Delivering quality at speed and ease-of-buying boosts Flipkart & Amazon’s large appliances sales

Indian ecommerce biggies Flipkart and Amazon have cracked the code for increasing online sales of large appliances. It is a tough category to crack since it has big-ticket items and logistics is tricky. But the rivals have managed to find a winning formula.

Speedy delivery with installation

As of now, Flipkart offers next-day delivery service across 10 cities for large appliances product category. The marketplace also offers pre-planned delivery & installation services through its service partner Jeeves that covers 9,000 pin codes.

Rohit Sharma, Head of Ekart, Flipkart’s logistics arm shared that their speed of delivery along with installation service gives them an edge over others.

Sharma said, “We cover buyers’ experience all the way through till one can turn on the TV and start watching. We take care of installation too. If you have ordered a TV on 14th, you are in Mumbai, you could be sitting in front of your new TV on the morning of the 15th, watching your favourite channels. How this can be done? You book the order, the delivery crew as well as the installation crew meets at your house and in maximum thirty minutes the whole process will be done. That is our winning edge.”

To ensure speedy delivery, Amazon has set up many fulfilment centres especially for the large appliances category.

Quality after-sales service

For large appliances such as television, air-conditioners, and refrigerators that are big-ticket items, the quality of after-sales service could act as deal-breaker.

Ecommerce biggies Flipkart and Amazon understand that.

The American etailer is aware of customers’ apprehensions regarding the quality of after-sales service. Buyers want someone that can do a flawless job without ripping them off. Amazon intends to deliver exactly that to its buyers.

Amazon India’s spokesperson revealed, “The vision for installation services is to be the most trusted service in India for Amazon customers to avail high quality installations for appliances and furniture, in a convenient slot chosen by customers, by qualified, trained and background verified installation experts, at transparent prices and backed by Amazon’s Happiness Guarantee.”

From screening technicians, running a background check to training them, Amazon is careful about selecting its service partners.  

Ease of shopping

The third factor that is contributing to large appliances’ surge in sales is the ease of shopping on these marketplaces. Product comparison is far easier on ecommerce shopping sites compared to offline stores. And customers can make an informed buying decision without the pressure of deciding ‘right now’.

Ekart’s head Sharma asserted the above-mentioned point, “You take a budget, maybe 40, 000 to buy a top of the line TV. But you want to look at every product that fits into that budget. Sometimes you even relax your budget to saying I’ll pay 43000 if I get great value for money… s/he can set those filters and still can have 35/40 options. And the customer is comparing every element with every brand that one can think of. It’s so much easier to compare.”

Buyers are becoming environment-friendly

Besides becoming more aspirational, Indian buyers are also trying to become more environment-friendly. This is why online marketplaces like Amazon are witnessing a steady rise in orders of eco-friendly products along with large appliances.

Speaking about this sudden surge in sales, Kaveesh Chawla, Director at Amazon India stated, “Customers today are more environment conscious and recognize the importance of using clean energy. We are excited by the rising demand for Solar and Garden products across the country. We are constantly striving to increase selection to meet customer needs for environment friendly products.”

Flipkart, Paytm, Amazon to diverse their portfolio with financial products

Indian ecommerce unicorn Flipkart’s growth mantra is to sell everything under the sun. After grocery, large appliances and furniture, the etailer wants to focus on financial products.

What do we know about Fipkart FinTech product portfolio?

While no official announcement has been made yet, many sources have confirmed that the home-grown etailer is seriously looking into the fintech segment. A special team to look after this division has already been appointed

“While several ecommerce companies are looking at financial products, Flipkart is leading the pack and is keen to launch this as a revenue-generating business and also to help its customers,” a source confirmed.

