Tuesday, 24 May 2016
Financial year 2015-16 has been a tough one for many new age e-commerce businesses. And it has been a rather volatile one too with several Venture Capital (VC) firms keeping a tight leash on funding. However, it is equally true that online businesses with unsustainable revenue models are the ones that have faced most of the heat.
The immediate impact of the above was reflected in the discounting models adopted by several large marketplaces. Discounts and promotions shrunk, margins charged by marketplaces to their merchants increased and the likes of Flipkart also started seriously focusing on complementary businesses like E-Kart to hedge against uncertainty. The year also witnessed a relatively high rate of attrition among the top management at large e-commerce marketplaces. We need to realize that all of the above was inevitable since business models purely driven by discounts were always unsustainable.
The Indian e-commerce industry is at crossroads right now and the future of all large marketplaces is uncertain. Consolidation and acquisition among them is a given and it remains to be seen who survives. But there is ABSOLUTELY no doubt that e-commerce as an industry is permanently here to stay. The consumers love the experience, the convenience, the variety and the prices. Discount driven business models will gradually be replaced by fundamentally sound models.
The internet and e-commerce industry in India
The world is moving digital and India is getting there at an even faster pace. We had 92 million internet users in 2010. We saw this internet user base grow 4 times to 354 million in 2015. The magical smartphone has acted as a catalyst for this growth and we have 75% of all internet traffic coming through mobile devices!
The Indian online retail market is slated to see an unprecedented growth from USD 22 billion in 2015 to USD 100 billion in 2020! More importantly, the Indian online retail market was 1% of total online retail in 2015, but is expected to be 5.4% of total online retail in 2020 over a 5-year period only. This pace is indeed rapid as compared to a mature economy like the US which saw this share grow from 1.8% in 2003 to 7.5% in 2015 over 12 years.
To top it all, India is a very young country. Our median age is slated to be 29 years by 2020.
What does this mean for you?
A shout out to all entrepreneurs and intrapreneurs who have painstakingly built and nourished a brand in their careers! You have surely put your blood and sweat over the last several years to come up with a brand that consumers love. And most certainly, you want your brand to grow and reach out to more consumers.
But where are these newer consumers? Please look up the statistics above; your newer consumers are online!
It would be hard to believe that you do not want to introduce your brand to the new age online consumers. Furthermore, you surely would want to capture them early on to avoid very high costs of customer acquisition a few years down the line when digital competition heats up even more. For all you know, by 2020 or 2025, these new age online consumers may buy your competitor brand if that is online and your brand is not.
Your products may be available online via marketplaces. But you certainly do not want to solely depend on them for your online business. If you do, please keep in mind that you would not be able to build an online brand, own the online consumer or develop any customer loyalty. An industry stalwart that I recently met, passed this cheeky comment - "Marketplaces ka kya hai, aaj hai, kal nahi hai!"
Shoptimize helps brands setup a profitable and independent online sales channel. We offer an end-to-end e-commerce solution that comprises of technology, marketing and analytics. We have worked with over 100 large and small brands across India now. Read here about how we have helped some of our clients go online and grow online.
3. MasterCard Worldwide Insights 4Q 2010, PWC e commerce in India report,
Wednesday, 10 February 2016
Case Study: Aadyaa Originals (www.aadyaa.com)
Aadyaa Originals is a fashion jewellery manufacturer based in Mumbai and Pune. Founded by Ms. Sayalee Marathe, it employs underprivileged women and trains them to make best in class hand-crafted fashion jewellery. Aadyaa has often styled renowned Marathi celebrities and has been a jewellery partner for Marathi movies too! Aadyaa offers its products via its website www.aadyaa.com and mobile apps on Android and iOS, besides also having a jewellery studio in Pune.
Reasons for going online:
Sayalee was an IT implementation consultant and worked across the globe with powerhouses like Siemens, Capgemini, IBM and Deloitte. Always an entrepreneur at heart with a deep passion for jewellery making, she quit the lucrative corporate life and started Aadyaa Originals in her Mumbai apartment.
