E-tailers may log record $7 billion festive month sales

Source: ETRetail.com, Sept 17, 2020

BENGALURU: E-commerce companies are expected to post nearly 50% jump in gross sales to $4 billion this Diwali, a two-year high, during the five-day sale events of Flipkart, Amazon India and others, according to the latest estimates from market research firm Redseer.

With Covid-19 accelerating digital adoption and traditional offline shoppers moving online, the festive season is expected to see an over 70% jump in consumers with 45-50 million digital buyers. Of these, over 50% are likely to be from tier-II cities and beyond, Redseer estimates. The entire festive month is expected to clock gross sales of $7 billion in 2020 against nearly $4 billion last year, a 75% jump.

The date of the much-publicised sales are yet to be announced, but e-tailers have started working with brands, sellers and logistics players in the run-up to the event likely next month. Industry executives are also working with sellers and brands to overcome supply-chain and investment issues to meet the surge in demand.

“Technically, what demonetisation did to the payments space, Covid-19 has almost done it for the e-commerce space. We are expecting a higher number of shipments than what we are seeing currently. In peak time, it should be 7.5-8 million shipments a day. We have already planned for the season and now the implementation will happen,” said T A Krishnan, co-founder and CEO, E Com Express, a third-party logistics company catering to online platforms. According to him, the industry is currently shipping about 5-5.5 million items daily.

Last year, the average shipments during the festival season were under 5 million.

According to industry sources, grocery, FMCG and general merchandise will drive higher volumes due to Covid-induced demand. Typically, smartphones, electronics, small and large appliances and fashion dominate Diwali sales.

“The estimates are very realistic. There is a significant higher adoption of digital in non-metro cities. In terms of consumer behaviour during pre-Covid-19 era, we had seen some spurt in online penetration but this is the first time that there has been a sustained and significant movement towards digital — with e-commerce penetration jumping to 5% compared to 3% last year,” said Ujjwal Chaudhry, associate partner, Redseer.

This year’s sales are also likely to happen when there are signs of a gradual economic recovery compared to last year when overall spends were muted owing to the broader slowdown in the economy, Chaudhry added.

“I am diversifying into new categories like handicraft items, Diwali lights as there are supply issues in segments like electronic accessories,” a Delhi-based online seller said. Emails sent to Flipkart and Amazon India did not elicit any response.

Tencent invests $62.8 million in Walmart-controlled Flipkart

Source: Financial Express, Sept 17, 2020

Tencent is investing about $62.8 million in Walmart-controlled Flipkart, according to filings sourced from business signals platform paper.vc. The investment is most likely part of Walmart-led $1.2 billion infusion in Flipkart announced in July.

Tencent’s stake in Flipkart is estimated to be between 4%-5.3% currently. China-based Tencent is a minority investor in the e-commerce firm and shares the cap table with other minority investors including Tiger Global, Accel, former CEO and co-founder Binny Bansal, Microsoft and Singapore GIC.

The Walmart-led $1.2 billion equity round gave Flipkart a post-money valuation of $24.9 billion. The investment round was also backed by the company’s existing stakeholders.

Flipkart had said in a statement that the funds would be released in two tranches during the financial year.

The funds will come in handy as Flipkart is gearing up for its upcoming Big Billion Days sale.

E-commerce companies like Flipkart and Amazon have been expanding their capacities and recruiting fresh staff as order volumes increased manifold on the back of most consumers shifting to online platforms. On Tuesday, Flipkart said that it expects the upcoming festive sale to create more than 70,000 direct jobs. The direct jobs will be in addition to lakhs of indirect seasonal employment opportunities that the sale event has the potential to generate.

E-commerce retail market expected to cross $100-bn mark by 2024: Report

Source: Business Standard, Aug 27, 2020

Mumbai: The e-commerce retail market, which stood at USD 30 billion in 2019, is expected to cross the USD 100-billion mark by 2024, driven by an increasing set of suppliers selling online and change in buying behaviour of consumers, among others, according to a white paper released on Thursday.

