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#Online #Travel #StartUps join #eCommerce fray #Press #Media @FinancialXpress

India is in the throes of an entrepreneurship revolution with online start-ups getting the support of both consumers and venture capitalists. Over the years a large number of online travel start-ups have entered the fray to cash in on the e-commerce boom that has to a large extent been driven by travel segment in the country. One of the biggest challenges in the online travel space is competition, both from other online service providers and from traditional travel agencies. The travel industry, especially luxury travel, is the first to suffer in times of recession or downward economic trend. Both these situations are more challenging for start-ups than they are for established companies. Start-ups do not have any additional capital or reserves to fall back on, and during an economic downturn, if people spend on travel they prefer to go to a service provider where service satisfaction is guaranteed and not experiment with a new entrant in the market.

For instance, in the year 2000 when online travel bookings were still relatively unknown to India, MakeMyTrip entered into the travel domain and today it is one of India’s leading travel companies. “Our comprehensive offerings coupled with the convenience of online transactions supported with great-value prices have revolutionised the way Indians purchased travel services. We continue to lead the market with innovative products and services. Today, MakeMyTrip is much more than just a travel portal- it is a one-stop-travel-shop that offers the broadest selection of travel products and services in India,” says Rajesh Magow, co-founder and India CEO, MakeMyTrip.

Presently, there are around 80 online travel start-ups in India, generating a revenue of approximately US$ 9.7 billion and a growth of 31 per cent year on year. “The January-April 2015 quarter has seen the segment receive a funding of approximately US$ 40 million (source Venture Intelligence data). This is a significant increase when compared to US$14.8 million invested in the online space during January-April 2014. Further, till December 2014, the segment had received a total of US$ 115.69 million spread across 13 deals. If we go by this trend, it is quite possible that the travel industry will continue to receive investor support in the current fiscal as well,” opines Rajat Tandon, senior director, NASSCOM 10,000 startups Program.

While Sharat Dhall, president, Yatra.com adds, “The rising internet (over 300 million users; 170 million via the mobile) and smartphone (126 million users) penetration in India has phenomenally changed the way we communicate and do business. Rising disposable incomes are further fuelling a surge in consumerism in India. E-commerce operates in a very large retail market so there is tremendous scope for future growth as online buying penetration increases. Therefore, valuations of these companies have sky-rocketed in a short span of time, and a great idea that is well executed will always find a long list of investors vying to support it. All of this has culminated in a huge opportunity in e-commerce in India.”

Changing ecosystems

Even though e-commerce is a booming sector, it has only reached three per cent of the overall transactions that happen offline. Consumers are now curating their own experiences using online, mobile, and social media, interchangeably, along their non-linear paths to purchase. The financial package and personalised deals offered by online travel companies is helping the industry grow both in terms of value and volume. Some of the aspects that are driving growth in the segment are- tie-ups with hotels and lodges to provide a complete travel package and out-of-the-box solutions offered by new entrants. Apart from this, use of innovative technology –like mobile apps to help customers connect with the portal, has become a major differentiating factor when selecting long-term association with a travel company.

“There are no direct head-on competitor as of now of iTraveller.com, but as far as discovery of the destinations is concerned we have Triphobo and Tripoto. For transactions we have Travel Triangle. For hotel bookings we have Oyorooms and Stayzilla. For package booking without the scope of much customisation we have SOTC and Thomas Cook, etc. For package booking with moderate customisation we have MakeMyTrip and cleartrip, etc. But there are none for customised package discovery, creation and booking that too online,” highlights Shiju Radhakrishnan, founder and CEO iTraveller.com.

Over the last couple of years, online shopping has become very popular due to cost and convenience for a consumer, this in itself is a major reason for start-ups to go the e-commerce way, as their customer is online. “The e-commerce boom has also helped widen the reach of the seller to a national or even a global level, a boundary-less market is every business’s dream. Another benefit of e-commerce purely for the business is that set-up cost has decreased drastically, with no investment required for renting/leasing high-end retail space for display/showrooms funds can be diverted to activities that will help generate business,” points out Tandon.

“E-commerce is becoming one of the most exciting spaces for today’s online community, and India’s young start-up economy is along for the ride. The huge potential that the market has to offer has given the space to the start-ups to venture. They are pertaining to the growing demand from the consumer. The trusted relationship with an e-commerce brand, the convenience and reliability of e-commerce businesses have to outweigh the benefits of traditional retail outlets for the consumers. One other reason is the increasing penetration of the internet which allows them to reach out to the wider consumer. The flow of venture capital investments turning into a storm is also one reason that can be attributed for this boom,” opines Vikram Malhi, managing director-Asia, Expedia.

