technopak consultancy, says that Flipkart will continue with discounts. “But their sourcing will be more intelligent now (with the entry of Walmart), and their pricing will be more tactical,” he adds.
Unless the Flipkart-Walmart integration is done efficiently, demand for lower prices (without discounts) will be a headache for sellers. According to the above mentioned seller, visibility for sellers would decrease without discounting. However, this person adds that logistics will not be an issue for sellers as it is managed by the marketplaces.
Flipkart’s advantage in operations
The Walmart deal will give Flipkart access to international markets. To penetrate deeper into different markets the homegrown ecommerce unicorn will need deep pockets like Amazon – exactly what Walmart brings in.
Currently, Flipkart claims to have the largest market share in electronics, mobile phones, and fashion. (The first two boost GMV while the third gives good margins.) But this does not prove customer loyalty to the platform. Customers often do their research online and choose according to their wallet size. To build loyalty among customers, they need to shift focus to beauty, grocery, personal care items, furniture, home furnishing etc. – fronts on which Walmart can do a lot.
Satish Meena, Forecast Analyst at Forrester Research, says Flipkart will now focus on more private label and higher margins, and expansion based on pricing outside metro cities. “It is not easy to get traction for their private labels without more investment in supply chain, logistics, and offline stores. It is only a matter of time before Flipkart opens up offline stores. Currently Flipkart has no expertise for running offline. But Walmart is already offline and can open physical retail in India with Flipkart brand stores in the long term,” he says.
Additionally, Walmart has started a new model in the US for certain categories, which can be replicated in India. Called “Check out with me”, this programme is piloting in the Lawn and Garden category now.
According to this blog, “Outfitted with cellular devices and Bluetooth printers, Lawn & Garden associates at these select stores can check out customers and provide a receipt on the spot. Customers no longer need to venture inside the physical store to pay for items like mulch, soil, and flowers, saving them valuable time. A Walmart associate scans a customer’s items with the Check Out With Me mobile device, swipes their credit card and provides them with a receipt – printed or electronic options available. Customers just (need to) pay and go.”
According to Devangshu Dutta, Chief Executive at Third Eyesight consultancy, Walmart has a good sense of product development, sourcing and supply chain. “Flipkart is big in commodities products like books, mobile, fashion etc. and they operate well independently. But a sense of product management does not permeate Flipkart as they remain just a marketplace. They are discount-driven,” he says.
Walmart’s earlier tie-up with the Bharti group in India when it entered the country in 2006 did not last long. By 2013, they parted ways, and Walmart got 100 percent ownership of the Best Price Modern Wholesale cash and carry business. Since 2009, they have had 20 stores in India.
In the last few years though, Walmart has been eyeing growth in online commerce. They acquired Jet.com, a year-old ecommerce startup in the US, for $3 billion in 2016. In turn, they gained ownership of online home and décor store Hayneedle, which was acquired by Jet.com earlier. Last year, Walmart bought online footwear retailer Shoebuy as well as Canadian offline-online retailer for sports goods, Moosejaw. Soon after, they bought women’s fashion e-tailer Modcloth.com.
An analyst who requested anonymity said about the Flipkart deal: “What Walmart essentially gains is a foot in the door. It never has had an online presence and it knows that to take on Amazon it has to get a strong online presence.” Of course, Walmart will not repeat the US mistake in India. Amazon had lot of time to build ecommerce in the US, and became a sticky platform. Since ecommerce has grown roots in India only over the last seven years or so, Walmart still gets an early mover advantage.
In India, Walmart needs majority stake in Flipkart so that they can experiment more with ecommerce. It has just 11 percent in revenue in the US now. But it has gone in for partnerships before. Walmart has partnered with JD.com in China, with Rakuten in Japan, and with ASDA in the UK.
