Angel investors and early institutional shareholders of ecommerce unicorn Meesho are reportedly in discussions with potential investors to divest their stake. WestBridge Capital and Norwest Venture Partners are reportedly among the investment firms engaging in discussions with Meesho’s early investors.

As per ET’s report, talks are underway for a transaction at a valuation ranging between $3-$3.5 Bn, but this figure may change. The publication further said that WestBridge has expressed interest in acquiring more shares in Meesho, while Norwest Venture Partners has also participated in the discussions.

The ongoing conversations primarily revolve around the negotiation of deal pricing, with early investors expressing their desire to exit the investment at this juncture.

It is to be noted that investment firm WestBridge Capital acquired a stake in the ecommerce unicorn in a secondary transaction from its early and long-term backer Venture Highway in October. Venture Highway sold a part of its stake in the ecommerce startup to earn over 50X return.

Venture Highway is reportedly considering the sale of its remaining 1% stake in Meesho during this round of transactions.

Founded in 2015 by Vidit Aatrey and Sanjeev Barnwal, Meesho is backed by other marquee investors such as SoftBank, Peak XV, Fidelity Investments, Prosus & Naspers, and Meta.

The startup, once hailed as the poster child of social ecommerce, made a strategic pivot in 2022 to become a marketplace. This move places the company in direct competition with industry giants such as Flipkart and Amazon. The company is best poised to disrupt the duopoly of Amazon and Walmart-owned Flipkart, as per analysts.

As we reported this week, analysts believe Meesho’s zero commission model for sellers who offer unbranded products targeted at consumers from middle-low income households has worked for the Bengaluru-based ecommerce unicorn which has captured 7% of the ecommerce market share in India.

The ecommerce major was the brightest star in Prosus’ India portfolio in the first half (H1) of the financial year 2023-24 (FY24). As per half-yearly financial data released by Prosus, Meesho clocked an internal return rate (IRR) of 32% for the investor.

Meesho reported an operating revenue of INR 5,735 Cr in FY23, a 77% increase over INR 3,232 Cr in the previous fiscal year, it said in a blog last week.

Fashnear Technologies, the parent entity of Meesho, reported a net loss of INR 1,675 Cr in FY23, a 48% drop from INR 3,248 Cr in the previous year.

However, Meesho is yet to file its financial statements for the financial year 2022-23 (FY23) with the Ministry of Corporate Affairs (MCA).

The post Meesho’s Early Investors Consider Secondary Sales At $3 Bn-$3.5 Bn Valuation appeared first on Inc42 Media.

India’s $100 Bn+ ecommerce market has seen a slew of changes in 2023, ranging from the entry of new players, the expansion of the Open Network for Digital Commerce (ONDC) going live and D2C brands exploring the omnichannel path for revenue growth.

While Walmart’s infusion of $600 Mn into Flipkart as a part of its mega $1 Bn round hogged the limelight towards the end of the year, Amazon put a pause on its spending in India and streamlined its workforce in line with global strategy.

The past year also saw MamaEarth, become the first publicly-traded D2C brand in India, with IPO subscribed 7.6 times amid a spiked interest from the institutional investors. 

India’s two largest conglomerates, Reliance Industries and Tata Group, are also rewriting their playbooks to grab a major chunk of the burgeoning online retail industry, with the focus now shifting to clock revenues from beyond metros and Tier 1 cities. 

At the same time, the government has lent its support to the ONDC to check the dominance of large players in the aggressively growing ecommerce market. The year 2024 promises to bring many of these factors into play.

The 8 Biggest Ecommerce Trends To Expect In 2024

Amazon-Flipkart Duopoly Likely To Weaken With Rise Of Meesho & Co

Despite a challenging regulatory environment, the strengthening of the D2C ecosystem and ONDC’s foray into digital commerce, marketplace giants Amazon India and Walmart-owned Flipkart have managed to capture more than 90% of the total gross merchandise value (GMV) during the peak festive sales in 2023. 

Even as these giants are building strategies to operate in a far more regulated environment than before, analysts believe that the marketplaces will continue to leverage the first-mover advantage, scale in terms of user base, and distribution channels in 2024, giving them an edge over the competition. 

Except for SoftBank-backed Meesho, which has made surprising leaps in terms of average month-on-month user growth, analysts predict other players will not dent the current ecommerce revenue share of Amazon and Flipkart. 

D2C players or ONDC will have some impact in 2024, but only Meesho is in the position to challenge the duopoly. In April 2023, equity research firm Jefferies said that Meesho is growing faster than the overall growth rate of the ecommerce industry in India.

 “Meesho had an impressive 120 Mn average monthly active users on its platform during CY22. Over the last two years, Meesho added ~100 Mn MAUs, much higher than additions by peers. Meesho scores well on all stages of an online purchase journey, including awareness (measured by app downloads), consideration (measured by MAUs) and transaction (measured by MTUs),” the Jeffries report added.

Other analysts believe Meesho’s zero commission model for sellers who offer unbranded products targeted at consumers from middle-low income households has worked for the Bengaluru-based ecommerce unicorn which has captured 7% of the ecommerce market share in India.

However, the larger question is how these giants will move beyond Tier 1 cities and metros, which have driven a majority of the revenues so far. Meesho and even the likes of JioMaart or TataNeu will have to capture underpenetrated markets, a top ecommerce industry analyst told us.

“This is especially true since Amazon and Flipkart do have control over large inventories earlier in the form of companies like Cloudtail, Appario and now private label brands. With time, if the regulators do not put an end to this structure through definitive laws, Amazon and Flipkart will build on the market duopoly,” an ecommerce analyst added.

National Ecommerce Policy Will Disrupt Best-Laid Plans

The year ahead is also expected to see the announcement and implementation of the much-awaited ecommerce policy after years of battles between India’s retailer body, the Confederation of All India Traders (CAIT) and the marketplace duopoly.

Sources told us that the announcement of the ecommerce policy was deferred since both Amazon and Flipkart have had several rounds of discussion with the Union Commerce Ministry expressing contentions over the various provisions of ecommerce consumer protection rules (2020).

Sources told us the policy builds on the ecommerce consumer protection rules (2020) and will incorporate strict adherence to local data storage, consumer interest, the counterfeit policy of marketplaces, marketplace linkages and ownership of sellers, predatory pricing, forced discounting and flash sales.

The ecommerce policy, as per several reports, will not see further revisions or drafts made publicly. 

Amazon and Flipkart are particularly in a tight spot since they are owned by foreign entities and have been alleged to have violated FDI and FEMA rules in past. As such, the upcoming ecommerce policy is expected to impact them the most, especially since both have aggressively expanded in having partnerships and tie-ups with private-label brands over the past few years. 

There have also been allegations of both using the data of the most popular products being sold on the platform to build their private labels. “It will be interesting to see what the regulations hold in place for advertising on ecommerce marketplaces since that is where Flipkart and Amazon draw a majority of their revenues now,” Prem Bhatia, CEO of ecommerce tech company Graas, told Inc42.

ONDC Penetration To Grow

ONDC made a big foray into India’s digital commerce sector in 2023, the first of its kind initiative in the world to transform the digital trade and ecommerce landscape. Although ONDC began by disrupting food delivery, the fact remains that the open protocol is yet at a very nascent stage. 

ONDC is still building its network and hence would need aggressive seller onboarding, awareness campaigns and investment in marketing to make a dent in the online retail industry as it is.

CBO Shireesh Joshi told Inc42 that in 2024, ONDC’s focus will be further expansion into cities and vertical expansion. 

“We are focussed on expanding our services to many cities with a wider range of products and services. A case in point will be for instance we are devising this product of sachet loan products for street side vendors at a very low interest rate against their sales history. The target is becoming accessible and penetrating to remote markets,” he added.

Notably large players such as Snapdeal, Amazon’s logistics arm Amazon Transportation Services (ATS), BigBasket, PhonePe, Paytm, and Ola have joined the network, showing the network’s growing presence and stature.

ONDC will continue to function as a not-for-profit entity and may eventually charge small fees from sellers but that will happen several years down the line. On the discount/incentive side, the ONDC CBO maintained that the buyers may expect some discounts slashing around Q1 2024. 

Sources have informed us that the big ecommerce players have largely stayed away from ONDC which again puts a question on the scalability of the open protocol. “That is a larger question which should be posed to Amazon and Flipkart,” Joshi said in response.

Reliance, Tata’s Acquisition Appetite To Grow

Despite the ecommerce industry’s explosive growth over the past few years, the $100 Bn+ industry is still very small compared to the $1.5 Tn retail industry which is where the biggest conglomerates of India like Reliance Industries, Tata Group, and Aditya Birla Group have a huge edge over the ecommerce players. 

Reliance and Tata have unshakeable dominance in the retail industry of India on top of which they have built JioMart, TataNeu as well as other platforms. 

Industry sources revealed that the next leg of growth for these conglomerates will come from digitising their thousands of offline stores, bringing their brands into the digital sphere and acquisitions. 

“In a way, Tatas and Reliance will have different playbooks. Reliance eyes acquisitions and distress deals to strengthen its presence in any industry. We may expect Reliance’s Jio to acquire more brands across fashion, grocery, pharmaceuticals, and apparel, verticals. For Tatas, their loyalty programmes, super app ambitions and infusion of capital to build a good tech stack, expand to multiple categories would be priorities,” an industry analyst said.

While Amazon and Flipkart’s dominance has been in online retail across selected markets, Reliance and Tata are bringing in organised retail models which will be integrated with their digital presence. 

Omnichannel Plays Will Dictate D2C Brand Success

Is the party over for the D2C ecosystem? Mostly, Yes. 

The D2C brands were cashing on the lower interest rates globally as a result of which the VC money aided the quick expansion of the digital-first brands. However post-pandemic, a realisation has dawned upon the D2C startups that they will have to build an omnichannel strategy to cater to offline markets and still depend on third-party marketplaces to sell online. 

“In future, omnichannel strategies will become even more essential for the success of D2C brands. For a seamless customer experience, brands need to integrate online and offline channels as new technologies continue to redefine consumer interactions,” Ashish Dhuwan, Vice President, beatXP, an online store for health products said. 

Personalised experiences across channels will be provided through data-driven insights, making personalisation essential. New technologies, such as artificial intelligence (AI) and augmented reality (AR), will further enhance the omnichannel play of D2C brands.

Success in the D2C is accelerated by omnichannel integration, which simplifies and streamlines the customer experience across multiple platforms. Online platforms, social media, and retail stores are just a few of the channels that D2C brands can integrate to create an easily accessible customer journey, he further said.

Graas’ Bhatia said that the D2C brands will have to cut down on their marketing, and advertising spending in 2024 while adopting a wait-and-watch strategy for capital to flow into the markets before they go into expansion mode.

“In general, I don’t think that the first few months of 2024 will be an easy market for D2C brands. On the positive side, some of the Indian D2C brands which have good products can explore Southeast Asia, the Middle East and other geographies as markets,” Bhatia added.

D2C House Of Brands, Roll-Ups Will Begin To Fold

Amazon brands aggregator Thrasio’s meteoric rise and fall perhaps now serves a lesson or two for many of its clones in India. 

The ‘house of brands’ ecosystem in India that mushroomed in the past few years has more or less subsided. The likes of Mensa Brands, Goat Brand Labs, Upscalio, and Globalbees raised millions of dollars in quick succession, going on an acquisition spree.

But industry players believe these acquisitions happened at fairly high valuations, and the fact that many ‘house of brand’ platforms raised venture debt, means they now find themselves in a difficult spot when it comes to long-term survival.

“Even the large fundraise for house of brands involved a heavy debt component and now the cost of the repayments has increased which has impacted their growth prospects,” an industry insider said.

The year ahead will see further consolidation and mergers in this space with the likes of Aditya Birla-backed TMRW, Wipro Consumer Care or even Reliance acquiring a few such startups.

“Even if the distressed sales happen in the first half of 2024, as soon as the interest rates lower globally and VC money flows, we can expect some of the roll-ups to raise capital again but till then it will be a matter of withstanding challenges,” the founder of a Bengaluru-based D2C brand said.