Investment opportunities

SAIF Partners has been active in the space for a long time starting with investment in MakeMyTrip. “We also invested in iXigo.com, and more recently we invested in TravelTriangle that is a platform for connecting travellers to service providers in all parts of the world to book their trips,” says Rohit Jain, principal, SAIF Partners, adding that, for his company the investment parameters revolve around aspects such as the start-up’s ability to being able to build great mobile products and going beoynd just providing information towards helping in the fulfillment. Travel being extremely competitive, a start-up’s ability to crack the product distribution is also critical.

Interestingly, there are many areas that are interesting for start-ups to tackle – from solving information gap, to build-out of supply using asset light approach like AirBnB in sectors like travel, stay, and dining. Also, the service providers need a lot of technology solutions for them to participate in these platforms.

Maninder Gulati, principal, Lightspeed Advisory Services India states that venture capitalist firms generally look at large markets, disruptive business models and exceptional teams while funding start-ups. “Our principal goal is to provide early-stage capital to talented entrepreneurs solving a core consumer problem through technology. The investment size for such start-ups in a seed or Series A stage could range from US$ 0.5 million to US$ five million,” points out Gulati, adding that the market pie for travel start-ups is increasing with consumers booking a large part of their travel online. “While unlikely to displace aggregators such as MakeMyTrip, there is a lot of room for start-ups to create large and valuable businesses by solving problems that traditional aggregators cannot. For example, OyoRooms which has created India’s largest network of technology enabled budget hotels,” he adds.

According to Amit Somani, partner, AngelPrime, some of the recent sectors that have been popular with investors include alternative accommodations, last minute hotels, travel research and planning and travel services marketplaces. “Travel as a sector has a lot of opportunities and hence continues to be a highly competitive area. In addition to domestic players, lot of foreign players have started to make inroads into India. It is imperative that the cost of customer aquisition is in line with the ‘lifetime’ value of customer over a modest time period – year or two years,” mentions Somani.

A UBS Securities India report states that India’s ecommerce market is estimated to grow 10 times by 2020 to US$ 50 billion from current levels. At a micro level, ease and variety of access to products (more so in smaller cities), and the widespread prevalence of the cash on delivery (COD) payment model have been vital e-commerce adoption triggers. “E-commerce valuations are currently being driven by the significant growth expected in the size of the ecommerce market in India. Growing revenues and a mounting user base combined with significant headroom for growth (as consumer behaviour changes in favour of online consumption), are driving individual business valuations. However, there are concerns with the continuing rise in valuations especially given high customer acquisition costs, continuing cash burn and unclear roadmap to profitability,”mentions Girish Menon, director, deal advisory, KPMG in India.

Greyhound Research believes that it’s important to first understand why investors are willing to invest enormous amounts in e-commerce companies. “Investors who have invested an enormous amount in e-commerce companies expect a huge profit in return. The truth is that e-commerce players make a huge loss and raising funds is the only viable option to stay in the business and ahead of competition. While the cost of creating mobile and web commerce has declined considerably in the last few years, the key to survival of e-commerce model is customer acceptability and quick adaptability to changing market dynamics,” elaborates Sanchit Vir Gogia, chief analyst and group CEO, Greyhound Research. “Rising valuations can be considered as a herd mentality as there are more than enough investors willing to invest in e-commerce players. E-commerce has been a flavour for a lot of investors and thus the push to create a demand for such investments,” adds Gogia.

Learning curve

The market is now flooded with start-ups like Tripoto.com, TravelTriangle, StayZilla.com, WeAreHolidays.com, iTraveller.com, TripHobo.com, Railyatri.com and Seeksherpa.com, who have got a solid funding from various investors to expand and strengthen their operations. “The real value in online travel is much more in the hotels and holidays category compared to transportation. The former has good margins; however, leisure travel in India is discretionary in nature and hence infrequent. Transportation affords higher frequency of use but has lower margins. Given the overall market is highly competitive, the cost of customer acquisition from the traditional online channels is quite high. Also, non-transactional business models such as advertising, affiliates, SaaS, etc. are just beginning to gain some traction,” says Somani.

