The offline retailers sales to boom in India, with the recent debacle of e-commerce FDI norms. Now, we think the retailers to match up to deep discounts online, to reduce due to the new FDI norms, with this they are expected to touch up to ₹12,000 crore in top line in FY20 , since the e-commerce firms asses their losses. The new rules to create a level-playing field could impact sales worth ₹35,000 crore to ₹40,000 crore at the country’s top online retailers, according to estimates by ratings firm Crisil.
India’s new foreign direct investment (FDI) guidelines for e-commerce companies to bring respite to brick-and-mortar stores that have, over the years, struggled to keep up with steep discounting and promotions offered by internet retailers. Offline stores will gain from the new rules, but some of them with excessive exposure to online sales may be affected. (Bloomberg)
The new guidelines will help bring about some kind of a price control in the market. In the past three years, owing to the popularity of e-commerce as a channel, “our own industry has faced pressure on offtake of inventory and the number of sales weeks have been expanded to six weeks per season. With the new rules, we hope the end of season sale duration to come down. As per Kumar Rajagopalan, CEO, Retailers Association of India, said under the new rules, marketplaces are not allowed to influence pricing.
Hopefully this will make sure brands have control over their pricing both offline and online," he said, adding that while discounts won’t come down dramatically, brands can finally take full responsibility for prices. This will “ensure a level playing field", Rajagopalan said.
Starting January 2019, most of the companies started opening up of the exclusive stores, for enhancing their offline presence. Chinese handset maker Xiaomi is has made a huge investment towards expanding its offline presence in the country and eyes 50% sales from offline in 2019.
Manu Kumar Jain, Managing Director, Xiaomi India said, that India is the largest market outside China and is currently the fastest growing market among all sizeable countries. “We are hoping to continue to be number 1 in India and we want to grow our offline share this year and it’ll be 50% online market share, and holding it is a tough task, thereby offline expansion is a focus area for Xiaomi this year.
Xiaomi is targeting 50% of handset sales to come from the offline channel this year against 40% currently and rest will be through online channel with 50% market share. We have the plans to take the overall retail shop count to over 10,000 by the end of this year from 6,000 at present. We are aiming to open a few hundred Mi Studio shops this year also. Jain said.
The company is also planning to launch consumer durable products like washing machines and air conditioners in the second quarter and may price them competitively like its smart TVs. "We will plan one or two new categories next year as well.Xiaomi has about 12 product categories in India and is planning to launch new products on the Internet of Things (IoT) space this year.
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