Tag: ASSOCHAM

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India’s digital commerce market to touch $128 bn in 2017?

ASSOCHAM’s research report pits the growth of the digital commerce space at a staggering $128 billion by the year 2017.
by The Editors | editor@themetrognome.in

The digital commerce market in India is likely to touch $128 billion in 2017 from the current level of $42 billion in 2015 due to increase in mobile and Internet penetration, m-commerce sales, different payment options, exciting discounts, according to the joint study brought out by ASSOCHAM and Deloitte.

With an increasing mobile and internet penetration, m-commerce sales, advanced shipping and payment options, exciting discounts, and the push into new international markets by e-businesses are the major drivers of this unprecedented growth.

The digital commerce market in India has grown steadily from $4.4 billion in 2010 to $13.6 billion in 2014, according to a study on ‘Future of e-Commerce: Uncovering Innovation’, jointly conducted by The Associated chamber of commerce and Industry of India (ASSOCHAM) and Deloitte.

The M&A deals (Softbank’s $627 million deal with Snapdeal, Flipkart acquired Myntra for $370 million, Ola Cabs acquired TaxiForSure for $200 million) and sky-rocket valuation of these e-commerce giants rising in last one year shows that the sector is heating up. The question would be whether these valuations are sustainable despite showing no signs of profitability. The global players like Amazon and Alibaba have deep pockets to rely on their parent companies for continuous funding support. The homegrown players would definitely need different metrics to preserve the investor confidence build in the sector.

Big retailers are increasingly focussing on their digital strategies in order to gain the obvious benefits of online platforms – wider reach, always on, personalisation, to name a few. E-commerce companies are concentrating their efforts on increasing the penetration of their mobile apps for higher growth. Big players in this space claim to have more than 50% of their revenue coming from mobile apps.

While releasing the paper, DS Rawat, Secretary General ASSOCHAM said, “The supply chain and logistics in e-commerce business are highly complex to manage in a vast country like India where infrastructure is not well-developed to reach every remote and rural area. The taxation policies for the e-businesses are not well-defined depending on different business models and transaction types. The complexity has further amplified with transactions happening across borders for online selling of goods and services. Moreover, e-businesses do not take sufficient steps to deploy a security solution, which is hindering the consumer from transacting online.”

Newer technologies that could significantly bring a paradigm shift in the online businesses are analytics, autonomous vehicles, social commerce, and 3D printing. Companies have started to invest in data analytics to gain real-time insights into customer buying behavior and thus offer personalized user experience. The e-commerce companies are building communities on social media networks to better understand customer needs and to drive effective marketing strategies, noted study.

The future of e-commerce is bright and growth will come from mobile platforms, personalisation, social media analytics, omni-channel service, and sharing economy business models. The e-commerce industry is in an exciting place with the interplay of social, mobility, analytics, cloud (SMAC), digital, 3D and, virtualisation. The current high valuations, in spite of losses, perhaps, are indicative of the future potential.

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 fundamentally alter the way companies connect with their customers.

Online travel, one of the key drivers of India’s e-commerce market, accounts for nearly 71% of e-commerce business in India. Though the online retail market in India, currently at $1.6 billion, is a miniscule fraction of India’s overall $500 billion retail industry; retail e-commerce has recorded a three-fold growth since 2011, predominantly driven by million dollar investments by domestic and foreign investors.

On the other hand, mobile commerce (m-commerce) is growing rapidly as a stable and secure supplement to the e-commerce industry. Shopping online through smart phones is proving to be a game changer, and industry leaders believe that m-commerce could contribute up to 70% of their total revenues.

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Kharcha paani

Cheaper to buy space in city malls?

ASSOCHAM report finds that mall space in Mumbai and other metros has dropped by 30% rental value with lower footfalls.
by The Editors | editor@themetrognome.in

Rising inflation and higher living costs have taken a toll on our favourite pastime: shopping. Tighter budgets are prompting many Indians to stay away from shopping malls. This has resulted in lower footfalls and high losses for retailers. On the other hand, if you are looking to buy shop space in a mall, now might be a good time to do it.

As per a new study published by ASSOCHAM (Associated Chamber of Commerce and Industry in India), a “slowdown in consumer footfalls, coupled with online shopping that provides convenience of delivery at door steps, have led to troubles for the shopping malls which are suffering 20 to 25% vacancy rates and 30% drop in rentals in the last one year.” The study finds that this trend runs parallel to a global one, where declining footfalls in retail space in over 200 shopping malls across the US, UK and other countries has lowered commercial space rentals. In the US, the malls are facing 46% vacancy rates whereas malls in UK are impacted by 32%.

