Snapdeal is trying to expand its presence in the high-end fashion segment and acquired luxury fashion portal Exclusively.com. The result of this acquisition will show a rise in their Gross Merchandise Value from $1 Billion to $2 Billion by the end of 2015.
The benefit to the consumers with this acquisition is yet to be seen as both the websites are to be run separately and Exclusively is said to be Complimenting Snapdeal ( Its like wearing a cheap dress and complementing it with some Diamond jewellery). Last year Flipkart had acquired Myntra for an estimated Rs 2000 Crore and Amazon had picked up a minority stake in gifting card technology venture QwikCilver. It seems to be a tug of acquisitions going on in the e-commerce business.
The enormous entry of Luxury Brands in India has been anyways speculative and dicey. But the e-commerce giants aren’t afraid of it. They cater to only around 5% of the country consumers who have the capacity to buy designer apparels and accessories Online, still they are confident enough to acquire a luxury portal. When it comes to designer clothes one would prefer going to the exclusive boutique than checking them online because these ‘Ones’ I talk about here are few. The idea behind online retailing was to provide the consumers what they need on their door steps. But today it turns out to be “its not about giving them what they want, its about giving them what they don’t know they want yet’.
Who would have thought E-commerce can be a great example of “Kansas City Shuffle”.
Kansas City Shuffle is a clever deception, one that requires thought on the part of the inciter and great ignorance on the part of the deceived. The primary goal of the Kansas City Shuffle is to catch one completely off-guard and unaware so that trickery can take place.
Hope you got a picture. For some unknown reason, FDI in e-commerce is 100% Automatic ( our government is too busy to look into it). Its like Indians still waiting for the East India Company to come back and take everything (because they sure seem to be tired by running the country from 6 decades, thats a long time). Anybody just comes in India and launches the e-commerce business. But again as mentioned in DIPP FDI Policy 2014 Such companies would engage only in Business to Business (B2B) e-commerce and not in retail trading, so are Flipkart, Amazon, Snapdeal Etc, B2B, or B2C?? Of course its B2B. So what does Government do. They create a loophole called marketplace model. In this model, the online company runs a website which provides the marketplace— a platform for business transactions between buyers and sellers. In return for the services provided, the online company earns commission from the sellers (how convenient).
Flipkart has created a complex business structure by integrating its B2B operations with the marketplace model. A company called WS Retail was incorporated in 2009, which transacts with the customers and allegedly acts as a ‘front‘ for the B2B firm (Flipkart Online Services) which receives foreign investment. This structure has been allegedly adopted to keep the foreign-funded Flipkart Online Services at an ‘arm‘s length‘ from selling directly to the consumer. Now this is called a Plan isn’t it.
So now they are on an acquisition binge where they are trying to make a more complex scenario for the us to understand.
Its all turning out as a Kansas City Shuffle.
Its a blindfold kick back type of a game
Called the Kansas City Shuffle
Whereas you look left and they fall right
Into the Kansas City Shuffle
The consumers are so busy trying to buy the offerings from the E-commerce portals that they don’t pay any heed to what exactly is happening inside the whole system of it.
At present, e-commerce, as per the total retail sales in India, is a small figure. However, the rate of growth in e-commerce per year and the impact of such growth on the economy has forced the Indian government to study the FDI policy framework with respect to e-retail.
The government has a lot on its shoulders to formulate clear e-retail policy and not the loopholes.