India’s ecommerce market to be world’s 2nd-largest by 2034; Amazon launches program for start-ups

As of now, India hasn’t found a place in the top 10 ecommerce markets in the world list. But in less than two decades, things could change for the Indian ecommerce industry, according to Worldpay’s Global Payments Report 2016.

The payment processing company’s research report has revealed that India would overtake US to become the second largest ecommerce market in the world by 2034. Also, it would grow by 28% YoY and touch $63.7 billion by 2020.

Ecommerce market of 30 countries including Australia, China, Hong Kong, India, Singapore and South Korea were evaluated for this study with the help of data collected from various primary and secondary sources.

“Our research has uncovered a number of trends that point to India’s potential for astounding e-commerce growth in the next two decades. The market is predicted to reach $63.7 billion by 2020 and overtake the US by 2034. This enormous development will, in turn, open up enormous opportunities for companies who sell online,” stated Ron Kalifa, Vice Chairman of Worldpay.

How Worldpay reached to this conclusion?

The prediction that India’s ecommerce market would be bigger than America’s and at par with China’s in the next 20 years is based on the current trends and developments.

Some of them are:

• The rising internet penetration as number of internet users is going to nearly double from present 350 million to 600 million by 2020
• India’s technical infrastructure is improving and is attracting huge investments
• The growing population of smartphone users
• Millennials who prefer to shop on mobile phones would drive this growth
• The rising popularity of online payment methods like e-wallets

“…as more Indians get access to the internet and bank accounts, they will, in turn, develop confidence in buying online at which point we can expect to see a decline in cash on delivery… In this rapidly changing payment market, merchants must adopt the right payment technology and work with experienced payment partners in order to keep up with the demands of India’s fast-expanding population of online and mobile shoppers,”emphasized Kalifa.

Amazon Launchpad – an unique program for start-ups

Worldplay’s report asserted that it is important for etailers to stake their claim swiftly in order to win over India’s ecommerce market and take advantage of the future ecommerce growth.

“Leading companies such as Amazon and Alibaba are already making their move, indicating clear incentive for merchants to gain their foothold within India’s budding e-commerce market as soon as possible,” said Kalifa.

One of the moves made by the American ecommerce giant is initiating its global program ‘Amazon Launchpad’ in India.

Are you wondering what the program is all about? The etailer’s aim is to help Indian start-ups to launch new products on Amazon and get them discovered world-wide. It is aligned with the government’s ‘Start-up India’ initiative. The online marketplace will use its ecommerce expertise, global infrastructure, and powerful marketing tools to help these new products reach millions of potential customers. It will also help the etailer to expand its product portfolio and sell unique products.

“India has great minds which invent amazing products and we will support their growth by helping customers discover their new products not just in India but other countries around the world. We hope that Amazon Launchpad has a positive impact on the economy by further promoting ‘Make in India, adding further impetus to the current interest in Indian start-ups and also creating additional employment opportunities,” said Amazon India’s VP, Amit Agarwal.

Some of the products that are already listed under this program are fitness bands, smart-watches, shoes insoles with navigation, floating bluetooth speakers, and jewellery with technology.

Discounts on ecommerce sites being given by sellers: DIPP

E-commerce companies have told the Department of Industrial Policy and Promotion (DIPP) that discounts on their platforms are being offered by sellers, who are free to run such schemes both in online and offline mediums, a senior official said on Monday.

“E-commerce companies have been telling us that the discounts are being given by the sellers and brand owners and when they come out with advertisements, they also make a disclaimer,” DIPP secretary Ramesh Abhishek said on the sidelines of an Amazon conference. He said sellers and brand owners can offer discounts both in online and offline mediums.

The comments come amid controversy over advertisements for discounts by online retailers like Amazon, Flipkart and Snapdeal.

Offline players, including traders body CAIT, have in the past raised concerns over these discounts, alleging they infringe the e-commerce guidelines. As per DIPP guidelines, e-commerce marketplace players cannot directly or indirectly influence the sale price of goods or services on their platforms and shall maintain a level playing field.

Responding to another query on the status of US-based technology giant Apple setting up its own stores in India, Abhishek said, “The company has to decide what they want to do.”

There has been speculation that Apple has re-started its discussion with Indian government to explore the possibility of opening its stores here. In June this year, government had relaxed foreign direct investment (FDI) norms by giving a three-year exemption from local sourcing to foreign players in single-brand retail and a five-year relaxation for ‘state-of-the-art’ and ‘cutting-edge’ technology.

He clarified that FIPB (Foreign Investment Promotion Board,) would take a final call on whether a particular technology is ‘cutting-edge’, with inputs from ministries.

“Ultimately, FIPB will decide on it…Administrative ministries give their views, but the ultimate decision is that of FIPB,” he said.

The cat’s out of the bag; Alibaba’s not buying Snapdeal!

Factor Daily reported at the start of the month that Alibaba was discussing acquisitions with Snapdeal. But, the rumors can finally be put to rest. On Thursday, a source aware of the situation revealed that no talks of an acquisition were underway.