Vertical Ecommerce In For Consolidation

Category-specific ecommerce marketplaces or vertical marketplaces have made significant strides over the past couple of years with the likes of publicly listed companies like Nykaa and CarTrade even achieving profitability, while Urban Ladder attracted Reliance’s eye. 

This is at a time when horizontal marketplaces like Amazon and Flipkart are yet to reach profitability despite a majority share in the industry. 

The upcoming FirstCry IPO will serve as an important metric for the success of vertical ecommerce marketplaces in 2024 as per analysts.

Nykaa, Cartrade or FirstCry will set the benchmarks for vertical ecommerce in the country. Since these are publicly listed companies the focus will also be laser-sharp on achieving and maintaining good unit economics, a market analyst said.

We have also seen Reliance acquiring Netmeds, Urban Ladder, and Tata acquiring 1MG, and CaratLane in the past few years. 

Experts are also expecting privately held vertical ecommerce marketplaces will land more funding and acquisition opportunities in 2024, given the success of category-specific market leaders. 

How Will B2B Marketplaces Fare? 

While most of the focus in ecommerce is on marketplaces, B2B ecommerce has grown tremendously in the past half-decade. However, market analysts expect their growth to be dependent on capital access given the cost of acquisitions of materials and maintenance of warehouses is capital intensive. 

Even as B2B unicorn Udaan announced a mega fundraise, the reports mentioned that it was a mix of equity and debt which was a down round. Udaan’s revenues have also fallen considerably in FY23 even as it looked to pare down costs. 

The smaller B2B ecommerce marketplaces are now challenged with reducing the acquisition/ purchase costs of raw materials and finding buyers who they can sell at a reasonable price.

“Essentially the discount party that the B2B marketplaces had to offer to buyers is over. And now, we will only see the market leaders surviving the storm,” an agritech marketplace founder said.

In addition, exploring markets beyond India may prove to be more difficult given the geopolitical tensions in the Middle East, Russia and the US. 

“The B2B marketplaces will have to reduce their dependencies on asset-heavy models and focus on India as a geography in 2024 to become cost-effective and generate revenue,” the founder quoted above said.

[Edited By Nikhil Subramaniam]

The post 8 Ecommerce Predictions For 2024 appeared first on Inc42 Media.

In a year which saw shares of new-age tech startups like Zomato, PB Fintech, and RateGain make big gains, the performance of Delhivery remained lacklustre on the stock exchanges.

Though the shares of the logistics unicorn surged between April and September this year, they are set to end 2023 with much lower gains compared to its new-age tech peers. 

It is pertinent to note that Delhivery went for its IPO in 2022 when the number of listings of new-age tech startups fell to a mere three amid tumultuous market conditions. After its listing in May, Delhivery shares slumped almost 40% in 2022, in line with the wealth erosion seen in most of the listed startup stocks.

The beginning of 2023 was also not too great for Delhivery as its shares traded sideways till the end of April. However, the stock gained momentum after that and was up 38% year to date (YTD) by September. But this upsurge didn’t last long as the shares shed some of the gains. As of December 28, the startup’s shares were trading about 16% higher YTD.

Slow business growth and rising expenses are seen among the key reasons holding back the stock. The startup’s losses have also not helped the stock as investors are focussing on companies which are profitable or, at least, have a strong profitability outlook.

With that said, let’s take a look at Delhivery’s 2023.

Delhivery’s Volatile 2023 

Shares of Delhivery remained volatile this year, but its earnings estimates’ miss in Q2 FY24 led to a bigger slump. 

Delhivery reported its Q2 FY24 financial results on November 4, posting a 90% year-on-year (YoY) decline in adjusted EBITDA loss to INR 13 Cr, while its net loss narrowed almost 60% YoY to INR 102.9 Cr.

Meanwhile, operating revenue increased a mere 8% YoY to INR 1,941.7 Cr. The shift of festive season sales to Q3 this year also played a role in this.

However, most brokerages expected the company to report a larger decline in loss and higher sales. The logistics startup’s growing expenses due to investments for growing its capacity and expansion hurt its bottom line.

Delhivery’s express parcel business, which accounted for the biggest chunk of operating revenue during the quarter, failed to increase its contribution to the overall business on a YoY basis. Meanwhile, revenue generated by the express parcel and part truckload (PTL) verticals continued to witness growth, while the growth of the supply chain services business slumped.

There were several other developments, which impacted the stock’s performance positively as well as negatively in 2023.

Key Developments In 2023

• Delhivery expanded its facilities across Chennai, Hyderabad, and Noida 
• Launched a mega-gateway in Bhiwandi, one of India’s largest trucking terminals
• Acquired an additional 4.75% stake in warehouse automation startup Falcon Autotech for INR 52.11 Cr
• Claimed to be “almost at the breakeven point”
• Moved to the National Company Law Tribunal (NCLT) against Go First alleging that the airline deliberately took payments from it despite heading towards insolvency

The exit of some of its pre-IPO investors also had an impact on the stock performance during the year.

Delhivery’s Shareholding Pattern

In a trend similar to the one seen in other new-age tech stocks, Delhivery witnessed large block deals and major exits during the year.

• Private equity firm Carlyle Group offloaded its remaining 2.5% stake in Delhivery in June via bulk deals worth over INR 709 Cr
• VC major Tiger Global offloaded its 1.6% stake in Delhivery in a bulk deal for INR 338 Cr
• SoftBank dumped over 6.3% stake in Delhivery during the year in deals cumulatively worth INR 1,701 Cr

The stake held by foreign investors in the logistics startup also saw a decline throughout the year. Foreign institutional investors (FIIs) held a 65.5% stake in Delhivery at the end of the September quarter of 2023 against a 74.24% stake a year ago.

Meanwhile, mutual funds increased their cumulative stake in the startup. As of September 2023, as many as 16 mutual funds held a 14.12% stake in Delhivery against 13 funds holding a 6.95% stake a year ago.

Will Delhivery Deliver In 2024?

The Delhivery stock is currently trading below its listing price at around INR 380.

Of the 23 analysts covering the stock, 16 have a ‘buy’ or higher rating on it while five have a ‘hold’ rating. Its average price target is INR 452.17.

Analysts largely believe that the stock has strong growth potential for the long term. However, rising competition and increasing expenses remain the key concerns in the near to medium term.

For instance, international brokerage UBS recently initiated coverage on Delhivery with a ‘buy’ rating, citing long-term synergistic growth and profitability potential. However, it flagged increasing competition and customer concentration as key risks.

Meanwhile, ICICI Securities, in a recent research note, said Delhivery’s adjusted EBITDA profitability could see a reversion on a sustained basis given that ecommerce shipment volumes are trending upwards again after a slow year.

However, the brokerage believes that if medium-term growth visibility worsens due to global headwinds, it could pose a risk to the growth thesis.

On the technical charts, the stock is showing signs of a 10-20% correction in the medium term, according to Kush Ghodasara, CMT and an independent market expert. He believes the stock will take a long time to script a turnaround.

With geopolitical tensions like the Red Sea attacks emerging as another threat, it remains to be seen if Delhivery can deliver better returns to its investors in the coming year.

The post Delhivery Delivers Another Lacklustre Year On Bourses, Can It Change The Course In 2024? appeared first on Inc42 Media.

Brainbees Solutions Limited, the parent entity of kids-focused ecommerce unicorn FirstCry, has finally filed its draft red herring prospectus (DRHP) with the capital markets regulator Securities and Exchange Board of India (SEBI) for raising INR 1,816 Cr through fresh issues of shares.

The initial public offering (IPO) also comprises an offer-for-sale (OFS) complement which will allow the startup’s investors to sell up to 5.4 Cr equity shares. SoftBank alone is shipping off around 2 Cr shares as part of the OFS, with many other major shareholders selling significant stakes as part of the OFS.

FirstCry is also looking to raise INR 363.2 Cr via a pre-IPO placement, the DRPH noted.

The 577-page draft document sheds light on how the entity, which has built three unicorns interacts with one another and delves deep into its business model. FirstCry’s draft papers also inform the company’s shareholding pattern and the people leading the ecommerce behemoth.

The Top Shareholders At FirstCry

Japanese investment giant SoftBank is the biggest shareholder in FirstCry’s parent company, owning around 12.41 Cr equity shares (on a fully diluted basis) or about 25.55% of the total equity capital, according to the DRHP. SoftBank owns the stake via the SoftBank Vision Fund’s Cayman Islands-based entity, SVF Frog (Cayman) Limited.

Mahindra & Mahindra and Premji Invest are the second and third largest stakeholders in Brainbees Solutions, owning 10.98% and 10.36% stake, respectively. While Mahindra & Mahindra invested directly in FirstCry, Premji Invest did so via its PI Opportunities I and II funds.

The company’s ESOP trust, the Brainbees ESOP Trust, is the fourth largest stakeholder in the ecommerce unicorn. Alongside the Brainbees Employee Welfare Trust, the company’s employee-focused entities own more than 11% of the total equity capital on a fully diluted basis.

Supam Maheshwari, the cofounder and CEO of FirstCry, is the fifth largest stakeholder in the parent entity he set up. Maheshwari owns a 5.95% stake, which translates to nearly 2.9 Cr fully diluted shares.

Incidentally, more than 100 different stakeholders, including the likes of Ratan Tata, cumulatively own around 9.5% stake in the FirstCry parent.

Who’s Who At FirstCry

Supam Maheshwari, who set up Brainbees Solutions in August 2010, is the company’s MD and CEO. He holds a bachelor’s degree in mechanical engineering from Delhi College of Engineering and a post-graduate diploma in management from IIM Ahmedabad. 

Before setting up the FirstCry parent, he set up business learning solutions provider Brainvisa Technologies in 2000, which he left in 2009 as its president. Maheshwari also brought along Sanket Hattimattur and Prashant Jadhav from Brainvisa, who joined as cofounders. Hattimattur is currently serving as executive director and chief of staff, while Jadhav is currently the CTO.

Working alongside Jadhav in the company’s C-suite is Gautam Sharma, the group CFO, an associate member of the Institute of Chartered Accountants of India (ICAI) and a fellow member of the Institute of Company Secretaries of India (ICSI). Other key managerial personnel (KMP) include CHRO Manjula Rao and company secretary Neelam Jethani.

The DRHP also mentioned Nitin Agarwal, who is leading Globalbees as CEO, and Amitava Saha, also a cofounder and major stakeholder at FirstCry, serving as XpressBees CEO. The two subsidiaries are unicorns in their own right.

Brainbees Solutions also reported key changes to its board of directors right before filing its draft documents. On December 26, Amitava Saha, Simit Batra, Puneet Renjhen, Atul Gupta, Vikas Agnihotri and Amit Gupta resigned from their positions as non-executive directors. While Saha had been serving on the board for a while, Batra and Renjhen were appointed only months ago.

Besides this, the company reported having 3,242 full-time employees.

Following the filing of the DRHP, all eyes would now be on SEBI’s approval. FirstCry, which had deferred its IPO in 2022, citing poor market conditions, will now sit among the most-awaited public listings next year.

The post FirstCry DRHP: A Deep Dive Into The Shareholding Pattern & People At The Helm appeared first on Inc42 Media.

The ecommerce sector is ever evolving, and in 2024, expect a new wave of changing customer expectations at every touch point and creative strategies and technologies to meet these changes. 

Ecommerce businesses witnessed intensified competition in marketplaces. They had to navigate through crowded marketplaces and also struggle with an increase in ad costs on these platforms. 

The surge in customer acquisition costs added another layer of complexity, pushing businesses to reevaluate their strategies for sustainable growth. So, 2023 was more about retention and loyalty than customer acquisition. There was also a noticeable uptick in overall marketing costs for ecommerce businesses. 

Amidst all the competition, a significant shift occurred—more and more brands started adopting an omnichannel approach. This strategy has proven instrumental in boosting conversion rates, recovering abandoned carts, and garnering positive word-of-mouth from satisfied customers.

