Tag: Kishore Biyani

Why Big Bazaar tied up with Paytm

With the latest partnership announced with mobile payments and commerce platform Paytm, Kishore Biyani is making an effort to go online without taking on the risks and huge costs associated with the e-tail business.

Kishore Biyani has been extremely critical of the business model followed by e-commerce companies in the past. The founder and group CEO of one of India’s largest organised retailer Future Group, however, cannot close his eyes to the potential of e-commerce and the ever-growing base of customers shopping online.

With the latest partnership announced with mobile payments and commerce platform Paytm, Biyani is making an effort to go online without taking on the risks and huge costs associated with the e-tail business.

Under the deal announced by the two partners on 4 August, customers will be able to shop for Future Group’s hypermarket chain Big Bazar’s merchandise on Paytm’s marketplace and also, get them delivered to their homes.
Explaining the rationale behind his tie-up with Paytm, Biyani said: “The cost of customer acquisition in the e-commerce space is more than 20%, the cost of fulfilment is more than 20% and the cost of running operations is 8-10%. This totals to almost 50% as the cost of operation. At this cost, you can’t sell any goods on this medium.”

Biyani, indeed, isn’t speaking through is hat. Almost all e-commerce companies, including the market leaders such as Flipkart or Snapdeal and even global companies such as Amazon, have been running massive losses in their operation with no signs of profit in sight yet.

Related Post: How Vijay Shekhar Sharma started – Life of Paytm’s founder

Since, market pundits have been predicting that at some point, online retail transaction will become big enough to command a viable business model with a huge potential for growth, Biyani did make a few attempts at hopping on to the e-commerce bandwagon in the past.

In 2014, for instance, the Future Group had tied up with Amazon India to sell its merchandise, primarily private fashion labels. The same year, it had also launched shop.bigbazaardirect.com, the online platform for its direct selling offshoot Big Bazar Direct.

Both experiments, however, failed to deliver desired results.



The deal with Paytm

The tie-up with Paytm is Biyani’s yet another attempt at going online. Is he late to the e-commerce party? He doesn’t think so.

“We are not entering late. We were unable to do business online because unit economic wasn’t working,” he told Techcircle, adding: “We didn’t want to spend considerable amount in the acquisition of customers, in fulfilment or administrative obligations.”

Biyani said in Paytm, the Future Group has found a partner that can “bring the unit economics into the business. Besides, we don’t have to worry about payment gateway cost. In that sense, it is a great fix for us.

“Biyani’s optimism may not be misplaced. To begin with, the tie-up with Paytm comes just a few days ahead of Future Group’s hypermarket chain Big Bazar’s yearly flagship sale, Maha Bachat that will run during 13-16 August this year. A hugely popular format, Maha Bachat contributes around 3% to Big Bazar’s annual revenue. With its discounted offers moving online during the four days, Biyani is hoping to reach out to a new set of customers outside of his loyal set.

Related Post: Flipkart launches Fliptech and Hobby Hub to help customers make more informed purchases

Big Bazaar’s online avatar

Under the deal, an anchor store has been created for Big Bazaar on the Paytm app. Customers will not only be able to browse and buy Big Bazaar merchandise on offer, they will get a further 15% cash back on all purchases using Paytm’s wallet facility.

Paytm, too, sees the partnership with Future Group as a win-win deal. “Together (with Future Group), we see a fantastic opportunity to create a mobile first, omni-channel retail and payment solution for our wide consumer base,” Vijay Shekhar Sharma, founder and CEO of Paytm, was quoted as saying in a PTI report.

In a chat with Techcircle, Sharma said the partnership is an attempt at bringing a high frequency, large offline platform, online. “They (Future Group) do not have a very active e-commerce strategy as publicly visible. This (the partnership) will allow them to get mobile and internet customers to shop for Big Bazaar merchandise. Everything that is available offline will be available on the anchor app,” he added.

This article was originally published in TechCircle VcCircle





Kishore Biyani, CEO Future Group, reboots for the digital era

As the lines between offline and online retail blur, India’s retail king is tweaking his strategy to stay ahead of the competition.

