Tuesday 12 October 2021

More global biggies line up for Paytm's $2.2-billion IPO


More global biggies line up for Paytm's $2.2-billion IPOPaytm's much-anticipated Initial Public Offering (IPO) has garnered interest from a set of new investors, including US-based asset manager Alkeon Capital as well as funds managed by Morgan Stanley and Goldman Sachs, sources aware of the matter told ET.

The new investors join a list of bidders that are in talks to invest in Paytm’s anchor investment as well as its IPO.

ET reported last week that Canada's CPPIB continues to be in talks with the Noida-based payment firm's anchor investment slot, sources confirmed.

“This is a big Diwali for online retail,” Manish Tiwary, vice president of Amazon India, said in an interview.

Online sales during the Festival of Lights should leap 42% to $9.2 billion this season, Forrester Research estimates, underscoring the phenomenal speed with which consumers are gravitating toward e-commerce. Over the next four to five years, online shopping could grow five-fold with half-a-billion internet consumers by 2030, marketing trade body MMA and media agency GroupM projected last month.

Anticipating the rising demand, companies are adding staff in warehouses and delivery hubs at an accelerating clip. Flipkart added 115,000 jobs this sales season, up from 70,000 in 2020 and 50,000 in 2019. They’re also recruiting unconventionally. Aiding the effort is the introduction of so-called pink shifts, consisting of just women.

Amazon and Walmart brace for crucial Diwali showdown

At its Chennai warehouse, 23-year-old supervisor Ramya Lakshmi N is barely 45 days into the job and already in charge of managing the floor and meeting targets. Sporting short hair and dressed in a checked shirt over black trousers, she sticks out among the coworkers in hair plaits and traditional salwar kameez dresses.

“We are helping India shop,” said Lakshmi, an MBA graduate in logistics. “Pink shifts are also creating new pathways for women in a fast-growing industry.”

The rivalry between Amazon and Flipkart peaks during Diwali, with both offering steep discounts on everything from smartphones and sports equipment to appliances and keto foods. Offers have begun even earlier than usual, during the inauspicious period of Shradh, a fortnight when Indians pray for their ancestors.

Whoever comes out on top this Diwali gains more than bragging rights. It’s early days for the digital-retail market, and both companies’ sales numbers are pointing sharply up. Importantly, investors will be watching how Amazon and Flipkart -- which is preparing for one of India’s largest IPOs -- fare against domestic competition such as Reliance Industries Inc.

Local contenders enjoy many benefits as Prime Minister Narendra Modi’s government wants to nurture homegrown champions. Amazon and Flipkart are barred from featuring exclusive products or owning inventory, and aren’t allowed to own more than 51% of supermarket chains.

The pair also run the risk of further legislative action from the government, said Arvind Singhal, chairman of consultancy Technopak Advisors Pvt. Meanwhile, the likes of Reliance and Tata Group gain time to catch up with the U.S. rivals while the online channel is in its infancy.

“Sure, online is the future of retail in India,” Singhal said. “But the future is not tomorrow.”
The Confederation of All India Traders, representing millions of small merchants, has threatened to launch protests after Diwali if the government doesn’t bring in policies to curb the online giants.

Unfazed, both Amazon and Flipkart are declaring early victory. Amazon, whose tagline this year is delivering Khushiyon Ke Dibbe -- a boxful of happiness -- said it’s signed up 60% more sellers than in 2020, resulting in record single-day sales. The company recorded a 65% increase in orders from smaller cities and towns, Amazon’s Tiwary said in a phone interview.

Helping to fuel the growth is voice shopping, as customers using the service have more than doubled since last Diwali, he said. About 85% of new customers are coming from smaller cities and beyond, versus 65% a year earlier.

Flipkart, which Walmart bought for $16 billion in 2018, said new sellers during its Big Billion Days sale last week grew 55% compared with last year. Sales of premium smartphones doubled from 2020’s tally, and 42% of these were purchased by customers in small cities and towns. The company sold more than 200,000 iPhone 12 devices at the start of the sale period.

Both Amazon and Flipkart expect to break Diwali records, helped by consumers getting more comfortable with online shopping during the pandemic. Trust in deliveries and digital payments has increased and users are sticking with newfound shopping habits, said Jitender Miglani, a senior Forrester analyst. Meanwhile, in-person shopping is taking time to rebound, even as growth in daily infections has slowed to about 20,000 from a May peak of some 400,000.

“The pandemic has been a blessing in disguise,” Miglani said.

Yamuna Gopinath is one of just millions taking advantage of Diwali bargains. The Bangalore middle-school math teacher stocked up on groceries and household goods on Flipkart, then went on Amazon to get a OnePlus Nord 5G smartphone. “The e-commerce race helps shoppers get the best discounts,” Gopinath said.

The bargains can be eye-popping. Amazon is advertising as much as 70% off on furniture and 40% off smartphones. The Seattle giant hawked Alexa-powered Echo speakers at 1,999 rupees ($27) -- less than a third its sticker price. Flipkart offered as much as 80% off on sunglasses and car accessories and is selling the iPhone 12 Mini at 40,000 rupees, about a 20% discount.

Back at the Flipkart warehouse, Diwali frenzy has gripped everyone from sorters and packers to supervisor Lakshmi -- a window into not just the Amazon-Flipkart rivalry but also the broader Indian consumption boom. Clothing tops the list for many of her colleagues -- but not hers.

“I have my heart set on an iPhone 11,” said Lakshmi. “I’ll use buy-now-pay -later offers to finance it.”

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