Asked about the growing competition in the market, Magow states, “We welcome strong competition since it is good for the marketplace and the customer. We are well-funded, have a clear focus on technology-led innovation and creating customer delight. Hence what a competitor or a new entrant does is not a threat. Beyond price-advantage and Tech-robustness, what creates a differentiator is user-experience and service. Those are the key attributes we are focused on.”

Highliting on certain importance business aspects, he asserts, “Generating financial revenue is the most critical step because that is what differentiates how sturdy your business plan is from your competitors. The second and yet critical element is to get the right funding. Now, you would ask as to what right funding would mean since start-ups can hardly choose where they get their money from, but we think otherwise. One must be selective and smart when seeking money for one’s start-up or it could turn your dream business into a nightmare.”

Holding another strong base in the online travel segment, Dhall shares, “Start-ups in the online travel segment need to be thinking about how they can come up with a very differentiated offering or target specific niches, to have a reasonable chance of success. We have always envisioned Yatra as a one-stop-shop for travel. We are focussed on growing and expanding our non-air segment (hotels and holiday packages) to add to our strength in the air section (flight bookings). This is progressing with our non-air business more than doubling over the last one year. Our mobile offering is also a key area of focus for us. Currently, close to 30 per cent of Yatra’s business is sold via the mobile and we see this increasing quickly to 50 per cent going forward.”

From a new start-up company’s perspective, Radhakrishnan points, “The biggest challenge is to get customers to transact online without any manual intervention. Start-ups have to struggle with getting the pricing right in order to be attractive as Indian consumers are wary of companies which do not have a huge brand value and might not go for a relatively unknown name for marginal monetary benefit.”

Cautious approach

Even though the segment is a lucrative business, the success percentage for start-ups is very low and the reasons for that are many. Dhall cautions by saying, “These are related to either the market opportunity or the problem they are addressing, the competitive landscape, or the ability of the team to execute. A failure in any one or more of these areas is typically the root cause of most start-up failures.”

While Magow adds, “Most of the start-ups tend to burn before they take their flights and one of the reasons for this is the inability to differentiate in the market. It might not be an extremely different product but you need to make a mark on the customer’s memory when they come to experience your product for the first time. You need to embed your brand with the customers with your range of product offering and the convenience that you bring with your product or service.”

Some of the other main reasons that lead to failure of start-ups in the online space are not knowing how to allocate funds, over promising and under delivering, not providing adequate customer service support, with heavy blanket spends on online advertising and an unclear marketing strategy or a complete lack of/ very less marketing of the company. Recruiting talent, especially experienced mobile product managers remains a challenge for such early stage travel start-ups.

Commenting on the issue, Menon highlights, “Indian consumers are price sensitive. This, coupled with high competition levels, has resulted in high customer acquisition costs and pricing pressures. Further, this also places significant challenges in developing subscription based business models and also rolling out premium products and services. Other challenges include uncertain and evolving regulatory environment, infrastructure challenges, limited payment ecosystem etc. From an online travel perspective, some of the specific challenges are declining airline commissions, comparatively lower growth rate given the relatively mature online travel market, and the entry of international players with their global supplier networks.”

From a new entrant perspective, Radhakrishnan points out that the biggest challenge is to get customers to transact online without any manual intervention, “Start-ups have to struggle with getting the pricing right in order to be attractive as Indian consumers are wary of companies which do not have a huge brand value and might not go for a relatively unknown name for marginal monetary benefit.”

Survival tactics

To ensure survival in a competitive industry like travel, it is critical to focus on building sustainable competitive advantages.”For instance user community participation, deeper supplier engagement by providing them with right tools to mange and grow their business, etc,” states Jain.

On a concluding note, Tandon emphasises on the need for start-ups to ensure top class customer service at all times, irrespective of the size/value of the customer. “They need to constantly innovate and gauge what the new-age customer is looking for with respect to value-added services at competitive rates. The start-ups should aim to become one-stop points for their customer’s travel needs and they need to cultivate tie-ups with forex providers, hotels, trusted tourist guides, car rental services, insurance, etc. And most importantly, as for a start-up company the product should be best fitted and designed to the needs of a consumer,” mentions Tandon.

Source: Financial Express

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With one login, @Snapdeal wants to do a @Facebook #eCommerce @1kunalbahl @FinancialXpress

Snapdeal is seeking to emulate social media giant Facebook in the commercial media space as it looks to expand its footprint. Kunal Bahl, CEO & co-founder, Snapdeal, is creating a clan of apps, just the way Facebook did with FB, Whatsapp, Instagram and Messenger. “Facebook had become a monolithic platform; now, they have a bunch of popular apps,” said Bahl.