Aadyaa Originals used Facebook, Instagram and WhatsApp as primary channels to reach out to people and solicit business. It soon had a loyal customer base that saw the jewellery designs offered on social media and then expressed an interest to buy.
The decision to launch an online store with Shoptimize was primarily driven by the following -
- Purchasing the jewellery designs showcased on social media was often a very cumbersome process for the customer and required an online bank transfer to be done before the product could be shipped out
- Neither did Aadyaa Originals have an efficient process for product cataloguing, inventory management, invoicing and shipment generation and tracking
- As business complexities increased, it became difficult to manage, sustain and scale
The e-commerce journey:
Aadyaa Originals decided to work with Shoptimize to create a state of the art e-commerce website in terms of design and functionality to transform its small scale business into a more professional and formal e-commerce venture.
Shoptimize helped introduce differentiated features like an endless product scroll on the home page so that the users could explore the innumerable designs that Aadyaa had to offer. Other differentiators included a ‘Pay Now’ feature where users could ‘pre-book’ specific limited edition designs or pay for a custom creation made exclusively for a customer.
As sales volumes picked up, Aadyaa Originals decided to invest in marketing and branding. Along with Facebook based digital marketing, its association with Marathi films and celebrities provided a fillip for an exponential growth in sales!
Aadyaa Originals also decided to embark on an omni-channel sales strategy and setup a jewellery studio in Pune. This was done on similar lines as Firstcry, Lenskart and Pepperfry.
Now equipped with a firm grip on the overall business, time was ripe for the next logical step in e-commerce. Shoptimize helped launch the Aadyaa Originals mobile app on Android and iOS.
With all the nuts and bolts in place, Aadyaa Originals is now gearing up itself for the next growth phase by offering exciting new jewellery designs that will be offered to shoppers in India and abroad using state-of-the-art technology! This tiny venture that started with only a tranche of Rs. 50,000 as the seed capital and without any external financial support has now grown to become one of the reputed names in this space with the right set of technology partners!
Monday, 8 February 2016
- "Fashion e-tailer Myntra incurred a loss of Rs 740 crore during the financial year 2014-15. The huge loss came on the back of heavy discounting and promotional costs.”
- "Flipkart suffers Rs 2,000-crore wound in bruising discount war”
- "Combined losses for Flipkart, Amazon, Snapdeal breach Rs 5,000 cr mark”
… Thus screamed some of the newspaper headlines over the last few months. Is profitability in e-commerce a myth? Will this euphoria last only till venture capital funds run dry?
The answer is a firm ‘No’. Shoptimize is a state of the art technology enabler that offers best in class e-commerce solutions and helps brands setup a profitable online sales channel. Spearheaded by a bright and young management team which has worked across the globe, Shoptimize guides brands since inception, defines a holistic e-commerce strategy and executes it impeccably to drive profit oriented results. Here are a few short case studies to drive home the point –
- Haldirams from Nagpur is one such
extremely popular brand for which Shoptimize helped setup a strong online sales
channel. The Haldiram’s brand has a very loyal following among the older
generation of consumers aged 40 and higher. They realized that a whole new
generation was growing up around quick serve restaurants and food delivery and
did not want to miss out on reaching out to them. As the younger generation
went digital, they decided to establish a presence there as well. Right from
design and development of their e-commerce website to integrating it with
online payments and logistics to carrying out their digital marketing
campaigns, Shoptimize helped Haldirams transform their online business into a
serious one. Haldirams achieved profitability within 6 months of launch! With a
mobile app also in its kitty now, Haldirams delivers several thousand orders a
month now, giving pure play e-tailers a run for their money.
- Apollo Pharmacy from Hyderabad had an
e-commerce website that was merely functional before they decided to transition
over to the Shoptimize platform. Shoptimize took full ownership of technology
and marketing and prepared a 2 year plan with revenue and profitability
targets. Website performance and responsiveness zoomed post launch and sales
doubled in a matter of 3 months driven by efficient SEO and minimal digital
advertising. And all of this at a fraction of the cost that competitors like
HealthKart and NetMeds had to spend! Apollo Pharmacy never had the need to
spend on high ticket items like TV or print ads.