Expanding presence was not limited to digital platforms only; ecommerce brands also took bold strides in crossing borders. This allowed brands to go beyond geographical boundaries and tap into diverse consumer bases. This strategic move widened the reach of these brands and set the stage for a more interconnected and globalised ecommerce ecosystem. 

The narrative of 2023 wasn’t entirely defined by external challenges, internal transformations also left a great mark. More and more brands recognised the power inherent in data as they increasingly turned to analytics for informed decision-making. 

Descriptive and predictive analytics, which were once cutting-edge, became mainstream tools for making ecommerce decisions and creating new strategies. Businesses use the insights derived from data to optimise everything from inventory management to personalised marketing efforts. This helped ecommerce brands stay a step ahead of those not using data. 

It’s also impossible to overlook how artificial intelligence evolved drastically and started transforming ecommerce in 2023. ChatGPT and many other generative AI technologies got great acceptance in the ecommerce ecosystem. They took centre stage to improve the way customers interacted with ecommerce businesses. 

Many brands used ChatGPT to provide better customer support and a more personalised and efficient interface for addressing customer queries. Integrating generative AI into ecommerce operations brought a new era of efficiency, creativity, and customer engagement. 

Looking at how 2023 has shaped, one thing is clear — how the ecommerce ecosystem shapes up in 2024 will depend heavily on technology. Here are some trends expected to shape up and gain significant traction in 2024.

Trends That’ll Shape Ecommerce Ecosystem In 2024 

Spotlight Will Be On GenAI: AI and Machine Learning are set to play even more essential roles in ecommerce. Expect these technologies to be crucial for retailers, helping predict demand, optimise inventory, and enhance marketing campaigns through proactive use of data.

Beyond conventional applications, the spotlight will be on Generative AI, a technological trend that’s already making waves. Brands like Myntra already use this technology to allow shoppers to ask specific outfit questions and receive suggestions from across categories. 

In 2024, more brands will implement generative AI to change how customers discover products and make the shopping experience more intuitive and personalised. 

Social Media Platforms Will Act As Marketplaces: Social media platforms will become spaces for socialising while also acting as full-fledged marketplaces. Integrating shopping features into social platforms will redefine the online shopping experience, allowing users to make purchases seamlessly while scrolling through their feeds. People still buy via social media with ads, but 2024 might be the year when you won’t have to leave the app to buy. 

Live Stream Shopping To Gain Traction: Live stream shopping, where influencers and brands showcase products in real-time, will gain immense traction. The immediacy and interactivity of this format create a sense of urgency and connection, making it a powerful tool for boosting sales and engaging audiences in a way that traditional ecommerce struggles to match. 

Aldo, a Canadian retailer, teamed up with two celebrity stylists to deliver a social shopping spectacular. On the stream, the celebrities shared their favourite style tips. With this shoppable live stream, Aldo saw a 308% engagement rate and registered 17,000 pageviews on its website. 

Immersive Shopping Experience To Gain More Adoption: As technology advances, immersive shopping experiences will gain more adoption and prominence. More customers will be trying clothes on virtually or visualising furniture in the living space before making a purchase. 

While AR is not entirely new, its integration into the ecommerce space is set to reach new heights in 2024. This trend is about enhancing the customer’s understanding of the product, reducing uncertainties, and ultimately driving conversion rates. 

If executed effectively, AR can bridge the gap between the online and offline shopping experiences, creating a more engaging and informed customer journey. 

Challenges Ahead For Ecommerce Ecosystem In 2024

It’s not all rosy in 2024. Ecommerce brands will have to deal with the challenge of margin pressures. Rising costs in various aspects of operations, from advertising to supply chain logistics, will require a strategic rethinking of business models. 

Brands will have to be innovative—finding ways to enhance operational efficiency, exploring alternative revenue streams, and embracing technologies that optimise costs without compromising customer experience. 

Also, a deep understanding of customers is no longer a luxury reserved for enterprise-level businesses; it’s a basic requirement if you want to stay in ecommerce. 

In 2024, Customer Data Platforms (CDPs) will transition from being an option to a must-have for retailers and brands. 

These platforms aggregate customer data from various touchpoints, providing a unified and comprehensive view. The insights derived from CDPs empower businesses to deliver highly personalised experiences, anticipate customer needs, and build lasting relationships. 

As we step into the year, the future of ecommerce is defined by a convergence of cutting-edge technologies and evolving consumer preferences. From the seamless integration of AI to the immersive experiences of augmented reality, businesses that adapt to these transformative trends will thrive. And businesses that fail to keep up with these trends will most likely be left behind.

The post How Will The Ecommerce Ecosystem Shape Up In 2024? appeared first on Inc42 Media.

Ecommerce unicorn Meesho, which counts SoftBank, Peak XV, Fidelity Investments, Prosus & Naspers and Meta among its marquee investors, has reported an operating revenue of INR 5,735 Cr in FY23, a 77% increase over INR 3,232 Cr in the previous fiscal year.

In a blog on Friday (December 29), the startup announced that besides an increase in its sales, it has also managed to narrow its losses.

Fashnear Technologies, the parent entity of Meesho, reported a net loss of INR 1,675 Cr in FY23, a 48% drop from INR 3,248 Cr in the previous year. 

It is pertinent to note that Meesho is yet to file its financial statements for the financial year 2022-23 (FY23) with the Ministry of Corporate Affairs (MCA).

The startup attributed the increase in revenue to increased transaction frequency of its existing customers, widening category mix and redoubled focus on improving monetisation through various value-added seller services.

Besides, Meesho claims to have achieved profitability in the Q2 of FY24. The startup in its blog said that it has reported an operating revenue of INR 3,521 Cr in the first six months of FY24, which is 37% higher than the previous year. It further added that during the same period, its loss stood at INR 141 Cr. 

Meesho has attributed the increase in topline of FY24 to its app download numbers. The startup said it achieved 14.5 Cr app downloads in 2013, whereas it crossed the milestone of 500 Mn downloads in the first half of FY24.

The startup also launched Meesho Mall during FY23 to cater to users with the growing demand of branded products. The startup in the last six months said that Meesho Mall has processed around 2 Cr orders, with more than 75% coming from Tier II cities.

Besides increasing the revenue stream, the startup underlined that it has also reduced its burn by capping customer acquisition costs, server and infrastructure costs, among others.

“…While maintaining the high growth witnessed in FY 2022-23 and H1FY 2023-24, Meesho has been able to optimise the selling, general and administrative expenses (SG&A) significantly on the back of its high mindshare with consumers resulting in organic traction as well due to the significant operating leverage inherent to a marketplace business,” the blog read.

The development comes close on the heels when Prosus, one of the backers of  Meesho, said that the startup was the brightest star in its India portfolio  in the first half (H1) of the financial year 2023-24 (FY24). 

As per half-yearly financial data released by Prosus, Meesho clocked an internal return rate (IRR) of 32% for the investor.

Founded in 2015 by Vidit Aatrey and Sanjeev Barnwal, the startup has raised around a billion dollars in funding and is valued close to $5 Bn till date.

The startup which was the poster child of the social ecommerce startup later in 2022 pivoted to a marketplace place, thus throwing its hat in the ring in a space which is dominated by giants like Flipkart and Amazon.

The post Meesho’s FY23 Loss Halves To INR 1,675 Cr; Sales Zoom 77% To INR 5,735 Cr appeared first on Inc42 Media.

D2C unicorn Mamaearth on Thursday (December 28) informed the bourses that a senior executive of the company flouted insider trading norms. 

In a filing with the BSE, Honasa Consumer, Mamaearth’s parent, said that the startup’s vice-president of sales, Shuchi Garg, traded shares of the company without prior approval from the company secretary or compliance officer. 

The violations pertained to the Code of Conduct under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.

“…We would like to inform you that one of the Designated Person (Employee) of the Company has traded into the equity shares of the Company without obtaining preclearance of the Company Secretary and Compliance Officer of the Company,” Mamamearth said. 

In the meantime, the unicorn has issued a warning letter to the erring employee and has directed her to ‘refrain’ from such actions in the future. Mamaearth also said that the matter will be placed before the company’s audit committee meeting for a ‘detailed action plan’.

As per the regulatory filing, the violations by the executive spanned two separate transactions on two different days. On December 12, Garg sold 2,000 shares of Honasa Consumer at INR 420 apiece, which translated into a total value of INR 8.4 Lakh. 

On the second occasion, on December 27, she again executed the sale of 1,500 shares of the company at a share price of INR 457.16, resulting in a cumulative value of INR 6.85 Lakh. Both the deals (INR 15.2 Lakhs in total) were undertaken without express pre-clearance from the company secretary.

Mamaearth made its stock market debut last month. The company listed at a premium of 2% (INR 330) on the NSE while it made a flat debut on the BSE at INR 324. The stock has surged more than 42% on the BSE since its listing, largely on the back of its positive Q2 FY24 financial results and an improving investor sentiment for new-age tech stocks.

Last week, brokerage firm JM Financial initiated a ‘BUY’ call on Honasa Consumer citing a better outlook and strong financial performance so far. 

Mamaearth shares closed 0.22% lower at INR 460.35 on the BSE on Thursday (December 28).

The post Mamaearth Sr Exec Flouts Insider Trading Norms, Sells Shares Worth INR 15 Lakh In Two Tranches appeared first on Inc42 Media.

Omnichannel marketplace FirstCry, which on Thursday (December 28) filed its draft papers for an initial public offering (IPO), also runs 180 preschools across 91 Indian cities under its umbrella brand – Intelli Education, which was rebranded after the former acquired Oi Playschool from Hyderabad’s People Combine Group in 2019.

At the time of acquisition, Oi Playschool operated 55 centres in Bengaluru and Hyderabad, and FirstCry had then announced it would expand the playschool to more than 1,000 centres across the country.

However, understandably, the two long years of pandemic interrupted its expansion plans.

The SoftBank-backed company’s parent entity Brainbees Solutions Private Ltd has filed its draft red herring prospectus (DRHP) with the capital markets regulator Securities and Exchange Board of India (SEBI) for raising INR 1,816 Cr via fresh issues of shares. 

The IPO offer also comprises an offer-for-sale (OFS) complement which will allow the startup’s existing shareholders to sell up to 5.43 Cr equity shares.

As per the startup’s DRHP, FirstCry under Intelli Education runs preschools which offer learning aids and core education services for kids between the ages of one to six.

The preschool offers products and services ranging from preschools, books, toys and home learning kits to baby cognitive development activities.

By the end of the first quarter of FY24, Intelli Education had a total enrollment of 6,649 students.

Founded in 2010 by Supam Maheshwari and Amitava Saha, FirstCry sells baby care and mother products through online platforms, company-owned modern stores, franchisee-owned modern stores and general trade retail distribution.

“…With the aim of providing early childhood experience learning centres to parents, in November 2019, we acquired a chain of preschools that was in existence since 2010 and re-branded them with the Intellitots brand in 2020,” the DRHP added.

These preschools instill a brand awareness about FirstCry to these kids’ parents. FirstCry’s preschool competes against Euro Kids, Kidzee, among others.

In 2021, the company also launched FirstCry Intelliskills, an early learning brand that develops educator-certified books and toys which aid a child’s learning beyond school.

The post Nuggets From FirstCry DRHP: Ecommerce Unicorn Runs 180 Preschools appeared first on Inc42 Media.

SoftBank-backed online omnichannel retail startup FirstCry has filed its draft red herring prospectus (DRHP) with the capital markets regulator Securities and Exchange Board of India (SEBI) for raising INR 1,816 Cr via fresh issues of shares. 

The initial public offering (IPO) offer also comprises an offer-for-sale (OFS) complement which will allow the startup’s existing shareholders to sell up to 5.43 Cr equity shares.

Besides, the company is also eyeing a pre-IPO private placement of equity shares to investors for an amount aggregating not more than INR 363 Cr. The amount raised in the pre-IPO round will be reduced from the fresh issue.

Pre-IPO placements, conducted months before the startup goes public, help in establishing a valuation base for an IPO and instil confidence among investors. The proceeds from pre-IPO placement will eventually contribute to the net proceeds of the IPO.

