E-tailers set to celebrate Diwali worth Rs 35,000 crore

New Delhi, With the second wave of festive sales coming to an end, industry experts say the e-commerce players like Amazon and Walmart-owned Flipkart are set to celebrate a bumper Diwali with pocketing over Rs 35,000 crore (nearly $5 billion) despite certain sectors facing severe economic gloom.

Led by Amazon and Flipkart, e-tailers in India achieved a record $3 billion (nearly Rs 19,000 crore) of Gross Merchandise Value (GMV) in the first six days of the festive sale from September 29-October 4.

Walmart-owned Flipkart and Amazon dominated 90 per cent of the market share, according to Bengaluru-based research firm RedSeer Consultancy, as the demand surged from smaller cities and towns this year -- indicating that the consumer spending has only increased in the country despite slowdown fears.

The shift in spending from offline to online and a slow first half has helped push sales this October. The entire month of October is expected to generate up to $6 billion (Rs 39,000 crore) in online sales, shared mostly by Amazon and Flipkart.

According to Forrester, it is not only customers in Tier 1 and Tier 2 cities that are spending more online during this festive season, buyers in Tier 3 cities and beyond are too.

"Online buyers in Tier 3 cities will spend more online during this festive season as compared to last year as they become more comfortable with online channels and getting access to brands and affordable financing options. This is an encouraging sign for online marketplaces, which need these customers to buy more frequently and in more categories," Forrester elaborated.

The third largest ecommerce player Snapdeal registered 87 million visits on its platform in the month of September as festive season began.

In the last one year alone, Snapdeal's traffic has grown 61 per cent on its web and mobile sites.

"The growing volumes on Snapdeal are built on a sound and granular understanding of the importance of value in Bharat-focused e-commerce. Our ability to build scale along with favourable unit economics gives Snapdeal an immense competitive advantage," Kunal Bahl, CEO and Co-founder, Snapdeal, told IANS.

In the ongoing Diwali sales, Snapdeal's order volumes grew 52 per cent over last Diwali and volumes doubled in more than 120 cities across the country, according to the company.

According to Anil Kumar, Founder, and CEO, RedSeer Consulting, the first wave of the festive sale event has seen record gross merchandise value (GMV) of almost $3 billion despite challenging macro environment, indicating that consumer sentiment on online shopping remains bullish.

"The larger push has come from 'Bharat' customers migrating to online shopping driven by the strong value provided from the online retailers across categories including mobiles, which have shown a strong surge during sale event," he noted.

Online buyers in Tier 3 cities contributed heavily towards spending more online during the festive season as compared to last year as they become more comfortable with online channels and getting access to brands and affordable financing options.

"This is an encouraging sign for online marketplaces, which need these customers to buy more frequently and in more categories," Forrester said in its latest report.

EBay forecasts holiday-quarter revenue below estimates, shares fall 3%

 EBay Inc forecast current-quarter revenue below Wall Street estimates on Wednesday, as it faces fierce competition from bigger rivals Amazon.com and Walmart Inc in the run-up to the crucial holiday shopping season.

Shares of the company fell 2.73% to $38.13 in extended trading as the holiday quarter typically generates a majority of its annual sales and profit.

EBay forecast fourth-quarter adjusted profit from continuing operations in the range of 73 cents to 76 cents per share and net revenue of $2.77 billion (£2.15 billion) and $2.82 billion.

Analysts on average had expected a profit of 76 cents on revenue of $2.85 billion, according to IBES data from Refinitiv.

The results follow the exit of Chief Executive Officer Devin Wenig last month, who cited differences with the company's revamped board, which is looking to sell some of its businesses amid pressure from activist investors.

Hedge funds Elliott Management and Starboard Value have been pushing the e-commerce company to improve profitability through a wide-ranging review.

EBay said active buyers grew 4% to 183 million in the reported quarter. However, its gross merchandise volume, which is the value of goods sold on its websites within a certain time frame, fell 4% to $21.72 billion.

The company's net income fell to $310 million, or 37 cents per share, in the third-quarter ended Sept. 30, from $721 million, or 73 cents per share, a year earlier.

On an adjusted basis, the company earned 67 cents per share, beating the average analyst estimate of 64 cents.

The e-commerce company's net revenue was flat at $2.65 billion, marginally beating estimates of $2.64 billion.

Mobile, fashion dominate online festive sales

New Delhi, The festive month of October brought a big cheer for those serving the mobile, fashion and consumer electronics industry as sales in these categories saw a massive boost on various e-commerce platforms.