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In #India, @Microsoft Starts #Global #Rebranding of #Mobile Outlets #Press #Media #CommunicationsToday

Redmond, US-based Microsoft Corp., which acquired Finnish firm Nokia Oyj’s mobile handset business for $7.2 billion last year, has started a global rebranding of its retail outlets, starting with India, which hosts nearly half of all such outlets.

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Offline vendors using e-comm sites for bulk buying #Press #Media #HBL

Taking advantage of huge discounts available on online retail portals

Products, especially those that are not available in these cities, are a major draw. The businessmen buy these products from various e-commerce sites and sell it to consumers through physical shops.

“Whether it is a carton of shampoo or facial cream, these customers are ordering in bulk to set up their shops. So we are creating a market place for those vendors for products that are not available in those cities or towns and also with better offers (discounts),” Sanjay Sethi, co-founder and Chief Executive Officer, ShopClues, told BusinessLine.

Cost-saving step

Another advantage is that they do not have to travel to wholesale markets like Chandni Chowk or Nehru Place in Delhi to buy the required products as they are available at the click of a button. “We have more than 70,000 merchants listing for their products on our site and by end of this year we will probably reach around 1.50 lakh merchants. We are selling more than one million products (excluding books) and we will do around 1.50 million products by the year-end,” Sethi said.

Similarly, HomeShop18 said that the emerging cities in India are on a high growth trajectory and the future demand drivers for virtual retail in India.

With increasing adoption of TV and Internet, the small towns and cities are collectively consuming more than the metros when it comes to virtual shopping, the company said.

“These are exciting times and we are seeing the industry evolve rapidly. Most of our audiences live in tier-II and tier-III cities. HomeShop18 has seen a boom in demand for a wide range of brands that might be unavailable in these cities due to a lack of physical retail presence,” Sundeep Malhotra, Founder and CEO, HomeShop18, said.

To cater to this demand, traders and merchants in small towns place bulk orders for products across categories, he said, adding that some of the most popular categories in terms of bulk purchase are mobiles and tablets, apparel, and home and kitchen.

HomeShop18 is seeing demand from small towns in Guwahati, Jammu, Lucknow, Patna, Bhubaneswar, Surat, Nagpur, Darbanga, Agartala and Chandrapur.

“Customers from tier-II and -III cities form 40-45 per cent of our total customer base,” Malhotra added.

Emerging trend

According to analysts, this is a trend that has a lot of potential and e-commerce companies should milk the opportunity.

“Everything is available on their (e-commerce) portals for the same price in any given location in India. The advantage in buying products in bulk for shops in smaller towns and cities is quick delivery and availability of the product for tier-2 and -3 cities,” Sanchit Vir Gogia, Chief Analyst and CEO, Greyhound Research, said.

However, he also said that it is a given fact that a major chunk of targeted customer base for e-commerce industry is still not equipped to purchase online.

According to a recent joint study done by Assocham and PWC, the Indian e-commerce industry is expected to spend an additional $500-1000 million on infrastructure, logistics and warehousing, leading to a cumulative spend of $950-1900 million till 2017-20.

The e-commerce is expected to reach anywhere $10-20 billion by 2017-20.

Source: The Hindu Business Line

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Wipro Q1 profit up 29.5% as IT spending returns in North America #Press #Media #ZeeBiz

IT services major Wipro today reported a 29.5 percent growth in its consolidated net profit at Rs 2,103.2 crore for April-June period, helped by large deals in the application and infrastructure space.

The city-headquartered firm had posted a net profit of Rs 1,623.3 crore in the year-ago period, it said in a BSE filing.

Consolidated net sales rose by 15.5 per cent to Rs 11,245.5 crore in April-June quarter of the current fiscal from Rs 9,733.2 crore in the same quarter of 2013-14.

The figures are in accordance with International Financial Reporting Standards (IFRS).

Wipro Chairman Azim Premji said: “We see a significant rise in business confidence in developed markets as well as India.”

The new government at the Centre has brought about hope and confidence in the minds of all stakeholders through reform pronouncements with fiscal prudence, he added.

In US dollars, Wipro reported a net profit of $351 million and revenue of $1.9 billion.

Revenue from IT Services stood at $1.74 billion, a quarter-on-quarter increase of 1.2 per cent and year-on-year increase of 9.6 per cent. Wipro had guided this to be in the range of $1.715 billion-$1.755 billion.