The startup’s IPO net proceeds will be used for the following:

• Expenditure for setting up new modern stores and warehouses, as well as lease payments for our existing modern stores in India, totalling INR 648 Cr.
• Investment in the company’s subsidiary FirstCry trading for overseas expansion via setting up new modern stores in Saudi Arabia totalling INR 155.6 Cr.
• INR 170.5 Cr as an investment in subsidiary Globalbees Brands towards the acquisition of an additional stake in the company’s indirect subsidiaries.
• Investment for sales and marketing initiatives to the tune of INR 100 Cr.
• Technology and data science cost of INR 57.6 Cr.
• The rest would be for funding inorganic growth through acquisition, other strategic initiatives and general corporate purposes.

Earlier this month, coworking space startup Awfis which filed DRHP to raise INR 160 Cr announced it might raise INR 32 Cr as pre-IPO placement ahead of filing its RHP. In another instance, Bhavish Aggarwal-led Ola Electric, which is heading for a mega IPO to raise upto INR 5,500 Cr via fresh issues of shares, in its DRHP has stated that it might also consider raising upto INR 1,100 Cr via pre-IPO Placement. 

In the first three months of FY24, Brainbees Solutions Limited, the parent entity of FirstCry reported sales of INR 1,406.9 Cr on a consolidated basis. In the Q1 of FY24, the startup incurred a net loss of INR 110.4 Cr. During the same period, the startup spent INR 904.4 Cr for procurement of materials and INR 164.5 Cr for advertisement.

The Pune-headquartered startup has raised over $700 Mn in multiple rounds till date and counts the likes of SoftBank, Chrys Capital and Vertex Ventures as among its backers.

The post SoftBank-Backed FirstCry Plans To Mop Up INR 363 Cr In Pre-IPO Placement appeared first on Inc42 Media.

After much speculation, Brainbees Solutions Limited, the parent company of kids-focused ecommerce unicorn FirstCry, has filed its draft red herring prospectus (DRHP) with the markets regulator Securities and Exchange Board of India (SEBI). 

The startup’s initial public offering (IPO) will comprise a fresh issue of shares worth INR 1,816 Cr and an offer-for-sale (OFS) component of up to 5.43 Cr shares.

SoftBank will offload the highest number of shares in the Pune-based omnichannel marketplace’s IPO. As per the draft papers, the Japanese investor will be selling up to 2 Cr shares as part of the OFS component of the public issue. Besides SoftBank, several others, including Mahindra & Mahindra, Premji Invest, private equity investor TPG, Apricot Investments and NewQuest, are also offloading their stakes in the IPO.

The company is also eyeing a pre-IPO private placement of equity shares to investors for an amount aggregating up to INR 363 Cr. The amount raised in the pre-IPO round will be reduced from the fresh issue.

In its DRHP, the ecommerce unicorn also highlighted several areas where it would deploy the funding raised via the public issue.

Where Will FirstCry’s IPO Money Go?

FirstCry plans to set up new retail stores and warehouses and undertake international expansion. It will invest INR 648 Cr from the IPO proceeds for setting up modern stores and warehouses and making lease payments for existing stores.

Further, the startup will invest INR 155.6 Cr in its foreign subsidiary for overseas expansion. The startup said it would set up modern stores in Saudi Arabia. However, it did not specify the details, such as the number of stores it plans to open in the Middle Eastern country.

Additionally, FirstCry intends to invest INR 170.5 Cr in subsidiary Globalbees Brands for acquiring an additional stake in the company’s indirect subsidiaries. The startup will also invest INR 100 Cr for sales and marketing initiatives and another INR 57.6 Cr in technology and data science.

According to the DRHP, the rest of the IPO proceeds would fund inorganic growth and other corporate purposes.

In FY23, FirstCry’s net loss surged over 500% to INR 486 Cr from INR 78.6 Cr in the previous fiscal year. Notably, the startup had logged a net profit of INR 215.9 Cr in FY21. The startup clocked sales of INR 5,632.5 Cr in FY23, 135% higher than INR 2,401.2 Cr in FY22.

Additionally, in Q1 of FY24, FirstCry recorded a net loss of INR 110.4 Cr on consolidated sale of INR 1,406.9 Cr.

The post FirstCry DRHP: Here’s How The Ecommerce Unicorn Intends to Spend IPO Proceeds appeared first on Inc42 Media.

SoftBank-backed omnichannel retail startup FirstCry has finally filed its draft red herring prospectus (DRHP) with the market regulator SEBI for raising INR 1,816 Cr through fresh issues of shares.

The IPO offer also comprises an offer-for-sale complement which will allow the startup’s investors to sell up to 5.4 Cr equity shares.

If we talk about the startup’s financials, in the first three months of the ongoing financial year i.e., FY24, Brainbees Solutions Limited has reported a sales of INR 1,406.9 Cr on a consolidated basis. The ecommerce unicorn primarily earns from selling babycare products on its platform. Including other income, FirstCry’s total income in Q1 of FY24 stood at INR 1,426.8 Cr.

The first three months’ sales is almost 25% of the startup’s entire FY23 sales. In FY23, FirstCry’s consolidated operating revenue stood at INR 56,32.5 Cr, a 135% increase from INR 2,401.2 Cr it had reported in the previous fiscal year.

Including other income, total income stood at INR 5,731.2 Cr in FY23, a jump of 127.7% from INR 2,516.9 Cr in FY22.

In the Q1 of FY24, FirstCry incurred a net loss of INR 110.4 Cr. FirstCry posted a consolidated net loss of INR 486 Cr in the financial year 2022-23 (FY23), a 518% increase from INR 78.6 Cr in the previous fiscal year.

Where Did FirstCry Spend? 

The startup in Q1 of FY24 had reported a total expenses of INR 1,541.8 Cr. In the previous fiscal year, the startup’s total expenditure stood at INR 6,315.6 Cr, a 145% surge from INR 2,568 Cr in FY22.

Procurement Cost: Being a marketplace, FirstCry has spent INR 904.4 Cr for procuring products. This was almost 59% of the startup’s total expenditure in the first quarter. In FY23, the startup spent INR 3,953.3 Cr for procurement, a 150% increase from INR 1,572.1 Cr in FY22.

Employee Benefit Expenses: In the first quarter of FY24, the startup spent INR 159.2 Cr for employee benefit expenses. This also included INR 45.2 Cr worth of ESOP expenses. In FY23, FirstCry spent INR 769.8 Cr for employee benefit expense, a 127% increase from INR 338.8 Cr

Advertising Expenses: In Q1 FY24, FirstCry spent INR 164.5 Cr almost 10% of the startup’s revenue for the same period. In FY23, the startup spent INR 416.4 Cr, a 55% increase from INR 268.6 Cr in the previous fiscal year.

FirstCry’s IPO offer also includes an offer-for-sale element to it. The offer includes an OFS component comprising 5.4 Cr equity shares. Japan’s SoftBank, which owns over 25% stake, will sell the most with up to 2 Cr equity stakes, whereas Premji Invest will sell 8.6 Mn shares during the OFS. Besides, founder Supam Maheshwari will also sell his stake in the IPO. Interestingly, Maheshwari isn’t selling shares in the OFS.

The startup currently owns 321 modern stores and 615 franchise-owned stores across the country. 

FirstCry has become the third Indian startup to have filed its draft papers in December this year. Earlier this month, coliving workspace Awfis filed DRHP to raise INR 160 Cr via fresh issues and Bhavish Aggarwal’s Ola Electric which is eyeing to raise INR 5,500 Cr via public markets.

The post FirstCry Clocks INR 1,407 Cr Sales In Q1 FY24 appeared first on Inc42 Media.

SoftBank will offload the highest number of shares in Pune-based omnichannel marketplace FirstCry’s initial public offering (IPO). As per the draft red herring prospectus (DRHP), the Japanese investor behemoth will be selling up to 2 Cr shares as part of the offer for sales (OFS) component of the public issue. 

SoftBank’s SVF Frog (Cayman) Ltd holds over 12.4 Cr shares or a 25% stake in the company.

The unicorn’s IPO comprises fresh issues of shares aggregating up to INR 1,816 Cr and an OFS component of up to 5.4 Cr equity shares. 

Besides SoftBank, several others including Mahindra & Mahindra, Premji Invest, private equity investor TPG, Apricot Investments and NewQuest are also offloading their stakes in the IPO.

Mahindra & Mahindra, which holds over 4 Cr shares in FirstCry or almost an 11% stake, will offload over 28 Lakh shares in the OFS. On the other hand, Premji Invest, holding over 2 Cr shares in the startup, will offload 86 Lakh shares.

TPG Growth also holds almost 2 Cr shares in FirstCry and is looking to offload around 39 Lakh of them in the IPO. Meanwhile, TPG’s NewQuest Asia Investments III Limited will offload over 30 Lakh shares in FirstCry IPO.

As an individual shareholder in the startup, Ratan Tata is selling 77,900 shares as part of the IPO.

FirstCry cofounder and CEO Supam Maheshwari, who holds over 2.8 Cr shares in the company, will also sell 18.2 Lakh shares in the IPO. The other cofounder Amitava Saha is selling over 13 Lakh shares.

Founded in 2010 by Maheshwari and Saha, FirstCry is an omnichannel baby and kids marketplace. The unicorn is looking to use the funds raised from the IPO to set up new modern stores and warehouses, invest in its subsidiary Globalbees Brands, and other expenses for growth such as acquisition and more.

In FY23, FirstCry’s net loss surged over 500% to INR 486 Cr from INR 78.6 Cr in the previous fiscal year. Notably, the startup had logged a net profit of INR 215.9 Cr and sales revenue of INR 1,602.8 Cr in FY21. In FY23, the startup clocked a sales of INR 5,632.5 Cr, registering a 135% jump from INR 2,401.2 Cr in FY22.

The post FirstCry IPO: SoftBank To Offload Over 2 Cr Shares appeared first on Inc42 Media.

Pune-based omnichannel marketplace FirstCry’s parent entity BrainBees Solutions Limited has filed draft red herring prospectus (DRHP) with the market regulator SEBI. The Supam Maheshwari-led ecommerce unicorn is looking to raise INR 1,816 Cr through fresh issues of shares.

The offer also includes an offer-for-sale (OFS) component comprising 5.4 Cr equity shares. Japan’s SoftBank, which owns over 25% stake, will sell the most with up to 2 Cr equity stakes, whereas Premji Invest will sell 8.6 Mn shares during the OFS. Founder Supam Maheshwari will also sell his stake in the IPO.

The startup will utilise the net proceeds from the IPO for the following:

• Expenditure for setting up new modern stores and warehouses, as well as lease payments for our existing modern stores in India, totalling INR 648 Cr.
• Investment in the company’s subsidiary FirstCry Trading for overseas expansion via setting up new modern stores in Saudi Arabia totalling INR 155.6 Cr.
• INR 170.5 Cr as an investment in subsidiary Globalbees Brands towards the acquisition of an additional stake in the company’s indirect subsidiaries.
• Investment for sales and marketing initiatives to the tune of INR 100 Cr.
• Technology and data science cost of INR 57.6 Cr.
• The rest would be for funding inorganic growth through acquisition, other strategic initiatives, and general corporate purposes.

The company is also eyeing a pre-IPO private placement of equity shares to certain investors for an amount aggregating up to INR 363 Cr. The amount raised in the pre-IPO round will be reduced from the fresh issue.

For the three months ending June 30, 2023, the company lost INR 110 Cr.  The startup had 8.25 Mn annual unique transacting customers as of June 30, 2023.

In FY23, FirstCry’s net loss surged over 500% to INR 486 Cr from INR 78.6 Cr in the previous fiscal year. Notably, the startup had logged a net profit of INR 215.9 Cr in FY21. The startup clocked a sales of INR 5,632.5 Cr in FY23,  a 135% from INR 2,401.2 Cr in FY22.

FirstCry’s consolidated financials include the financial performance of its 38 subsidiaries, including Globalbees.