“On the other hand, the  Indian e-commerce industry appears to be unaffected by the demand slowdown and is likely to clock a compounded annual growth rate (CAGR) of 35% and cross the $100-billion mark in value over the next five years,” the study finds, pegging the e-commerce industry in India presently at $17 billion.

Continuing on the strong growth momentum of 2015, the e-commerce industry is estimated to see a 72% increase in the average annual spending on online purchases per individual in 2016 from the current level of 65%, the study said. Online shopping mainly focusses on purchasing electronics, books, music, apparel, sporting and outdoor goods.

“It is true that the online shopping has shown handsome growth while the brick and mortar malls are witnessing slowdown. It looks that the growth in e-commerce looks impressive because of quite a low base and increasing penetration of internet,” ASSOCHAM Secretary General DS Rawat said. “The brick and mortar outlets on high streets and inside malls are trying to hold on through lower prices and deals. In India, sales in shopping malls have dipped by 25 to 30% and footfalls by 15 to 20% compared to the same period last year.”

There were around 50 operational malls in 2005, a number that rose to 610 in 2015 in top 10 cities. Additionally, 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. It estimates around 65 million consumers in India to buy online in 2015, as against around 40 million in 2014.

“The challenges of suburban sprawl, worsening automotive traffic, rising fuel prices and the increased difficulty of time management in modern families have made going to the mall a planned activity,” adds the paper.

Mobile technology is also having a huge impact on brick and mortar retail. Amazon recently reported that roughly 8 to 10% percent of their total sales are being generated by mobile devices, and expect this trend to continue upwards.

(Picture courtesy www.indiantravels.com. Image is used for representational purpose only)

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Kharcha paani

Gold, mutual funds major draws for Indian women

A new ASSOCHAM survey reveals that the Indian middle class, especially women, relies on gold and mutual funds for investments.
by The Editors | editor@themetrognome.in

Gold has always been a staple investment for Indians. Now, it is safe to add mutual funds to the list.

As per a new survey commissioned by ASSOCHAM (Associated Chamber of Commerce and Industry in India), the country’s middle class families are investing in gold as a ‘reliable and stable’ bet, while some of them are also returning to the riskier option of the stock market, enthused by a runaway rise in the equity market in the last one year, especially after formation of the new Government at the centre.But gold appears to be a clear winner for the middle class and white collar salary-earning employees. Interestingly while jewellery remains an all-time favourite with women, a sizeable percentage of working women covered in the survey are fast moving to stock markets as well through mutual funds schemes like Systematic Investment Plans (SIP) etc, highlights the survey.Gold bars are displayed at a gold jewellery shop in the northern Indian city of Chandigarh

As per the survey, about 72 per cent of 1,200 respondents said they preferred gold as an investing option followed by shares and mutual fund schemes this Diwali, helped by extra earnings from bonuses. The survey included responses of all corporates and Government employees located in Mumbai, Ahmedabad, Bangalore, Chennai, Delhi-NCR, Hyderabad, Jaipur, Kolkata, Lucknow, and Pune.Over 62 per cent of corporate employees in the survey preferred gold followed by shares and equities. The main reason for Government and corporate employees to foray into equities is the easy availability of advisory services by experts, reveal the respondents. “They are now focussing on investing in gold and stock markets rather than in traditional channels of investment like post offices, fixed deposit and PPF promoted by the Government,” said DS Rawat, Secretary General ASSOCHAM, while releasing the paper.

However, nearly 21 per cent of employees surveyed said they still preferred the traditional routes of investments as they assured them of safe returns. The demand for gold is on the rise in the run up to the festive and the ensuing marriage seasons. “This explains a huge rise of 450 per cent in gold imports in September causing concerns among the policy makers while the Government is mulling import curbs again”, said Rawat.

Though some of the PSU banks and other State-owned gold importing firms have stopped promoting gold sale because of the Government’s advice to cut gold import and consumption, the sale of gold ornaments, coins and bars has picked up .While gold provides ready liquidity, it continues to be treated as a safe haven against inflation. Jewellers have also launched several discounts and freebies while those marketing cars, real estate are also offering gold coins, points out the survey.

 (Pictures courtesy archives.deccanchronicle.com, in.reuters.com. Images are used for representational purpose only)

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Trends

Mumbai real estate losing out on NRI investments?

If a recent real estate survey is to be believed, Mumbai is not the top investment choice for NRIs any more.
by The Editors | editor@themetrognome.in

Mumbai has become a real estate nightmare, what with unrealistic, sky-high market rates making it impossible for people to buy their first homes in the city. For long, though, the real estate market in the city has somewhat been buoyed by investments from NRIs.

