Bangalore-based hyperlocal delivery startup Pickingo will soon shut shop. In a series of setbacks, that first set foot when the funding deal with SAIF capital fell through, followed closely by cash-strapped Zomato pulling the plug on a potential investment, Pickingo is shutting operations according to a report by Livemint.
Pickingo had raised $1.3 million from Orios Venture Partners and angel investor Zishaan Hayath in August. Among some of the clients of the startup were Jabong and Snapdeal and its core product reverse-logistics ( returns by customers),
While Pickingo will cease to operate in its current entity, its core business and a 300-strong will be taken over by rival logistics firm.
“Pickingo’s own rival Shadowfax Technologies Pvt. Ltd is close to taking over the reverse logistics part of the business. Another business-to-business (B2B) delivery start-up Grab (Grab a Grub Services Pvt. Ltd) will take over the hyperlocal delivery business in Bengaluru and Mumbai. Shadowfax and Grab will also absorb the existing teams in these verticals, said the two people, asking not to be identified by name.”, say the two people aware of the development.
Pickingo was founded in 2014 by IIT-IIM graduates Rahul Gill, Piyush Sharma, Rishav Papneja and Siddharth Maheshwari. According to one of the two people cited above, the co-founders will be absorbed into different ventures promoted by Orios Venture Partners.
In the hyperlocal delivery space, other than Bangalore based Opinio and Roadrunnr, there are more than 20 similar startups, operating at small margins and without significant funding.
Whether the current wave of trouble in the food tech sector triggered by Zomato and TinyOwl‘s troubles or the shutting down of Dazo and Spoonjoy will aggregate the hyperlocal delivery services market or the other way, only time will tell.
Some very interesting facts are emerging from the stiff competition between online players and their brick-and- mortar counterparts. Just when it seemed that huge sales and big discounts offered by players like Amazon, Flipkart, and Snapdeal had wooed and won customers online, the offline sector is also going gaga and reporting huge revenues. Top retailers like Future Group, Shoppers Stop, Max, Puma and Vijay Sales report double digit growth this Diwali.
Kishore Biyani, CEO of the Future Group, the country’s largest retailer, hopes to increase sales by 25-30% this festive season. “Ecommerce is still a minuscule of the entire market, except a few categories like mobile phones, so there is not any impact on business” he claims. There could be some truth here, since mobile phones which form the largest segment of online sales, are restricted to exclusive models or older models of big brands, the offline sales of mobiles are not really deeply impacted.
Is Consumer Sentiment positive this Year?
Online players have claimed record sales this Diwali, whilst offline players too are experiencing huge growth. This could be attributed to positive consumer sentiment. “Money is never an issue for consumers during Diwali,” said Nilesh Gupta, MD at Vijay Sales. “Our sense is either there is a revival in consumer sentiment or they are hopeful that things could get positive soon at the Macro level”.
A year ago, the online players had resorted to a very aggressive pricing or discount policy which negatively hugely impacted physical stores. The hue and cry over this predatory pricing lent its way to the ears of the authorities and government, seeking an intervention and an even playing field.
This year too the online players will not rest easy and are expected to spend Rs.2000 crore on marketing and discounts. How far this will, if it at all does, negatively impact the brick-and-mortar stores, only time will tell.
Not too long ago, the world had its eyes on China as one of the fastest growing countries in the globe. Now its economy has been slowing down, and the future doesn’t look quite as bright any more. One of the bright spots in China’s economy was its e-commerce sector, where players like Alibaba were breaking new ground with their humungous sales figures. A new report, however, takes the sheen off these numbers.
An official report stated that a good 58.7 per cent of items in online trades in China were genuine or of good quality last year, with the remaining 40 per cent shoddy or counterfeit. 77,800 complaints were received concerning online orders, which is a huge rise of 356.6% against last year. The internet is a key driver of the nation’s economic progress in the last 5 years, amounting to 7% of the nation’s Gross Domestic Product (GDP) and 1% higher than the USA, with online shopping accounting to 20% of the nation’s demands.