The rise of online fresh groceries sales along with growing numbers of prepared food delivery companies entering this space could propel category growth by five times in the next five years, according to the paper jointly prepared by global professional services firm Alvarez & Marsal (A&M) India and CII Institute of Logistics.

According to the white paper, titled ‘Enabling the next wave of e-commerce in India through supply chain innovation’, some of the key evolving models for e-commerce include order to store for apparel; dark store for FMCG/ grocery and meat/pharmaceuticals; store to customer deliveries for FMCG grocery and omnichannel presence for retailers.

The Indian retail landscape has seen a momentous change over the past 10 years with the overall industry growing to USD 915 billion in 2019, it said. The paper added that e-commerce retail, which accounted for less than USD 1 billion in 2010, has grown to more than USD 30 billion in 2019.

It attributed the growth of e-commerce over the last decade to internet penetration, smartphone adoption and category expansion. The paper also said categories like electronics have been led by the horizontal marketplaces, while penetration in groceries, furniture, pharmacy and cosmetics have been led by specialists.

“E-commerce retail (B2C) market to be more than a USD 100 billion opportunity by 2024,” the white paper said adding that with just around 3 per cent penetration of e-commerce in 2019, the market continues to ride its next wave of growth given the significant headroom available.

E-commerce penetration in retail in mature markets like the US and China has reached around 15 per cent and around 20 per cent, respectively, by 2019; while in India, it could reach around 6per cent by 2024, it added.

“While the bulk of e-commerce volumes come from top-30 cities, over 60 per cent of e-commerce volumes are likely to come from tier-II and tier-III cities in the next five years, It is an imperative for e-commerce businesses to build their seller base and delivery reach in smaller towns,” said A&M India Managing Director Manish Saigal.

Operating models for e-commerce will evolve depending on various factors including customer requirements and changing buying behaviors and the availability of appropriate technology and logistics partners, the papaer said. The next wave of anticipated online retail growth drivers for categories such as fast-moving consumer goods (FMCG), groceries and apparel will be through social media, chat engines and artificial intelligence bots, it added.

Amazon faces new antitrust challenge from Indian online sellers: Report

Source: ETRetail.com, Aug 27, 2020

A group of more than 2,000 online sellers has filed an antitrust case against Amazon in India, alleging the U.S. company favours some retailers whose online discounts drive independent vendors out of business, a legal filing seen by Reuters showed.

The case presents a new regulatory challenge for Amazon in India, where it has committed $6.5 billion in investment but is battling a complex regulatory environment.

In January, the Competition Commission of India (CCI) had ordered an investigation of Amazon and rival Flipkart, owned by Walmart , over alleged violations of competition law and certain discounting practices, which Amazon is challenging, according to court filings.

30 September is deadline to adhere to country of origin tag

Source: LiveMint.com, Aug 26, 2020

The Union industry department has asked e-commerce companies to tag ‘country of origin’ on all items on their platforms by 30 September, in what could turn out to be a race against time for the online retailers.

“We have asked e-commerce players to complete the exercise by 30 September,” an official at the Department for Promotion of Industry and Internal Trade (DPIIT) said on condition of anonymity.

Initially, the government was keen on a 1 August deadline, but the move was opposed by retailers. E-commerce firms such as Flipkart wrote to the government that they will need at least six months to finish the process, according to two e-commerce executives aware of the discussions.

DPIIT mentioned the deadline only during recent meetings, but there has not been any written communication yet, said one of the two executives cited above, both of whom spoke on condition of anonymity.

“Though the government would like it to be sooner than later, I doubt the 30 September deadline is practical. For new listings, it is possible; but for old listings, much more time is required. Some trade bodies have written that companies would need 6-7 months. Some companies have written that for legacy listings it will be impossible to meet the deadline as in a physical lockdown, it is not possible to access the goods physically and check the country of origin in the packet. We want it to be done quickly, but it is the sellers who have to do it, not platforms. The problem is sellers are not in those meetings though they have to do 90% of the work,” the executive said.

Country of origin refers to the country where the item is produced, irrespective of the point of shipping. For example, if a Chinese-made mobile handset is shipped via Vietnam to India, the country of origin will still remain China, not Thailand.