According to industry analysts, mobile once again ruled the roost, catering to nearly 50 per cent of all online sales during the month.

"Smartphones led all the other categories in terms of wooing the users. People thronged online platforms for new smartphones that came bundled with attractive offers," Faisal Kawoosa, Founder and Chief Analyst, techARC, told IANS.

Consumers delayed their mobile purchases for the festive sale season, indicating the strong "value shopping" proposition of festive days.

The online festive sales on e-commerce platforms such as Amazon India and Flipkart will lead to an addition of six million new 4G smartphone user base in the country, according to techARC.

The online festive season will see users upgrading to 4G smartphones from existing 2G and 3G devices and an estimated 10 million smartphones are to be sold during the festive season.

"We expect existing 2G and 3G smartphone users to take advantage and upgrade to the latest commercially available technology in smartphones," said Kawoosa.

The installed base of 4G smartphone handsets will go up by 1.3 per cent to 72.9 per cent. Non-4G Smartphone installed base is still above 30 per cent of total smartphones in use.

The smartphone industry in India is not impacted by economic slowdown and is, in fact, moving towards a record festive quarter this year.

Apple is in for a bumper festive season sales and Samsung India is targeting business worth Rs 3,000 crore by selling over 2 million smartphones online this month.

Chinese smartphone makers like OnePlus, Xiaomi , OPPO and Realme are also expecting record growth online.

Other than smartphones, fashion and consumer electronics were among the top gainers as the demand surged from smaller cities and towns this year -- indicating that the consumer spending has only increased in the country despite slowdown fears.

According to Forrester, TVs and smart speakers are the categories to watch this year, especially with Motorola, Xiaomi, and OnePlus launching new TV models to cater to customers looking to upgrade their current sets.

"We expect around 20.2 million TVs to be sold in India in 2019; 30 per cent to 35 per cent of these will be sold online due to pricing and products with better specifications," said a latest Forrester report.

Amazon Fashion saw a massive jump in customers from non-metro and Tier 2 and 3 cities in its first wave of festive sales. In apparel, top performing brands included Levis, Van Heusen and Allen Solly.

Leading kids wear brands like Mothercare and USPA were most popular. Max Fashion was the largest single brand. In shoes, top brands included Bata, Puma, Crocs, Mochi, Catwalk and Metro.

Amazon Beauty saw a huge surge in demand led by makeup products, followed by daily care essentials and international perfumes.

On Flipkart, Fashion witnessed a 70 per cent growth in sales compared to last year and 40 per cent of all new customers to Flipkart on its first "Big Billion Day" sale came through Fashion.

Younger consumers prefer digital payments this festive season: ACI study

Pune: Digital payments are preferred by 42 per cent of consumers in India, leading card payments (29 per cent ) and cash (27 per cent ), according to a new online study conducted by YouGov and ACI Worldwide, a global provider of real-time electronic payment and banking solutions.

The study found that younger consumers preferred digital payments (42 per cent for Gen Z and 48 per cent for Millennials), but their adoption was consistent across age groups.

Nearly 77 per cent of Millennials had used digital payments at least once during the festival season, compared to 72 per cent of Gen Z and 69 per cent of Gen X. Nearly half (45 per cent ) of Baby Boomers also indicated they had used digitals payments within the survey period.

“Digital payments, including UPI and other eWallets, are increasingly the payment method of choice across a wide spectrum of consumers in India,” said Kaushik Roy, vice president & country leader – South Asia, ACI Worldwide. “While there is still a perception that UPI, for example, is primarily for the peer-to-peer channel, this study shows that significant inroads are being made in the merchant payments channel.”

Other key findings and trends:
* 43 per cent of respondents used digital payment methods regularly (at least 2-3 times per week) during the festival period, with 15 per cent purchasing this way once or more per day.

* 32 per cent have not used cash for festival season purchases, indicating that for some, festival season spending is becoming a largely cashless affair.

* Only one in ten respondents (10 per cent ) claimed to have not made a digital payment method at all in the period leading up to Diwali.

* Peer-to-peer (P2P) payments were made by 36 per cent of respondents for low-value payments (less than Rs 1,000) and 37 per cent for high-value payments (more than Rs 1,000) during the festival season.

* Internet connectivity is a top concern for 44 per cent , while failed transactions (36 per cent ), problems processing refunds (32 per cent ) and fraud (29 per cent ) also were identified as major concerns.