According to reports:

• Flipkart is rumoured to be negotiating deals with several digital lending start-ups for financial products
• Mutual funds and insurance products, in addition to offering credit and loans would be launched
• It might not be a high-margin product category for Flipkart
• The marketplace is partnering with fintech start-ups to compensate for the lack of expertise

“We are talking to multiple ecommerce players who are looking to launch financial products. Since financial products is not their core area, they are looking to integrate with players like us who have multiple banking and NBFC partners and offer nearly 200 products,” disclosed Manavjeet Singh, CEO of Rubique, an online marketplace for financial products.

Paytm and Amazon are also looking to offer credit products

Like the source mentioned above, many Indian ecommerce players have developed an interest in financial products. Flipkart’s rivals Amazon and Paytm too are planning to launch credit products with the help of lending start-ups.

For instance, fintech start-up LoanTap has started disbursing loans to Paytm’s customers from the last two months.

“Paytm speaks to their customers based on the average wallet account balance, and if they consent for a loan, we do the loan disbursal,” stated Satyam Kumar, LoanTap’s CEO.

Bengaluru-based fintech start-up ZestMoney is also in the middle of developing credit products such as EMI option to buy tickets/pay bills for Paytm.

The US-based ecommerce giant Amazon would offer financial products via its digital payments venture Amazon Pay. The etailer would collaborate with financial start-ups to allow its buyers to pay for insurance, credit lines and many other payments.

Would financial products be the next battleground for the Indian ecommerce industry?

GST compel sellers to take their pick from discounting or loss

The Goods and Services Tax (GST) is all set to be rolled out in July 2017. This would alter the tax structure of sellers’ (online & offline) existing stock. That’s why vendors are trying to clear their inventory before GST is implemented by offering discounts.

The alternate to this is incurring loss, since the new tax structure under GST would eat away the profits.

Indian ecommerce biggies like Flipkart and Amazon have also asked sellers to recall their inventory from marketplaces’ fulfilment centres. But taking back the stock would invite various state border taxes as well.

Speaking on this issue, the representative of the All India Online Vendors Association (AIOVA) said, “If we recall the inventory from the warehouses of e-marketplaces to get the MRP changed by the brands, we have to bear the recall fee of around Rs 25,000 for 1,000 units to get it sorted and sell it after GST roll-out. If we sell it as is in the new tax system, we’ll be doing so at a loss… Everyone is trying to clear their stock pre-GST so that they won’t have to incur any additional cost on their stock after GST. A few days ago also there was a sale on Flipkart, and everybody is putting out more ads so that stocks can be liquidated.”

Getting GST compliant would be tough for sellers and marketplaces

Be it sellers or etailers, all are on the side of GST. It would help Indian ecommerce companies to get rid of tax woes and sellers too believe that it is a big step ahead.  But just like any big reform, the transition period is going to be rough for both.

The three options available to sellers are:

1. Sell the stock at a discounted price
2. Sell it after GST is implemented and bear the loss
3. Recall the stock and ask brands to change the MRP by paying various State taxes and marketplace fees

“Sending back stock and taking it through state borders will involve tax implications. If the stock is in transit during the transition, then also there are rules and regulations around it,” stated Cleartax founder Archit Gupta.

Buzz is that the Indian government would offer rebates on goods sold during the GST transition period.

As for ecommerce players, Amazon India is combing through the GST developments and enabling its systems to make it compliant with GST regulations. Indian etailer Shopclues is waiting for more details to come on the surface, so that they can integrate those changes in their system.

To say that it is a Catch-22 situation, would be an understatement. Let’s hope that the government and online marketplaces make it easy for sellers to go through this transition period.

Sellers, how do you plan to deal with this situation? Do you have an alternate option besides the three mentioned above?

Centre to announce New Rules for the sale of packaged goods via ecommerce

The number of complaints against ecommerce companies is on the rise. Compared to the 1,300 registered back in December the number of complaints registered so far has risen to 28,000 (i.e. from November 2016 to March 2017). The main reason for these complaints has been undelivered products, wrong products, defective products and so on.