However, a recent report by ASSOCHAM (Associated Chambers of Commerce and Industry in India) reveals that Mumbai is no longer the first, or even second or third choice for NRI purchasers. As per the report, Bangalore is the most favourite property investment destination for NRIs, followed by Ahmedabad (2nd), Pune (3rd), Chennai (4th), Goa (5th), Delhi (6th) and Dehradun (7th).

“Indian property developers are anticipating a 35 per cent surge in inquiries from NRI-based purchasers as compared to last year about 18 per cent,” reveals the report, which was compiled based on a random survey of nearly 850 real estate developers in Delhi-NCR, Chandigarh, Mumbai, Kolkata, Bangalore, Hyderabad, Ahemdabad, Pune, Dehradun and Chennai. “NRIs feel confident about the new Government and are waiting for an investment-friendly market in various fields,” adds the survey.

The majority of real estate developers said that the NRI traffic is coming primarily from the UAE, US, Singapore, Australia, UK, Canada and South Africa. This year, the demand is more for the high-end property and commercial buildings. Said DS Rawat, Secretary General, ASSOCHAM, “With the revival in global economy, especially in the United States and Europe, people are more optimistic and looking for property to invest in. Both small and big developers are focusing on the NRI base in the US, UK and Asia Pacific Region this year.

“As per the findings, the share of NRI sales are currently at approximately 18 per cent and are likely to increase by 30 to 35 per cent in the coming year,” says the survey.

To tap a large section of the cash-rich NRIs living overseas, developers are not just conducting property shows, exhibitions and opening overseas representative offices, they are also expanding their existing distribution chains and entering into strategic partnerships to encourage investors from this cash-rich segment also.

The findings

– According to the survey, Bangalore tops in terms of investment from NRIs, who are considering settling down in India in the coming years. The major factors that drive NRIs to invest in Bangalore’s property market is the booming IT sector. It has the largest concentration of leading IT and ITeS companies. According to an estimate, there are 2,200 IT companies, over 664 MNCs, 183 biotechnology companies, and 248 BPOs operating in Bangalore.

– Growing number of IT/ITES companies in Bangalore provide lucrative job opportunities to NRIs who are considering settling in India. Moreover, exponential growth in infrastructure and real estate sector also contributes positively towards influencing NRIs to invest in the property market. The demand has also shifted from mid-segment housing to luxury housing in Bangalore.

– Ahmedabad (32 per cent) has continued to be the most stable market in terms of demand and absorption of both residential and commercial spaces.  NRI’s consider Ahmedabad as a safe place to invest in, with lenient government regulations regarding property investments by NRIs.

 

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Kharcha paani

Ad spends on a high this festive season

A survey on corporates’ plans to push products this festive season reveals maximum thrust will be on television, social media ads.
by The Editors | editor@themetrognome.in

We have now entered the phase known all over the country as ‘the festive season’. Starting with the Ganpati festival, the season will see Navratri, Diwali, Durga Puja and will culminate in Christmas in December.

As per a survey done by ASSOCHAM (Associated Chambers of Commerce and Industry in India), faced with a hard-sell situation, corporates are gearing up to spend about 25 to 30 per cent more on advertising this festive season as compared to the last year, with consumer durables, electronics and automobile sectors taking the lead. “But the blitzkrieg is expected in the e-commerce space vying for higher sales in mobile telephones, shoes, apparel, gifts and electronic gadgets,” says the survey.

Shopping in festive seasonThe feedback from corporates suggest that the marketing teams of the companies engaged in the Business-to-Consumer (B2C) sector have already lined up plans for their ad campaigns which will begin from Navratras and run through Durga Puja, Diwali and right up to Christmas. The period is also considered busy season for the Indian economy with the policy makers and the RBI expecting pickup in consumer spending  to rev up the overall GDP growth in the current financial year to 5.5 to 6 per cent, ASSOCHAM General Secretary DS Rawat said while releasing the findings.

“Though the corporates are facing higher cost pressure due to high interest rates, rising raw material costs and wages, marketing expenses mainly through advertisements in television, newspapers and the social media have become unavoidable with the companies in the media sector becoming the main beneficiaries,” adds the survey.

By increasing their ad spend by up to 30 per cent this festive season, corporates are hoping for a commensurate rise in their sales hoping that the consumer confidence will return with the new Modi government taking incremental measures to boost the economy, adds the paper. Big and attractive discounts are expected from the main players in the e-commerce space in tie-up with the manufacturers of mobile handsets and other electronic gadgets. In the brick and mortar model, the companies engaged in manufacture of TV sets, washing machines, microwave ovens will do some hard sell.