* Only 21 per cent of respondents cited lack of clarity about fees as a top concern and 23 per cent lack of acceptance infrastructure at merchants, reflecting increasing ease of use for customers and greater merchant acceptance.

* The survey was conducted on 1,025 adults

Commerce minister Piyush Goyal says ecommerce companies cooperating with the government

Commerce and industry minister Piyush Goyal said that ecommerce companies are cooperating with the government after being sent questionnaires over complaints regarding the alleged violation of foreign direct investment (FDI) rules.

He also spoke to Kirtika Suneja in Stockholm about issues such as India’s redlines in trade negotiations with the US, its position on the Regional Comprehensive Economic Partnership (RCEP) treaty and plans to modernise the Indian Railways.

Goyal, who’s also minister for railways, was in Stockholm to attend the Swedish-India Business Leaders Roundtable. Edited excerpts:
The government has sent questionnaires to e-commerce companies and told them to comply with the rules. Are they cooperating, and is there a time frame by when they have to reply?I’ve said before also on several occasions that while we welcome e-commerce companies to India we have explained to all of them the importance of running e-commerce as an agnostic marketplace where all suppliers get equal opportunity to offer their products and buyers have a choice to buy certain or any products on that marketplace.

There are well-defined rules that they can’t have ownership or control over the inventory at any stage and can’t be selling their own products on that marketplace, and several other associated conditionalities were attached when we permitted e-commerce. We also have a very clearly laid out policy of not allowing multi-brand retail with foreign ownership more than 49%. E-commerce companies are expected to respect these policies and the law of the land both in letter and spirit.

Certain complaints were made to the ministry that some of the e-commerce companies were engaged in selling products at highly discounted prices, leading to concerns of predatory pricing. There were some complaints about circumvention of the e-commerce policy and our multi-brand retail laws, and in all fairness, it is the government’s duty to verify, validate all such complaints, which is why I believe e-commerce companies may have been asked certain questions and the department will assess the response.

So far, I haven’t received any complaint of non-cooperation and I’ve had several interactions with e-commerce companies, and at different times they have assured me that they will work within the letter and spirit of the law, comply with India’s laws and policies fully and always be available for any clarification to satisfy the Indian authorities on the law of the land.

By when do you expect issues around the US trade deal to get resolved?Trade deals are very complex issues. It’s not a switch off-switch on and something where we work on deadlines with a pistol on our head. We have to very carefully analyse and assess long-term impact of trade negotiations and trade transactions and deals, and neither side would like to rush it. We would like to ensure a fair deal which should be good for the people of both countries. Ambassador Robert Lighthizer and I are working through the numbers, doing a lot of number crunching and internal reconciliation with other line ministries so that what we finally decide is good for the people of India and is also good for the people of the US.

What are our redlines or non-negotiables in the trade deal with the US?Redline issues are often there and no government compromises on any redline issue. For example, one redline issue that immediately comes to my mind is any product coming into India which has got animal feed into the food chain will be a redline if it is not properly marketed as a non-vegetarian product because of the religious sensitivities around it. Or let’s say opening up access to certain agricultural products where India is self-sufficient and we want to protect our farming community.

There are always certain issues where one takes extra precautions and ensures that it doesn’t affect the Indian ecosystem, but usually in a trade deal, there are no complete no-nos. One can always work around and find sustainable solutions which can be acceptable to all parties. The job of good trade negotiators is to find solutions.

What will be India’s position on RCEP, especially when there is opposition from industry?Whether to join RCEP or not, this decision will be taken going forward. In what form we join it is more important. And in the form on which discussions are happening and issues being negotiated, that is an example how trade negotiations can be beneficial for India’s people and industry. How we have carefully looked at every aspect, individual industry’s concerns, benefit from market access from every country and what our needs are that other countries can fulfil. We have thought about all these and with sufficient safeguards which will take care of India’s industry and not harm them, we are thinking over all these issues.

I will assure Indian industry not to worry about it. Whatever happens will be for the good of the people and industry, boost Make in India and create employment opportunities, benefit consumers, help create infrastructure at low cost and open new avenues for India’s strength in services sector. We will go forward looking at all these for comprehensive and holistic benefit to India.

In which sectors is Sweden keen to invest in India?In the transport sector, they have shown interest. Transport and energy are two sectors where Sweden is working a lot. Many Indian IT companies are working in Sweden. There are nearly 35,000 people of Indian origin working here, largely in the IT sector. They want many more people of Indian origin, especially professionals, to come here and work.