The post FirstCry Files DRHP; To Raise INR 1,816 Cr Via Fresh Issue appeared first on Inc42 Media.

Taiwanese electronics manufacturing services major Foxconn has injected $55.29 Mn (around INR 461 Cr) into its India’s Bengaluru unit Foxconn Precision Engineering Private Limited, as per a regulatory filing.

This investment was facilitated through Foxconn’s Singapore-based subsidiary, Foxconn Singapore Pte Limited. 

As per the filing accessed by PTI, Foxconn Singapore acquired approximately 46,08,76,736 shares at INR 10 each, totalling around $55.29 Mn (INR 460.87 Cr). Foxconn Precision Engineering was incorporated around six months ago.

To ramp up iPhone manufacturing across India, Apple supplier Foxconn is planning to invest in Karnataka. 

In December, Foxconn was planning to invest an additional INR 13,911 Cr ($1.67 Bn) in Karnataka, to further support the expansion of iPhone manufacturing in India.

In July, Foxconn proposed a supplementary plant with an investment of INR 8,800 Cr in Devanahalli, spanning a 300-acre land in Doddaballapur and Devanahalli taluks.

Foxconn is also expected to start manufacturing iPhones in the state by April 2024, a project expected to create around 50,000 jobs.

The Taiwan-based company, responsible for assembling approximately 70% of iPhones and holding the title of the world’s largest contract manufacturer, is strategically shifting its production away from China due to disruptions caused by COVID-19 and geopolitical tensions. Over the past year, Foxconn has significantly expanded its footprint in India, making substantial investments in manufacturing facilities in the southern part of the country.

In September, the company announced plans to double its India employment, investment and business size in one year. 

The focus on India is not without reason. Its Indian arm clocked an annual turnover of $10 Bn at the end of the second quarter of 2023, the company said in August.

The post iPhone Maker Foxconn Infuses INR 461 Cr In Bengaluru Unit appeared first on Inc42 Media.

Flipkart Internet Private Limited, the B2C arm of Walmart-owned Flipkart, saw its operating revenue near the INR 15,000 Cr mark in the year ended March 31, 2023. The marketplace arm’s operating revenue zoomed 42% to INR 14,845.8 Cr in the financial year 2022-23 (FY23) from INR 10,477.4 Cr in FY22.

Flipkart Internet primarily earns revenue through commission charges and other services it offers to merchants, including advertising of products. Including other income, the B2C arm’s total revenue rose 41% to INR 15,044 Cr during the year under review from INR 10,640.5 Cr in FY22.

The company also managed to reduce its cash burn, which helped it reduce its net loss by 9% to INR 4,026.5 Cr during the year under review from INR 4,419.5 Cr in FY22.

Where Did Flipkart’s B2C Arm Spend?

The online marketplace arm’s total expenditure stood at INR 19,043 Cr in FY23, an increase of 27% from INR 15,024.3 Cr in FY22.

Employee Benefit Expenses: The company spent INR 4,482.2 Cr on paying employee salaries, PF contributions, gratuity, among other employee welfare benefits. This number was 20% higher than INR 3,735.7 Cr in FY22. Employee benefit expenses also included ESOP expenses of INR 2,155 Cr in FY23, a jump of 29% from INR 1,668.6 Cr in FY22.

Transportation Cost:  The B2C arm spent INR 6,571.2 Cr on transportation expenses in FY23, an increase of 30% from INR 5,045.6 Cr in the previous fiscal year. Transportation cost comprises expenses incurred by the company to move products from one point to another.

Advertising Expenses: To further attract more users to its B2C marketplace, Flipkart spent INR 2,407 Cr on advertising, an increase of 24% from INR 1,945.9 Cr in FY22.

It must be noted that Flipkart’s B2B or wholesale arm, Flipkart India Private Ltd, reported a 9% rise in operating revenue to INR 55,823.9 Cr in FY23 from INR 50,992.5 Cr in FY22. Its net loss rose to INR 4,845.7 Cr, a 1.4X increase from INR 3,404.3 Cr in FY22.

The fresh development comes at a time when amidst the ongoing funding winter, Flipkart has bagged a whopping $600 Mn from its parent Walmart. The startup is likely to raise another $400 Mn in this funding to take on its rival Amazon India.

Flipkart to date has raised over $14 Bn in funding and counts backers such as Tencent, Softbank, Tiger Global, Microsoft, among many others. However, over 70% of the company’s stake is now owned by US retail giant Walmart. 

The post Flipkart’s B2C Arm’s Sales Near INR 15,000 Cr Mark, FY23 Loss Dips To INR 4,026 Cr appeared first on Inc42 Media.

Unlike most of its peers, Nykaa listed on the bourses as a profitable entity in 2021. However, rising competition, high inflation, and an increasing customer acquisition cost started taking a toll on the company’s fundamentals towards the end of 2022. Unfortunately, the same concerns continued until the fag end of 2023.

Speaking with Inc42 in June this year, an analyst flagged that Nykaa failed to improve its margins ever since its listing on the stock exchanges. This resulted in the stock not seeing much gains, despite the company being profitable. The analyst had added that the shares of Nykaa could rally if the company showed improvement in its margins.

While it took some time for the stock to regain investor confidence, it did manage to script a decent turnaround by the end of 2023. A rally in its share price starting mid-November resulted in the stock gaining 19% within a month — from INR 148.5 on November 12 to INR 176.85 on December 15.

While the stock lost some steam after that, it ended Tuesday’s (December 26) session at INR 170.85 on the BSE with a market capitalisation of nearly $6 Bn. The stock has gained over 10% year to date (YTD).

While increasing competition from deep-pocketed players like Reliance and Tata continues to weigh on Nykaa, the uptick in its beauty and personal care (BPC) and fashion verticals and improvement in margins have helped the company regain some of its lost sheen.

Now, let’s take a look at the key events, which shaped Nykaa’s journey in 2023.

Nykaa’s 2023: A Snapshot

Nykaa’s BPC and fashion verticals remained under investors’ scrutiny for most parts of 2023 due to their lower-than-expected growth. However, Nykaa managed to report improvement in the performance of these verticals in the second quarter (Q2) of the financial year 2023-24 (FY24).

While the BPC vertical witnessed moderate growth during the quarter, Nykaa Fashion posted better-than-expected results. 

The net sales value of Nykaa’s BPC vertical grew 19% year-on-year (YoY) in the September quarter while the same jumped 32% for the fashion business. GMV for the BPC and fashion verticals grew 23% and 27%, respectively.

This growth in the fashion segment, which was a matter of concern for analysts and investors due to a high cash burn, increased conviction that the vertical would become profitable earlier than expected.

During the earnings call post the release of Q2 results, Nykaa Fashion CEO Adwaita Nayar said that the vertical had reached its peak loss and its books would see improvement from thereon. 

Meanwhile, Nykaa’s consolidated net profit also surged 50% YoY and 44.4% quarter-on-quarter (QoQ) to INR 7.8 Cr in Q2.

While the Q2 numbers played a part in the stock’s rally, as per analysts, the stock was also due for a big upward movement given that other new-age tech stocks like Zomato and Paytm had surged in 2023.

“Most other internet stocks had moved up and Nykaa was positioning itself for that. If we look at the Q2 earnings, while the results were okay, the fashion vertical did quite well. Hence, a thesis was getting built that investors might finally start ascribing a value to the fashion vertical,” an analyst had then told Inc42.

Meanwhile, talks about rising competition for the company prevailed throughout the year. Not only this, Nykaa also saw many top-level exits and restructuring during the year.

 Here’s a sneak peek into each one of the aforementioned topics: 

On Competition Front

• The thesis for Nykaa took a turn when deep-pocketed Reliance entered the beauty retail space, with an omnichannel playbook and launched Tira earlier this year. 
• Investors’ fears escalated as Tata CLiQ announced the launch of its first omnichannel beauty retail outlet, Tata CLiQ Palette, in mid-2023.
• Nykaa’s fashion business was already facing competition from players like Flipkart-owned Myntra and Reliance’s AJIO by then. 
• Besides, beauty retailer giants such as Loreal India and Hindustan Unilever’s Lakme, which have ruled the offline space for years, also increased their focus on expanding their online presence. 

On Restructuring Front

• Five senior executives quit the company around March this year.
• Following this, Nykaa restructured its leadership team with new appointments, including that of former Amazon employee Rajesh Uppalapati as the chief technology officer.
• The company saw the exit of six other executives during the year, including its marketing head, resulting in founder and CEO Falguni Nayar taking over the reins of the marketing department.

Besides, heavy spending on advertising and marketing also caught investors’ attention during the year. However, Nykaa kept reiterating that it was laser focussed on long-term growth. 

Ironically, at a time when most stakeholders were worried about its high cash burns, Kotak Institutional Equities said that Nykaa would have to keep spending on advertising to retain its market share amid rising competition.

No Major Block Deals Witnessed In 2023

Unlike 2022, the ecommerce startup didn’t see any major offloading of stakes by big investors. Nykaa’s pre-IPO shareholder Kravis Investment Partners was the last to sell a chunk of shares via block deals worth INR 629 Cr in December 2022.

However, the company’s shareholding pattern underwent some major changes in 2023, which are as follows:

• Like most other new-age tech stocks, Nykaa has also been seeing a growing interest from mutual funds. At the end of the September quarter of 2023, 21 mutual funds held a 10.62% stake in the company as against a 2.04% stake held by 24 mutual funds a year ago. 
• Foreign institutional investors’ (FIIs) stakeholding in the company remained volatile. While they increased their stake in Nykaa to 9.84% at the end of the September quarter of 2023 from around 7% a year ago, it was a decline from the peak of 12.26% at the end of the March quarter of 2023.

How Does 2024 Look For Nykaa?

As of now, the Street seems to have a divided outlook on Nykaa. While most analysts see competition as the major risk for the ecommerce startup, others see the reversal in the Nykaa Fashion narrative to drive up the share price.

For instance, JM Financial notes that Nykaa Fashion appears to have turned the corner and is on track to generate incremental value for shareholders. The brokerage sees the vertical attaining profitability earlier than expected.

Surprisingly, the brokerage isn’t much concerned about the increasing competition. “We postulate that Nykaa retains its competitive edge as the preferred platform for brand launches, with marketing initiatives to provide brand visibility, along with its premium and sticky customer base,” it said.

Of the 22 brokerages covering the stock, 12 have a ‘buy’ or higher rating on the stock. While six have a ‘hold’ stance on Nykaa, the remaining four signal a ‘sell’. JP Morgan, HDFC Securities, and Macquarie are among the ones with a bearish stance on the company.

Meanwhile, the average price target set on the stock is INR 172.73 – a level that Nykaa is already trading at.

Moving on, Nykaa shares look positive on the technical charts. According to Rupak De, senior technical analyst at LKP Securities, Nykaa faces resistance at INR 187. However, a rally till INR 260-INR 300 level is possible in the next 6-7 months if the stock manages to cross this level, he added.

On the other hand, Kush Ghodasara, CMT and an independent market expert, said that Nykaa is trading at a premium when its fundamentals are taken into view. But, he expects the stock to rise up to INR 220.

For now, Nykaa’s Q3 FY24 results, which would also include the festive sales’ impact, are keeping the market hopeful. Still, it will be interesting to see if Nykaa can sustain growth in 2024.

[Edited by Vinaykumar Rai]

The post Losing Sheen? Decoding Nykaa’s Volatile 2023 & Calling Out The Risks Ahead appeared first on Inc42 Media.

IPO-bound omnichannel retailer FirstCry’s net loss surged over 500% in the financial year ended March 31, 2023. The Mumbai-based startup posted a consolidated net loss of INR 486 Cr in the financial year 2022-23 (FY23), a 518% increase from INR 78.6 Cr in the previous fiscal year. 

It is pertinent to note that the startup had logged a net profit of INR 215.9 Cr in FY21. 

FirstCry’s consolidated financials include the financial performance of its 38 subsidiaries, including Globalbees.

Founded in 2010 by Supam Maheshwari and Amitava Saha, FirstCry is an omnichannel baby and kids marketplace. The startup converted into a public company last year, taking the first step in its journey to list on the bourses. 

