Amazon Pay launches new option; ready to compete directly with Paytm & PhonePe

 First,Amazon captured the Indian online retail market to an extravagant extent. Then it decided to take its rival’s share of order deliveries and now it plans to take over their payment methods too. Amazon Pay (the etailer’s digital wallet) launched last year.

The wallet now comes with a payment option that enables it to compete directly with Flipkart Phone and Paytm.

What’s the new wallet service from Amazon?

Unlike the previous gift card feature offered through Amazon Pay, via Qwikcilver, customers can now add money to Amazon Pay and it automatically goes into their wallet accounts instead of converting into gift cards.

According to a spokesperson from Amazon, “We are focused on addressing customer needs and to innovate to ensure that customers have a trusted and convenient payment experience. We are leveraging our PPI (prepaid payment instrument) license received from RBI while we continue to partner with Qwikcilver to offer digital gifting and payments solutions.”

Why is this better for customers?

Using payment options like internet banking, credit and debit cards are cumbersome since they involve banks and third-party payment gateways that result in 30% payment failures and multiple retries that affect the whole online shopping experience.

With this new feature from Amazon Pay customers won’t have to go to their bank websites to fulfill their purchase transactions. The 2-factor authentication for their online payment completion is bypassed with the Amazon wallet.

The new option also allows shoppers using the Amazon Pay wallet when purchasing from other retailers. Amazon planned on using Pay as an alternative source of revenue, this could be just the feature customers and partners are looking for.

Snapdeal, IndiaMART issued notice for selling wildlife related items

The Madhya Pradesh Tiger Strike Force has served notice to e-commerce firms Snapdeal, IndiaMART, Wish and Buy and Craft Comparison for allegedly selling wildlife products on their websites.

The notices were served to the e-commerce companies last week after their names surfaced during an investigation of seizure of wildlife-related items in Indore, a state public relations department official has said.

“MP Tiger Strike Force has served notices to Snapdeal, IndiaMART, Wish and Buy and Craft Comparison for selling wildlife-related items on their websites. The companies were told to remove all such content and to submit a clarification as to why an action should not be initiated against them,” the official said.

The official said the force had confiscated items made out of wild animals’ limbs from the premises of a company called Shubh Bhakti in Indore’s Vijay Nagar in June this year. The company’s owners, Sumit Sharma and Firoz Ali, were arrested and a case was registered against them under the Wildlife Protection Act.

“During interrogation, the accused told that they were into trading of puja (worship) materials and are also into sale of wildlife related items,” she said.

They also told police that superstitious people believe that possession of such products will make them win court cases, help them become rich, child birth, business growth and saw it as solution to every problem. The duo said that they sold these products in a large quantity to people at a high price.

During interrogation, the accused confessed that they sold these wildlife related items through Snapdeal, IndiaMART, Wish and Buy, and Craft Comparison. Initially, the accused defended themselves by claiming that the items are not related to wildlife, and are made up of roots of plants. However, a forensic examination confirmed that the products were wildlife items, the official said.

Flipkart, Amazon get ready for festive face-off; profit margins reduced to accommodate discounts

A festive season without discounts won’t have many takers. And Indian ecommerce companies understand that. But with FDI restrictions on offering huge discounts and big brands’ reluctance to deplete the value of their brand, etailers had to find a new way to entice consumers. With peak shopping season just around the corner, online marketplaces have found what they were looking for.  

Letting go of profit margin and commission for discounts

Biggies like Flipkart and Amazon have approached brands directly and requested them to reduce their profit margins. In return, marketplaces too have agreed to reduce their commission by 50% so that there’s enough room for discounts.

Big electronic brands such as Samsung, LG and Sony are not going to encourage online discounts on their products. Therefore, etailers are relying on online-focussed electronic brands like Sanyo, Onida, BPL, and TCL.

An executive from one television brand that etailers have approached said, “Since the marketplaces cannot burn money on mainstream brands now due to a direct business relationship, they are placing their bet solely on the online exclusive or focussed brands this festive season to drive their category volumes. Even during the just concluded Independence Day sales, the focus has been on these brands.”

It is a win-win situation for online marketplaces and online-focussed electronic brands. During the festive season, besides fashion products, large appliances and smartphones sell really well. And the bigger the discount, the more it sells, especially in tier 2 & 3 cities.

Brands like Panasonic, BPL, TCL and Onida are working with the online marketplaces to come up with hard-to-ignore offers during the festive season instead of burning money on advertising and promotions.

No dearth of funds

Amazon India has deep pockets, thanks to Jeff Bezos. The American etailer recently injected$63 million into its logistics arm as part of its festive prep. Its food business too would be ready to roll by Diwali.

But this time around Flipkart is also flush with funds thanks to the $2.5 billion investment by Softbank. The home-grown etailer has laid out clear plans to utilize this money to fight against Amazon.