A Flipkart employee, on the condition of anonymity, said Walmart will push towards developing stronger storage, inventory and logistics. “They are strong in groceries; they will push for that in India with Flipkart,” he says. In the US too, the Walmart-Amazon war in groceries makes daily headlines in the media. As Mohit says, Walmart is not here for a short time; it is in for the long game.
According to experts, Walmart is slow paced, and needs new generation leaders like Flipkart, which encourages entrepreneurial culture, to boost their online presence in India. “It is a huge company. Hence the pace of innovation is not as fast as some smaller companies. It needs to attract better talent,” a former Walmart executive says.
The acquisition of India’s most valued unicorn by an American giant could be seen as the inability of Flipkart to make it on its own, and take on Amazon by itself. But Satish says that this deal does not mean that Flipkart has lost. “They are still the largest ecommerce player in the country. But it is a long term battle, and the best option is Walmart. Investors pressure for exit after all,” he says.
At the end of the day, if it is benefiting the company and the consumer, it is a win for the Indian ecosystem altogether. Surely, Walmart brings in its unique culture as mentioned above. What is more, Walmart announced last week that suppliers have reported reduction of more than 20 million metric tons (MMT) of greenhouse gas emissions, as part of the company’s Project Gigaton initiative. It’s not just Flipkart, but India itself that could benefit from such initiatives.
As Amazon seems losing its deal around Flipkart, the Amazon India Head is now all bullish over Walmart acquiring its arch-rival. In a recent media statement, Amazon India country head Amit Agarwal stated, “ the deal will be good for ecommerce as Amazon continues its focus and investments in the country.”
In a recent interview with Livemint, Agarwal talked about the deal saying, “Given how early India is in the stage of ecommerce, wouldn’t you rather have a lot more investments? I don’t get too emotional about someone’s adversities or someone’s success because our time will also come in one of those two phases. For us to get close to any of the credible markets it’s a long journey. So as long as there are investments, it’s good for everyone.”
On the question of Amazon’s offer to acquire Flipkart, he said that we should ask Alexa about it as he has no comments on that.
Also, calling Flipkart founders, Sachin and Binny Bansal “missionary entrepreneurs”, Agarwal added that he has a great deal of respect for what they’ve built. “Not just them, but all the startups that are running, people should be very proud of what they’ve achieved,” he added.
To be noted, the two companies have always been in a tug of war and have been seen hitting back each other at some incidences.
For instance, Kalyan Krishnamurthy, then Flipkart’s Head of Advertising and commerce platform, had said that Amazon has allegedly been copying its business moves. “We came up with the construct of BBDs (Big Billion Days), they copied that. When we have a bank offer, they have it as well.” he added. “They copy everything, or they wait for someone from somewhere to tell them what to do.”
Soon after when Indiatech, a lobby group by Indian startups like Ola and Flipkart, was created, Amit Agarwal shrugged off whether he considered the Indiatech lobby as a threat stating, “I am as much as an Indian as anyone else out there and Amazon India is as much an Indian company as other startups. Other startups are as foreign in their investment profile as any other company. So I really don’t understand this. But our focus is very much on serving customers and we are committed to the long term.”
Still Positive On Amazon India Growth
Talking about the growth of Amazon in India, Amit shared, “When we entered India, ecommerce was mostly an urban phenomenon, with a few people buying and price being the main determinant. Our focus was on offering a great selection, value and convenience. What excites me is the evolution of ecommerce in the past five years and our role in that.”
For the next five years, Agarwal has set the target to democratise aspirations, make convenience normal and bring the next 100 Mn customers to shop with Amazon.
Agarwal also claimed that Amazon has more than 115 Mn registered users and its “active user base is in the tens of millions—high double digits.” Talking about the investment in fashion space, he shared that as per IMRB data, “on a standalone basis, we have the largest fashion business in terms of units sold, GMS (gross merchandise sales), customer share.”
In another conversation with Reuters, Agarwal shared that Amazon expects groceries and household products to account for over half of its business in India in the next five years, as it moves to broaden offerings in the segment and foray into areas such as fresh produce.
