Also in the letter:
■ Flipkart posts double-digit growth in revenue
■ Infosys, Wipro roll out variable pay amid economic uncertainty
■ Thrasio pulls the plug on India
Sales grow quickest via quick commerce for packaged goods
Hi, Pranav Balakrishnan here in Bengaluru. I teamed up with my colleague Ratna Bhushan, who closely tracks the consumer goods industry, to understand how these firms perceive the quick commerce space especially as they come off the peak they hit in 2021.
Driving the news: Despite a slowdown in new user additions, and a funding crunch that has hit the new economy tech startups, quick commerce has emerged as the fastest-growing sales channel for these traditional consumer goods companies. “Quick commerce is the fastest growing channel for us now online,” Suresh Narayanan, chairperson, Nestle India, told us in an interview. “I will not say it’s overtaken the regular platforms but in the last quarter, more than half of the growth in ecommerce came from quick commerce,” he said.
Tell me more: Britannia CEO Rajneet Kohli also said the growth through quick commerce is more prominent in certain categories. “There is a clear uptick that’s happening on the quick commerce side, and very much so in certain categories.”
What’s next? Will q-commerce beat horizontal ecommerce players like Amazon and Flipkart? Not yet, because finding new users has been hard for these young startups as they struggle to expand beyond top cities. Industry insiders say it does not make economic sense for these companies to operate in low-density cities, a challenge unique to them which is not faced by traditional ecommerce.
RBI set to introduce regulations for offline point of sale firms
Hi, this is Pratik Bhakta in Bengaluru. The Reserve Bank of India (RBI) will soon regulate offline point of sale (POS) companies which offer digital payment services at offline merchant outlets.
Driving the news: The RBI is looking to come up with regulatory guidelines for offline POS deploying companies. These entities offer digital payment services to merchants mostly to accept card and UPI payments. After the payment aggregator licences, this is the central bank’s second move to regulate the digital payments ecosystem, bringing the entire payments ecosystem within its direct supervision. For the industry, this means higher scrutiny and an increase in costs of compliance and operations.
Shrinking sector: Unlike the online payment firms that have raised capital from venture capitalists, offline payment players are lesser in number and have grown slowly. The only outlier here is Pine Labs which is now valued at $1.6 billion. Others in the sector include MSwipe, Innoviti Payments, among others. PineLabs and Innoviti are already regulated under the payment aggregator licences.
Flipkart posts double-digit growth in sales, PhonePe crosses $1 trillion in transactions processed
Ecommerce major Flipkart posted double-digit growth in sales, while PhonePe surpassed $1 trillion in transaction processed value (TPV), Walmart said during its earnings call on Thursday.
Flipkart and PhonePe’s contribution: Flipkart improved its contribution profit in the January-March quarter and helped drive Walmart’s advertising revenue, its share jumping about 50% year-on-year.
Judith McKenna, president and CEO of Walmart’s international business, said that PhonePe crossed $1 trillion in transaction processed value (TPV), up from its TPV of $950 billion in the previous quarter.
Walmart’s numbers: Walmart’s total revenue for the quarter jumped 7.6% year-on-year to $152 billion, whereas its operating income grew 17% year-on-year to $6.2 billion. Its international net sales rose 12% year-on-year on the back of strong sales not just from India, but from China and Mexico. Walmart’s international ecommerce business grew 25% year-on-year fuelled by in-store fulfilment and advertising.
PhonePe chief Sameer Nigam flays those backing ex-ante regulations
Sameer Nigam, cofounder and chief executive officer of fintech PhonePe, has termed ex-ante competition regulations “a bad idea”. He was reacting to our newsbreak on Paytm’s formal opposition to submissions by industry lobby Internet and Mobile Association of India (IAMAI) to the Committee on Digital Competition Law (CDCL).
Both Paytm and PhonePe are members of the IAMAI.
Quick recap: ET had reported on May 13 that internet industry body IAMAI had submitted its views to the CDCL opposing the prescription of ex-ante regulations for digital companies, saying that ex-ante measures “may limit growth not only of the market in question but the digital economy altogether”.
Tweet of the day
Thrasio gives up control in India’s Lifelong, founders take 60% stake
US ecommerce rollup firm Thrasio, which acquired consumer durables brand Lifelong in India last year and was looking at expansion, seems to have pulled the plug on its India plans.
Driving the news: The US ecommerce rollup firm has divested the majority of its holding in Lifelong India to the its founders and investors. The founders will now own a 60% stake in the firm, sources said. “The company still needs to grow and thus they (Lifelong’s founders) have taken back control of the firm,” the person quoted above added.
Why this decision? Sources in the know said the move was driven by headwinds Thrasio, led by CEO Greg Greeley, was facing in its home market, the US.
Other Top Stories By Our Reporters
Nodwin Gaming raises $28 million: Nodwin Gaming, a subsidiary of Nazara Technologies, has signed agreements to raise $28 million (about Rs 232 crore) from Nazara, South Korean digital games developer Krafton, Sony Group and others.
Gaming startup Rooter raises $16 million: Gaming and esports content platform Rooter has raised $16 million in a growth round of funding led by existing investor Lightbox.
Infosys, Wipro roll out Q4 variable pay: IT services major Wipro has rolled out 80.25% variable pay for its employees for the fourth quarter ended March while Infosys has decided to give out 60% variable pay, according to internal communications seen by ET.
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