Reliance Jio’s free pricing blitzkrieg has triggered the largest round of consolidation in the telecom industry. Vodafone and Idea Cellular are reportedly in talks for what could possibly be an all share merger deal; Vodafone indicated that its 42% stake in Indus is excluded from any potential transaction. Such an agreement would combine the 2nd and 3rd largest domestic telco operators, commanding ~40% revenue and 35% subscriber market share, ahead of Airtel’s 31% revenue and (more…)
Amazon is continuing its push into the auto category, now into auto parts. More specifically, Amazon has reportedly struck first party supply contracts with some of the largest auto part manufacturers, including Robert Bosch, Federal-Mogul, Dorman Products, and Cardone Industries. We have seen Amazon grow and take share in many categories through its strategy of working to improve selection, SKU availability, and the amount of inventory sold first party and available for Prime same day, 1 day, and 2 day shipping.
If adopted, the Amazon Vehicles business and Garage functionality (and accompanying improving auto parts offering) would (more…)
We have already covered the phase of Indian eCommerce Startup Valuations breaking through the roof between 2013 to 2015. The year 2016 saw funding crunch, the sector has had a reality check. GMV is no longer the holy grail and the focus has now shifted to metrics such as the net promoter score, user monetisation and customer experience. Also, there is a growing recognition of the fact that India is different from China and may not necessarily mirror the early e-commerce trends and trajectory in China.
Indian e-commerce firms have pursued several initiatives including increasing the commission rates (at an overall portfolio level), controlling the logistics costs (particularly returns), rationalising discounts and shifting the portfolio mix in favour of high-margin categories to curtail the losses and create a foundation for achieving profitability. Regulations have so far been (more…)
The Indian eCommerce Saga trails the Americas by a decade. 2013 to 2015 were eventful years for the Indian internet sector. Overall, 2015 GMV growth for the e-commerce sector saw the fastest pace in the past five years, despite a higher base. Funding activity, too, peaked in 2015. Investor optimism was high as well valuations doubled in many successive rounds of funding within a gap of just a few months. There were several large funding rounds such as Flipkart’s US$1 bn one, followed by a couple of US$700 mn funding rounds over the next six months, valuing the company at US$15 bn. Snapdeal raised over US$600 mn in 2014 and followed it with another US$500 mn round in mid-2015, while Paytm raised US$680 mn in Sep-15 from Alibaba and Ant Financials (Alipay). Ola also raised over US$1.1 bn between Oct-14 and Nov-15, in three rounds of funding
The Flawed GMV Based Valuations Model
GMV was the most widely tracked key performance indicator for ecommerce companies — not only internally, but for investors as well. Companies expanded GMV without focusing much on unit economics. This led to an increase in discounting and marketing (more…)
Despite some respite from being allowed to accept old Rs 500 / 1,000 notes for a brief period, the two big events, i.e. demonetization and full quarter of Jio’s free services, are likely to result in a sharp sequential revenue decline. Pressure from Jio’s free launch offers is likely to be felt on three fronts – data volumes (as industry’s paid volumes take an expected knock), data pricing (as the incumbents try to hold on to data volumes) and voice pricing (initial impact of bundled offerings in line with Jio’s announced pricing construct + step-up in aggression on pure voice plans)
Jio’s free offers have resulted in a sharp (more…)
There is lot of bugaboo about the proliferation of digital media in India. India too is estimated to follow the same consumption pattern as in US with surge in internet penetration . However, currently, broadband infrastructure in the country is too inadequate due to which internet penetration is limited to ~27.5%. Further, available wired broadband speeds to paying consumers in India are far below what the service providers promise. A data service package that promises 8mbps typically max out at 5mbps. This is due to high contention ratio (that measures the number of internet users sharing a fixed amount of bandwidth) given limited availability of bandwidth.
Nonetheless, mindset of consumers is rapidly (more…)
New car business accounts for 75% of the CarDekho’s revenues currently. There are three revenue streams in this segment: 1> advertisements by OEMs; 2> Lead generation for dealers/OEMs – CarDekho generates leads for ~2,000 partner new-car dealers; and 3> technology solutions including lead management systems for OEMs/dealers, virtual reality and sales & marketing solutions. CarDekho has strong OEM relationships with Renault, Ford, Nissan & Datsun, Tata Motors, Honda and M&M for a portfolio of solutions.
The revenue from the used car business is (more…)
Major internet companies still generate significant revenues from advertising models. As the softening macroeconomic environment continues to affect overall ad budget sentiment, internet companies are embracing opportunities and challenges by adapting to changing dynamics.
Specifically, 2016 has been challenging for search advertising post the Zexi Wei incident in April and stepped-up regulatory policy on (more…)
Cybersecurity is non-negotiable. Investments in cybersecurity can be split into three key fronts: 1) Technology (advancement of cybersecurity solutions to tackle the ever-growing nature of threats), 2) Operational, and 3) Talent (Lack of talent remains the biggest area of concern in the field of cybersecurity). There is no silver bullet when it comes to cybersecurity and organizations need to invest on all the key fronts.
Big Wall Street Firms spends roughly $500 Mn+ a year on cybersecurity (and has roughly 2,000 people working on this area) and views this as a risk management tool. Advancement in (more…)
The Executive management (including marketing and strategy heads) met with Analysts and discussed current on ground situation, near term execution strategy, strategic vision and market positioning over a 2-4 year horizon. Mukesh Ambani while he outlined his vision & road map suggested that Jio be positioned as Digital Service Provider and not as Wireless Operator.
Jio Subscriber growth has slowed; Welcome Offer could be extended. Jio’s Current subscriber base is round 40 Million [Chasing a Target of 100 Mn] If Jio is unable to achieve this target, there is high probability of extension of the Welcome Offer beyond Dec-16. However, there has not been any official internal communication regarding this. We note that back-end IT issues, poor consumer service and weak distribution network are (more…)