At present, Amazon offers Amazon Now in India for two-hours delivery of groceries and consumables. However, in the US Amazon bolsters AmazonFresh and aims to bring it to India too.
“I would not speculate on when we would launch AmazonFresh but, absolutely, if you ask me the next five years of vision – from your avocados to your potatoes, and your meat to your ice cream – we’ll deliver everything to you in two hours,” he said.
Amazon has also become first foreign venture to explore food retail market in India. The company received the final nod from the government in July 2017 to invest $500 Mn in its Indian food retail business.
However, despite the growth and scalability, Agarwal shared that profitability in India is years away for Amazon as logistics, payments and other infrastructure needed to address the long-term opportunity are still being built.
He also said that the $5 Bn Bezos had committed to investing in Indiawas just a signal of intent, and the company was ready to invest significantly more to achieve its goals.
In its latest Annual Shareholder letter, Amazon Inc. founder Jeff Bezoshas claimed that Amazon India is one of the fastest growing marketplaces and the most visited site, on both desktop and mobile, in the country, citing data from comScore and SimilarWeb.
India’s ecommerce industry is expected to touch $200 Bn by 2026, as per a report by Morgan Stanley. The market reached $33 Bn registering a 19.1% growth in 2016-2017, as per Indian government’s Economic Survey 2018.
At the time when ecommerce has been blossoming with huge investments, Amazon India has a major challenge coming up with the deal between Flipkart and Walmart.
The e-commerce industry in India is growing rapidly and the jewelry industry is one of the fastest contributors to it. Jewelry industry in India is largely labor intensive and export oriented. E-commerce jewelry market is vastly growing in Tier 1 and Tier 2 cities due to increase in purchasing power parity of the people, demand for varied jewelry designs, lack of time to visit the local market etc. Duplication of jewelry designs and the burgeoning growth of offline jewelers at the equidistant interval is a huge challenge for this industry. From marketing the product to its sales and shipping, e-commerce jewelry stores play a major role. There are ladies in Tier 2 and Tier 3 cities who love to wear jewelry but it is neither affordable nor do they get too much variety. So, online jewelry shopping helps them to customize their jewelry according to their choice and is also affordable.
Current Market Scenario Indian e-commerce market is expected to grow to $200 billion by 2026 from $38.5 billion as of 2017. India's jewelry market will be worth $50 billion, by 2018. The global growing jewelry market is expected to reach a total of $272 billion in sales by 2020. Due to the increased purchase in Tier 2 and Tier 3 cities, jewelry portals have seen a growth of 25% to 30% in cities like Agra, Coimbatore as well as the cities of North-east. These online jewelry portals are amongst the most trustworthy ways for purchasing jewelry at an affordable price. They offer contemporary designs which give the women a luxurious and unique look and also offer various designs, which they do not keep in the physical stock at their stores.
E-commerce jewelry market is growing in Tier 2 and Tier3 cities because of their increasing demand and the changing trend. Reaching out to a larger target audience in the competitive jewelry marketplace, has a lot of significance because the brick and mortar stores are incapable of reaching out to the customers on a global scale, unless they have an E-commerce Jewelry store. There are also e-commerce stores, who have made it very convenient for ladies to take jewelry on rent, these give them a wide variety to choose from without creating too big a hole in their pocket.
Conclusion In Tier 2 and Tier 3 cities, E-commerce jewelry stores are growing larger as the ladies find it very comfortable to shop online as they get a lot of mesmerizing designs for purchasing the jewelry. The major factor for the growth in the e-commerce jewelry industry is the changing consumer behavior, as nowadays ladies are exposed to the changing global trends and they increasingly shop online. Ladies also have the option to take a trial of the jewelry free of cost, if they are purchasing it online. Easier accessibility, home delivery, easier payment option and finance schemes along with a wide range of designs, have propagated the growth of online stores for people living in Tier 2 and Tier 3 cities.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.
