Monetary Madness: 1971 USA

Goofball Economics

If you thought that the title was a reference to the collapse of the Bretton Woods system (AKA the “Nixon Shock”), you couldn’t be more wrong. I was referring to the fact that in 1971 United States Notes ceased to be put in circulation by the Treasury. From then on Federal Reserve Notes were to be the sole currency of the Untied States.

Wait, what?! The US had two different currencies?

Not exactly. You see, the currency was always the US dollar, but the way in which every new dollar printed would enter the economy was different for the United States Note and the Federal Reserve Note.

Notice the slight differences between the two? The one above (a United States Note) has a red seal and serial number and says “United States Note” at the top. The one below has a green seal and serial number, has a Federal…

View original post 563 more words

E-COMMERCE THE NEW PORTAL FOR ENTREPRENEURS

The last one is underway! Greetings, today I am going to write about what account for the large number of entrepreneurs in the e-commerce industry and why I believe this sector has seen a larger growth than traditional industries.

Now every industry that is going through a boom witnesses a surge in the number of start-ups and ancillary industries. But what sets this apart from traditional booms is the people being benefiting from it. This e-commerce revolution seems to be reaching the middle class and low income entrepreneurs. Traditional booms seem to only benefit the already rich or the occasional daring entrepreneur who is willing to take the risk of putting up that much capital. Right from techies quitting to start their own website to families beginning to manufacture products to sell exclusively online, e-commerce seems to be reaching the grassroots and making an impact. The question that therefore arises is why is this happening?

According to me this is because of the Ease of doing business. There are barely any hurdles to setting up a business as compared to a traditional brick and mortar business where licences, approvals and so on play a major part. Setting up a website costs a few thousand rupees and registering oneself as seller on any website like Flipkart or Amazon is easier. Also, the risk associated with this is lesser as compared to businesses that require huge capital. While there undeniably an increased number of failures, these seem to be offset by the one successful firm.

Overall the future looks bright. In a entrepreneur starved India, e-commerce seems to be the knight in shining armour that will create the much needed growth in jobs and opportunities. Adios!

– Narayan Sharalaya

IRCTC to “Flip” its decision’s “Kart”

IRCTC being one the country’s biggest e-commerce portals, catering to the railway ticketing need of crores, plans to hire a consultant to emulate the strategies of Flipkart, to reach certain benchmark growth level. The chairman and MD of IRCTC, Mr. AK Manocha has been asked by the government to exploit the website and grow like Flipkart in the coming years.

The government wishes to monetise the railway assets and it is looking forward to raise as much amount as it can, through its Initial Public Offer (IPO) in upcoming months. The Indian Railways expects to post a net profit of Rs.85 crores over the revenue of Rs.1000 crores, and it is eyeing a revenue of Rs.10000 crores by 2025. Thus, it is really important for it to have a growth oriented online database and action plans, which Flipkart, being an $11 billion firm, would help them to achieve.

If we look at the positives for this site, it has an advantage of being a complete monopoly on online ticket reservation and it has a huge advertising potential, by the virtue of huge website traffic. Now, the negatives include the extreme level of dependence on the government, which reduces its agility. The dividend pressure from the stakeholders also reduces money for expansion, and thus it’s unable to fund the long term plans.

In February 2015, there were allegations that the IRCTC was to start “Cash-ON-Delivery” system for ticket booking and distribution, but the same hasn’t been implemented as of now. Now to attract customers, IRCTC would soon enable the commuters to order food online before boarding and book wheelchairs & disposable bedrolls. It also plans to open 17 AC executive lounges at railway stations. Thus, having a captive customer base, if the plans fall in place, IRCTC would soon be among middle class favourites.

Thus, hiring a consultant to help chart a “Flipkart-Like” growth plan, may prove to be the biggest breakthrough for the Indian Railway ticketing Lifeline, IRCTC.

NEW DELIVERY OPTIONS COMING SOON FOR E-COMMERCE FIRMS

Have you ever imagined your birthday present coming flying for you. Well, now this is possible…

Due to an increasing cost of courier services, the e-commerce firms have developed an unmanned aircraft as an alternative mode of delivery. These ‘drones’ are robotic devices capable of being operated either by remote or through an automated AI program. The commercial version of the drone is the “quad copter” model that uses four spinning propellers to lift the goods through air. Coupled with GPS and flight path mapping technology, these devices are automated to leave a shipping warehouse and fly directly to a customer.

FACT:

Unmanned Air Vehicle (UAV) drones have been used in military activities since 2000. They can perform surveillance and combat functions without putting soldiers directly at risk.