The Government e-Marketplace (GeM) portal, which is used by government departments for public procurement, has also made it mandatory for sellers to submit the country of origin while registering new products.

Some e-commerce platforms were displaying names of two to three countries as “country of origin” to factor in components sourced from different countries. However, the first e-commerce executive said DPIIT has clarified that sellers have to display only the country of manufacture of the final product.

“The government is conscious to not put a hard deadline since that may lead them to take punitive action against sellers and it might not want to hurt the sentiment for small businesses. It is treating the matter as a work-in-progress since it is a challenge for sellers to source data on legacy listings, and add the ‘country of origin’ tag,” the first executive mentioned above said.

“A new deadline cannot be issued since adding country of origin to listings is already a law, basis Legal Metrology (Packaged Commodities) Amendment Rules, 2017, and issuing a deadline means that all sellers who were flouting this directive earlier, come clean from a legal standpoint, starting 2017,” added the second executive.

As part of its Atma Nirbhar Bharat Abhiyan plank to achieve self-reliance, India is seeking to reduce its over $50 billion trade deficit with China. Though mandating country of origin is not openly targeted against China, the government seems to be riding on the growing sentiment against Chinese products amid the ongoing face-off along the Line of Actual Control (LAC). Chinese imports and investments have been facing intense scrutiny after a tense border standoff that left 20 Indian soldiers and an unspecified number of Chinese troops dead. The DPIIT in April notified changes in its foreign direct investment (FDI) policy by mandating government clearance for all FDI inflows from countries with whom it shares land borders.

High sales, health focus make e-pharmacy hot

Source: ETRetail.com, Aug 23, 2020

Bengaluru: Consumer stickiness, average order size increasing to $15-20 and the possibility of selling other healthcare services like online doctor consultation and diagnostics services have caught the interest of large strategic names like Reliance Industries and Amazon, driving them to the e-pharmacy sector.

E-pharmacy had over 3 million users before the pandemic struck in India, according to a white paper from industry body Ficci and market research firm RedSeer, but added 6 million new customers since March. Industry executives said Reliance’s talks with Netmeds, which were on for at least six months, triggered the consolidation in the industry between two other established brands — PharmEasy and Medlife. The proposed merger came about after Medlife found it tough to raise capital from external investors.

“Our ecosystem was a crowded one and all the main four-five players were in the market to raise funds. Netmeds or Medlife were not able to raise from external investors and it reached a point that consolidation was inevitable. The ecosystem demanded there be fewer players and, on top of that, since Covid-19, digital health has become a top priority. So, the process got accelerated,” a top executive in the e-pharmacy industry said. The sector saw an investment of over $700 million in FY20, according to the white paper.

“What they (remaining players) are trying to do is build a break-even business here and then have a wider play on overall healthcare needs. So, this becomes a good customer acquisition channel, and then serve consumers with high gross margin products like a consultation and lab-test,” a former e-pharmacy entrepreneur said. According to him, medicine delivery platforms haven’t been able to top gross margin levels of 25-30%.

Ankur Pahwa, partner and national leader (e-commerce & consumer internet), EY India, echoed the views. “There is higher repeatability and retention for e-pharma, given the skew towards chronic ailments. Once on-boarded, customers tend to stay on even as discounts reduce over time. There is also the broader expansion into health tech around diagnostics, e-consultation, private labels, insurance, and wearables, which make it a larger opportunity,” he said. For most platforms, 60-70% of medicine order volumes are from chronic patients.

Top e-pharma founders and executives said, while online sales contribute just 3% of the total medicine market, the recent developments will have a lasting effect on the sector. This would include a gradual fall in discounts, which was 20-30% last year and is now already sliding towards 15%.

Giants like Amazon and Reliance would cautiously scale up the business amid the current regulatory framework. Industry executives said this will lead to a “mature” play by remaining players for the next one to two years. While all this happens, PharmEasy has also appointed JP Morgan for a new fund-raise of $100-200 million to prepare for the next round of battle in e-pharmacy. TOI had reported in its Friday edition that traditional chemists are alarmed by the recent developments and fear it could be monopolised over a period of time.

