E-commerce
Will The New FDI Guidelines For Ecommerce Change The Indian Retail Industry?
The Indian Government announced a policy allowing 100% FDI in online marketplace platforms. But the policy added that ecommerce entities operating in a marketplace model will not directly or indirectly influence the sale price of goods & services and will maintain a level playing field. In effect, this means that etailers will now not be able to provide discounts as a business strategy to acquire or retail customers.
While many in the startup eco-system were critical of the government interfering on how ecommerce companies run their business, many, especially brick & mortar retailers and those who were critical of the deep-discounting strategy, welcomed this move as something that will ensure a level playing field.
While I fully agree with those who want the government to stay out of deciding how companies should run their business and what marketing strategies they should deploy, I find no merit in the argument that this policy will create a level playing field.
Why do brick & mortar retailers feel that the field was not level?
What prevented them from raising capital – from banks, VCs, PEs or from public markets that some of them have experience in tapping – to follow similar strategies that ecommerce companies deployed. And if they did not want to raise capital because they did not agree that discounting was a sensible business strategy, they should simply follow the strategies that they feel are most suitable for a retail business. Just because I disagree with your strategy does not give me the right to declare it as unfair.
A handful of PEs and VCs were / are willing to bet big bucks on their conviction that discount will be a more capital-efficient way of acquiring customers faster, and their belief that once a customer is acquired, there will be a way of retaining the customer to benefit from the expected ‘lifetime value’ of that customer. Whether this strategy is prudent of not, only time will tell. It is their money and they are willing to bet it on their conviction and belief. Just because you do not agree with discounting as a prudent business strategy does not give any one, brick & mortar retailers or the government, the right to protest against the strategy or block it.
Those critical of the deep-discounting model also argue that discounting reduces a brand to a commodity. I disagree. A strong brand is something that consumers trust and feel strongly about for the value proposition that it delivers to them. Yes, they may switch to buying it from someone who offers it cheaper. But if they are switching to a cheaper option, to me it just means that the brand connect for the user was not strong enough for the price-value equation to hold. Anyway, no one is forcing any brand to participate in deep-discounting models online or offline. And if ecommerce players were offering discounts on their own, the brand owner should in fact be happier with a healthier price-value equation.
That said, irrespective of whether ecommerce players will find some loopholes to continue to offer discounts, they will need to strengthen the core foundations of their businesses. Customer experience, supply-chain, warehousing, logistics, after-sales services, brand equity, being good places to work at, being responsible corporate citizen, CSR, etc. are some of the building blocks of any strong business. Many of those who started as startups in the recent past have started to develop organizational competencies in some of these areas. But building organizational competencies, including culture and processes and brand equity, is hard work and takes a long time.
Ecommerce players too are in the retail business. Some of the rules of the retail businesses will apply to them; and they may redefine some of the rules. But unlike the government’s definition that ‘ecommerce marketplaces’ are ‘information technology platforms’, I would argue that ecommerce companies need to think of themselves as retail companies, with online as their ‘currently’ (and perhaps for a long time) preferred mode of engaging with consumers.
Now, whether consumers who started buying online will switch back to offline if the discounts stop remains to be seen. Ecommerce and brick & mortar retail businesses provide a significantly different and differentiated experience for the customer. I like going to shops as much as I enjoy the convenience of buying online. And I may continue doing both. Much like sometimes I order food via an online app, and sometimes I go to a restaurant to eat.
Just because the app offers me cheaper options I am not going to stop going to restaurants, and just because the apps stop discounting I am not going to stop ordering from them. Both customer engagement mediums will have to create their customer-delight points differently, and the pressure from each other will drive innovation beyond just discounting. Hopefully. Or should I discount my optimism?
Either way, the government should refrain from suggesting to the industry what business strategies are acceptable and what are not. As long as it is legal, it should be permissible.
E-commerce
Blinkit delivers Lenskart products in 10 mins.