Meanwhile, the startup’s sales crossed the INR 5,000 Cr mark during the year under review. Operating revenue rose 135% to INR 5,632.5 Cr in FY23 from INR 2,401.2 Cr in the previous fiscal year. It primarily earns revenue from the sale of baby care products.

Including other income, total income stood at INR 5,731.2 Cr in FY23, a jump of 127.7% from INR 2,516.9 Cr in FY22.

Where Did FirstCry Spend?

FirstCry reported a total expenditure of INR 6,315.6 Cr in FY23, an increase of 146% from INR 2,568 Cr in FY22.

Procurement Cost: Being an ecommerce marketplace, FirsCry’s biggest expense was its procurement cost. In FY23, the startup spent INR 3,953.3 Cr for restocking its shelf, a 150% increase from INR 1,572.1 Cr in FY22.

Employee Benefit Expenses: FirstCry spent INR 769.8 Cr to pay staff salaries, gratuity, PF and other employee welfare benefits, a 127% increase from INR 338.8 Cr in the previous year. The sharp increase suggests that the startup increased its headcount amid the layoff season. Interestingly, it spent INR 361.4 Cr on ESOPs, an increase of 292% from INR 92.1 Cr in FY22.

Transportation Cost: FirstCry saw a sharp increase in its transportation cost for the year under review. In FY23, the startup spent INR 429.2 Cr on transportation cost, a 604% increase from INR 61 Cr in the previous fiscal year.

Advertising Expenses: Advertising costs shot up 55% to INR 416.4 Cr in FY23 from INR 268.6 Cr in FY22.

FirstCry’s EBITDA margin deteriorated to -2.9% from 4.05% in FY22.

Maheshwari-led startup, which has raised over $700 Mn in multiple rounds till date and counts the likes of SoftBank, Chrys Capital, and Vertex Ventures among its backers, is likely to file its draft red herring prospectus (DRHP) by the end of the month.

As per media reports, FirstCry is looking to raise $500 Mn-$600 Mn from its IPO at a valuation of $4 Bn.

A few months back, three family investment offices – Manipal Group’s Ranjan Pai’s MEMG Family Office, Marico’s Harsh Mariwala’s investment office Sharrp Ventures, and the DSP family office of Hemendra Kothari – picked up stakes in the startup for about INR 435 Cr in a secondary round from SoftBank. 

The post IPO-Bound FirstCry’s FY23 Loss Zooms Over 500% To INR 486 Cr appeared first on Inc42 Media.

Covid-19 has come and gone and continues to raise its ugly head now and then. But many of the disruptive business models it has effected have not run out of steam, yet. One seismic shift in the retail space is the ubiquity of ecommerce, ensuring safety and convenience in the wake of the pandemic.

Soon enough, India experimented with the ‘rapid’ version of traditional ecommerce and got used to the 10-to-30-minute quick commerce/hyperlocal deliveries. Companies in the q-commerce space typically keep 1,500-2,500 SKUs in strategically located dark stores to ensure swift deployment within a radius of 2 km.

It was not a fad. Between 2021 and 2023, the quick commerce sector in India rode its sudden popularity surge and raised $4.2 Bn, according to Inc42 data. Be it grocery, food or on-demand hyperlocal delivery of non-food items (electronics, jewellery, personal care products and more, plus package pickups), the format seemed so lucrative that food delivery giants Zomato and Swiggy, hyperlocal delivery specialist Dunzo and grocery delivery startup Zepto topped up their capabilities to compete.

Even Rebel Foods, the parent company of famous cloud kitchen brands Faasos and Behrouz Biryani and the master franchisee of American fast-food chain Wendy’s, decided to take the plunge.

But here is an element of surprise. All the ventures we mentioned assumed that quick commerce in grocery delivery would be the way to go. Imagine the emergence of a convenience economy where consumers can never run out of daily essentials. The wait times are negligible, delivery charges are affordable, and an entire battalion of low-paid riders is ready to vroom through the city traffic to deliver in a few minutes. It became a norm in many countries during the pandemic, and Indian businesses foraying into grocery quick commerce anticipated a similar tailwind for years.    

While Zomato started its full-fledged quick commerce operations via Blinkit (formerly Grofers, which was founded in 2013 and acquired by the foodtech behemoth in 2022 for $569 Mn in an all-stock deal), Swiggy set up Instamart in August 2020 to offer instant grocery delivery. A year later, industry veteran Dunzo launched Dunzo Daily to run its quick commerce business. Finally, there came Zepto, a poster boy creating waves. It was incorporated in September 2020, started operations in April next year and became the first and only unicorn of 2023 after raising $200 Mn in August at a valuation of $1.4 Bn. 

The 10-Minute Delivery Game: Did Indian Players Master It?    

The Covid-induced gold rush subsided when shops reopened and the allure of 10-minute home deliveries started to wear off. The lack of solid business fundamentals was another key reason why many ultra-fast grocery delivery firms failed to corner success in the post-Covid era. 

Essentially, quick commerce companies need to create long-term value for consumers beyond the novelty of speed delivery. For instance, those catering to specific areas or customer groups can accurately estimate the local demand through data analytics, up the personalisation bar and supply products not readily available in local kirana stores. 

Also, the economies of scale work differently for quick commerce players. Unlike regular ecommerce, high order density and good AOV (average order value) may not produce the best results here for two reasons. First, the order flow is continuous and delivery needs to happen immediately. Therefore, each dark store’s productivity and profitability are crucial for business success. Additionally, order margins typically depend on product categories rather than average order value. Hence, a rigorous focus on top-selling categories and unit economics of every dark store is required for sustainable growth.

Given these complex parameters, it is not surprising that profit-making is still a distant dream for many of these quick commerce businesses. A quick look at Dunzo’s numbers also reveals these difficulties. 

Set up in 2014, the on-demand delivery startup has been backed by Reliance Retail (RRL) and a clutch of marquee investors such as Alteria Capital, Google and Lightrock India, among others, amassing $500 Mn in funding. Its backstory also showed resilience and potential. Dunzo was one of the lone flag-bearers in the graveyard of hyperlocal startups that mushroomed during 2015 and 2016 but promptly scaled back and shut shop after facing huge losses.

However, the platform has failed to make good on the quick commerce wave in the wake of the pandemic and seems to stand on the brink with scant survival prospects. 

Even after raising $240 Mn from RRL in January 2022 and undergoing two changes in its business model – an expansion into quick commerce using dark stores in 2020 and subsequently providing logistics services to retail stores on a revenue-sharing basis – Dunzo spent INR 9 to earn INR 1 in FY23. This resulted in a colossal loss of INR 1,801 Cr, nearly 4x the loss of INR 464 Cr recorded in the previous financial year.

Other major players also cut a sorry figure, while a few shut down their quick commerce initiatives shortly after the launch. Among these were JioMart Express from Reliance, Ola Dash (from the house of Ola), Swiggy’s premium grocery delivery pilot Handpicked and ZopNow. Then there was Flipkart Quick, which gradually scaled down its operations and consolidated the business with its next-day grocery delivery platform, Flipkart Supermart. Amazon, too, went for consolidation play and clubbed Amazon Fresh and Amazon Pantry, as pure-play q-commerce did not pay dividends.

Nevertheless, listed food delivery unicorn Zomato’s recent success in grocery delivery and quick commerce segments has kept hope alive. After initial struggles, Zomato’s quick commerce arm Blinkit turned contribution positive for the first time during the quarter ended September 30, 2023 (Q2FY24). Blinkit’s contribution margin as a percentage of gross order value (GOV) in the overall business improved from -7.3% in Q2FY23 to +1.3% during the quarter ended September 30, 2023 (Q2FY24). 

Interestingly, Tata group-backed grocery delivery platform BigBasket is the latest to join the bandwagon with BBNow. It comes alongside the existing BBExpress that offers deliveries in an hour, within a six km radius, offering more than 8K products.

This shows market expectations are now firmly established despite a few below-par performances. For instance, a RedSeer report projects India’s quick commerce growth to surge 10-15x by 2025 to reach $5.5 Bn. Although it indicates huge headroom for growth, consumer loyalty will ultimately determine the final winner in the 2023 quick commerce race. 

Of course, people loved the convenience and comfort of quick commerce in the hours of need. But will they be equally willing to pay for these speedy deliveries? More importantly, will they ditch local kirana stores and supermarkets for good to nurture the 10-minute wonder, often promoted as the future of ecommerce and retail delivery?  

How Blinkit Led The Quick Commerce Race In 2023

Before entering the whistle-stop quick commerce track, Blinkit (then Grofers) weathered two damaging storms in the grocery delivery space. The first occurred during 2015 and 2016 when numerous startups, including Shadowfax, Peppertap (B2C business), Local Banya, TownRush, Paytm Zip, Ola Store and Flipkart’s Nearby, entered the space but met with failure. (As we have already mentioned, Dunzo was a survivor, too, at the time.)  

Next came the Covid-19 crisis, but Grofers managed to enter the coveted unicorn club with a $120 Mn infusion from Zomato in June 2021. It was rebranded as Blinkit in December of that year, marking a strategic shift towards quick commerce.

In its third innings post the Zomato takeover, Blinkit has looked past the typical challenges of quick commerce and secured a leading position in several crucial areas, thus improving its brand image. Here is a deep dive into what the platform has done right in CY23.

Blinkit Emerged As The Top Customer Service Provider

According to a consumer sentiment analysis by Inc42 and Clootrack, customer service is among the topmost criteria for choosing any grocery delivery service. Surprisingly, none of the top quick commerce players could score well on that account.

On a scale of 1 to 10, where 1 is the lowest and 10 means the best customer experience, Blinkit topped the ranking with 2.4 and Swiggy Instamart was bottom with 0.5. Other major deciding factors include app functionality, simple return and refund policies, delivery partners’ behaviour and ease of order cancellation. 

Blinkit Records Maximum App Downloads

The quick commerce platform saw maximum app downloads between January 1 and November 22, 2023. An analysis by Inc42-AppTweak puts Blinkit downloads at 14 Mn+, followed by Zepto (11 Mn+) and Dunzo (3.4 Mn+). Swiggy Instamart data has not been considered here as there is no separate app for Swiggy’s grocery delivery service.

Blinkit saw a maximum spike in app downloads in October, probably due to the festive frenzy. Compared to the previous month (September), it recorded a 62% increase, while Zepto downloads flatlined and Dunzo plunged.

There’s A New Face In Town, But Can It Compete With Blinkit?

Rebranded from Kirana Kart in late 2021, Zepto is a Mumbai-based quick commerce unicorn that rose to prominence within three years of its inception. To date, the startup has raised $592 Mn from Goodwater Capital, Nexus Venture Partners, Glade Brook Capital and Y Combinator, among others. Its founders, Kaivalya Vohra and Aadit Palicha (Stanford dropouts), also led Hurun India’s top 100 under-30 list of 2023, sorted by age. 

A better business environment will go a long way. Interestingly, Zepto’s delivery partners have turned out to be its key strength, according to the Inc42-Clootrack consumer sentiment analysis. The quick commerce startup got the highest rating of 5.7 on a scale of 1 to 10 when it comes to interactions with delivery partners (10 denotes the best customer experience and 1 represents the worst). Next came Dunzo (1.9) and Blinkit (1.2), while Swiggy Instamart bottomed the list with 0.7.  

Although Zepto could not bring in a high score closer to 10, the overall positive sentiment it generated should be lauded compared to other storied players. Gig workers at Swiggy Instamart and Blinkit faced financial challenges in 2023, leading to strikes that lasted for several days. Sometimes, things came to such a head that delivery partners left en masse to join other players. Dunzo, too, delayed salaries and eventually laid off more than 20% of its workforce.   

Zepto, on the other hand, has a proactive approach and focusses on empowering its workforce. For example, the startup has partnered with Yulu and other EV majors to set up an all-electric fleet, enabling cost-effective mobility solutions for its delivery partners. Going forward, such an approach will result in a win-win scenario as 6.7% of the non-agricultural Indian workforce is estimated to join the gig economy by 2030. Their overall welfare will help build a thriving economy.    