“The heavy competition and aggressive activity are all behind us now. No one can out-discount the others. The crazy discounting will certainly stop. Advertising spends might go up. This (aggressive discounts) only works when you are trying to be the last man standing,” said Prashant Tandon, co-founder and CEO, 1MG. “We expect the ecosystem to come to a steady and mature state. For us, pharmacy is a little over 50%. The other digital health business — since Covid-19 — has taken off, making us a much broader digital health platform,” he added.

“Reliance’s entry is a validation of the space and the online model. It’s good news for the sector and more people will try online medicine ordering,” said Dhaval Shah, co-founder of PharmEasy. He did not comment on his fund-raise initiatives, or the progress of the merger with Medlife.

E-commerce recovered, witnessed 17% growth post-Covid-19, says report

Source: Business Standard, Aug 20, 2020

Bengaluru: According to the ‘E-commerce Trends Report 2020’ by Unicommerce, an online retail-focused technology platform, e-commerce not only recovered, but witnessed an order-volume growth of 17 per cent as of June 2020.

After the lockdown was announced, the problem of limited availability and fear of getting infected created a new shift in consumer behaviour and their buying patterns leading to a new wave of online consumers.

The consumer buying patterns and preferences have changed significantly with categories like health and pharma, fast-moving consumer goods (FMCG) and agriculture seeing a surge and exponential growth along with the rising number of first-time online shoppers.

“As the world is grappling with the effects of Covid-19, the e-commerce industry in India has seen a major boost since the beginning of this year,” said Kapil Makhija, CEO, Unicommerce. “With changing consumer buying patterns and preferences, the rise of new first time online users, increased focus on digitisation by retailers and brands opting for D2C (direct to consumer) model, we are confident the e-commerce industry will emerge as the most promising market across the globe with tremendous growth potential in the future,” he said.

After e-commerce resumed operations post Covid-19, the return rate has seen a dip of about 10-30 per cent depending on the category. The reduced return can be attributed to the new safety norms, increasing demand for essential products, which are generally non-returnable. However, it will be interesting to see if the trend of lower returns continues in the long term.

The report said all leading e-commerce companies are focusing on cities beyond the metropolitan cities. Currently, Tier II and beyond cities contribute around 66 per cent of the total online consumer demand in India. This share is expected to rise in the coming years.

Tier III and beyond cities witnessed 53 per cent growth, making it the fastest-growing region. It has also been also observed that the top 5 Tier III cities contribute only about 22 per cent of the overall Tier III order volume. However, in metros, the top 5 cities constitute 90 per cent of overall order volume. The top 3 states, by e-commerce volumes, are Delhi NCR, Maharashtra, and Karnataka, and they constitute 65 per cent of overall consumer demand.

There is also an increasing trend of consumers buying directly from brands’ websites. Retail brands are now strengthening their online capabilities and opting for different approaches to connect with consumers. In the last one year, there has been a considerable growth of 65 per cent for brands developing their own websites, which led to an increase in self-shipped orders.

However, the percentage of self-shipped orders declined from 35 per cent in February 2020 to 30 per cent in June 2020. This decline can be attributed to brands trusting marketplace logistics due to better service levels and lower unpredictability during current uncertain times.

While the brands have created their own websites, they continue to sell on the marketplace as it still drives the majority of the order volume. But the number of consumers shopping directly from the brands’ websites is increasing at a much faster pace than marketplaces.

Brand websites have witnessed 88 per cent order volume growth as compared to 32 per cent order volume growth on marketplaces. The top three segments that have seen an increasing penetration of D2C brands are beauty and wellness, fashion and accessories and FMCG and agricultural sectors.

India’s e-commerce sector seen a constant growth on an annual basis. The e-commerce order volume saw a growth of about 20 per cent while the GMV (gross merchandise value) witnessed a surge of around 23 per cent with an average order size of about Rs 1100.

Beauty and wellness is one sector that has witnessed an unprecedented order volume growth of 130 per cent. This is followed by FMCG and agriculture and health and pharma with a growth of 55 per cent and 38 per cent respectively. These are emerging sectors with the potential to accelerate e-commerce growth in India.

