Author Archives: Aristotle Consultancy
Being driven by a young demographic profile, increasing internet penetration and relative better economic performance, India’s e-Commerce revenue is expected to jump from $30 billion in 2016 to $120 billion in 2020, growing at an annual rate of 51%, the highest in the world, according to a joint ASSOCHAM-Forrester study paper.
While in terms of base, India may be lower than China and other giants like Japan, the Indian rate of growth is way ahead of others. Against India’s annual expansion of 51%, China’s e-commerce is growing at 18%, Japan 11% and South Korea 10%, according to a joint study.
With annual additions of 25 million internet users, India is ahead of countries like Brazil and Russia even within the BRICS nations. India has an Internet user base of 400 million in 2016 whereas Brazil has 210 million internet users and Russia has 130 million of internet user.
Interestingly, about 75% of online users are in the age group of 15-34 years since India is one of the youngest demography globally. “This is expected to be a continuing trend in coming years, given the age distribution in India”, said D S Rawat, ASSOCHAM Secretary General. It is not surprising to see the growth among categories focused on younger audiences in the last 12 months, added the paper. The maximum online shoppers are from the 15-24 years of age group, comprising both of males and females.
Online travel has seen growth across all subcategories including car rentals, airlines, hotels and travel review and information sites. The top 10 sites among the travel category show a good mix of travel options as well as information. Users are seeking information on travel options on a regular basis, with the railways being the largest target. One out of every 5 online users in India visits the Indian Railways site.
Retail category penetration has increased to 65 million unique visitors a month registering an annual growth of 55%. The growth has come across all retail categories and most of them show promising transactions and conversion rates along with growth in visitors. Apparel has been the fastest growing subcategory in retail and reaches 24% online users
Increasing internet and mobile penetration, growing acceptability of online payments and favourable demographics has provided the e-commerce sector in India the unique opportunity to companies connect with their customers, it said. Branded apparel, accessories, jewelry, gifts, footwear among the major hits on the e-commerce shopping, which is moving up fast on the mobile phones applications.
In India roughly 60-65 per cent of the total e-commerce sales are being generated by mobile devices and tablets shopping online through smart phones is proving to be a game changer, and industry leaders believe that m-commerce could contribute up to 70 per cent of their e-commerce revenues.
Source – ET Retail
Six investments have been made in the space so far this year up from four in 2015 and one in 2014. The value of investments made in fashion companies stood at $38 million in 2015, up from $21 million in 2014.
One of the investee companies is StylFlip, a social platform to sell and shop pre-owned apparel and accessories, which got an undisclosed sum from real estate developers Raj Gala Shah and Zaheer Memon. YourNest Angel Fund led a pre Series A round for Fashalot, an online to offline location based store discovery platform.
Jaipur-based fashion retail platform Yufta raised a pre Series A round from Ajay Data, a founding member of the Rajasthan Angel Investor Network. Hippily , a Mumbai-based shopping personalisation app raised $250,000 in seed funding from investors like Sridhar Ramaswamy , senior VP , ads and commerce at Google and Rakesh Mathur, founder of Junglee.
The top fashion deals of 2015 were -Voylla, which got $15 million from Peepul Capital; Relevant E-S, Wooplr and Clovia getting $5 million each from investors like Tiger Global, Helion Ventures and IvyCap Ventures; and Voonik getting $6.5 million from a funding round led by Sequoia Capital.
“Investors certainly seem to be taking a greater interest in fashion and lifestyle brands in India and are putting in money where they see growth. It’s a reflection of the changing demographics in India and customers evolving every day. There’s more focus on looking good and spending on fashion,” said imitation jewellery company Voylla’s co-founder and COO Jagriti Shringi.
Shringi said Voylla, which secured the funding in October last year has used it to increase footprint. It is expanding its retail footprint. It is adopting an omni-channel strategy and will open 100 stores this year, and will expand globally to store in store formats in markets like Dubai and the US besides kiosks in major malls across India. Twenty stores are operational currently.
“Investments in the fashion space have reached a consolidation phase now. There’s a big opportunity in the private labels and the big companies will focus on private labels,” said Navin Honagudi, investment director at Kae Capital. The fund has invested in a Fynd, a fashion discovery app that ties up local retailers and lets users locate and track inventory in those stores.
Source – ET Retail
Founded by former Zomato official, Alok Jain, along with restaurateur Abhimanyu Maheshwari in November 2014, Yumist, serves home-style meals prepared in their own kitchens.
The startup took a step back and paused Bangalore operations for the time being where it was operating out of a rental kitchen in Bangalore since August 2015. The reason cited for the pause is that Yumist did not own a kitchen facility in Bangalore which stopped them from bringing similar enhancements as NCR and fragmented the brand.
In addition, the startup has launched a 12000 sq ft, mega kitchen for NCR. The move will allow Yumist to significantly upgrade the customer experience. Besides lunch and dinner, the startup will also expand its offering to all-day options, breakfast and snacks.
In December 2015, Yumist raised $2 Mn (about INR 12 Cr.) in a fresh round of funding led by Ronnie Screwvala‘s fund Unilazer Ventures and from existing investor Orios Venture Partners. Steven Lurie, a valley-based investor also participated in in this round of funding.
Ronnie Screwvala of Unilazer Ventures said “We have a great product at Yumist and it’s made a great connect with consumers and so it’s best to focus on one territory and the NCR territory is the largest in the country so this is a good step forward for the growth plans of Yumist.”