The Amazon Global Selling programme was launched in India in 2015. Since then, there has been a 200 percent growth in the e-tailer’s global exports business.
When Eric Broussard joined Amazon 20 years ago, the Seattle-based company was just an online book store with just one fulfillment centre (FC). Till 2004, he was part of building new categories like kitchen (which later became home and garden), toys, jewellery, personal care etc. By 2004, he was VP of International Seller Services overseas, building international marketplaces across Europe and Japan, a post he continues to hold today. Once he was back in Seattle in 2012, he got back into the global scheme of things.
An MBA graduate from Stanford University, Eric has all the striking qualities of an Amazon veteran. When I chat with him in Amazon India head office in Bengaluru, I couldn’t help but ask: when he looks back at the two decades of Amazon, what stands out? Eric doesn’t need to think much – it is the focus on large selection, he says. (At this point, I was expecting him to reiterate the three pillars of Amazon, selection, price, and convenience, which every spokesperson from Amazon mentions.) But Eric is quick to add that what has evolved are the tactics.
“A major milestone is the launch of marketplace. Amazon started as a retailer, but went on to have third-party sellers, which has really transformed the business,” he explains. While in India Amazon follows a marketplace model (due to FDI restrictions), in all other countries/markets they follow a hybrid of marketplace and retail. According to Eric, the sales are 50-50 between the two.
More importantly, Amazon did not restrict itself to domestic retail. As it grew, international retail between third-party sellers and foreign customers through Amazon’s marketplaces began to make waves. In 2015, Amazon launched its famed Amazon Global Selling programme in India. Since then, there has been a 200 percent growth in their global exports business in 2017; Amazon's international marketplace saw a 500 percent increase in Indian products offered. Also, global selling Indian sellers have grown 224 percent since 2017.
Global selling for the Indian seller
Currently, more than 32,000 sellers from India are part of Amazon’s Global Selling programme. They sell to 11 countries including US, Japan, and most recently Australia. Notably, it is not just the Indian/South Asian diaspora in these countries that buys Indian products. Categories like home décor and handicrafts, tapestries, bedsheets and duvet covers, dinnerware and copper mugs, art supplies and writing instruments, ethnic wear and women’s dresses, kitchen linen and leather messenger bags are quite popular among natives in these countries.
In the Australia market, where 60 Indian sellers piloted last month, categories such as books, home, apparel, HPC, office products, and shoes from India are popular, with more than 300,000 products listed already.
Gopal Pillai, GM and Director Seller Services, Amazon India, says this is unexpected growth. “Customer reviews have helped the sellers to adapt to foreign customers’ tastes and demands by modifying their products accordingly. The ‘Amazon Choice’ label gives recommendations too,” he says. According to him, many sellers in Tier IV cities, now exporting to these countries, have seen themselves becoming brands.
Eric adds that while some sellers prefer taking the international and domestic routes at the same time, many sellers choose to sell only international, while others choose to do a good job only in the domestic market.
Amazon sellers from over 130 countries cater to customers in 185 countries through the Global Selling Programme. Amazon claims that cross-border sales by small and medium-sized business on Amazon surged more than 50 percent in 2017 and exports worldwide are increasing by nearly 30 percent.
Sales from small and medium-sized businesses selling cross-border represent more than 25 percent of Amazon sales now. Eric says global sellers grow twice as fast as domestic sellers.
There is clarity in where products are coming from – retail or marketplace. For instance, if a seller is shipping a product to an Amazon customer in Japan, s/he has two options: either send it directly to the customer, which might take at least a week for delivery, or send it to the Amazon FC in Japan through the FBA programme – depending on customer behavior and popular categories – and get it delivered in two days after the order is placed.
