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Business of Brands

Rasul.Bailay@timesgroup.com

New Delhi: Brick-and-mortar retailersquestioning the modalities of foreign-funded ecommerce marketplaces in In-dia are finding an unlikely backer —American ecommerce firm eBay Inc thatalso operates a marketplace in India.

“There is confusion and the govern-ment needs to look at it. Companies thathave their own logistics and warehouses,can they be classified as marketplaces?”said Latif Nathani, managing director ateBay India, alluding to rival Amazon andhomegrown but foreign-owned market-places Flipkart and Snapdeal.

Over the weeks, India’s brick-and-mortarretailers have stepped up their campaignagainst the country’s nascent but aggres-sive breed of online retailers that are ac-cused of hurting traditional retailers withtheir heavy discounting strategies.

Retailers Association of India, the lobbygroup of companies including FutureGroup, Reliance Retail and Shoppers Stop,have even petitioned against the govern-ment in the Delhi High Court pleadingnon-parity in India’s foreign investmentrules between physical retailers and on-line retailers that have attracted billionsof dollar under the marketplace model.

Although India bars FDI in ecommerceselling to consumers, it allows fully-own-ed foreign subsidiaries under the mar-ketplace model to play facilitators forsellers and buyers.

Brick-and-mortar players argue thatonline rivals such as Amazon, Flipkartand Snapdeal are holding inventoriesthrough warehousing and logistics oper-

ations, and that amountsto retailing.

“Virtual retailers, likereal retailers, store mostof their merchandise orinventories in their ownwarehouses,” KishoreBiyani, chief executiveof the Future Group, thecountry’s largest listedretail group, told ET ear-lier this week. “How onetreats this inventory in

the financial accounts may differ. Someaccount this inventory on their own bal-ance sheet, others account for it in theirsuppliers' balance sheet. There are real-world retailers as well who do not ac-count for the inventory on their ownbooks,” he said.

eBay’s Nathani supports the argument.“I completely understand and agree withMr Biyani as there needs to be more clar-

ity on what a marketplace is and defineit,” he said. “Mr Biyani’s concern is thatmarketplaces are having warehousesand courier companies and supplies ofsellers are staying in their warehouses.Is that a proper definition of a market-place or is that a stretched definition?”

Without naming any company, Nathanisaid there is a foreign-funded marketplaceoperator whose subsidiary accounts for80% of the products sold on its platform.

Snapdeal declined to comment whileAmazon and Flipkart did not respond toe-mails seeking comments as of press

time Thursday.Coincidentally, eBay owns a minority

stake in Snapdeal.“Look at Uber. Now, that is a market-

place as they don’t own cars and theydon’t have the drivers as their employ-ees,” Nathani said, referring to the app-based taxi hailing US company. “Now, forexample, if they were to start owningsome of the cars and some of the driverson their rolls as employees, would theybe classified as a marketplace?”

He said eBay is a “pure marketplace” asit neither owns warehouses nor holdsany inventory on sellers’ behalf.

Over the last one year, online market-places have been facing a lot of heat fromvarious quarters, but this is the first timean online player is pointing fingers at thebusiness models of its peers.

Earlier this week, Snapdeal founderKunal Bahl, in an interview with ET,sought to distance himself from the rag-ing debate on ecommerce in India, say-ing his is an IT company and enabler forretailers to sell online.

eBay was the first global major ecom-merce company to enter India about 10years ago, but the California-based compa-ny failed to make the most of its first mov-er advantage and now trails the likes ofAmazon, Flipkart and Snapdeal in sales.

Now, eBay MD Questions the Ecomm ModelLatif Nathani agrees with Future Group CEO Kishore Biyani, feels there’s a need to clearly define the contours of the marketplace model here

Marketplace ConundrumOffline retailers are raising doubts over foreign-funded ecommerce marketplaces in India

Retailers say Amazon, Flip-kart and Snapdeal are holding inventories through warehousing and logistics operations, and that amounts to retailing

Virtual retailers, like real retailers, store most of their merchandise or inventories in their own ware-houses

Kishore BiyaniCEO, Future Group

There is confusion and the government needs to look at it. Companies that have their own lo-gistics and warehouses, can they be classified as marketplaces?