Fabfurnish.com, the online furniture retailer acquired by Kishore-Biyani-led Future Group, was relaunched with a fresh campaign and a slew of deals. It marks a new chapter in the evolution of the group, which is best known for kicking off the modern retail revolution in India a decade ago.

However, when Biyani, 54, laid his hands on the Rocket-Internet-promoted company last month, it did come as a surprise. The Marwari businessman has been a fierce critic of the e-commerce business model in India, saying it is designed to lure consumers with discounts with little focus on profits.

That moment appears to have arrived. Fabfurnish is his first acquisition but more such deals could be in the offing. “I am not closed to the idea,” he says. “I will do it selectively and ensure our investments make money,” he adds.

It is clear the lines between physical and virtual shopping are blurring for him. He said he plans to merge the group’s home furnishings business under HomeTown with Fabfurnish and subsequently de-merge it from flagship Future Retail.

The goal is to unlock value and make his home furnishings business a stronger enterprise in the face of increased competition. Once the online and offline arms are merged, HomeTown is likely to reach a turnover of Rs 1,000 crore within a year. It closed the last financial year with revenues of around Rs 750 crore.

The driving force

Biyani’s hybrid business model, also called omni-channel retail in industry parlance, is a compulsion, say analysts. With consumers today spread far and wide, brick-and-mortar retailers have been left with no option but to add an online leg to their offline operations in a bid to reach as many customers as possible, and quickly.



Biyani has been at work on an omni-channel presence for a year now, trying to create a seamless and consistent brand experience across his group’s retail channels: bigbazaardirect, futurebazaar.com and offine stores. Other retailers, including Reliance Retail, Aditya Birla Retail and Shoppers Stop, have also been working on creating an omni-channel presence in recent months.

“The endeavour is to reach more consumer touchpoints and ensure you are there while the action is on. The ultimate objective is customer acquisition. That will mean that you have to go where he or she is,” says Devangshu Dutta, chief executive, Third Eyesight, a consultancy firm.

A recent study by the Retailers Association of India and Mumbai-based data analytics firm Hansa Cequity says that nearly 74 per cent Indians shop across all channels including neighbourhood stores, modern trade outlets and online platforms.

The study also notes that a significant number of these consumers still prefer to touch and feel products before buying, implying therefore that an online-only model is not enough.

Domestic e-tailers have picked up this cue. The top three e-commerce majors -Flipkart, Snapdeal and Amazon – have all gone offline in the last six to eight months to ensure the “touch and feel” experience is provided to consumers.

Flipkart, for instance, has tied-up with brick-and-mortar retailer Spice Hotspot to provide access to its exclusive range of phones offline. Its fashion arm Myntra is in advanced talks to acquire brick-and-mortar chain Forever 21, which will allow it to stock its online catalogue offline.

The same goes for rival Snapdeal, which has initiated tie-ups with The Mobile Store and Shoppers Stop for mobiles and apparel, respectively. Amazon, too, is tying up with small retailers across the country in a bid to allow consumers with no internet access to shop online in these outlets. It is also setting up Amazon-branded stores offline.



Additionally, the top three e-tailers have pick-up stores offline where consumers who’ve purchased products online can get delivery of their goods.

Dutta says the online-offline retail marriage follows global trends. “E-tailers abroad such as Amazon, Birchbox and Bonobos in the US, Spartoo in France, Astley Clarke in the UK have all opened physical retail stores in recent years. This completes the picture in a sense and plugs gaps if any,” he says.

Social media to retail

Hybrid business models are not restricted to retail alone. Social media giant Facebook recently entered hyper-local services in India, offering everything from medical and repair to business and personal services. Apart from letting users to browse for these services, the initiative also allows them to leave reviews so that other consumers can make the right choice.

Tech giant Google, too, is on a similar adventure. In recent years, it has ventured into making wearable tech devices, mobile phones and is now piloting driver-less cars. This even as it strengthens its presence online with a suite of services from basic search to online advertising, email, chat, browsing and software for phones.

Harish HV, partner (India leadership team), Grant Thornton India, says that hybrid business models for these companies is a way to ring-fence themselves from competition by marking their presence in virtually every space.

This online-offline merger, he says, will mean that these firms will get stronger as they enter new areas. The world is indeed shrinking.

This article was originally published in Business Standard

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