Balancing growth and profit will be challenging. Zepto may have the right approach, but to emerge as the industry leader, it must bring home the bacon and grow sustainably, the survival mantra of the ongoing funding winter. Of course, a startup rarely breaches INR 2K Cr revenue in the first two years like this unicorn did. Its revenue from operations ballooned 14.3x to INR 2,024.3 Cr in FY23 from a meagre INR 140.7 Cr in FY22. But it also suffered a net loss of INR 1,272.4 Cr in FY23, a massive 226% jump from the previous financial year. However, its PAT margin improved to -63% from -277%, which means the narrative is not as bleak as it seems.

Unfortunately, this has more to do with the newbie’s low operating leverage. In simple terms, operating leverage is the degree to which a company can increase its operating income through revenue growth while keeping its gross margins high and variable costs low. In the case of quick commerce, the gross margin is typically low, and a newcomer like Zepto will have to burn cash for years for business expansion to push its revenue.

 According to some experts, the startup may have to raise funds every 12-15 months to retain its growth drive and keep its revenue flowing. Locking horns with competitors like Binkit and Instamart won’t be easy either, as their deep-pocketed parent companies enjoy a revenue mix advantage and will adequately fund these quick commerce platforms.

What Lies Ahead Of India’s Quick Commerce Startups In 2024 & Beyond

Now that the frenzy for safe and ultra-fast grocery delivery has declined to a large extent, will the quick commerce bubble burst and vanish in 2024? Not necessarily. Convenience is a habit, and the demand for instant home delivery will continue to drive the quick commerce market, say retail experts. In addition, India’s demographic shift and the subsequent rise in income may help remove the cost constraints hindering the sector’s growth. 

For context, 65% of India’s population will be within the crucial consuming cohort of 15-59 years until 2030. The surge in income is expected to lift 110 Mn households to middle-class consumption of goods these quick commerce platforms are rushing to deliver. Given this scenario, players in this space may find it easy to levy packaging and delivery charges and cut down on discounts and freebies to balance costs with earnings.

There are other ways of making quick commerce more viable and attractive. Platforms are now looking at extensive ad monetisation, promoting thousands of brands to their captive audiences for the best possible outcomes. Blinkit’s CEO, Albinder Dhindsa, is also pushing business growth through service diversification. The platform is now venturing into Urban Company-like at-home handyman services, starting with electricians, plumbers and specialists in AC repair. 

Nevertheless, the exponential rise in online shopping and digital payments has triggered quick commerce growth, so much so that research firms predict robust growth. A 2023 Deloitte report on the future of retail estimates a $40 Bn market by 2030, from $2 Bn in 2022. Another report by MarkNtel expects Indian quick commerce to grow at a CAGR of around 67% during 2023-28.

The model has its merits if it is valued as a premium service but stays within the realms of possibility. Sticking to a 10-minute deadline (or a maximum of 30 minutes) gets difficult in crowded metros, the critical markets for quick commerce. Moreover, given the low gross margins and high delivery costs of q-commerce, unit economics would remain elusive for many players.

Success will depend on processing more orders, pushing the right assortment of products (SKUs with good margins to increase AOV), ensuring efficient deliveries and offering unique value propositions that will encourage customers to top up their carts even after purchasing the required products. Industry players will do well to heed the lessons from Dunzo’s decline or Instamart’s perpetual issues with scaling as it continues to operate in the shadow of its parent app, Swiggy. 

Finally, quick commerce players in the grocery delivery space will soon have a formidable contender in ONDC (Open Network for Digital Commerce), as kirana stores and retailers of all sizes can join the network to provide direct delivery services to their respective customers.

Can quick commerce/q-commerce race past so many hurdles – from getting access to a steady funding flow to optimising execution to building a best-in-class delivery partner network as customer experience (and loyalty) will hinge on it? To say nothing about the criticality of exploring multiple revenue channels to survive and grow? Or will 2024 witness a spate of consolidations as it happened earlier with food delivery? Companies remain bullish about success, but the ground realities may craft a different narrative soon.      

[Edited by Sanghamitra Mandal]

The post India’s Quick Commerce Race: Blinkit On Top After 2023; Can Rivals Catch Up? appeared first on Inc42 Media.

Japanese tech investor SoftBank has reportedly offloaded a part of its stake in IPO-bound FirstCry for INR 630 Cr (about $75 Mn).  

Sources told news agency PTI that the shares were lapped up by a few high-net-worth individuals (HNIs), pegging the ecommerce unicorn at a $3.5 Bn to $3.75 Bn valuation. 

“SoftBank recently sold shares worth INR 630 Cr in FirstCry. It was picked up by a few high-net-worth individuals. With this sale, SoftBank has realised $310 Mn from two rounds of stake sale in FirstCry,” the news agency reported, citing a source. 

As per the report, another person familiar with the development said that the tech investor still owns shares valued at $800 Mn-900 Mn in FirstCry, which SoftBank will sell at a later date.  

It is pertinent to note that SoftBank is said to have earlier invested around $400 Mn in FirstCry at an enterprise valuation of $900 Mn. SoftBank has been looking to pare its stake in the company to effectively bring it down below the 26% mark so that the investor is not classified as a promoter of FirstCry.

Earlier this year, Ranjan Pai’s Manipal Education and Medical Group family office, Harsh Mariwala’s investment office Sharrp Ventures, and the DSP family office of Hemendra Kothari picked up stakes in the ecommerce major for about INR 435 Cr from SoftBank.

The stake sales come as the startup plans to reportedly file its draft red herring prospectus (DRHP) before December 29. With an eye on raising $500 Mn-$600 Mn through the IPO, the company is targeting a valuation of $4 Bn during the IPO. 

Founded in 2010 by Supam Maheshwari and Amitava Saha, FirstCry is an omnichannel kids and baby marketplace. 

The company clocked a net loss of INR 78.7 Cr in the financial year 2021-22 (FY22) against a profit of INR 216 Cr in FY21. 

The company’s IPO plans have been in the works for some time now. It converted into a public company last year. Since then, however, the plans have not materialised as volatile market conditions and a slump in the share prices of listed new-age tech companies played spoilsport for the company’s plans to list on the bourses. 

If the plan materialises, FirstCry will become the second new-age Indian vertical ecommerce major to go public after Nykaa. As per Inc42 data, as many as 10 Indian startups are slated to go public in 2024.

The post HNIs Line Up As SoftBank Offloads Stake Worth $75 Mn In IPO-Bound FirstCry appeared first on Inc42 Media.

Delhi NCR-based audio and wearable startup Noise is now valued at about $426 Mn (or INR 3,541 Cr) post its Series A fundraise from audio giant Bose. This is the first time Noise’s valuation has been revealed as the startup was bootstrapped before this funding round. 

As per the startup’s regulatory filings accessed by Inc42, Noise has raised close to $10 Mn (INR 82.9 Cr) by allotting 2,400 Series A preference shares to Bose.

As per Inc42 estimates, the startup raised the fresh funding round at a valuation of about $426 Mn. We have reached out to cofounder Gaurav Khatri for clarification on the valuation. The story will be updated on receiving a response.

Post the conversion of the Series A preference shares, Bose will hold 2.17% stake in the company.

This is possibly the first investment by Bose in any Indian company. While announcing Bose’s investment, Noise cofounder Amit Khatri said, “It’s about the right partnership at the right time, and we firmly believe that our strategic alliance with Bose will be a pivotal juncture in our journey towards revolutionizing the future of smart wearables realm.” 

Noise said that the strategic collaboration will increase innovation in the audio space and strengthen its research and design.

In September this year, Noise also entered a joint venture with Il Jin Electronics, a subsidiary of Amber Enterprises India, to boost manufacturing of its smart wearables in India.

Founded by Amit and Gaurav in 2014, Noise initially started by selling smartphone cases and accessories. However, it pivoted to selling smart wearables and wireless headphones. The startup competes with Aman Gupta’s boAt and several others.

It currently sells its audio and wearable products on its website and other online marketplaces such as Amazon and Flipkart.

In FY23, Noise reported over 97% year-on-year (YoY) decline in its net profit to INR 88 Lakh. However, sales revenue jumped 1.8X YoY to INR 1,426.5 Cr.

The post Noise’s Valuation Touches $400 Mn Post $10 Mn Funding From Audio Giant Bose appeared first on Inc42 Media.

For years, India’s ecommerce landscape was dominated by a few major players, with most of the action concentrated in the country’s metros. However, in recent years, a new wave of ecommerce startups has emerged from Middle India, challenging the status quo and reshaping the online retail landscape. 

These startups are catering to the growing demand for ecommerce in Middle India, where internet penetration is increasing rapidly, and consumers are becoming increasingly comfortable with online shopping. 

They are also benefiting from several factors, including the rise of smartphones, the increasing availability of affordable data plans, and the growing popularity of cash-on-delivery (COD) payments.

As a result of these factors, Middle India is now one of the fastest-growing ecommerce markets in the world. In fact, according to a recent report by Morgan Stanley, ecommerce in Middle India is expected to grow at a CAGR of 50% over the next five years, reaching $150 Bn by 2025.

Successful Investments In Middle India’s Ecommerce

Several successful investments have been made in Middle India’s ecommerce space in recent years. These investments have helped to fuel the growth of the market and have also provided valuable insights into the needs and wants of Middle Indian consumers.

One example of a successful investment is that of BuyEazzy, an ecommerce platform that focuses on beauty and personal care products. BuyEazzy has been growing by 100% over the last six months and is currently completing over 10,000 orders per day. 

The startup is operational in ten cities in Karnataka and Tamil Nadu: Mysuru, Hubli-Dharwad, Belagavi, Coorg, Hassan, Davangere, Tumkur, Erode, Salem and Coimbatore. It claims to have boarded over 2,50,000 first-time online shoppers while working with more than 5,000 neighbourhood stores. About 50% of BuyEazzy’s orders come from remote towns and villages tagged to these cities.

How Middle India Startups Are Reshaping Online Retail

Middle Indian ecommerce startups are reshaping online retail in several ways. They are:

Catering to the needs of Middle Indian consumers: Middle Indian consumers have different needs and wants than consumers in metros. For example, Middle Indian consumers are more price-sensitive and more likely to prefer COD payments. Middle Indian startups are catering to these needs by offering a wide range of products at competitive prices, as well as COD payment options. They understand the importance of affordability and trust in these markets.

Using technology to reach rural consumers: Middle Indian ecommerce startups are using technology to reach rural consumers, who are often underserved by traditional retail channels. For example, some startups are using mobile apps to reach rural consumers, while others are using WhatsApp to communicate with customers and process orders. This tech-savvy approach allows them to connect with even remote customers and provide a convenient shopping experience.

Building strong logistics networks: Middle Indian ecommerce startups are building strong logistics networks to ensure that they can deliver products to customers in rural areas. This is a major challenge, as rural India needs a better infrastructure network. However, some startups are solving this problem by using innovative solutions, such as using bicycles and drones to deliver products. They are thinking outside the box to overcome logistical challenges.

Challenges And Opportunities

Despite the strong growth of ecommerce in Middle India, there are still several challenges that need to be addressed:

• Low Internet penetration: Internet penetration in Middle India is still relatively low, which limits the number of people who can access e-commerce platforms. While this challenge persists, the expanding internet infrastructure promises growth opportunities in the future.
• Lack of infrastructure: The infrastructure in Middle India is poor, which makes it difficult to deliver products to customers in rural areas. This poses a significant logistical challenge for ecommerce companies operating in this region.
• Lack of awareness: Many consumers in Middle India are unaware of ecommerce or hesitant to shop online due to lack of trust and awareness. Educating and building trust among consumers remains a challenge.

However, despite these challenges, there are also several opportunities for ecommerce in Middle India:

Growing Internet penetration: Internet penetration in Middle India is expected to grow rapidly in the coming years, which will increase the number of people who can access ecommerce platforms. As more consumers gain access to the internet, the potential customer base expands.