Will shipping by drones change the e-commerce industry?

Many business enterprises have tried to ship their products through drones. Drones are loaded with the products before they take off for various customer destinations No doubt it will revolutionize the e-commerce industry in a way that the several hundreds of local shippers will be laid off and lose a bit of their business. However, it will give a fast and hassle free delivery as these drones will not be dependent on third-party carriers to deliver products to customers. The customers will have their products delivered at their doorsteps faster which may result in improved customer experience. These drones also help in reducing the reliance on manpower.

Drones have limitations when it comes to accessing areas as they cannot sneak into corridors or narrow lanes and follow a predefined path. This possibility strikes right at the heart of doorstep delivery strategy, which has been such a huge hit with customers so far. This is a complex issue e-commerce retailers must address before launching the move. Also, this technology is expensive. While giants like Amazon and eBay can afford to buy drones, smaller and mid-sized ecommerce retailers will find drones out of their reach. Such retailers will continue to employ traditional supply chain models although some of them may partially deliver with the help of one or two drones. If the ecommerce biggies invest big on drones (and they can) and employ highly advanced and efficient drones, it might create a lopsided e-commerce industry with smaller and mid-sized ecommerce retailers at a disadvantageous position as they risk Amazon and eBay taking away their customer base unless they develop a smart counter strategy.

Recently, Amazon has hit a snag in developing its logistics industry and transformed their operations to utilize Unmanned Aerial Vehicles (UAVs) to transport packages that weigh less than five pounds on the back of a GPS device. This is delivery system is known as Amazon Prime Air.

The UAV manufacturers said that the rapid development of drone manufacturing technology in recent years has made UAVs good options for the logistics sector. Not to mention the reduced carbon emissions from delivering via drone instead of truck. “It’s very green,” Jeff Bezos, Amazon CEO said. “It’s better than driving trucks around.

However the Federal Aviation Administration (FAA) has regulated the commercial use of unmanned flying of drones by putting various restrictions on it.

Many other firms like the Chinese e-commerce titan, Alibaba have started experimenting with delivery drones, launching small pilot projects.

Bidding goodbye,

Simran Bhatia 🙂

E-commerce companies to bring down discounting to 20% by 2015 end

Top e-commerce companies, which have over the past couple of years captured millions of Indian consumers to shop online by offering deep discounts, have collectively reached an understanding to cut the high discounts through coupons to incorporate losses. Flipkart, Myntra, Jabong, Snapdeal and Amazon, among others, have unofficially decided to bring down coupon discounting to the global levels of 20% by the end of 2015. Over the past six months or so, ecommerce companies have brought down the range of discounting through coupons on various products from as high as 40% to about 30% currently. Now they plan to bring it further down to global average of 20% in the coming months. “There was a time when we were creating market using it (coupon discounting) as an incentive to make people come on board. Now we do think it is time to bring it to normal level.” – An ecommerce executive said.

Consumers and coupon companies confirm that the amount of coupon discounting has come down since Diwali, when ecommerce players took discounting in India to new highs, creating an unprecedented online shopping frenzy in the country. “Coupons discounting have for sure reduced,” said Aman Jain, co-founder of coupon site GoPaisa.com. Some four months ago, typical coupons were 35-40% discounts. Now, coupons are no more than 25-30% discounts and the frequency at which they were doling out new coupon has reduced quite a lot recently. The online retailers in India have incurred losses of about ₹1,000 crore over the years due to heavy discounting. E-commerce companies shelled out about $600 million, or about ₹3,720 crore, in discounting products to woo consumers during the crucial shopping quarter of October to December in 2014.

What they have done is that they first tempted the customers to shop online and now that all eyes are turned to e-tailers, they will decrease discounts obviously! It’s the marketing strategy for their business. The question now is that will Indian customers known for their bargaining skills, still go to these e-shops or will prefer to buy in stores (Real ones)?

– Harsshi Mitruka

Reaching Out!

We, Group 3, have been following the growth story of e-commerce firms in India since December 2014. We have spoken about almost each topic linked to e-commerce. It is no secret that the mobile & Internet revolutions have seeped into even the remotest parts of India. Even places that don’t have concrete buildings have access to the Internet. One of the topics not covered so far is reaching out to towns and villages by e-commerce firms. This includes distribution as well as payments. Surfing on the Internet is not as difficult as delivery of goods is. This is because logistics companies employed by e-commerce firms don’t have the resources and means to reach the further geographical locations of India as there are few or no effective last-mile delivery options. Also, usage of bank accounts is limited, therefore Cash-On-Delivery is the most preferred payment option. This raises the issue of collecting payments as well.