“They will be required to really go for hard push since the consumer durables and consumer goods sector have not been performing well, as was clear in the June IIP numbers”, said Rawat.

Seeking to build on robust sales in the past few months, supported by lesser excise duty, car manufacturers are expecting a real growth in sales, though they would need to spend more on their advertising and marketing costs, points out the paper. At least 40 per cent of the ad budget of the corporates is typically earmarked for the busy season which coincides with the change of weather and several festivals. The rural market also remains in focus, though the response this year around may not be encouraging because of scanty rainfall.

While TV remains a preferred medium for the FMCG, consumer durables and car and bike ads, the increasing penetration of the social media will also attract the marketing and media planners. The social media is far more focussed when it comes to target audience. Besides, the age profile of those using social media is a big temptation for the media spenders.

Nearly 69 per cent of marketing heads said that companies see in the festive season a perfect time to advertise their products. Even as the media cost has been rising, companies want to work closely through consumer touch points in retail outlets.

“Some of the marketing schemes will come up bundled with financing options like interest free loans, easy EMIs and extended periods of warranties”, highlights the paper.

(Picture courtesy www.dailydealmedia.com, www.topnews.in)

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Trends

About 35% couples took a trip this weekend

Survey reveals that about 5 lakh travelers from the metros went to nearby tourist spots over the long I-Day weekend.
by The Editors | editor@themetrognome.in

The long weekend, starting from Friday, August 15 (Independence Day), and ending on Monday, August 18 (Pateti, Janmashtami) certainly allowed several people to take short trips to nearby locations. If a quick survey by ASSOCHAM (Associated Chambers of Commerce and Industry in India) is to be believed, about 35 per cent working couples of 500 couples surveyed in the metros of the country took planned an extended weekend trip during this time. 

About 5 lakh travelers made the journey to renowned weekend destinations, as per the survey based on feedback received from various working couples and tour operators in metros. “The weekend, starting this Independence Day on Friday, was extended up to Janmashtami on Monday (August 18) and about 35 per cent of working couples in metros planned to make it an extended holiday and escape to the nearby tourist destinations,” highlighted the survey.

ASSOCHAM representatives interacted with about 500 working couples to gauge their mood and plans for the Independence Day weekend in five cities of Mumbai, Ahmedabad, Bangalore, Delhi-NCR, and Kolkata during the last fortnight.

While about 35 per cent respondents conceded they had planned their itinerary in advance, about 55 per cent said they would relax at home and enjoy some good quality time with their family and the remaining 10 per cent said they have not made any plans so far. “With work schedules getting hectic by the day, working couples in India impatiently await weekends and thus make the most of extended weekends,” said DS Rawat, secretary general of ASSOCHAM.

The survey also took into account inputs from representatives of leading travel portals, travel agencies, and hoteliers who came up with various packages, as they had received a good number of bookings for traditional picturesque destinations located around the metros.
 
Certain respondents even said that their companies enabled the ‘work from home’ facility for their employees so that they could spend the weekend comfortably and complete their tasks as per their convenience.

Ashtvinayak, Goa, Khandala, Lonavla, Mahabaleshwar, and Matheran were the top destinations for about 30 per cent working couples in Mumbai, while almost 40 per cent respondents from Delhi-NCR rated Agra, Dharamshala, Haridwar, Jaipur, Jim Corbett, Khatu Shyam, Landsdowne, Mathura and Vrindavan, Manali, Mussoorrie, Nainital, Rishikesh, Shimla, Vaishno Devi and other spots among their favourite spots. 

Ambaji, Gir, Kutch, Mount Abu, Daman and Diu, Dadra and Nagar Haveli, Udaipur and others were significant getaway destinations for about 45 per cent working couples planning a quick holiday this weekend in Ahmedabad. Meanwhile, Chikmagalur, Coorg, Madhugiri, Mysore, Nandi Hills, Ooty, Ramanagara, Shivanasamudra Waterfalls, Wayanad and others were most sought-after weekend getaway destinations for 35 per cent working couples in Bangalore.

Bakkhali, Darjeeling, Digha, Mandarmoni, Murshidabad, Navadivpa, Raichak Santiniketan, Sunderbans, Tajpur, Tarapith and others were preferred weekend getaways for about 25 per cent respondents in Kolkata.

Also read: ‘Four-day holiday causes six-hour traffic snarl on Mumbai-Pune Expressway‘, TOI

(Picture courtesy www.planmoneytax.com)

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