Increasing disposable incomes: Disposable incomes in Middle India are increasing, which is leading to more demand for ecommerce. With more spending power, consumers in Middle India are increasingly looking to shop online for convenience and choice.

Rising urbanisation: Urbanisation is increasing in Middle India, which is creating more opportunities for ecommerce startups. As more people move to urban areas, the demand for online shopping is likely to rise.

In Conclusion

Middle India’s ecommerce market is booming, and it is poised for continued growth in the coming years. Middle Indian ecommerce startups are reshaping online retail by catering to the needs of Middle Indian consumers, using technology to reach rural consumers, and building strong logistics networks. 

Despite the challenges that remain, there are several opportunities for ecommerce in Middle India, and the market is expected to continue to grow rapidly. The success stories of startups like BuyEazzy, along with the investments pouring into Middle India’s ecommerce sector, paint a promising future for this emerging powerhouse in the world of online retail.

The post Middle India’s Ecommerce Revolution: A New Wave Of Startups Redefining Online Retail appeared first on Inc42 Media.

The Indian ecommerce industry stands as a transformative force, which is capable of reshaping the country’s retail sphere so that it is abreast of how digital consumers shop today. 

According to Inc42’s latest “State Of The Indian Ecommerce Report Q4 2023”, launched in partnership with Simpl, the market opportunity for ecommerce is going to be $400 Bn+ by 2030. Additionally, it is anticipated that the number of online shoppers will reach an estimated 500 Mn during this period.

Over the years, the growth in this sector has been fuelled by factors such as increased internet penetration, a rising digital-savvy population and increased online spending. However, investor confidence, too, has dwindled due to startups struggling to demonstrate profitability and high cash burns. 

According to Inc42, of the 19 Indian ecommerce unicorns, whose all financial metrics are available publicly, only six were profitable in the financial year 2021-22 (FY22). 

While the FY23 financials for the majority of companies are not yet available, names like Beardo, Bluestone, boAt, CaratLane, idfresh, Paperboat, and Purplle are in the red.

This has further dented investor confidence and reduced funding in the ecosystem, according to Inc42’s Q4 2023 report. Between July and September, the ecommerce funding stood at $224 Mn, down 47% in the same period a year ago, while the deal count dropped 26% year-over-year (YoY) to 52.

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With Q4 (October to December) 2023 data yet to be compiled, let’s steal a glance at what fresh challenges 2023 brought during the July to September quarter in the ecommerce realm.    

With that said, here are a few key funding trends that we have noted in our latest ecommerce report — State of Indian Ecommerce In Q4 2023.

Key Funding Trends In the June To September Quarter

Zero Mega Deals Observed

In Q3 2023, zero mega deals were observed in the ecommerce sector in India, indicating that investors are being cautious with their money. Surprisingly, only two startups were able to secure mega deals for the period between January and September  2023 — Fresh To Home, which raised $104 Mn in February 2023, and Lenskart, which secured $500 Mn in March 2023 and an additional $100 Mn in June 2023.

D2C Remained The Most Sought After Sector

Despite the prevailing downturn, the direct-to-consumer (D2C) sector stands out as a beacon of promise within the ecommerce sphere. Continuously proving its mettle, the D2C segment has solidified its position as the most promising domain within the ecommerce landscape, a trend that carried through into Q3 2023. 

Remarkably, the D2C segment secured substantial funding of $192 Mn, comprising a striking 84.9% of the total ecommerce funding for this quarter. Moreover, the segment claimed 33 deal counts, representing 63.5% of all deals within the ecommerce sector.

Additionally, D2C funding increased by 13.6% YoY during the quarter. Noteworthy D2C players that secured substantial funding in Q3 2023 included Furlenco ($36.6 Mn), Third Wave Coffee ($35 Mn), GIVA ($33 Mn), and Pepperfry ($23 Mn).

Seed Stage Continued To Gain Traction

Despite an overall downturn in funding and deal counts across various funding stages in Q3 2023, a noteworthy exception emerged. Seed stage funding during the quarter rose 11% YoY to more than $29 Mn. 

However, a contrasting trend was observed in the growth stage, as the funding nosedived 78% YoY to over $78 Mn. Similarly, late-stage funding stood at $95 Mn, sustaining a 37% YoY decline.

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Positive Consumer Sentiment Gave A Boost To Online Festive Sales

Struggling to make a comeback in the year of the extended funding winter, the ecommerce segment witnessed a positive spike in sentiment. 

According to Inc42’s consumer sentiment analysis, conducted in association with Clootrack, customers embraced the digital shopping experience with heightened enthusiasm. 

As a result, the Gross Merchandise Value (GMV) for online festival sales in 2023 (for the period between October 1 and November 15) stood at an impressive $11 Bn, up 16% during the same period a year ago.

This surge underscores the escalating trend of consumers favouring online platforms for their festival shopping escapades, indicating a burgeoning reliance on digital avenues for shopping convenience and diverse offerings.

Delving into the specifics of these festival sales reveals intriguing insights into consumer preferences. Here are some of the key findings from the survey:

• Electronics Commanded The Most Share: Commanding a total GMV of $4.7 Bn, electronic items such as mobile phones, tablets and laptops accounted for a staggering 42% of the total GMV, signifying the robust demand for electronic gadgets and appliances during festival seasons. Following closely, the fashion category stood out prominently, boasting a GMV of $2.8 Bn, contributing significantly with 25% of the total GMV. This notable preference for fashion-related products during festival sales highlights the enduring allure of clothing and accessories as quintessential festival purchases for consumers.
• Price & Value Superseded Discounts: Between October 1 and November 29, consumers were seen focussing more on price and value than discounts. This contrast illuminates a newfound appreciation for product quality, signalling that consumers prioritise intrinsic value over mere discounted prices. Moreover, the emerging trend underscores that customer satisfaction stands as the second most pivotal factor guiding consumer behaviour during online festival sales. This shift accentuates a changing consumer psyche — one that places heightened importance on the overall shopping experience, valuing satisfaction derived from quality purchases over fleeting price reductions.
• Delivery Experience Continued To Be A Concern: Amidst the bustling fervour of online festival sales, consumers navigate through significant hurdles, particularly concerning the timely delivery of purchases and the efficacy of customer service interactions. The delivery process, plagued by delays, communication lapses, or logistical complexities, remained a substantial concern, impacting overall satisfaction. Additionally, inadequate customer service responsiveness, unresolved queries, and post-sales support deficiencies pose critical challenges, shaping consumer perceptions profoundly.

What To Expect In 2024?

There’s no denying the fact that the troubles for Indian ecommerce startups are far from over. However, with D2C leading the command in terms of funding and companies like Nykaa and Mamaearth making it to the public markets, the sector is expected to regain its investors’ confidence.

Further, the buoyant festival sales vividly underscore the ecommerce sector’s enduring influence, evidenced by the consistent year-on-year increase in GMV. 

Yet, amid this privilege and growth, challenges persist. From refining delivery experiences to elevating customer service and navigating funding fluctuations, these hurdles need to be addressed for sustained progress. 

To ensure a robust and consumer-centric ecommerce landscape, companies must prioritise innovative solutions. By addressing these challenges head-on, the sector can pave the way for a more resilient and gratifying ecommerce experience for both businesses and consumers alike in India’s dynamic ecommerce market.

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The post With Zero Mega Deals In Sight, Ecommerce Funding Falls 47% YoY To $224 Mn In Q3 2023 appeared first on Inc42 Media.

Update | December 21, 11:00 PM

Foodtech major has denied reports of making an offer of $2 Bn to acquire logistics startup Shiprocket.

In a filing with the bourses, the company ‘cautioned’ the investors against the incorrect reports floating in the market about any such move, adding that it has no plans for any acquisitions currently.

“We have noticed that there are certain news articles circulating in the mainstream media with the subject “Zomato offers to acquire Shiprocket for $2 billion”. We deny this statement and would like to caution investors against such incorrect news floating in the market. We remain focused on our existing businesses with no plans for any acquisition at this moment,” said Zomato in a filing with the BSE.

The company attributed the clarification to ‘abundant caution’ citing uncertainty that the reports may create in the market.

Original Story| December 21, 05:31 PM

Listed foodtech major Zomato has reportedly made an offer to acquire ecommerce logistics unicorn Shiprocket.

As per a Bloomberg report, Zomato’s offer values the SaaS logistics platform at about $2 Bn. Sources aware of the development told the publication that a final decision has not been made. Besides, Zomato could also opt against proceeding with a deal for the company, the report said.

Zomato and Shiprocket were not immediately available to comment on the development.

Shiprocket is an aggregator of third-party logistics companies and works with several courier partners, including Delhivery, FedEx, Aramex, Xpressbees, DTDC, and Shadowfax. Founded in 2017 by Vishesh Khurana, Akshay Gulati, Saahil Goel, and Gautam Kapoor, the startup had raised $185 Mn in its Series E round co-led by Zomato, Temasek, and Lightrock India. 

Later, in August 2022, the startup raised $33.5 Mn in a Series E2 funding round led by Lightrock India with participation from Temasek, Bertelsmann, Moore Strategic Ventures, PayPal, and others, which valued the company at $1.2 Bn.

In October this year, Inc42 exclusively reported that Shiprocket was in advanced talks to raise $10 Mn-$12 Mn from McKinsey & Company in a strategic funding round for business expansion.

Shiprocket reported a 3.6X widened net loss of INR 341 Cr in FY23, hurt by its multiple acquisitions. In fact, the startup blamed its two acquisitions – Omuni for INR 200 Cr and one of its rivals Pickrr for $200 Mn in FY23 – for the threefold increase in loss. 

Meanwhile, its operating revenue increased 78% year-on-year to INR 1,089 Cr in FY23.

On the other hand, after struggling for a year, Zomato has started witnessing a revival in its business. The foodtech major also attained profitability in Q1 FY24, which helped the company’s share performance breach the INR 125 level for the first time in almost two years. The company also posted a profit in the second quarter of FY24.

Shares of Zomato are currently trading at INR 127.55 on the BSE and have gained over 100% year to date.

The post [Update] Zomato Denies Report Of Shiprocket Acquisiton Bid appeared first on Inc42 Media.

Walmart-backed ecommerce major Flipkart is reportedly looking to raise a fresh funding of $1 Bn, with the US retail giant committing $600 Mn.

This fresh infusion will likely value Flipkart at about 5-10% premium to its last valuation of $33 Bn, ET reported, citing sources.

Besides Walmart and other existing shareholders, the Bengaluru-based ecommerce major’s round will also see new investors joining the cap table, the report said.

Flipkart confirmed Walmart’s infusion of $600 Mn in the company but said that the rest is speculative. Walmart also informed about its fresh infusion in a regulatory filing.

Walmart acquired 77% stake in Flipkart in 2018 for $16 Bn, valuing the company at $22 Bn. After the separation of PhonePe from the group last year, Flipkart’s valuation stood at $33 Bn.

Recently, during the six months ended July 31, 2023, Walmart spent $3.5 Bn to acquire Flipkart shares from non-controlling stakeholders, including Tiger Global and Accel.

Flipkart also plays a major role in the US-based ecommerce giant’s earnings performance each quarter. Walmart said in its recent Q3 2023 earnings statement that its India operations were impacted due to the late arrival of the festive season, and as the Flipkart Big Billion Days sales shifted from Q3 last year to Q4 this year.

“The timing of Flipkart’s Big Billion Days pressured International sales growth, as the event moved from Q3 last year to Q4 last year. So we expect the timing to be a benefit to Q4’s growth rate for the segment,” Walmart had said.

Meanwhile, Flipkart continues to incur losses. Flipkart India, the B2B arm of the company, saw its standalone net loss widen over 42% year-on-year to INR 4,845.7 Cr in FY23 while its operating revenue increased 9.7% to INR 55,923.9 Cr.

In FY22, Flipkart Internet, the ecommerce giant’s marketplace arm, also reported widened losses.

The post Walmart To Inject $600 Mn Into Flipkart During A Billion Dollar Funding Round appeared first on Inc42 Media.