Goods sold via Amazon’s FC will show ‘Shipped and Sold by Amazon’ Retail, while ‘Sold by Seller and Shipped by Amazon’ goes for FBA (Fulfilled by Amazon) items. If the seller does not choose FBA, it will show ‘Ship and Sold by seller.’ Customer service is done in local languages. In case of returns, the product just goes back to the respective country’s FC.
Products exported by Indian sellers to the US FC are delivered to Prime customers within two days of placing the order. Even same-day delivery is possible in some cases.
Game of sellers
In August 2017, Amazon’s Indian rival Flipkart launched ‘Flipkart Global’ to provide its 100,000-plus sellers with an opportunity to export their products to buyers across 190+ countries, by leveraging the ecommerce export capability of eBay India, which it had acquired earlier.
But Amazon India is looking beyond e-tail, which is estimated to be around $2 billion by 2020, according to a study by IIFT-FICCI. A few days ago, Amazon India launched an online marketplace for exporters in the country to trade with the world. Named Amazon Business, this B2B selling platform is an extension of the Amazon Global Selling Programme. Now Indian exporters/B2B sellers can register on any of the Amazon marketplaces individually and export to the US, UK, Germany, Japan, and France.
Of course, online retail continues to be the priority. Domestic retail sellers on Amazon India’s platform can use the same account for B2B business too.
International demand for Indian products is the highest from Amazon’s marketplaces in the US, Canada, Mexico, UK, Spain, Germany, Italy, France, and Japan.
The highest number of Indian international exporters is from Delhi, Rajasthan, Maharashtra, Gujarat, and Uttar Pradesh - in that order. Among the Tier I cities, Delhi, Mumbai, Bengaluru, Hyderabad and Kolkata have the maximum number of international sellers.
So what is next for Amazon Global sellers?
Eric says, “We continue to invest in this programme; we have a new dedicated team in India. The next step is spreading more awareness through one-on-one interaction, events, and webinars to provide as much as information about the processes – logistics, tools, dashboard etc.”
Before he signs off, Eric repeats Amazon’s famous motto: It’s still Day 1. I was curious, so asked what happens on Day 2 for the 24-year-old company? Eric points to a wall poster, which quotes Founder-CEO Jeff Bezos:
“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”
That explains why Amazon continues to be one of the highest valued companies in the world.
Premium British lifestyle brand Carlton London partnered with Ace Turtle, an omnichannel platform company to ramp up its e-commerce business in India.
Ace Turtle's proprietary omnichannel platform, Rubicon, will power Carlton London's e-commerce business through seamless inventory and catalogue management across existing and new demand generation channels.
Having a meaningful presence across multiple retail channels has become one of the top priorities of any large brand. However, control over the presence of inventory across multiple retail channels has always been a challenge that retailers are grappling with. Ace Turtle's Rubicon platform through its tech capabilities aligns inventory view and allocation of stock towards the channel that performs the best.
"India's retail consumerism is going through a paradigm shift with customers interacting with brands through various channels. The rise of e-commerce has ensured growing dominance of online channels, as one of the most preferred platforms to optimise sales. However, adoption of technology becomes critical in ensuring optimisation of fulfilment using data. We are confident that Ace Turtle's platform will add significant value in scaling up our omnichannel business in India," said Business Head of Carlton London, Kim Virk.
Rubicon will provide real-time information about the availability of inventory across the brand, regardless of which channel is accessed. Moreover, a single feed of catalogue, pricing, and inventory shared with all multiple retail channels will ensure consistent brand representation, feature rich descriptions and real-time inventory for better control in the multiple retail channels.
The growing awareness of global fashion trends in India has been fueled by the increasing internet consumption. As a result, consumers are conscious not only of the international styles but also about the lifestyle attributes connected to the brand, leading to increasing penetration of premium international brand.
In this regard, Carlton London, by venturing into multiple retail channels operation, aims to reach out to a wider audience across geographies.
