E-commerce fuels India's commercial property boom

NEW DELHI: Internet retailer Amazon and its fast-growing local rivals are driving a boom in commercial property leasing in India as their storage needs rise, with shoppers in the country going online to buy everything from televisions to groceries.

Demand from e-commerce firms, a tiny fraction of India's retail industry, accounted for as much as 40% of 1.7 million square feet of warehouses leased in 2014 -- a seven-fold increase from 2013, according to consultants CBRE South Asia. Warehouse rents have risen by a quarter over the past year.

Other estimates indicate office rents in India's tech hub Bengaluru could rise by as much as a fifth in the next six to nine months as e-commerce companies add to demand.

The result, say developers and analysts, is a speedier than expected recovery for India's commercial property sector, badly dented by two successive years of sub-5% economic growth.

"The best has yet to come for the sector and that will have a snowball effect on the property sector with increased appetite for office space, logistics and warehouse," said Sigrid Zialcita, managing director, research for Asia Pacific at consultant Cushman & Wakefield.

In October, online retailer Flipkart , one of India's largest market place sites, agreed to lease 3.25 million square feet of office space in Bengaluru from developer Embassy Group, making it one of the biggest commercial property leasing deals ever.

"There will be large requirements from these kinds of companies," said Jitendra Virwani, chairman and managing director of Embassy, adding such deals were few, but growing.

While e-commerce companies comprised less than 5% of the 30 million square feet of offices leased in 2014, they are expected to drive demand over the next three to six years.

Uptake of total warehouse space is likely to more than double to 4 million square feet in 2015, as more Indians shop online.

Revenues of e-commerce companies in Asia's third-largest economy are expected to rise to $1.5 to $2 trillion over the next 10 years, says Cushman. India already has the world's third-largest population of internet users.

Among those looking for space is Amazon, which needs a million square feet of offices in Bengaluru, according to property consultants. Amazon had no immediate comment.

Indian classifieds portal Quikr said it is looking for 50,000 square feet. Furniture retailer Pepperfry said it plans to grow its shed space to 3 million square feet by 2017 from 250,000 square feet, while rival FabFurnish said it would more than double its space to 800,000 square feet by mid-2016.

Cushman's Zialcita said that while technology and outsourcing companies will make up the lion's share of demand for now, e-commerce firms will contribute notably in future.

India Post Launches It’s First Android App ‘Post Info’ With Focus on Ecommerce Niche

Telecom Minister Ravi Shanker Prasad has officially launched India Post’s first Android app: Post Info, which is now ready for download. Centre for Excellence in Postal Technology (CEPT) has designed and developed this app.

As of now, there exist 5 basic functionalities in this application:
Tracking of Goods
Post Office Search
Postage Calculator
Insurance Premium Calculator
Interest Rates

Besides this new app, India Post also launched a new delivery hub in Safdarjang area of New Delhi, which will exclusively cater to the ecommerce portals. This state of the art delivery center is equipped to handle 30,000 packages per day.
Highlighting the importance of the Internet based Digital Economy; Minister Prasad made it clear that India Post needs to become a major force in this domain.
He said, “I want that in e-commerce, India Post should become the largest player and you have to do it… if you take 4 steps, I will take 10 steps with you because I am seeing that in India, e-commerce has got a very good future.”
Tracking feature of this app is being talked about a lot, considering that it will ease the process and transparency will be ensured. The user just needs to enter the ‘Article Number’, and after that, the application will provide information such as: The booking timing, timing of dispatch, goods’ current location and expected delivery time.

Postage calculator is also very handful, as it can save time for India Post customers. Earlier, the only option was to visit the concerned post office and enquire about the rates based on weight. But with the new app, all you need to enter is: Weight in grams; Insured amount and COD amount. Based on the inputs, the app will inform about the exact rates applicable.
Post office search is another excellent feature of the app.
India Post & Ecommerce in India
With it’s vast network of 1.5 lakh post offices and 4.6 lakh employees, India Post can become a major catalyst of ecommerce growth in India. Considering that 4 out of 10 orders on Internet are originating from rural areas, and India Post has 80% of its presence in Tier 2 and Tier 3 towns, both ecommerce and India Post can complement each other and solve some major shipping and delivery issues.

Major ecommerce portals such as Flipkart, Amazon, Snapdeal, Shopclues and others have already started using India Post’s delivery services, and the growth is pretty encouraging. Between December 2013 to December 2014, India Post delivered COD products worth Rs 280 crore for these ecommerce companies. And this year, it is expected to increase substantially.
India Post’s Own Ecommerce Portal
Besides helping other ecommerce players, India Post is also planning to launch their own portal, which can actually make some serious dents in the market. We had earlier analyzed that once India Post’s own ecommerce portal is launched, it can become India’s largest online marketplace and shared three reasons for the same.

Govt. has allocated Rs 5000 crore to modernize and upgrade India Post, as per latest technologies and protocols. Another Rs 2000 crore would be spent on purchasing new, faster vehicles for speedy delivery as well.
With a new delivery center, and a clean sharp Android app, India Post is well on its way to claim it’s share in the Indian Ecommerce market.

Decoding Alibaba-Paytm deal: Indian e-tailers are at a new inflection point

The e-retailers are always in the news these days for the next big round of funding they are raising. While enough trees have been destroyed writing about their valuations, the bigger issue - in fact the elephant in the room - is that the segment is at an inflection point.
With every round of funding that e-retailers raise, their need to go public is also increasing. Private equity investors are pumping in money so that these companies can garner higher revenues. Most of them are pumping money into two things advertising and discounts.
Until now, their only competition was other e-retailers but now old brick-and-mortar companies such as the Future group are also getting into the game. In a front page story in ET Kishore Biyani has kicked off a frontal assault on the pricing and discount.