According to (China Internet Network Information Centre (CNNIC), China boasts of 328 listed internet companies accounting for 25.6% of China’s market capitalization. Four of these internet companies are on the world’s top 10 list, including China’s own iconic giant, Alibaba. The credibility of this e-commerce portal has taken a beating, whilst Alibaba founder Jack Ma has been reiterating that his company has focused a lot on the scrutiny of its suppliers but complaints continued to mount. The turnover of the country’s online retail increased by 40 per cent annually and the number of online shoppers touched 361 million, amounting to 55.7 percent of the nation’s shoppers last year. The Chinese government seems to have taken a serious view of such counterfeits on the online platform and have made public the report.
Alibaba has also made a push into India, with investments in PayTm and Snapdeal. Snapdeal has been attempting to replicate Alibaba’s model in India of merely acting as an intermediary between buyers and sellers. It remains to be seen if e-commerce in Asia can rise above these challenges and win the trust of the local consumers.
The mega sales have ended. The partying is also over. E-commerce majors such as Flipkart, Amazon and Snapdeal are now in for some sobering news.
Government of India has asked Reserve Bank of India (RBI) and Enforcement Directorate (ED) to probe whether e-commerce majors have violated Foreign Direct Investment (FDI) rules by engaging in business-to-consumers (B2C) activity.
The move follows a complaint filed by Confederation of All India Traders (CAIT) which alleged that e-commerce portals circumvented law and engaged in B2C activity as 100% FDI is allowed in the business-to-business (B2B) segment. In its complaint, CAIT stated that Amazon, Flipkart and Snapdeal, which recently conducted mega sales, solicited the general public through big advertisement campaign in print, electronic and social media. Since these companies have received foreign investment, they are allowed to undertake B2B e-commerce activity and not B2C. The said advertisements addressed to the public in general tantamount to retail trading, according to CAIT.
The complaint added, “These companies claim to be a marketplace and therefore can provide only a technology platform for the sellers who are registered with them. Since ownership of inventory does not hold by the said companies they cannot offer ‘sale’ or ‘discounts’ in totality on their online portals but they are doing so which also establishes that they are not marketplace and as such openly flouting FDI policy.”
Earlier, in September, the All India Footwear Manufacturers and Retailers Association had petitioned to the Delhi High Court alleging that e-commerce companies were violating the existing FDI regulations. The petition stated that e-commerce companies have created a complex business structure behind which they are evading the law, adding that the entities are taking an undue advantage of the footwear retailers and manufacturers present in the physical world as they are giving discounts on the products, which has left the brick-and-mortar retailers only as a trial room or showrooms.
Radha S, a 40 year executive in Bangalore has just placed an order on Snapdeal for a high-end phone, at a great deal. 3 days later her ordered is delivered, and as an excited Radha opens the package, the biggest shock awaits. Instead of the shiny new Samsung phone she had hoped to be carrying in her hands, it turns out to be a brick! What has happened? Has Snapdeal cheated her? Livid, shocked and disappointed, she begins making a round of angry calls to customer support, demanding a refund.
It’s not just the customer, but the ecommerce portal that’s been had. The brick was delivered by a fraudulent vendor that registered on the ecommerce platform posing as an electronics retailer, complete with fake pictures and product descriptions, and upon receiving the price for the phone, delivers a fake order, only to disappear the next day. The company – Snapdeal – in this case, bears the brunt of the cost, while the customer is left with a sour taste in her mouth.
With several online customers facing such bad experiences in terms of pricing discrepancies, non-availability of desired products, or even receiving sub-standard or fake products, online marketers are now pulling up their socks to ensure customer satisfaction on one hand, and prevent fraud on the other. And one of the approaches taken by many ecommerce platforms, including biggies Flipkart and Amazon is the introduction of the Mystery Shopper. In a brick and mortal scenario, the Mystery Shoppers are hired to carry out the process of a purchase from a store, recording their entire experience and reporting back to the company.
In the online realm, the approach is very similar, except the mystery shoppers are usually employees of the company, regularly assigned to double up as mystery shoppers, creating fake orders and testing the experience.
Flipkart have recently hired 60 employees who act as mystery shoppers for the portal. These mystery shoppers or ‘secret agents’ will have to send in photos of the packaging, labels and products that are delivered to them, which will be processed by the trust and security team. When they spot or detect such devious ploys, the same is reported to the company, who first warn the seller, and after warning, if the deterrent vendor does not fall in line, he/she is banned from the system. The employee of course is rewarded, with incentives.
