SoftBank Group to book 1.2 trillion yen profit on Alibaba share sale

TOKYO: Japan's SoftBank Group Corp said on Tuesday it expects to book around 1.2 trillion yen ($11.12 billion) in pre-tax profit on the sale of shares in China's Alibaba Group Holding Ltd.

The sale dates from 2016 when SoftBank sold part of its Alibaba stake via derivatives to fund its acquisition of British chip designer ARM.

The transaction leaves SoftBank with a 26% stake in Alibaba worth $101 billion. The Japanese investment firm said it would book the profit in the financial quarter ending June.

SoftBank Group founder and Chief Executive Masayoshi Son bought into Alibaba for just $20 million in 2000. The Chinese startup's growth into one of the world's biggest e-commerce companies has helped burnish Son's tech investor credentials.

The windfall comes as one of Son's biggest tech bets, Uber Technologies Inc, has shown lacklustre stock market performance since its market debut last month.

SoftBank booked a 418 billion yen gain on its Uber stake in the financial quarter ended March ahead of the debut. On Monday, Uber's shares closed 9% below their IPO price at $41.

Son has referred to the value of the Alibaba stake to argue that SoftBank Group's shares are undervalued. Following the end of a 600 billion yen stock-buyback programme and Uber's disappointing listing, the shares have fallen 23% from their April high.

SoftBank Group shares closed down 3% on Tuesday ahead of the Alibaba sale announcement, giving the conglomerate a market capitalisation of 10.2 trillion yen.

New York-listed Alibaba is considering a follow-on share sale in Hong Kong to raise as much as $20 billion to boost its investment war chest, people familiar with the matter told Reuters last week.

Share of electronics dip in e-tail pie as groceries grow

The e-tailingmarket is moving away, albeit slowly, from just selling mobile phones and electronics to grocery and fashion. 

A study by management consulting firm RedSeer said that the share of mobiles and electronics has dropped to 38% in the Jan-Mar quarter of 2019 from 45% in the same time last year. It has been steadily dropping since then. 

During April-June last year it dropped to 44%, and to 40% in the following quarter and to 39% in October-December last year. “The Indian e-tailing ecosystem always had a high share of mobile devices category, with the figure often exceeding 50% of all gross merchandise value (GMV) in certain quarters. The mobile category share started dropping below 40% since 2018 and is likely to stay at 35% for 2019 as a whole,” said Ujjwal Chaudhry, director, RedSeer Consulting.

Mobiles and electronics still take the largest share of the pie, followed by fashion – which hovered around 21%-23%. Industry players feel that the change bodes well for the whole ecosystem — for horizontals; it indicates a clear pathway to profitability, with a GMV composed of higher margin non-mobile categories. For verticals, this growing comfort with non-electronics helps them to increase their total consumer base and attract buyers by offering a better experience. RedSeer’s Chaudhry adds that while for customers it means convenience and better options, for e-tailers it means margins move on from just sub 10% (with mobiles and electronics) to 30%-40% with smaller articles. “This will also improve the engagement with customers since there are many more touch points. From more than 70% a couple of years ago, mobiles and electronics will stay at around 35% this year,” he said. Results from the study also showed the increase in the contribution of grocery — from 3% to 5% and analysts add that the category is fast emerging with the grocery and food delivery space seeing attention. Arvind Singhal, MD, Technopak Advisors said that in addition to saturation in the mobiles segment, grocery and F&B is seeing growth. 

“In two years, food and grocery would be among the top 2 shopped categories. The e-tailing market is becoming saturated and to keep the clicks coming, e-tailers are improving their unit economics by involving more high-margin categories,” he added.

Paytm eyes $200bn gross transactions

BENGALURU: Payments player Paytm will step on the gas to expand its offline merchant base as it looks to clock gross transaction value (GTV) of $150 billion by March 2020. The Noida based company closed 2018-19 with $50 billion in GTV and saw about 5.5 billion transactions for the same period. Going forward, the company is now looking to expand beyond metros to tier I and tier II cities to widen its merchant base, especially among unorganised merchants. In total, it has about 10 million registered merchants across the country.

“After growing two times last year, we are eyeing another year of growth by two times. This expansion will also see merchant base doubling to 20 million by March 2020,” said Deepak Abbot, SVP, Paytm. The company said it would clock 12 billion transactions in the next one year. These transactions include all the payments on its platform and Paytm Mall, the e-commerce business. These are typically for retail payments, fees, utility payments, travel booking, entertainment, and gaming, among others.

For Paytm, wallets remain key as 50-60% of its transactions come from this instrument, while UPI contributes about 20%. The rest is from cards and internet banking.

CashKaro offers internships to students from international colleges, starting with LSE

Cashback website CashKaro is offering internships to students from international colleges this year, starting with the London School of Economics. 