Tata Group’s ecom arm, Tata Cliq is looking to be India’s biggest retailer in the online space. The etailer is rolling out major discounting initiatives and hoping to give tough competition to larger e-commerce players viz, Amazon and Flipkart. If Amazon gave the world e-commerce, Flipkart made it mainstream in India.
Tata Cliq is enhancing its online presence with spending on digital marketing and heavily discounting products. As Amazon and Flipkart continue to grow, and with Reliance Retail planning to enter the market later this year, the pressure is on the medium to large sized e-commerce firms such as Tata Cliq to stand out.
Tata Cliq sells a variety of product and brands and has a big emphasis on fashion. However, it is the electronics, home appliances, and smartphone sections that the business is most heavily discounting at present with prices lower than rivals Amazon and Flipkart in many cases. However, some worry discounting items too heavily in the hope of drawing customers could cause an unsustainable price war, as has happened before.
The CEO of Tata UniStore, Ashutosh Pandey, had earlier said while there will be discounts and it will not burn pockets. The brand will not be the cheapest but the most authentic place to shop. This suggests heavy discounting will not become the main strategy of the brand but more of a short term one.
Tata Cliq started its operation in 2016 named by Tata UniStore and reported sales of Rs 12 crore ($1.8 million) for the 2016-17 financial year, with a loss of Rs 162 crore ($24.4 million).
Indian ecommerce, touted by IBEF to be a $38.5 Bn market as of 2017 and expected to reach $200 Bn by 2026, is presently going through a phase of turmoil. As indicated by a few recent developments, the certain segments of the ecosystem consider this growth as a result of the ‘unfair play’ and now demand a government intervention to plough a level playing field.
As per an ET report, a group of brick and mortar retailers including Future group and Reliance Retail have alleged that ecommerce companies like Flipkart, Amazon India are violating FDI rules by“influencing prices on their platforms and illegally funding “abnormal discounts.”
A letter in this regard has been submitted to Minister of Commerce and Industry Suresh Prabhu by the Retailers Association of India (RAI) asking for government intervention and taking an action against the ecommerce marketplaces.
Most recently, Handset maker’s lobby Indian Cellular Association (ICA) had alleged that Flipkart and Amazon India are violating FDI (foreign direct investment) rules by offering discounts — directly or indirectly — on mobile phones and other products through intermediaries or partner companies. The association represents handset makers such as Apple, Micromax, Nokia, Vivo, Lava and Lenovo/Motorola.
The Press Note 3 states that 100% FDI investment in ecommerce companies is allowed under the automatic route if the companies are engaged in B2B sales, not B2C transactions. The norms highlight that they can’t have an inventory-based model that involves goods being sold to consumers directly. Such ecommerce companies can only function as marketplaces to connect vendors with buyers and they can’t influence prices.
To be noted, Amazon India operates in India through its subsidiaries such as Amazon Seller Services, Amazon Wholesale India Pvt., Amazon Pay and sellers on Amazon platform such as Green Mobiles, Rocket Commerce, Darshita Electronics and others.
On the other hand, Flipkart operates through Flipkart Internet, Flipkart India, Ekart Logistics, PhonePe and sellers on the platform such as Retailnet, SupreComnet, Omnitech Retail, Trunet Commerce and India FlashMart.
Both Flipkart and Amazon India has given media statements indicating that on their part, they have been fair and are have not been flouting the FDI rules in any manner.
Apart from the issues related to FDI, the Indian ecommerce companies are also facing the ire of Income tax authorities.
As per the latest ruling, the IT departmentwants ecommerce companies to reclassify discounts not as a cost but a capital expenditure, meaning that it should not be deducted from revenue and should, therefore, be taxable.
While the government has set up an ecommerce think tank to evaluate a policy for the sector, the claims of FDI violation by ecommerce majors is a huge setback for the sector. However, what happens after such allegations could either be a huge turnaround for the sector or a lesson for the companies.