While speaking about the 2017 festive season, Flipkart’s senior director Smrithi Ravichandran stated, “With every festive season, Flipkart has expanded the e-commerce horizon in India, bringing to existing and new customers the widest product range at best prices. This year is going to be even more delightful for customers, because along with existing affordability programmes, we’re making new additions like extended warranties and buyback guarantee.”

While Amazon is counting on its subscription service Prime, Flipkart is looking to capture buyers’ attention by offering new schemes. The Bansals-led company also revamped its large appliances category ahead of the festive season. Push for private labels too have increased.

With each passing day, the festive war between Flipkart and Amazon would intensify even further.

Is Flipkart’s $2.5bn funding sufficient to take-down Amazon?

With $2.5 billion worth of funding juice from Softbank Vision Funds, Flipkart is ready to level-up with Amazon India. Its main rival has already taken the lead in sales for the first quarter of FY18. It has also managed to inject $2 billion into its Indian ecommerce unit. With the funding from its parent company, Amazon is building its online food segment and delivery network.

What will Flipkart do with its mega investment?

Those tracking the progress of the ecommerce sector claim that Flipkart will attempt to:

• Increase its dominance of online fashion through infusions in Myntra
• Fund the building of stronger private labels for higher margins
• Scale up online grocery like Amazon

“Going forward, growth under multiple heads including new technologies like AI, omni-channel play and strategic alliances for better reach of private labels on the platform to increase margins, newer categories like groceries, furniture, digital content services like music, video and games will be high-impact areas for evaluation where there is enough funding to play a larger game,” said Sreedhar Prasad, partner-ecommerce, KPMG.

An online commerce company founder stated, “I think they have realised that they will have to execute better and do lots of innovation to give a fight to Amazon. For this, Flipkart might acquire somebody who can make a difference to execution or few tough categories where they are weak such as furniture, babycare and FMCG.”

Acquisitions in the verticals where the etailer has troubles will solve the problem of building a supply chain for them.

Satish Meena a senior forecast analyst at Forrester said, “To match up, Flipkart will have to invest at least as much as Amazon, and grocery will be important to increase wallet share.”

The revival of Flipkart First is also being looked into. Flipkart First is a programme that offers priority access deals, priority shipping and free next day delivery, similar to Amazon Prime.

Two independent sources also disclosed that Flipkart is looking for an answer to Prime.

Meena added, “With the new round of funding we will see Flipkart expand its portfolio. It is likely that the company will revive Flipkart First programme as an answer to Amazon Prime apart from a strong push on private labels in the categories of small appliances and the Billion brand. There is a ready base of customers who have been loyal to the platform for eight to nine years and Flipkart First will provide much needed fillip to this.”

Flipkart Snapdeal merger talks fell apart on complexity of deal: report

The Snapdeal-Flipkart merger talks hit a dead end for a variety of reasons, including the complex structure of the deal that would have placed millions of dollars worth of tax liability on many of Snapdeal’s investors, according to people familiar with the matter.

In July, Snapdeal called off the $950 million (over Rs6,000 crore) merger discussions with larger rival, Flipkart. While Snapdeal had stated that it would follow an independent path and was, therefore, terminating all strategic talks, people had said differences in valuation and terms of the deal had led to the fallout after five months of negotiations.

Two people close to the negotiations said the share swap between Snapdeal (domiciled in India) and Flipkart (registered in Singapore) would have led to an extremely inefficient taxation structure due to restrictions arising out of laws in India, causing millions of dollars of tax burden to multiple investors.

The persons did not wish to be identified as the discussions were private and they are not authorised to speak on the matter.

They added that once the deal value was set, shareholders were not prepared to pay large amounts towards tax payouts and had contented that the tax incidence should have been factored into the valuation at a much earlier date.

Another point of friction was the differential payout to some of the investors like Kalaari and Nexus Venture Partners.

One of the persons mentioned above said many of the smaller but influential shareholders like PremjiInvest (Azim Premji’s investment vehicle) and Temasek were opposed to it. This caused a huge row between the shareholders and the board and dealt a fatal blow to any efforts to drive consensus, the person added.

The discussion between the two companies was being driven by Snapdeal’s largest shareholder, SoftBank. After the deal failed to materialise, the Japanese conglomerate went ahead and invested about $2.5 billion in Flipkart through SoftBank Vision Fund earlier this week.

Snapdeal has a number of investors including Ratan Tata, Alibaba Group, Foxconn and Ontario Teachers’ Pension Plan among others.

The second person said there were many clauses put forward by Flipkart that made the deal additionally complex.

Instead of just a majority approval, Flipkart wanted a sign-off from all of Snapdeal’s shareholders, the person said.

Also, there was a five-year non-solicit clause that barred all shareholders from approaching any employee, buyer or seller working with Flipkart for the next five years. This was completely unacceptable to the shareholders as it imposed unworkable restrictions on them as there are common buyers and sellers and a small pool of skilled workforce in the e-commerce space, the person said.

Besides, many of these investors hold stakes in multiple companies and agreeing to this clause would have led to a situation of immense potential conflict and chaos, the person added.