In the case of Amazon India, random sampling by mystery shoppers keeps a check on quality of items shipped by sellers who directly pack and ship items. Where sellers use the company’s packing and shipping service, mandatory checks at the fulfilment centres are carried out to prevent shipping of counterfeits and damaged products. “We scrub our platform periodically to test random sample products and take action,” said an Amazon India spokesperson.
With the increasingly vast ecommerce ecosystem in India, these steps by the market leaders should not only help deal with errant and fraudulent behaviour plaguing the industry, but also help mitigate the many trust and quality issues the consumer may still harbour, preventing a conversion on the online platform.
Flipkart’s been packaging and shipping an astonishing number of packages during their ambitious 5 day Big Billion Days sale, this festive season, and resources are understandably stretched. So they’re calling in reinforcements for their delivery teams. They’re hardly your typical delivery employees though.
Flipkart’s founders Sachin Bansal and Binny Bansal are out on the streets of Bangalore this morning, wearing Flipkart jackets and delivering packages to Flipkart’s customers. They will be joined by Flipkart CPO Punit Soni, and the trio will visit distribution centres and finally make deliveries to some surprised users.
This comes at a time when Flipkart’s ensured to pull out all stops to ace the sale game with its Big billion Days, while competitiors Snapdeal and Amazon are running parallel sales.
Flipkart’s journey has indeed come a full circle. Back in 2007 when Flipkart was founded from a 3 BHK flat in Koramangla, Sachin and Binny had distributed packages to Flipkart’s first few customers. Now 8 years (and Rs. 9010 crore) later, they’re both out on the streets, doing what they started off as. While it’s unlikely that Flipkart really needs these 2 to chip in for delivery, this sets a great example for Flipkart’s employees who’ve been working long hours to cope with the flurry of orders they’ve received over the last few days.
The festive season is in full swing, and Indian e-commerce giants are battling it out for a share of India’s online shopping pie. The 3 biggest players – Flipkart, Amazon and Snapdeal – are running simultaneous sales from 13th to 17th October, and marketing and promotions have been fierce.
Snapdeal had thrown down the gauntlet with CPO Anand Chandrashekharan takings digs at Flipkart’s website being briefly down before the sale, and CEO Kunal Bahl had sneakily tweeted that “Snapdeal’s site is working fine, come shop with us while others figure out how to make their app work”. Flipkart on its part has been heavily promoting the sale, launching a video in collaboration with TVF and upping sales commissions for its affiliate partners. Amazon claimed that October 13, the first day of the sale, was the highest grossing day in the history of the company in India. In addition to this, all 3 companies have been investing heavily in traditional media.
But who’s winning? All three sides claim to be India’s top shopping destination, and reported figures are often a confusing mess of GMV numbers and interpretations. However Google search trends can serve as a useful proxy to gauge consumer interest, especially for companies in the same vertical over short time periods.
The results are quite telling. In the days leading up to the sale, Flipkart was slightly ahead of the pack in terms of worldwide searches, followed by Snapdeal, and Amazon came in third. This position was fairly static for a while, until Snapdeal ran a campaign for the sale on 12th October.
That day, interest for Snapdeal shot up, eclipsing both Flipkart and Amazon by a wide margin. However, Snapdeal found it hard to sustain its momentum. As the clock was about to strike midnight on 12th October and Flipkart’s sale was about to launch (Amazon’s launched at 8am on 13th October), Flipkart’s marketing efforts seemed to pay off, leading to a huge spike in queries.
As 13th Oct wore on, a clear hierarchy was established. Flipkart led the pack by a fair distance, followed by Amazon, and Snapdeal was a close third. The pattern has sustained going into the third day of the sale. Interestingly, queries for Flipkart are still running strong three days into the sale, but interest for Snapdeal and Amazon seems to be tapering off.
While Google Trends are hardly an exact way to predict sales volume and profitability, they do provide an insight into what the Indian consumer is interested in. And if these results are to be believed, Flipkart is at the top of the Indian ecommerce pile, and Amazon leads Snapdeal in a close battle for 2nd place.
According to an Assocham-PricewaterhouseCoopers study, India is at the cusp of an e-commerce revolution. Accelerating internet access, staggering penetration of mobile phones and robust investment have driven the growth of this industry, and if current projections are anything to go by, India is on route to becoming the world’s fastest growing e-commerce market.