Now, the price comparison between brick-and-mortar stores and e-tail will heighten. Both segments of the organised retail will likely bleed, notching up losses due to deep discounts. This is a real war and the only winner will be consumers and the biggest losers will be domestic manufacturers.
When discount becomes deep enough, retailers will look for the lowest prices in the world. Walmart story about discounting every day lower prices is well documented. This will happen at a hyper-speed in India, because we do not have any rules and regulations to protect domestic manufacturing.
Rampant signing of FTAs has created enough duty free doorways for the rush of cheaper goods into the country, especially Chinese. E-retailers allow manufacturers to bypass traditional roadblocks too. Xiaomi is a classical example of an entry of a strong Chinese brand through this route into India.
The whole e-retailer model is based on cheap Chinese exports and this is a great cause of concern both for the Indian government and the future of Indo-Sino trade relationship. Earlier, these imports were only coming through Indian e-retailers. But now they are directly entering the country, again through a circuitous route.
Take the recent acquisition of 25% stake by Chinese behemoth Alibaba in payment company Paytm. Alibaba did not acquire stake directly or in an e-retailer as there are laws preventing FDI in retail, which, of course, every company including Amazon.com have bypassed.
The irony is that a company like Amazon.com lists these as risks and not as breaking of the country's laws. Indian lawmakers are also turning a blind eye to such blatant violation. The inflection here is that now Alibaba vendors would be able to sell directly through Paytm.
Now that Chinese vendors can sell directly to Indian consumers through Paytm officially, both because of the ownership of the company and its own thrust, Indian e-retailers should be worried about this.
Chinese products are cheaper of that there is no doubt. Companies like www.lightinthebox.com have created a global e-retail model and the site is available in multiple languages and delivers across the world. It is not known to Indian consumers because it does not advertise its services in India. But it offers high quality product that are not just a threat to Indian retailers but also Indian manufacturers - particularly, small manufacturers who were hoping to get a global consumer base.
A global consumer base is what Jack Ma, owner of Alibaba, had promised to prime minister Narendra Modi. And then he went and invested in Paytm opening the gateway for Chinese manufacturers into India.
Jack Ma or Alibaba maybe doing what is good for their business; but is the Indian government really listening to what these companies are doing to Indian manufacturing? The trouble is that nobody in the government knows how much is being imported through export gateways that are the e-retailers.
The trade data does not capture their imports into the country very well, especially how much of it is Chinese, because a bulk of it is routed through Singaporean subsidiary of these e-retailers.
It is no secret that the route for Chinese low priced consumer goods is through Singapore, a country with which India has signed an FTA. The challenge is that the Indian government fails to recognize the long-term impact of this and e-retailers are so busy building revenues that they do not see it is in their interests to block the Chinese imports.

Trouble for e-comm: CCI probing resale price arrangements between e-tailers, manufacturers

New Delhi - Bringing the retail sector under its scanner, the Competition Commission is now analysing whether price discount arrangements between manufacturers and distributors are anti-competitive in nature.

The move assumes significance against the backdrop of the regulator recently rejecting allegations of unfair business practices against leading online retailers.

The Competition Commission of India (CCI) has come across instances of resale price mechanism where a manufacturer does not allow distributor or trading platform to sell its product below a certain price, according to a senior official.

onlineretailCCI says there are arrangements between manufacturers and distributors or trading platforms to not sell their products below a certain price

It is now being looked at whether such practices are in violation of competition norms, the official said.

Under resale price maintenance practices, seen in consumer goods and some other sectors, a manufacturer and distributor decide that the former's product would not be sold at a price that is neither below a certain threshold level.

Recently, the Commission rejected allegations of unfair business practices against five online retailers -- Flipkart, Snapdeal, Amazon, Jabong and Myntra.

The complaints were filed against Flipkart India Pvt Ltd, Jasper Infotech Pvt Ltd, Xerion Retail Pvt Ltd, Amazon Seller Services Pvt Ltd and Vector E-commerce Pvt Ltd.

After looking into the matter for the past few months, the regulator ruled that these entities did not violate competition norms by indulging in cartelisation or by abusing their dominant position.

Jasper runs Snapdeal.com, Xerion owns Jabong.com, while Vector is the company behind Myntra.com. Myntra has been acquired by Flipkart.com.

It was alleged that e-commerce websites and product sellers entered into exclusive agreements to sell products exclusively on select portals.

India Post starts e-commerce centre for handling deliveries

NEW DELHI: To cash in on growing online shopping trend, India Post Delhi circle will start its e-commerce centre from Monday

"Considering the rapid growth of e-commerce business in the country in the recent past, the Department of Posts, through Delhi Postal Circle has taken up a project to establish the e-commerce Centre at Safdarjang, New Delhi," an official statement said today.

This processing centre will handle exclusively all the e-commerce business.

"The e-commerce Centre at Safdarjang, New Delhi is to be dedicated to the Nation by Ravi Shankar Prasad, Hon'ble Minister of Communications and Information Technology on 11th May 2015," the statement said.

The centre is capable of handling 30000 parcels or articles per day and parcels collected from the e-commerce customers, processed and dispatched within 24 hours to respective destination through quickest available flight or train, as the case may be.

"The leading e-commerce customers, Amazon, Paytm, Yepme, Snapdeal, etc are already availing the benefits of fast, reliable and safe processing of their e-commerce parcels at the newly established e-commerce Centre at Safdarjang in New Delhi," the statement said.

India Post will also launch a mobile application for Android phones that will help people in real time tracking of accountable articles, post office search, postage calculator, etc through Mobile Phone.