- Ekbote Furniture from Pune is
one of the oldest furniture manufacturing brands in Maharashtra since 1960s. The
advent, preliminary success and VC funding of online only players like Urban
Ladder, Pepperfry and Fab Furnish proved the fact that there is potential for
home furnishing as a category to do well. Plus, Ekbote Furniture, being a
manufacturer, was higher up the value chain and had the potential to do better
monetarily, and this made great economic sense. Ekbote Furniture decided to
work with Shoptimize to create a state of the art e-commerce website in terms
of design and functionality to take the online only start-ups head on.
Shoptimize helped them introduce differentiated features like 360 degree
rotation of products to give the end consumer an ‘in-store like’ shopping
experience. Other differentiators included the introduction of a B2B sales
channel where existing dealers of Ekbote Furniture would be able to act as
online resellers through the same website.
- Aadyaa Originals from Mumbai is
a fashion jewellery manufacturer that employs underprivileged women and trains
them to make best in class hand-crafted fashion jewellery. Aadyaa used
Facebook, Instagram and WhatsApp as primary channels to reach out to people and
solicit business. However, purchasing was often a very cumbersome process for
the customer and required an online bank transfer to be done in advance. Neither
was there any efficient process for product cataloguing, inventory management,
invoicing and shipments. Aadyaa decided to work with Shoptimize to transform their small scale
business into a more professional and formal e-commerce venture. As sales volumes
picked up, Aadyaa decided to invest in marketing and branding. Along with
Facebook based digital marketing, their association with Marathi films and
celebrities whom they have styled have provided a fillip for an exponential
growth in sales! Now equipped with a firm grip on the overall business, Aadyaa
again partnered with Shoptimize to launch their mobile app on Android
This tiny venture that bootstrapped with tranche of Rs. 50,000 only, has now grown
to become one of the reputed names in this space driven by the right
The primary conclusion that one can draw from this post is that it is absolutely possible and realistic to launch and grow a successful e-commerce business with the right set of technology and marketing strategy! There are enough case studies to showcase in the SMB world that have been able to create a niche for themselves in an industry where the likes of Flipkart and Amazon dominate.
Wednesday, 20 January 2016
I was lucky to be invited to attend this event. Being in Pune, we are often away from any possible buzz and I would have known about this event only when I opened the papers on Sunday. I was lucky that did not happen. It was definitely the Oscars for Indian startups with the who's who showing up. And it was pleasantly surprising that it was orchestrated by the Govt. of India. Here are the top 5 things I took away from the event:
1. The Government means business when it says it will support startups
I got a chance to meet a few officials and talk about some of the areas in which we are facing some hurdles. All those hurdles have been removed within a week. I no longer fear that I may not be able to move as fast as I would like because of regulation. That is huge! I have been an entrepreneur in India for nine years now and this is the first time I felt this. It was empowering.
2. Being an entrepreneur is sexy
The kind of welcome that successful entrepreneurs and influential investors got was nothing less than that of a rockstar or a Bollywood celebrity. People loved them, for reasons unclear to me; just like a rockstar or a Bollywood celebrity. The time had come and the men and women had risen to the occasion. People are taking risks like never before and the net result of all of those can only be positive.
3. The path ahead is unclear
It seems like midway through a football match, the referee blew the whistle and said we are dropping certain rules. There are no sidelines, you can use your hands. Most entrepreneurs such as myself, for whom circumventing regulations occupied half our mindspace, now suddenly have so much more time. How are we going to use this new found backing from a very unlikely ally? How are we going to pick up pace like never before. It is unclear and so damn exciting!
4. There will be blood
At the end of respected PM's speech, everyone in the auditorium wanted to head back straight to their offices or workspaces and get cranking. Everyone wanted to be the next something. Everyone wanted to solve a billion dollar question. But not everyone will succeed. At least not right away. We will all learn and get better and make a difference. But not all of us will be famous and rich. People will have to come to terms with being happy through the journey and not with the outcome. This is more relevant now than it ever was. Sustaining the life of an entrepreneur is something people need to learn. Because that is what we all will be for a long long time.