For the July-September quarter, the IT services revenue is forecast to be in the range of $1.77 billion-$1.81 billion.

“We continue to win large deals particularly in the application and infrastructure space. We recently announced our largest ever total outsourcing deal,” Wipro CEO T K Kurien said.

These wins demonstrate confidence of clients in Wipro’s transformational capabilities and re-affirm their faith in its client engagement strategy, he added.

IT Services revenue in rupee terms was Rs 10,510 crore, an increase of 18 per cent year-on-year.

The IT services segment had 147,452 employees as of June 30, 2014 and the firm added 35 new customers for the quarter.

“We continue to drive operational efficiency and invest in our strategy. Operating margins for the quarter was on expected lines, impacted largely due to wage hikes,” Wipro CFO Suresh Senapaty said.

Analysts said the April-June quarter has been lukewarm for the country’s third largest IT services firm.

“Its been a lukewarm period overall for the IT industry at large, including Wipro. That said, few contracts over the last quarter has helped Wipro get access to more high-profile deals at a time when outsourcing demand looks stronger as compared to previous years,” Greyhound Research CEO Sanchit Vir Gogia said.

Wipro shares today rose by 1.31 per cent to close at Rs 576.80 apiece at the BSE.

Wipro’s IT products segment delivered revenue of Rs 770 crore, registering a decline of 6 per cent over the year-ago period, after Wipro’s strategy to focus on services business by engaging in selective transformational deals where products form an integral part of the solution.

Segment wise, BFSI contributed the most towards Wipro’s revenues in the first quarter followed by Manufacturing & Hi-tech, Energy, Natural Resources & Utilities, Global Media & Telecom, Retail, Consumer, Transport & Government and Healthcare & Life Sciences.

Geography wise, the US was the main revenue generator followed by Europe, Rest of the World and India.

Last week, Wipro had announced that it had entered into a multi-million dollar dual pact with ATCO through which the company will provide a complete suite of outsourcing solutions to the Canadian firm as well as acquire its IT services arm.

Wipro signed a series of Master Services Agreements with ATCO under which it will acquire ATCO’s IT subsidiary for an all-cash consideration of CAD 210 million ($195 million or over Rs 1,176 crore).

Besides, Wipro also secured a 10-year IT deal with ATCO for providing outsourcing services, that will result in annual revenues of over CAD 120 million ($112 million or over Rs 675 crore) for Wipro for the next 10-years.

Gogia said ATCO deal will definitely add to Wipro’s overall growth, particularly in the Utilities vertical.

“However, currently it is early to comment on the actual benefits and outcomes will only be visible once all formalities have been completed,” he added.

Going ahead, Gogia said the company is expected to gain substantially if it manages to crack the Rs 1,200 crore call centre deal from Reliance Communications.

Separately, its active conversations with the government on various pending issues like taxation and allotment of new SEZ are clear signs of the expected growth in the near future.

Wipro is also planning to invest in upcoming software firms, a clear sign of their intent to also sell software to their customer base, Gogia said.

Attrition still remains one of the key issues that the management needs to address, he added.

Gogia said attrition still remains one of the key issues that the management needs to address.

Wipro Senior VP Human Resources Saurabh Govil said: “We have RSUs, and salary increases so we expect to see impact of that in the coming quarters.

“Also, we are seeing that among the high performers at Wipro, attrition rates have fallen drastically, which makes for about 25 per cent of our total workforce.”

Last week, Wipro had announced that it signed a series of Master Services Agreements with ATCO under which it will acquire ATCO’s IT subsidiary for an all-cash consideration of CAD (Canadian dollar) 210 million (USD 195 million or over Rs 1,176 crore).

Besides, Wipro also secured a 10-year IT deal with ATCO for providing outsourcing services, that will result in annual revenues of over CAD 120 million (USD 112 million or over Rs 675 crore) for Wipro for the next 10-years.

Gogia said ATCO deal will definitely add to Wipro’s overall growth, particularly in the Utilities vertical. Going ahead, Gogia said the company is expected to gain substantially if it manages to crack the Rs 1,200 crore call centre deal from Reliance Communications.

Separately, its active conversations with the government on various pending issues like taxation and allotment of new SEZ are clear signs of the expected growth in the near future.

Wipro is also planning to invest in upcoming software firms, a clear sign of their intent to also sell software to their customer base, Gogia said.

Source: Zee Biz

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