Latif NathaniMD, eBay India

India bars FDI in ecom-merce selling to consumers

But fully-owned foreign subsidiaries under the marketplace model are allowed to play facilitators for sellers and buyersNathani

said eBay is a ‘puremarketplace’as it neitherowns norholds anyinventory on behalf of sellers

Top US apparel

brand Gap is all set

to open its first

store in India in

New Delhi’s Select Citywalk mall on Saturday,

May 30. Its Indian franchisee partner Arvind

Lifestyle plans to open 10 Gap stores by next

year in Delhi, Mumbai and Bengaluru with an

investment of around .̀ 100 crore, and in-

crease the store count to 40 in five years.

“Gap is not a niche opportunity for us but a

large opportunity,” says J Suresh, managing

director of Arvind Lifestyle Brands. He feels

Gap can be a .̀ 1,000-crore brand in the next

5-6 years. Stefan Laban, senior vice-presi-

dent at Gap Specialty International, feels that

it’s just about the right time for the brand to

entering the Indian market. In an interview

with ET’s Varun Jain & Rasul Bailay, Laban

said one reason Gap took its time was to en-

sure that it got its strategy right in the first go.

Edited excerpts:

Don’t you think that you are slightly late

into entering this market?

I think the Indian consumer is very fashion-

able and knowledgeable. They are educated

about the brands and are aware of the prices

as well. This made us take some time to land

our plane right; you really need to get it right.

You only get one shot at the market. And you

need to get it right and create great impres-

sion because you don’t get a second chance.

That is why we took some time to get to the In-

dian shores. We are bringing American casual

style and we do not see too much of it here.

So, you think this is the right time to come in?

I think it is just about right time for us. The

danger if you come earlier is the malls are not

ready yet and you open one store but nothing

happens after that for years. We want to open

few stores in Delhi and Mumbai to get the

brand out and going. We started talking to Ar-

vind almost two years ago. The strategy and

the negotiations took some time. We could

have launched two years ago also, but we

didn’t want to first come here and then learn.

Didn’t you consider entering the Indian

market on your own?

We have looked into that. But it was not easy

for us because of the terms and conditions

that need to be followed when you enter on

your own. India is a complicated market. And

when you have a local partner who knows the

market inside out and has better real estate

capabilities, we thought it is better to get into

the market the way we did. This is a good

strategy to enter emerging markets.

But you entered China on your own…

The size of the market that China offers is enor-

mous. It is a fast growing market. Although In-

dia is a big opportunity for us, it has not yet re-

ached the level of China. But our research says

the brand awareness is much higher among the

Indian audiences as compared to China.

Forty stores in five years: is this normal or

aggressive by Gap’s standard?

A lot will depend on how successful we are

here. Other thing to be considered is the avail-

ability of great real estate. Brazil, which we

entered in 2013, has 12 stores now. This is a

similar pace that we follow.

Brand Awareness Much Higher inIndia than in China: Gap Executive

Q&A

� Haier Plans to Invest .̀ 370 crore in Pune Plant

KOLKATA Chinese appliances mak-

er Haier plans to invest .̀ 370 crore

in its Pune plant to scale up oper-

ations. The company said on Thurs-

day it has signed a memorandum of under-

standing with the Maharashtra government in

this regard. The investment will be used to ex-

pand manufacturing capacity of refrigerators

besides adding new products, such as washing

machines, air-conditioners, LED television

panels, water heaters and deep freezers, to the

production line. At present, one-third of the

plant’s 40-acre area is used for manufacturing

refrigerators. It has a capacity of one million

units per year. The company said it also plans

to increase its manpower 120% to 2,600 em-

ployees across the country by 2017.

� Starwood Plans Q3 Debutfor St Regis in Mumbai

MUMBAI Starwood Hotels & Re-

sorts has announced the debut of its

iconic luxury brand St Regis in India

with the St. Regis Mumbai in the

third quarter of this year. Owned by Pallazzio

Hotels and Leisure, the 386-room Palladium

Hotel is currently undergoing an extensive re-

branding and will soon fly the St Regis flag. ET

had reported in October 2013 that St Regis was

in talks to manage the hotel atop the Palladium

luxury mall. The property — which was earlier

managed by Hong Kong-based Shangri-La Ho-

tels and Resorts — is a unit of Atul Ruia-con-

trolled Phoenix Mills.