5. Show me the money
We had a lot of speakers come up and talk about how it is not about the money. It is about passion, sparkling eyes, tenacity, greater good and a lot more. It is not about the money. Yet, each and every person invited to speak or be a part of any panel had lots of money to his or her credit. Each one of us in the audience would like to get on the stage one day. But it only seems like that will happen when we make a lot of money. So I guess it is about the money. I hope that all current and future entrepreneurs do not feel this way. Respected PM said that you will make a difference even if you employ 5 people. I think that is a great parameter to have. Make a small difference and learn. We still have loads to learn in our journey as entrepreneurs and as a country. Let it not be about the money. But at the same time, make enough money sustain the journey and not have to give up.
Haldiram’s is India’s largest food brand with annual revenue that is more than that of McDonald’s in India! Haldirams’ primarily manufactures ethnic Indian snacks and sweets and the products are distributed across the world. They use state of the art manufacturing processes to ensure high quality of taste and hygiene. The products range from Rs. 10 per pack to as high as Rs. 400 per pack.
Reason to go digital:
The brand has a very loyal following in the older generation of consumers ranged 40 and higher. Haldiram’s realized that a whole new generation was growing up around quick serve restaurants and food delivery and did not want to miss out on reaching out them. As the younger generation went digital, they decided to make their presence there as well.
The role of Shoptimize:
Shoptimize has been their single partner in this journey. We started with the designing of the web store. We identified partners for them right from logistics to packaging and ensured that they built the best of experiences to compete with the most popular marketplaces in India. During peak festival season, Shoptimize even helped Haldiram’s with optimizing its packing and order dispatch process to keep pace with the growth they were experiencing.
From the beginning, there was a clear mandate from the brand that the online store would not be a loss making endeavour. Following were the major achievements in the past 1 year:
- Building the back end operations at Haldirams to ensure smooth functioning
- Handling peak period traffic and business to register 1000 orders per day
- Ensuring online marketing cost is less than 20% of average order value
- Achieving profitability within 6 months of launching the store
Case Study: Ekbote’s Logs and Lumbers Pvt. Ltd. (www.ekbotefurniture.com)
Ekbote Furniture is one of the oldest furniture manufacturing brands in Maharashtra and has showcased impeccable quality, outstanding growth and advanced furniture styles since 1960s. They have retail outlets in Pune, Mumbai, Kolhapur, Bangalore and Chennai.
Reasons for going online:
Ekbote Furniture has been a very well established and reputed player in the Maharashtra market. With uncompromised quality, product prices also command a premium. They fiddled around with e-commerce for six months, but not in a serious way. There were two primary motivators for them to launch their online business to take on competition –
- The advent, preliminary success and VC funding of online only players like Urban Ladder, Pepperfry and Fab Furnish proved the fact that there is potential for home furnishing as a category to do well. Plus, Ekbote Furniture, being a manufacturer, was higher up the value chain and had the potential to do better monetarily, and this made great economic sense.
- The foot fall that Ekbote Furniture’s retail outlets used to attract was on a steady decline. Moreover, the reduced foot fall also did not result in conversions due to premium prices.
Revamped online strategy:
Ekbote Furniture decided to work with Shoptimize to create a state of the art e-commerce website in terms of design and functionality to take the online only start-ups head on.
Shoptimize helped them introduce differentiated features like 360 degree rotation of products to give the end consumer an ‘in-store like’ shopping experience. Other differentiators included the introduction of a B2B sales channel where existing dealers of Ekbote Furniture would be able to act as online resellers through the same website.
Long term plans of Ekbote Furniture include a lesser focus on the offline channel and exclusive products for the online channel with reduced prices. The objective is to increase value for the customer by offering superior quality solid wood products straight from the factory for a much lower price than competition. They currently spend well on online and offline marketing and plan to continue that in the future. Initial results have confirmed the fact that the revamped online strategy was right on target.