The cashback company believes that given their three-country presence (India, UK and Singapore), it is necessary to be more inclusive and enable exchange of ideas with young talent from across the world.

Aside from LSE, CashKaro will also be bringing in interns from top Indian colleges and universities like the IITs, IILM, BITS Pilani, St Stephens, NDIM, Thapar University, Lovely Professional University, Amity University, NIIT University, NIFT, DSIM, NMIMS, Symbiosis among others. The idea is to bring in interns from diverse educational backgrounds and skill sets. This year the company is also accepting applications from high school students.

CashKaro runs different internship programs through out the year. These range from Summer Internship Programs (SIP) to a long-term intern project which comes with an opportunity to get a full-time job post completion of the internship, based on performance. This year CashKaro will on-board about 25 interns across verticals.

In the last cycle, the company extended offers to 10 interns out of the 20 interns who had worked with them.

I am forced to go to court to protect our brand equity: Vishal Gondal, GOQii

GOQii has taken online marketplace Flipkart to court over deep discounting, and received a stay order, preventing Flipkart from, in the interim, selling the products. Vishal Gondal, Founder, GOQii, talks to ETNOW about the court case and more.

Edited excerpts:
Where do things stand as of now with you and how big a blow is this really turning out to be?Since the case is sub judice I do not want to specifically go into some of these details but I want to talk more about the impact and having faced it firsthand. Customers are cancelling your orders, when corporates who placed thousands of units with you are saying hey! your product is sold at this price, when you are cheating us and then customers are returning your product. It was a terrible nightmare we had to go through.

Look at the kind of pictures you are getting on twitter.Yes, on twitter there are people who have posted that they have got newspapers, empty boxes, broken seal, products being reused. We have currently offered that any person who complains we will give them a free replacement. It is a health product, we want people to be healthy not stressed because of a purchase. So for us, it is about protecting my brand interest, my brand image, we are a health product. So, it has been a nightmare.

How does it work when GOQii decides to sell on the platform Flipkart? What do you negotiate in your deal when it comes to prices?In general, we have contracts with Flipkart, we have contracts with Cloudtail who sells to Amazon, Croma etc. We have a wholesale price. In a way we give them our services and then they typically have their own margins and that is when they sell the products. Specifically when there are sales like Diwali or Christmas or Big Billion Day, on those days we would work with them to offer slightly more discounts to support and we do marketing activities.

This is opening up a hornet’s net because if they are going to go this route, this is going to cause a lot of chaos for several brands. So, what is the deeper significance of this as well in terms of policy, in terms of being able to regulate what is happening online?The most important part here is the interest of consumers. While in one way, they are benefiting with the discount, on the other hand, we have seen what is going on because if brands like us are going to suffer, it may even take us out of business very frankly. 

The reason we have to do this is because we had no option. As a start-up, we do not have the resources to fight these billion trillion dollar companies. We are here to do business, to make people healthy but we were forced into this. I am glad that the court at least gave us some relief. We are assessing the situation and my hope is the government should look at this very seriously because this can have an impact to small sellers, SMEs. It can also have an impact on the larger ecosystem especially when India is going to be the biggest market for ecommerce, online taxi services, food delivery.


Having faced this yourself, what would you want the government to do in terms of a policy change? What would be idea that can really protect founders and businesses like yours?Clearly, business needs to work on the principle of demand supply. Right now the pricing and all that typically works on that. If I buy at x price, I will not sell it at a huge loss. Maybe if it is not selling, I will take 10% loss, 20% loss. Right now, that logic is somehow not working in this marketplace.

How many of your sales actually come from online platforms like Flipkart or others?We have three channels; online of course, we sell, we then have a huge offline partnership and then we have enterprises. Insurance companies work with us, banks work with us, corporates get their employees on our platforms. So, we have several channels. Online is about 20-30% of our sales but the problem is not this 30%. The problem is that discounting here has impacted my 100% because everybody else is coming on our backs and besides that the customer backlash online where they are saying they are being scammed, the products are fake. It is a storm and we are going to hopefully sail through this I hope.

What is the timeframe that you are looking at to resolve this? Are there going to be restrictions on how you are functioning in terms of your sales, your other streams?The order just came in last week. The next hearing is this week. With court matters, this could take a little longer. We are prepared for that and like I said, for a start-up we are putting a lot of our resources now. I do not want to do this but we are forced.

It is quite a significant discount that they have given and on top of that like you said it is a damage to the brand. Is it not also damaging Flipkart if they are going to be selling empty boxes?Flipkart should possibly answer this. At least what I can say is that any person who has bought from Flipkart during this sale and who have suffered, we are giving them a free replacement, no questions asked. I do not want at least the GOQii’s brand to suffer.