� Royal Enfield Unveils Limited Edition Bikes, Gear

NEW DELHI Royal Enfield, the two-

wheeler division of Eicher Motors,

on Thursday unveiled a range of

limited edition bikes, inspired by

the 'despatch riders' of the World Wars, which

will be sold online only. “These bikes can be

booked online from our gear stores and deliv-

eries would begin by July 15,” Royal Enfield

CEO Siddhartha Lal told PTI. Commenting on

the limited edition range, which is based on

Classic 500 model, he said that only 600 units

of the range would be rolled out and would be

available for sale.

� OYO Rooms to Expand to2,000 Hotels by Year-end

BENGALURU Budget hotel chain

OYO Rooms is planning to expand

its network by five-fold to 2,000

hotels by the end of this year. Fund-

ed by Lightspeed, Sequoia, Greenoaks Capital

and DSG Consumer Partners, OYO has 4,500

rooms in 400 hotels across the country. In

March, OYO Rooms raised .̀ 150 crore from

Lightspeed, Sequoia and Greenoaks Capital.

Earlier, the company was targeting 450 hotels

by the end of this year. “The company has set

itself a revised target to expand its network to

2,000 hotels in 45 cities by this year-end,” OYO

Rooms said in a statement.

� Google Brings ‘Buy’ Button to Online Ad Service

MOUNTAIN VIEW Google Inc. plans

to unveil a “buy” button for its ad-

vertising service, stepping up pres-

sure on rival Amazon.com Inc. as

the Web company moves deeper into online

commerce. The tool, which will let users pur-

chase items from Google’s search results pag-

es, is “imminent,” chief business officer Omid

Kordestani said at a Re/code conference in

Rancho Palos Verdes, California. The Wall

Street Journal reported earlier this month the

company would introduce buy buttons, citing

people familiar with the matter.

� GM’s Chevys to Link to Apple CarPlay, Android Auto

DETROIT General Motors is trying

to get a jump on the competition

for connected cars by enabling

owners of many Chevrolet models

to use voice commands to control Apple and

Android applications on smartphones. The

program, starting this summer, includes the

redesigned 2016 Cruze small car that debuts

in June, GM said Wednesday in a statement.

Most of Chevy’s 2016 vehicles will be able to

use the brand’s MyLink infotainment system

to access Apple's CarPlay and six models will

be set up to work with Google's Android Auto.

There’s no additional cost to car buyers for

the compatibility.

Pitch Report

SOAP OPERA

HUL Stays No. 1Despite the entry of several new players, the pecking order in soaps, the largest personal care category, has remained unchanged over the last three years. Hindustan Unilever (HUL) continues to dominate with as many as four brands among the top 10. According to Nielsen data, Wipro Consumer's Santoor gained the most market share in the first quarter of 2015...

TOP SOAP BRANDS, MARKET SHARE BY VALUE (%)*

Rank Brand (company)Jan-Apr

2013Jan-Apr

2014Jan-Apr

2015Change from Q1, 2014**

1 LIFEBUOY (HUL) 16 17 17.1 0.1

2 LUX (HUL) 14.7 14.3 14.4 0.1

3SANTOOR (Wipro Consumer Care)

8.3 8.6 9.2 0.6

4 DETTOL (RB) 7.1 7.4 7.7 0.3

5GODREJ NO 1 (Godrej Consumer)

8.2 7.5 7.6 0.1

6 DOVE (HUL) 4.4 4.6 4.5 -0.1

7 PEARS (HUL) 4.2 4.6 4.3 -0.3

8JOHNSON'S BABY(J&J)

3.3 3.3 3.1 -0.2

9CINTHOL(Godrej Consumer)

2.5 2.6 2.8 0.2

10 VIVEL (ITC) 2.7 2.5 2.5 0

Others 28.6 27.6 26.8 -0.8

*Urban + Rural; **Change in percentage points Source: Industry sources quoting Nielsen data—RATNA BHUSHAN

RaviTeja.Sharma@timesgroup.com

New Delhi: The first 59 matches of therecently-concluded IPL season eightdrew 10 lakh more television viewersthan the previous edition, data releasedby TAM Media Research shows. The au-dience research firm has not yet releasedfigures for the final match played lastSunday, in which Mumbai Indians (MI)defeated Chennai Super Kings (CSK).

