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India Inc finally catches e-commerce bug in economical growth

New Delhi,Ashish K Tiwari: Tatas, Birlas, Ambanis, Godrejs and Mahindras join the bandwagon, line up big plans to take on the online incumbents. Anand Mahindra-Kumar Mangalam Birla Anand Mahindra and Kumar Mangalam Birla

Anand Mahindra-Kumar Mangalam Birla
Anand Mahindra-promoted $16.9 billion Mahindra Group has taken the lead in kick-starting a trend of diversified Indian conglomerates such as Tata, Reliance, Aditya Birla, Godrej launching e-marketplaces.

The Mahindra group has launched a new wholly owned subsidiary Mahindra eMarketplace Pvt Ltd that will own and operate the e-marketplace platform www.m2all.com.

According to V S Parthasarathy, group CFO, group CIO, president (group finance and M&A), M&M, its e-marketplace will compete with other e-marketplace operators since their business model is completely different.

“What differentiates our e-marketplace from the likes of Flipkarts and Snapdeals of the world is that rival brands from across Mahindra Group’s line of businesses such as Tata, Bajaj, Honda, Renault and others in the automobile business will not be allowed to partner.

“However, vendors or small and medium enterprises (SMEs) selling add-ons and complementary items /expertise will get to showcase and sell their products and services,” said Parthasarathy, adding that growing at a CAGR of 47%, India’s e-tailing market is expected to reach $50 billion by 2020.

The Mahindra group is seeking this opportunity and feels this is the right time to go into it, he said.

Interestingly, the $108 billion Tata Group, with a multi-brand portfolio valued at over $23 billion in 2015, has been toying with e-commerce foray for some time now. It has reportedly earmarked Rs 1,000 crore for its planned e-commerce foray that will offer both Tata and non-Tata brands across lifestyle, electronics and other segments.

Reliance Industries too is said to be aggressively planning an e-commerce/e-marketplace play especially for its retail businesses. While Reliance Fresh (www.reliancefreshdirect.com) is the only vertical that allows for online buying of food, grocery, bakery etc. Reliance Group chairman Mukesh Ambani had in the annual general meeting in June 2015 had said that Reliance Retail this year will be embarking on its next phase of building a high growth trajectory supported with e-commerce and larger geographic coverage.

“This year will bring about disruptive shopping experience for consumers as they embrace technology and get access to anytime anywhere shopping. With the advanced internet infrastructure built by Jio and a robust physical retail business built by Reliance Retail, we will create a differentiated e-commerce model for India. This model will entail seamless integration of online and offline while innovating across superior customer experience, delivery services and payment ecosystem,” Ambani had said.

The group’s plans revolve around rolling out Reliance Digital Marketplace platform that will enable millions of small retailers and provide them with; enhanced supplier base and product range, better supply chain productivity, digital payment capability, connectivity to customers and credit capability.

“We believe that this initiative will be a driver for economic growth by enhancing business potential for millions of small retailers. This combined physical and e-commerce retail business is poised for a growth of 30% to 50% year-on-year and sustain our leadership in retail,” said Ambani.

Kumar Mangalam Birla promoted Aditya Birla Group is another big Indian corporate house that has created an e-marketplace viz www.trendin.com for its fashions and lifestyle apparel business. “The thought process here is that being a large and diversified corporate, Aditya Birla Group is creating a value proposition for customers to buy on their e-commerce / e-marketplace while pitching against the likes of Flipkart, Amazon, Jabong, Snapdeal. It is just a matter of time for Birlas to possibly replicate (create an e-marketplace) the model for all its businesses,” said a senior executive from a leading international advisory.

Last week, Tanya Dubash, executive director and chief brand officer, Godrej Industries Ltd, in her response to a dna query on the possibilities of launching an e-marketplace for Godrej Group companies, said the group has several businesses participating in an e-commerce play some way or the other and that plans were still to be drawn on how to collaborate/co-ordinate and move forward in a concerted manner.

“Our businesses across consumer, appliances, real estate, furniture etc., are currently exploring the e-commerce space. There certainly are synergies in doing it together, but how we actually evolve and have one platform over time is something we haven’t come to that understanding yet,” said Dubash.

Experts are of the view that Indian conglomerates joining the e-commerce bandwagon is basically a part of their diversification strategy of adding new businesses to the portfolio.

“Given the excitement around digital or online, e-commerce fits into the plan very well. And the timing is certainly right given there is enough traction from online shopping population and these business houses do not really have to worry about burning cash which is what most of the existing e-marketplace operators have been doing and continue to do since their respective foray into the Indian e-commerce industry,” said a retail /e-commerce sector consultant.

The consultant’s observations (in terms of a differentiated business model) are clearly visible in Mahindra group’s e-marketplace that went live on Monday. The portal currently has four group companies on board viz. Mahindra Lifespaces, Mahindra Twowheelers, Mahindra Powerol and Mahindra Firstchoice Services offering their products and services for Indian online shoppers to transact.

Vijay S Mahajan, head – eMarketplace and corporate IT, Mahindra & Mahindra Ltd, said there are 31 brand within the group of which transactions can be done on five brands at present and others will follow suit gradually. “Visitors on our e-marketplace will be able to browse over 400 Mahindra products and services and currently order over 40 of them, including vehicles, real estate, gensets, and two-wheelers among others. The portal works on the ‘click-and brick’ model wherein consumers can order the products online while Mahindra’s partners i.e. its dealers, distributors, and logistics teams will help in the delivery,” said Mahajan.

While not sharing financials (investments, revenue targets etc) pertaining to the new business venture, the company executives said the e-marketplace is available pan-India for browsing and transactions in the available categories for now. “We will gradually enhance the offerings and in two years from now, the e-marketplace will be feature a plethora of products and services in addition to all our brands that can be bought online,” said Mahajan, adding the e-marketplace is currently only available in India and plans of taking it international have not being thought of as ye

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