Do you expect any new tie-ups with Swedish companies in railways?In railways, several companies are already present in India under the Make in India initiative. Swedish companies are working on electrification, signalling and telecom systems, train sets, coaches, metro and equipment.

We had an engagement with railway companies where Bombardier was there, Ericsson from telecom was there, ABB and SAAB were there. I gave them a few challenges. For instance, Wi-Fi has now reached 5,150 railway stations in India. In future, every train should have Wi-Fi and there are companies here which can work on it so that when we invite bids, Swedish companies can make it in India. The target is to reach 6,500 stations. The last 1,000 will take a little longer due to technical challenges as the optic fibre cable has not reached there, or the ecosystem is missing. That should take six-eight months. We will start working on Wi-Fi in trains after that.

Today, the feed on trains (data loaders) is linked to stations. As and when a train passes a station, the feed can be picked up from the stations. Going forward, all passenger trains will have Wi-Fi. We hope to achieve this target in the next three-four years.

Is this one of the big plans for the railways now that you have ruled out privatisation?I have ruled out privatisation. It (Indian Railways) will continue to be a government entity. I do believe that we need large investment in the railways. The target is around Rs 50 lakh crore investment in the next 12 years in upgradation of infrastructure, new lines, new dedicated freight corridors, new high-speed and semi high-speed train lines and train sets, which require huge investment. We want to improve passenger services, speed of trains; we want to further improve our safety record. In the current year, from April 1, there has been zero fatality in Indian Railways.

The signalling system is going to be completely overhauled over the next five-seven years so that it adds to safety, it adds to capacity and ensures much more seamless movement of trains in a very efficient manner. All this will need a lot of capital and money and we are looking at public-private partnerships. We are looking at how railways can become a carrier where many people can serve the people.

We also believe that railways need not own the entire wagons so that Coal India can have its own wagons for moving coal, NTPC can have its own wagons for moving coal and moving train rakes. Our idea is that in partnership with Indian Railways we should be able to invite investment so that people can get better service without compromising the character of Indian Railways, which will always remain government.

Private sector has not been allowed to come into the railways, be it containers or station modernisation. How will you assure foreign investors in such a scenario?I won’t entirely agree. There are several large private players in container movement besides Container Corporation. Several companies own their own rakes, several companies have their own private freight stations. On station modernisation, we have been able to do the pilots in Bhopal, which is nearing completion. NBCC is working on 12-13 locations to modernise the stations and simultaneously develop housing, commercial connectivity, shopping malls in a cross-subsidy model. Once these models become successful, there will be a faster roll-out across the country. What we are trying to do now is segregate station modernisation with monetisation of land. There are a lot of possibilities to involve the private sector in all these activities. I also have other plans to develop railway land such as solar installations in a big way.

We want to make Indian Railways the world’s first zero emission railway. We are fast moving towards 100% electrification of the railways and in the next four-five years, we shall be 100% electric. Having said that, one other area where I think the government and railways should work together is to see where we have surplus land in big measure and can promote industrial parks. It’s a new area and we are going to try to locate certain parcels of land that the railways owns but doesn’t need for its own requirement which can at some stage become industrial parks and become generators of large number of jobs and working opportunities while adding to the economic activity in India.

Will these parks be necessarily related to railways?Not always. They could be related to railways but not necessarily always. Usually they are located quite near the railways land. So, there will be good connectivity and goods can come in there and move from there through the rail network very efficiently.

Is there a target for land monetisation this year?As of now, I don’t see that we are planning too much of land monetisation in the current year for housing projects, but we could consider land monetisation for freight terminals or container terminals, wagon sidings and other such ancillary activities.

The IRCTC IPO was a success. Was that only because of the attractive pricing?Railways is an engine of growth. Also, IRCTC has done some wonderful work in the last few years, particularly on passenger bookings and serving passengers in terms of improving the quality of catering, allowing independent companies to come and cater to passengers on the train, and the services it has been giving have helped it build databases and I think those databases have a lot of value. So they have ambitious plans to look at tourism in a big way, foray into newer areas in partnership or on their own in different fields, which I think the market recognised and gave a good value.

The offer price left room for too much of an upside...That is good. Giving an upside to investors always gives you better traction the next time you are doing fundraising. Many successful companies the world over have been successful because they gave very good upside to their investors and were able to build up a strong loyal group of people who are always willing to participate with that company in more and more offerings.