In an announcement on Friday, Albinder Dhindsa, the founder of Blinkit, revealed that the quick commerce firm, owned by Zomato, will now offer delivery of eyewear products from Lenskart in under 10 minutes. This partnership allows Blinkit customers to access Lenskart.com products swiftly, initially focusing on sunglasses and Lenskart’s Hustlr range, which includes computer glasses. Dhindsa expressed curiosity about the evolution of the Hustlr brand over time.
The expansion of quick commerce services beyond groceries is evident as various categories such as beauty, toys, health, and electronics witness significant sales growth on such platforms. For instance, Arindam Paul, a founding member and CBO at Atomberg, recently shared on LinkedIn that the company has started selling its products on a quick commerce platform, maintaining the same prices as offered on other e-commerce platforms.
Additionally, Blinkit recently announced its availability of PlayStation 5 on its platform. Dhindsa noted that Blinkit customers in Delhi NCR, Mumbai, and Bengaluru can now have the all-new PlayStation 5 Slim editions and controllers delivered within 10 minutes. However, due to high demand, the product quickly went out of stock within a week of its launch. Dhindsa reassured customers on LinkedIn that the company is actively working on restocking PlayStation 5 units at its stores to meet demand.
E-commerce
Amazon collaborates with neighborhood stores to offer community New Year items.
In Kolkata, approximately 15,000 local shops spanning across Bengal have partnered with Amazon India to provide a diverse range of items essential for various community New Year celebrations. These items include fresh flowers, rangoli, and puja essentials necessary for rituals during festivities such as Poila Baisakh, Ugadi, Gudi Padwa, Bohag Bihu, and others.
Furthermore, not only shops specializing in traditional festival items, but also those selling home furnishings, kitchen appliances, personal care products, computers, and peripherals have joined Amazon for this occasion. The collaboration aims to cater to the diverse needs of customers during the New Year celebrations of different communities.
These local partner shops of the e-commerce giant are situated in prominent locations across Kolkata, Howrah, Durgapur, Nadia, Hooghly, and Kharagpur. Abhishek Jain, the head of local shops at Amazon India, assured that orders placed would be promptly delivered to customers.
The festivals such as Poila Baisakh, Ugadi, Gudi Padwa, Bohag Bihu, Maha Vishubha, and Sankranti are celebrated with great fervor in various regions. In Bengal, these New Year festivals are embraced by the respective communities residing in the state.
Jain further elaborated that this year, nearly 4,700 sellers are offering approximately 60,000 festival-themed products across India through Amazon’s platform. The company anticipates an increase in the number of sellers partnering with them, thereby enhancing the variety and accessibility of festival-related products for customers nationwide.
E-commerce
Indiamart shakes up management, names new CFO, CIO.
Indiamart, a prominent B2B e-commerce platform, has announced the appointment of Jitin Diwan as its new Chief Financial Officer (CFO), effective May 15, according to a regulatory filing on Monday. Diwan brings over 17 years of experience to his new role, having previously served as the Head of Finance (Vice President) at Upstox Securities and holding positions at companies like Amazon India, Bharti Airtel Limited, and Vodafone.
Diwan will succeed Prateek Chandra, the current CFO, who will transition into a new role within the company as Chief Strategy Officer starting June 15.
The filing also revealed Indiamart’s recent investments totaling Rs 1100 Cr in pursuing inorganic growth opportunities across B2B, Fintech, Logistics, and business SAAS sectors. It mentioned acquisitions of Busy Infotech and Livekeeping Technologies, along with multiple minority investments. To further nurture and grow these investee companies while exploring organic and inorganic growth opportunities, Indiamart has created the new role of Chief Strategy Officer.
Furthermore, Indiamart has appointed Nikhil S. Prabhakar as its Chief Information Officer. Prabhakar, with over 13 years of experience, brings expertise in business management, sales management, product management, and leadership. Before joining Indiamart, he was associated with companies like Pristyn Care, Ola Financial Services, and Bharti Airtel.
In addition to these appointments, Dinesh Chandra Agarwal has been re-appointed as the Managing Director and CEO for a term of 5 years, effective from January 8, 2025.
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