Hailed as the knight in shining armor, the Indian Postal services came swooping in to save the day. India Post is world’s most widely distributed postal system, meaning that they can reach the most inaccessible places in India with relatively less difficulty. They cater to areas encompassing 25,000 pin codes whereas the largest private courier service providers cover only 10,000 pin codes. As of March 2011, with 154,866 post offices all over the country and 466,903 employees, 90% of all post offices are in rural areas. On an average, a typical post office covers 21.23 square kms, and serves 7114 citizens. The whole nation-wide network of post offices is divided into 22 circles, thereby covering each and every nook and corner of the nation. Also, the Indian Post had witnessed a rapid decline in demand for services due to more technologically advanced modes of communication such as e-mail and mobile phones, resulting in lesser revenue. Therefore, a partnership between both entities would have substantial benefits for the two.

MoUs were signed and the partnership began. Snapdeal and Shopclues were the first ones to have partnered with India Post. Amazon and Alibaba have also partnered with the American and Chinese postal services respectively. Hence, there is no reason to believe that we cannot have a similar system in India. Soon, Flipkart & Amazon also joined the wagon and tied up with the Indian Post. As per government officials, the Indian post collected Rs. 280 crores cash in 12 months. Even though this is only a small chunk of what e-commerce firms make, it is significant because demand from non-metro areas is expected to rise. Eyeing the recent e-changes, Raghuram Rajan, RBI Governor has given the India Post a green signal for a banking license which means that doing COD transactions with the E-commerce portals will be further easy. The long severed public image of the India Post will get its big break by tying up with the e-commerce giants. This shows the effectiveness of the partnership. We hope this partnership fosters the e-commerce revolution and India’s development as well.

– Arushi Kotecha

DON’T UNDERESTIMATE THE POWER OF THE COMMON MAN!

Yes, this is what e-tailers were doing since a long time.

Till now the e-commerce firms were mainly pursuing customers of the age group 18-34 thinking that these were the people who were comfortable with using technology, and hence did a lot of online purchase not realizing that they were overlooking a segment of population that was also eager to spend money online.

Why Target People Over 50?

There are a lot of myths about seniors. Namely, that they don’t shop online or only buy necessities. Therefore, the only advertising directed towards them is related to physical infirmity. However, it is forgotten that these people do buy things other than pharmaceuticals. For instance, these people buy gifts and toys for their grandchildren. Thus, there is a huge demand coming from this segment of society.

Also, the purchasing power of the teens is overestimated. In India, where teens stay with their parents, most of them are unemployed and don’t have a great deal of discretionary income. All the things that they buy are from the pocket money that they get every monthJ. Thus, the seniors have more purchasing power than the teens.

What do the old shoppers look for online?

They mainly look for good quality and value over bargains. However they do use the discount coupons for shopping.

All shoppers today can switch brands with a swipe of the screen. The old shoppers compare a lot of brands before making a purchase. Therefore, the e-tailer should provide detailed information about the product along with visuals to establish a loyal customer base.

Seniors are receptive to email marketing. They respond more to it than to other forms of online communication. Also, providing discount coupons help in attracting older customers. The main idea is to let them know that the firms are interested in doing business with them.

RECENT DEVELOPMENTS

Sensing a big opportunity, the e-commerce ventures are trying to cater to the needs of the senior citizens. Lack of easy offline availability of certain products desired by the senior citizens provides an opportunity for such a venture. Recently, many online portals for the elderly have been created. Senior Shelf and Old is Gold Store are some of the firms that offer mobility aids, toilet safety products and items for arthritis patients. Also, various firms like Healthgenie sell products like wheelchairs; diagnostic aid etc. and Lenskart provide home eye care check up services for the elderly.

– Simran Bhatia J

 

 

 

 

 

 

 

 

HANDICRAFT EXPORTERS JOIN DOMESTIC E-COMMERCE MARKET

With the ever-growing e-commerce sector in the country, handicraft exporters are joining hands with big portals to enter the domestic market. The demand for handicraft products in India is huge and e-commerce portals are the best medium to tap the customers and therefore various handicraft sellers are joining hands with various e-commerce companies like Flipkart and Snapdeal which are considered as good companies to start off the sales with. Today, India is one of the fastest-growing e-commerce markets in Asia-Pacific along with China. With increase in Internet penetration, adoption of smartphones and advancing technology, are completely changing the way India shops.

