“There is nothing called selling online. It’s just a technology for taking orders. It’s just an ordering mechanism wherein the platform operator doesn’t even have own products/brands to sell in the market.”
This is what India’s maverick retailer and Future Group CEO Kishore Biyani told dna when asked him about e-commerce during an exclusive interaction at the launch of India Food Park facility at Tumkur in Karnataka just three weeks ago.
After coming down heavily on Indian e-commerce player Flipkart for under-cutting prices last week, Biyani startled his peers on Monday through a strategic alliance with Jeff Bezos owned global e-commerce giant Amazon’s India unit. As part of the arrangement, Future Group plans to initially sell (on an exclusive basis) its 40-odd fashion brands including private labels on Amazon.in and will subsequently cover all the other categories, the company said in a statement.
Biyani is not new to e-commerce and has tried capturing the space twice in the past and failed.
“While we did have our own e-commerce platform years ago I think it was in a different time and age and the money didn’t last long enough to make the business sustainable. Hence, the focus now is to use other similar platforms and sell our products,” Biyani had said during the interaction in Tumkur.
Thus, despite strongly opposing e-commerce approach to selling, Future Group continues its focus on private labels expecting them to be sold by other online players in the market.
And while a lot of buzz is getting created around the development, one needs to be clear in the mind that this is not a tie-up between two retailers as it is being made out to be, feels Arvind Singhal, chairman and managing director, Technopak. “His (Biyani’s) businesses involve a host of private labels some of which are currently being offered on the Amazon platform. The approach is very similar to what most brand owners are currently doing in India i.e. using one more channel to distribute their products and expand reach,” said Singhal.
Industry experts also feel that since the market for online retail in India is still very small there is no reason for brick-n-mortar retail to feel threatened.
“It is inevitable that e-commerce will grow and take a larger share of the retailing business in the years to come. Having said that one also needs to understand that e-commerce will still be insignificant versus physical retail. The primary reason for physical retailers jumping the e-commerce bandwagon is that most are currently struggling to grow for various reasons. And partnerships with e-commerce portals are being forged in their search for newer business generating avenues,” said Harish H V, partner, Grant Thornton.
The additional revenue theory gets substantiated when Biyani (during the Tumkur interaction) quoted internal numbers saying that the company has sold goods worth Rs 400-500 crore through various e-commerce sites and that the number could very well increase to Rs 1,000 crore by the end of this fiscal.
The article appeared in DNA. The article can be found here.