The startup claims to have witnessed a doubled number of orders and revenue in the past three weeks.
Earlier in April 2016, Bangalore-based foodtech startup Petoo raised $1 Mn from early stage venture capital firm Axilor Ventures and some HNIs. Other players in this segment include Bangalore-based Jiyo Natural,Sattviko, WIMWI Foods, InnerChef, First Eat, Faasos, etc.
Source – Inc42
The new foreign direct investment (FDI) regulations that prohibit online marketplaces from offering discounts may inadvertently help e-commerce firms Flipkart and Snapdeal, which are scrambling to conserve cash and cut costs, by slowing Amazon’s advance in India, albeit temporarily.
While the three companies continue to fund discounts purportedly given by third-party sellers on their sites, they have cancelled planned sale events and accompanying advertisements until the start of the festive season to avoid potential punishment from regulators.
The cancellation will hit Amazon more than its local rivals.
Amazon, with its deep pockets, gained significant market share last year at the expense of Flipkart and Snapdeal by outspending its rivals on discounts, advertising and logistics. This, despite the fact that Flipkart and Snapdeal were flush with funds.
Meanwhile, Amazon has seriously stepped up its pace of spending. Amazon Seller Services Pvt. Ltd (Amazon India) nearly doubled its authorized capital to Rs.16,000 crore in February, exceeding its capital commitment of $2 billion made in July 2014.
After the new regulations, however, the US-based company has been forced to hold back on discount-driven sale events and accompanying ads for a few months until it figures out new methods of funding discounts and devising ad messages.
“Amazon was beating Flipkart and Snapdeal at their own game of discounting deeply so in the short term. Yes, the new regulations will pull back Amazon slightly because it cannot discount and advertise as freely as it was doing earlier,” said Harminder Sahni, managing director at Wazir Advisors, a consulting firm. “But over the long term, the regulations may be good for Amazon. It excels at customer service and offering the widest range of products. If the e-commerce game comes back to basics, Amazon will surely emerge as the winner.”
“The recent clarifications to the FDI policy give clarity to this fast-growing sector and will definitely help Snapdeal accelerate growth, since we have no corrections to make arising out of the policy clarifications,” a Snapdeal spokesperson said by email. “We are a true marketplace with more than 300,000 sellers connecting to millions of buyers across India. With so many sellers and buyers being able to discover and transact with each other through our frictionless technology platform, it is natural that consumers will continue to benefit from extremely competitive options.”
In March, the government allowed 100% FDI in online retail of goods and services under the so-called marketplace model, seeking to legitimize existing businesses of e-commerce companies operating in India.
However, the government added two riders that have far-reaching consequences for e-commerce firms. One, marketplaces cannot influence pricing of products and services on their platforms, directly or indirectly. Two, no one seller can contribute more than 25% of the sales of any marketplace.
“E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field,” the department of industrial policy and promotion said on 29 March.
The government attempted to create a level playing field between cash-rich e-commerce firms and offline retailers, which have lost millions of customers to their online rivals.
For now, however, it looks like the regulations may have accidentally created a level playing field even among the three large online retailers by temporarily neutralizing the spending power of Amazon.
Source – Livemint
The company secured €300 million ($339 million or Rs 2,250 crore) from Germany’s Rocket Internet SE and Swedish investment firm Kinnevik. The transaction values the company €1 billion, Rocket Internet said in a statement. This is a drop of almost 68% from its previous funding round in July when it was valued at €3.1 billion.
Kinnevik will invest up to €200 million while Rocket Internet will underwrite the remaining. Rocket Internet said it expects to invest up to €85 million including the conversion of an existing investment at the terms of the financing.
Separately, Kinnevik said GFG will get pre-funding of €50 million as shareholder loan during the first quarter.
GFG CEO Romain Voog said the financing will provide the company the necessary capital to execute its strategy of building out its leading position in the online fashion sector in emerging markets. Voog said the company reduced its loss from operations during the first quarter of 2016 compared with a year earlier, resulting in an improvement of the adjusted EBITDA margin by over 10 percentage points.
Formed in 2011, the Luxembourg-based GFG was created by combining six e-commerce brands that continue to operate in emerging markets around the world. It includes India’s Jabong, Latin America’s Dafiti, Russia’s Lamoda, Namshi of the Middle East, Southeast Asia’s Zalora and The Iconic in Australia.
Jabong, which competes with Flipkart-owned Myntra among others, has been struggling for the past many months after expanding at a rapid pace that led to massive losses. The company has been focusing on mending its leaking boat now. Its operating loss (adjusted for share-based compensation), shrank in the three months ended December 31, 2015.
However, its number of orders declined by a third as it cut discounts and its gross merchandise value dropped by one-fifth to Rs 377.3 crore in October-December 2015. GMV is the value of products sold through an e-commerce platform before discounts. It is a key performance metrics used by e-commerce firms even as actual revenue that the firms clock is much less as consumers rarely pay the full price or the maximum retail price for a product.
Jabong, which has a hybrid e-commerce model with both inventory-based business and third-party merchants selling through its marketplace, has also been on the radar of other e-commerce companies. As first reported by VCCircle, e-commerce giant Amazon.com, Inc was in talks to acquire Jabong where the asking valuation was $1.1-1.2 billion. The deal was called off due to a mismatch in valuation by the prospective buyer and Jabong’s shareholders.
Sources – Tech Circle