Furthermore, favoured demographics and growing Internet user base helped in aiding the growth. As per estimates, the sector’s market size in the country is around USD 5 billion annually. Also as handicraft is a labour intensive sector, these platforms would also help in further creation of job opportunities. The major product categories which can be sold on these platforms include house-ware, home textiles, furniture, glassware, bamboo goods, fashion jewellery and lamp & lighting.

Online shopping space in India is expanding at a massive scale and the journey is not yet over. Further talking about the councils’ expectations from the forthcoming Budget, the government will have to take several steps in order to boost the sector’s growth domestically and in the global markets also. The handicraft sector also requires skill development, enhancing the quality and standard of the products and also explore various new markets.

The country’s annual handicraft exports ranges between USD 3 billion to USD 4 billion. The sector employs about 70 lakh people directly and indirectly. India had a number of good artisans who don’t really market their products or the people are ignorant. E-commerce will certainly open new doors to them and bring them new opportunities. This could lead to a boost in the revenue of the handicraft sector as the sale of these products through the e-commerce portal will definitely widen the market, not only this, it will also showcase the Indian handicrafts in a better way.

-Harsshi Mitruka

COME ONE, COME ALL!

If you’ve only glanced through today’s newspaper, you’d read that yet another company has been attracted towards the glitter that the Indian e-commerce industry has acquired. PepsiCo has joined the likes of Motorola, Marks & Spencer, Britannia and Coca-Cola in selling their products exclusively online. “The Dramatic Decade: The Indira Gandhi Years”, published by Rupa Publications was to be sold only on Amazon for 21 days after its release by author and President Pranab Mukherjee.

PepsiCo will be selling premium snacks named Doritos and Tostitos, while selling variants of its Tropicana juice. These are most likely to be sold on LocalBanya.com, BigBasket.com and AaramShop.com. Lays’ chips, Kurkure, Pepsi and Mountain Dew are already being sold on the aforementioned websites. The important point to note here is that though fashion, books and electronics are the most popular choices for online shoppers, the entry of FMCG e-tailers could be the advent of another dawn because of the inelastic demand for consumer perishables. The ability of e-tailers to give more discounts over brick-and-mortar sellers is only an added advantage.

An obvious question that comes to mind would be, “Why are we seeing so much exclusivity in online sales?” The answer is quite simple, actually. The online sector is growing at a tremendous pace in India, which would give firms more access to markets which might be limited had they chosen to sell their products offline. Also, the common consumer trusts established online portals such as Flipkart so much so that when Motorola put up its Mobility range of phones (Moto E, Moto G & Moto X) exclusively on Flipkart, the first batch was sold out in all of 20 hours. The consumers had only seen the phones but not experienced their functioning before buying them as they can in stores such as Croma, Reliance Digital, etc.

This is an extremely important factor taken into consideration by PepsiCo because their new products are priced slightly higher than their previous ones, which could deter market demand. Also, there more moolah to be raked in by PepsiCo, so they wouldn’t mind giving some part of the margin up until the products are out of the trial phase and the consumers are habituated to them. Therefore, consumers will be more willing to try new products from reliable sources such as e-commerce giants.

In conclusion, it’s a great time to be an Indian consumer!

Until next time,

Arushi Kotecha

E-Comm’s free shipping of cheer to Banks

The growing trend of e-shopping, the use of online transactions, has taken a flight over a period of time and thus the increased use of credit cards for shopping brings revenue to banks in terms of interest and fee income. According to the official data released by the RBI, the average monthly credit cards spending has risen up from 12,035 crores to 15,470 crores, over a period of one year. It is a delight for banks, as they see a boom in their fee-based incomes, and all thanks to the globalised e-commerce sector in India.

Higher credit card outstanding translates into higher interest income for banks, as they charge penal interest for unpaid dues beyond the stipulated period, i.e. the credit card customers have to pay interests in form of fines, if they are unable to their pay their credit dues, before a given deadline. Thus, with increasing amount of credit card usage over e-trade payments, the chances of payment defaults by customers also increase, eventually leading to a hike in revenues of the banks.

Head of the credit card division at a private sector bank said online shopping and travel spends have led to a rise in credit cards spends. “Customers are increasingly buying tickets online, booking hotels and vacations, which has increased credit card spends,” he said. “Banks have tied up with many electronic chains and mobile companies, giving EMI (equated monthly instalment) options to customers on purchase of phones and other electronic items on credit cards. Alongside, the EMI option over the purchase of expensive gadgets, has also increased the credit card spending by a large chunk of consumers.

Therefore, as the customers across the country will keep on getting more and more variety of their desired products online, they will keep on using online payment modes, and thus income of both banks and the e-commerce firms would keep on increasing.