India’s e-commerce industry is likely to clock a compounded annual growth rate (CAGR) of 35 per cent and cross the $100-billion mark over the next five years, from $17 billion at present. The e-commerce sector is estimated to see a 72 per cent jump in the average annual spend on online purchases per individual in 2016, from the current level of 65 per cent, the study said.
In contrast, shopping malls are suffering from lesser footfalls leading to around 25 per cent vacancy rate, along with a 30 per cent drop in rentals in the last one year.
With improvement in infrastructure such as logistics, broadband and internet-ready devices, there is likely to be a significant increase in the number of consumers making purchases online, the study said, predicting around 65 million consumers in India to buy online in 2015, as against around 40 million in 2014.
The greater adoption of Internet and smartphones is the biggest driver of e-commerce in India. Internet penetration is rapidly increasing with around 300 million users in 2014. The smartphone is steadily growing and consists of 35% of the overall mobile phones market in the country.
The success rate of some of the technologies, such as cloud technology, mobile apps and digital advertisements, is directly connected to the success of e-commerce. Most e-tailers are depending on cloud technology for its flexibility, scalability, availability, and efficiency. With more than 235 million people in India accessing internet through mobile devices, e-tailers are focusing their efforts on mobile app penetration across the country. The mobile apps are helping to reach more customers, even in remote areas. The revenue coming from mobile app is also on the rise e.g., 50% for Flipkart and 70% for Quikr. The digital advertisement industry is growing rapidly with growth in digital communication devices.
According to the Deloitte India TMT Prediction, 2015, a new category of service, (handyman, delivery, healthcare, repairing) that touches the daily lives of the consumer, would play a pivotal role in the growth of e/m-commerce in the coming years.
Customer would be the king for the e-retailers. Leading telecom operators are working with mobile app vendors to improve the overall network performance on smartphones which would help better customer experience in terms of network speed and performance of mobile apps.
There are about 930 million wireless subscribers in India. The number of internet users among them is growing rapidly. This rapid spread of mobile internet could unlock a significant market beyond the Tier 1 cities for the online retail segment. Undoubtedly, mobile retailing is expected to continue to grow aggressively.
The e-Marketplaces are growing significantly. These provide a technology platform for sellers to participate and a trusted environment to scale up rapidly. With e-tailers disrupting the traditional shopping, every retailer is looking for an online and offline presence either through omni-channel or through marketplace e-tailers.
According to Euromonitor, store-based retail sales will increase 10% in the next five years, while online sales are projected to increase by 40% in India. The retailers have started to work on their omni-channel sales strategy. For example, Future Group inked an exclusive deal with Amazon while Tata Group owned Croma partnered with Snapdeal to sell private brands online. While the reverse is also true with companies like FirstCry opening physical stores later to complement online sales. Just as physical stores are seeking to get into the online and mobile space, the time is also right for online stores to make their presence felt in the offline space. Organized retailers will need to invest significantly more to compete with the e-commerce giants.
Online retailers are slowly but surely stepping into the real world. After Flipkart opened stores where customers could pick up their supplies, Amazon is moving to the streets and towns of India to convince businessmen to sell through its platform. And the Seattle-based company’s latest acquisition push for sellers has a distinctly Indian whiff to it – it’s trying to woo people with hot cups of chai.
Piloting in Bangalore, Amazon’s Chai Cart programme is used to spread awareness about the company among local small entrepreneurs and sellers in small cities and towns. These tea stalls will offer free cups of tea and coversations around getting businesses online.
“(I) came across them in Bangalore. They basically invite local shopkeepers over for some chai and explain them about what e-commerce is and how it would help them.”, said reddit user hardshock. “I was happy to see that they actually explained even about the negatives of going online. Lastly, the chai was amazing!”
The programme will run for the next three days in retail hotspots like Commercial Street and Chickpet. Amazon has deployed four ‘Amazon Chai Carts’ in these areas.
“We realised that (the Indian seller base) is not as evolved or as sophisticated like other markets, therefore a lot of focus and investment from our side is going into these initiatives,” said Rohit Kulkarni, senior manager, new initiatives, Amazon India.
Earlier, Flipkart had launched ‘FlipkartOne Stop’, a support facility that would equip sellers with necessary information and procedures to kick start and grow their business online. The company is offering services ranging across registration to training, cataloguing, packaging and financial assistance.