Even the marketplace’s co-founder Kunal Bhal tweeted the following on Thursday:

Alibaba’s entry into Indian online retail

Alibaba might have invested in Snapdeal but the Chinese ecommerce company has also invested in Snapdeal’s competitor Paytm.

Paytm recently took Snapdeal’s lead in the ecommerce rat race. Backing from Global ecommerce leader Alaibaba could have given the etailer the push it needs. But poor performance could be a reason why the foreigner isn’t interested in acquiring Snapdeal.

Before Snapdeal, it is rumored that Alibaba was in talks with Flipkart about an acquisition. But when that deal didn’t work out, it is believed that Alibaba set its sights on Snapdeal.

Many believe that Paytm will be Alibaba’s entry way into Indian ecommerce. However, the international ecommerce giant was supposedly in talks with Shopclues about an acquisition. Again, no official details were provided by either party.

Alibaba claimed 2016 would be the year it dived into the Indian online retail scene. However, the online marketplace seems to have cold feet on account of the changing ecommerce landscape.

2016 may not be the year the foreigner enters Indian online ecommerce, however it has already begun to assemble its Indian online retail team. It was looking for an office in Bangalore, In June, it hired Bharati Balakrishnan, the chief business officer at LocalOye as its first employee.

By September, Madhur Deep an executive at McKinsey and Goldman Sachs was appointed as vice president. The market entry, investments and partnerships for B2B and B2C businesses are going to be initiated by Deep, for the Alibaba Group in India.

Craftsvilla partners with Co-optex to support Tamil Nadu Handlooms & boost its product range

The last time IOS checked up on Craftsvilla, we found out that the online retail portal was dabbling into the ethnic snacks and sweet business by acquiring the food start up Place of Origin. This time the etailer has partnered with Co-optex, the Tamil Nadu Handloom Weavers’ Co-operative Society).

A mutually beneficial association

The new partnership between Craftsvilla and Co-optex is meant to help support talented weavers and handlooms in Tamil Nadu. This association will allow the ethnic etailer to support and promote Tamil crafts and art forms throughout the country.

“It gives us great pleasure to join hands with Craftsvilla. This association has opened up numerous opportunities and a chance to connect with consumers from across the world. We offer authentic handloom products and this combined with Craftsvilla’s focus to support artisans and crafts of India, we are sure to achieve great milestones in the future,” said the managing director of Co-optex, T.N. Venkatesh I.A.S.

With Co-optex authentic handloom products on Craftsvilla, there will be a wider range of ethnic goods for consumers to choose from. It will boost the categories of silk, cotton and organic sarees and home furnishing.

By partnering with Co-optex, the etailer’s handlooms portfolio which presently offers Pochampalli Silk, Ikat, Banarasi, Tussar and Jamdani handlooms, will expand.

“Craftsvilla is deeply committed to development of artisans in India and disruptively change artisanal supply chain from origin to consumption. We believe we can unwrap billions of dollar of business value to artisans across India by interventions across design, quality, big scale manufacturing and logistics. We have identified close to ten major clusters in India which we will develop for our ethnic supply. Co-optex will play a very crucial role for development of our cluster in Tamil Nadu for handloom products. We are very excited to partner with them to produce ‘Make in India’ products for global consumers,” said the co-founder of Craftsvilla, Manoj Gupta.

Craftsvilla is looking at achieving profitability by next year and small efforts like this could help it complete its goals quicker.

It’s raining devaluations for Flipkart; Vanguard marks down its shares’ value

Earlier this week IOS reported about how Morgan Stanley devalued the holding value of Flipkart’s shares by 38.2%. This was the fourth time the American financial MNC marked down the Indian etailer’s value.

According to the latest reports, another investor has decided to follow suit. American investment management company Vanguard Group devalued Flipkart’s shares by 33%.  The investment firm that owns 53,619 shares (37,575 in the series G round of funding and 16,044 shares in series H) in the ecommerce company has brought down the per share value from $102.6 in March 2016 to $68.7 as on 30 September 2016.

The direct result is – Flipkart’s valuation that stood at $11 billion in March is now at $7.3 billion, according to Vanguard. Morgan Stanley’s valuation stands at $5.57 billion from $15.2 billion last year.

Tough times ahead for the home-grown unicorn?

After the Morgan Stanley devaluation, experts predicted that if one more investor marks down Flipkart, then the etailer might face trouble in raising capital in the next round of funding. Now that it has happened, all are anxiously waiting for the etailer’s upcoming meeting with potential investors.

In many interviews, the founders of the marketplace have asserted that these devaluations don’t bother them. But potential investors would surely bring up the issue while negotiating the funding deal, believe industry watchers. The investors will also gain more control over the marketplace’s operations and policies.

Not to forget, losing market share to Amazon, shaky top-management and the mountain of losses has drastically reduced Flipkart bargaining power.

As far as the ecommerce industry is concerned, the online marketplace leader’s mark downs would force start-ups to keep their expectations & valuations real and back it up with performance reports. The funding activities would no longer be just a headline-making activity. It will help to bring the ecommerce businesses back to real fundamentals, according to experts.