Managing returns is an integral part of running an e-commerce business. The total percentage returns (as a percentage of forward dispatches) saw a decline of 13 per cent as compared to last year. It constitutes 17 per cent of the overall order volume as compared to 20 per cent in the previous year.

E-commerce companies have invested extensively to reduce COD (cash on delivery) returns as they constitute large part overall returns. The return percentage on COD orders have reduced from 27 per cent in 2019 to 20 per cent in 2020 and for prepaid orders. The total return has decreased from 12 per cent in 2019 to 11 per cent in 2020. Even after such remarkable reduction in COD returns, it’s still almost 2X returns on prepaid orders. Another interesting trend observed is Tier II and beyond cities have seen a significant reduction of 23 per cent in overall returns. This change can be attributed to increasing, technology adoption improved last-mile delivery and customer-centric return policies.

Amazon enters online pharmacy space in India

Source: Business Standard, Aug 14, 2020

E-commerce giant Amazon has forayed into the online medicine segment and launched Amazon Pharmacy. The service has been started in areas with select pin codes in Bengaluru, while the company is learnt to be mulling scaling it up to other cities across India in the near future.

The service would allow customers to order prescription-based medication in addition to over-the-counter medicines, basic health devices and Ayurveda medication from certified sellers.

“As a part of our commitment to fulfill the needs of customers, we are launching Amazon Pharmacy in Bangalore,” said an Amazon India spokesperson confirming the development. “This is particularly relevant in present times as it will help customers meet their essential needs while staying safe at home,” the spokesperson said.

Amazon’s foray into the online medicine segment puts it in direct competition with established local players including NetMeds, 1mg, PharmEasy and Medlife. Amazon has launched the service at a time when there is a tremendous demand for such services which are delivering essential medicines to patients amid the Covid-19 pandemic. An increasing number of people are buying products online and avoiding visiting the stores due to fears of catching the virus.

However, it is not going to be easy for Amazon to tap the e-pharmacy space due to the regulatory hurdles and the ongoing war between online and offline pharmacies and the delay in finalisation of e-pharmacy rules by the government.

Recently, the All India Organisation of Chemists and Druggists (AIOCD), representing more than 850,000 pharmacy outlets across the country wrote a letter to Prime Minister Narendra Modi with a request to ban the activities of e-pharmacies in the country.

Last December, the health ministry came up with revised draft regulations for online sales of drugs. It said e-pharmacies cannot stock drugs and will have to operate through retail chemist shops for doorstep supply of medicines just like food-delivery platforms Swiggy and Zomato. The draft regulations also make retail pharmacies eligible to deliver medicines at a customer’s residence.

The Indian e-health sector is expected to become a $16 billion opportunity by FY2025, growing from $1.2 billion, at a compound annual growth rate of 68 per cent, according to a report by research firm RedSeer Consulting. It is expected to touch 57 million households, driven by positive reception from both consumers and providers along with supportive government regulations and investments.

According to RedSeer, the overall Indian healthcare industry is set to grow at 17 per cent CAGR until FY2025 to reach $353 billion (7 per cent of the expected nominal gross domestic product). In May, Amazon also announced its entry into online food delivery in India. Customers are now allowed to order from select restaurants and cloud kitchens that have cleared the company’s hygiene certification bar.

Fresh job creation by Amazon! E-commerce giant sets up 10 new warehouses, to create thousands of jobs in India

Source: Financial Express, Jul 24, 2020

Amazon India on Thursday announced the expansion of its fulfilment network in India, with 10 new fulfilment centres (FC). With the latest additions, the company will have more than 60 FCs in 15 states, with a total storage capacity of over 32 million cubic feet.

The new FCs will be set up in 10 locations including Delhi, Mumbai, Bengaluru and Kolkata and will be operational before the festive season, the company said in a statement. Amazon India’s fulfilment network will be spread across a floor area of more than eight million square feet. The firm will also expand seven existing buildings.