According to the data, 19 crore peoplewatched the first 59 matches on televisioncompared with 18.9 crore TV viewers un-til the final last year. The average ratingfor the 59 matches was 22% higher overthe previous year. After 59 games, the av-erage rating for the tournament stood at3.7 against 3 last year. This year, cricketenthusiasts watched the games for an av-erage 45 minutes 43 seconds comparedwith 41 minutes 47 seconds last year.

“New players in all teams and manyclose matches helped this year,” said Ba-sabdatta Chowdhuri, CEO at PlatinumMedia, a part of Madison Media Group.

Advertisers are happy with the good vis-

ibility and positive traction that theirbrands have got this season of the IPL, shesaid. “A good rating this year will certainlygive a boost to the next edition as advertis-ing is always based on past performance.”

There were question marks over the IPLthis year as it was right after the ICCCricket World Cup. Many predicted crick-et fatigue but ratings tell a different story.

“If India does well in the World Cup,IPL usually does well too. Next year isthe T20 World Cup that will be hosted byIndia and that should also have a positiverub-off on IPL,” said Chowdhuri.

This year, Multi Screen Media, the offi-cial broadcaster of the IPL, was able tosell most of the tournament’s advertis-ing inventory before the start of thetournament and is expected to makeclose to .̀ 950 crore. It signed up 12 spon-sors that included ecommerce firmsAmazon, Paytm, and traditional ad-vertisers such as Vodafone and Pepsi.

According to the data so far, the secondsemi-final between CSK and Royal Chal-lengers Bangalore garnered the highestrating of 5.6, followed by the MI-CSKquarter final which got a rating of 5.5.

IPL Grabbed More Eyeballs This Year

If India does well in the World Cup, IPL usually does well too. Next year is the T20 World Cup that will be hosted by India and that should also have a positive rub-off on IPL

Basabdatta ChowdhuriCEO, Platinum Media

A Clear WinnerIPL 8 IPL 7

TVViewership

19cr 18.9cr

AverageTV Rating

Average Viewing Time

45 min, 43 sec

41 min, 47 sec

3

3.7

*TAM data for fi rst 59 matches

Vijaya.Rathore@timesgroup

New Delhi: Co-owned by cricketer Sa-chin Tendulkar, Mumbai-basedSmaaash Entertainment is allset for an international de-but as it targets marketssuch as Germany, Londonand the Middle East for itsgaming and recreationcentres.

The promoters are in theprocess of raising close to.̀ 200 crore from the marketfor funding the projectalong with India expansion.

“We will raise $30 millionvia equity and debt,” saidShripal Morakhia,founder of Smaaash

Entertainment.Serial entrepreneur Morakhia is a mi-

nority stake holder in the company thatwas set up in 2010, along with Tendulkarand FW Sports Investment Fund LP, aMauritius-based private equity fund.The fund acquired a significant minori-ty stake for about .̀ 100 crore in the com-pany last year.

The company will set up special pur-pose vehicles (SPVs) in the overseasmarkets to execute the blueprint.

For the company, virtual realitygame will be a focus area. “Currently,

we are developing 24 new soccergames in partnership with a

world-class player. Thesegames will be a combinationof real and virtual sports,”Morakhia said without shar-ing more details.

While Smaaash has been op-erating a 1.2 lakh square feet

gaming and entertainment des-tination in Mumbai and an-

other one in Gurgaon, thereare plans to enter other

destinations likeBengaluru,

Chandigarh.

Tendulkar’s Smaaash Set for a Global SplashPromoters plan to raise

close to .̀ 200 cr to fund

the project along with

expansion in India

Eighth edition of T20 league, barring the final, drew 19 cr TV viewers, 10L more than IPL 7