To bring down the number of these complaints the government has decided to intervene. The central government is planning to amend the Legal Metrology (Packaged Commodities Rules)-2011 to reduce consumer complaints.

New amendments by the Centre

Rule #1 – Sellers and ecommerce platforms must compulsorily declare MRP, net quantity and the grievance redressal process on all packaged goods.

Rule #2 – All packaged commodities imported and sold in India will need to have the place of origin and manufacture displayed on them.

Rule #3 – Displayed quantity, MRP and other detail sizes will be doubled on small packets and for larger packets, the font size for these details will have to be 1.5 times their current size.

Rule #4 – The above may not be applicable to food items, except for those unfit for consumption after the expiry of a certain period of time. For these products, the best before or use by details must be prominently displayed on the packaging.

These amendments are expected to be enforced through an official notice in the coming weeks. After the amendments are enforced, under the Packaged Commodities Rules-2011, the director, controller legal metrology officer would be empowered take necessary action against merchants and ecommerce companies violating these rules.

Ecommerce companies and marketplaces like Amazon will need to meet these amended requirements to avoid legal action.

A senior official stated that, “The amendments have been framed because we have received many complaints that consumers weren’t provided the same goods as mentioned in the packages and also inadequate information were furnished by some companies on their packages.”

The official further mentioned that in the event of discounts, vendors and sellers on some online retail platforms display the wrong or inadequate information on their product packages.

Seller Response

According to sellers, many of the amendments introduced are already being observed by them. Former president of ESS, Sanjay Thakur said,

“We are already complying with the guidelines. Everything from dimensions, weight, consumer helpline details are mentioned on all packaged commodities.”

AIOVA, on the other hand, said that these rules and requirements are already being followed by sellers with products at marketplace fulfilment centres.

Precaution by the government

A couple of big ecommerce companies last year wound up in trouble for violating packaged commodities rules.

The draft of the above-mentioned amendments of the Legal Metrology (Packaged Commodities Rules) – 2011 was put through public consultation for 30 days during late last year, i.e. December 2016. After the objections and suggestions were considered, the Centre decided to now enforce them through a notification that will be published in the official gazette.

The official mentioned earlier mentioned, “We had sent the draft amendments to the Law Ministry and after considering all the aspects will now issue a notification regarding the same.”

These amendments may change things for online shoppers to a certain degree for sure, but at the same time, online sellers are waiting for rules by the government that will also protect their best interests as well.

Lenskart to invest Rs100 crore to open 400 stores in two years

Ratan Tata-backed eyewear retailer Lenskart plans to invest over Rs100 crore on business expansion, including opening of 400 stores, in the next two years.

The company, which has a strong online presence, is eyeing a total of 700 stores by March 2019 by targeting small towns, tier II and III cities.

“As of now we have 300 stores across India and in the next two years we plan to open another 400 stores,” Lenskart chief executive officer Peyush Bansal told PTI. The current Lenskart stores in over 80 cities are based on franchise model, he added.

When asked about investment for the expansion, Bansal said the company will be putting in capital primarily around building back-end supply chain, while franchises would invest in opening stores. “For us the total investment would run to around Rs100 crore primarily to build supply chain, to be able to service all our stores and also train staff,” he added.

Elaborating on the company’s expansion strategy, Bansal said it so far has received good response from the tier I cities and was looking to expand its footprints in small towns.

“We have started entering some of these small cities. We have opened a store in Lucknow, one will soon be opened in Bareily,” Bansal said.

On expenditure on brand marketing and advertising, Bansal said: “We would be spending close to Rs140 crore in brand marketing and advertising over the next two years, apart from the back-end expenditure,” he added.

Lenskart has raised over Rs700 crore from investors, including Ratan Tata, IFC (venture capital arm of the World Bank) and Kris Gopalakrishnan (Infosys co-founder), among others.

In September last year, the company had raised an undisclosed amount from Premji Invest—the investment office of Wipro chief Azim Premji.