“The increase in storage capacity is in line with our long-term commitment to invest in India. With the expanded network of more than 60 fulfilment centres, we look forward to creating thousands of job opportunities with competitive pay. Our investment in infrastructure and technology is to provide sellers with closer access to Amazon’s fulfillment offerings, customers with faster delivery on a wider selection of products and help ancillary businesses such as packaging, transportation and logistics.” said Akhil Saxena, VP, Customer Fulfilment Operations, APAC, MENA & LATAM, Amazon India.

Amazon has already hired nearly 70,000 contract workers in India to cater to the rising consumer demand. The company expects traffic to further scale up in the coming months with the onset of Indian and global holiday seasons. The domestic festive season will commence with Ganesh Chaturthi on August 22.

Earlier this week, the company said it will hold Prime Day in India on August 6 and 7. The two-day sale event is said to feature over 300 new product launches from top brands. In January, Jeff Bezos-led Amazon had announced that it plans to create 1 million new jobs in India by 2025 through continued investments in technology, infrastructure and its logistics network.

Amazon’s investments have enabled nearly 7,00,000 jobs over the last seven years in India.

How India’s 12 million kirana stores becoming cornerstone of growth plans of Reliance Retail, Amazon, Flipkart

Source: Financial Express, Jul 24, 2020

India’s 12 million kirana stores are becoming the cornerstone of the growth plans of retailing giants Reliance Retail, Amazon and Walmart Inc-owned Flipkart.  They are increasingly teaming up with mom-and-pop stores to supply merchandise and also to help digitise their operations, empowering them to record customer preferences and stock SKUs accordingly. Moreover, they’re enabling buyers to place orders online at their neighbourhood stores, and at some point, plan to help the stores deliver the goods.

As they transact on e-marketplaces and dabble in analytics, kiranas are transforming from pure brick-and-mortar entities to quasi-digital businesses and in the process changing the character of the country’s $650-billion retail industry. Experts reckon that powered by the involvement of these ubiquitous outlets, the country’s e-retailing business could grow multi-fold to $100 billion very soon.

While Reliance Retail is betting on its alliance with WhatsApp to give it an edge, Amazon is already enabling small kiranas to sell their goods on their e-marketplaces. In fact, four years back, Amazon had in a pilot project tied up with local groceries and modern retailers such as Big Bazaar to deliver groceries in Bengaluru.

Flipkart now proposes to supply goods to kiranas leveraging the expertise of Walmart India — a cash-and-carry business — that has been servicing kiranas for more than 10 years now.  Walmart India runs 28 best price shops and caters to more than 1.5 million customers kiranas and MSMEs.

In a corporate restructuring exercise, announced on Thursday, Walmart India will be housed in Flipkart Wholesale, which will launch marketplace operations in August, starting with services for the grocery and fashion segments.  Last week, Walmart Inc topped up its investment in Flipkart, which it bought out in 2018 for $16 billion, by a chunky $1.2 billion.

Given Flipkart’s relationships with manufacturers, big and small, it should have no problem sourcing merchandise, experts said. The latest initiative is aimed at retaining the customers of Walmart India and not losing them to Amazon and Jio.

Satish Meena of Forrester Research pointed out companies like Amazon, Flipkart and Jio not only want to support kiranas with back-end infrastructure but also want to deliver supplies so that kiranas need not rely on local distributors. Meena believes Walmart’s expertise in sourcing and Flipkart’s in last-mile delivery can be a good combination.

Reliance Retail announced last week it was planning to expand its range of merchandise — that would be supplied to small stores — to include electronics, fashion and healthcare products. The retailer runs a pan-India network of 12,000 stores that includes neighbourhood outlets Reliance Fresh and supermarket Reliance Smart. So far Amazon Inc has committed over $6 billion to its India operations and experts believe the US-based firm will unravel more strategies to grow its business here.

Flipkart said in a statement on Thursday: “Whether in grocery, general merchandise or fashion, kiranas and MSMEs will have one-stop access to an extensive selection of products with attractive schemes and incentives, supplemented with data-driven recommendations for stock selection, delivered through a fast and reliable network to drive greater efficiencies and better margins.”  Flipkart Wholesale will be led by Adarsh Menon.