US Shutdown: How does it Impact India

US Shutdown: How does it Impact India !!

The US government began a partial shutdown on Tuesday for the first time in 17 years, and its 12th since 1981. Though a closure of state services for a few days would hardly cause ripples, a prolonged shutdown could impact negatively on the US and the rest of the world. Incidentally this shutdown comes a few weeks ahead of the next political battle; to raise the federal government’s $16.7 trillion debt ceiling. 

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Online Retail

Online Retail: How far is the Tipping Point for etailing in India!!

Amazon is here, but it’s content to dip its toes while it waits for regulations to change in its favour. If and when they do, it will still face the task of doing something it has never done so far: crack an emerging market. Shelley Singh reports

IN JUST three months, MirchiMart, a Delhi-based online retailer of mobile phones, has seen its business jump by 50%. In the same period, another electronics retailer Universal, which runs 500 stores in South India, has shipped tablets and smartphones to every state and union territory in India. And AXA PDA Lounge, a Bangalore-based retailer of mobile phones and accessories, has seen its business grow by one-third, selling products as far away as Srinagar and Imphal.
Behind the increase in sales and reach of these three retailers is their decision to sell their products also via Amazon.in, the Indian platform of the world’s largest online retailer launched in June. While this is doing wonders to their sales, it’s a small step to bigger things for Amazon India, but far from a done deal.
Indian rules don’t allow Amazon to stock and sell products, which is how it earned 60% of its 2012 revenues of $61 billion (Rs 3,66,000 crore). So, as it bides its time for rules to change in India, it is dipping its toes in this $12 billion market by being an online marketplace, hosting and enabling 500 sellers like MirchiMart, Universal and AXA PDA Lounge. “If regulation permitted Amazon. in to be a seller, it would be good for the consumer,” says Amit Agarwal, vicepresident and country manager, Amazon Seller Services. “We will be able to offer more choice.”
In his 14 years at the 19 -yea r- old Amazon, Agarwal has seen the company do that, with great purpose, force and results. Before he relocated to lead Amazon in India, the IIT Bombay and Stanford graduate helped build the marketplace business in the US, started its cloud computing business, did a stint with Amazon international and did two years as advisor to Amazon founder Jeff Bezos. He has seen Amazon power ahead in developed markets. And he has seen Amazon move gingerly in emerging markets, hemmed in by rules, local consumer behaviour and local competition. India is the 12th country for which Amazon has a dedicated website. It’s only its third emerging market, after China in 2004 and Brazil in 2012, and this is a space where Amazon is yet to stamp its presence the way it has done, say, in the US. “In Brazil, Amazon’s offering is fairly new and focuses on e-books,” says Zia Daniell Wigder, vicepresident and research director, Forrester Research. “However, it will face competition from traditional retailers in Brazil, who have now gone online.”
Amazon has been longer in China, which is also a much bigger market. According to Praveen Sengar, research analyst at Gartner, e-commerce in China is a $197 billion market, against $220 billion in US. “China will overtake the US as the largest e-commerce market in a few years,” he says. “But Amazon is not among the top five sellers in China. Even in developed economies like Japan, local player Rakuten is much bigger than Amazon. Companies have to localise to succeed in emerging markets and Amazon has been unable to do so in China.”
The Local Challenge Like China, e-commerce in India is throbbing with local players—75-100 start-ups, driven by entrepreneurs and backed by venture capital. “It’s hard for an executive to compete with an entrepreneur,” feels Sanjeev Aggarwal, managing director of Helion Venture Partners. “The passion and energy they bring is very different.”
Besides, adds Aggarwal, these start-ups understand the local market—like low value transactions, cash on delivery and supplying to 20,000 pin codes. “You can’t run retailing in India with executives installed from the US,” he says. “Amazon will replicate what has worked for it in other markets.” In developed markets, what has worked for Amazon is its large product catalogue, competitive pricing, good customer orientation, a culture of innovation, deep pockets (it has about $11.5 billion in cash and marketable securities) and branding. In India, too, it will gradually leverage all of this.
Globally, Amazon offers products in 40 categories and two million sellers, and draws about 100 million buyers. “Amazon is like Walmart —keep a huge inventory and sell at a low price,” says Anshul Bansal, who quit as vice-president in the investment banking division of Yes Bank in 2011 to become an online retailer of sarees on eBay, another online marketplace.
In India, Amazon is currently offering 13 product categories and is planning to add more in time for the festive season. Sengar calls it a “timely entry”. According to Pragya Singh of Technopak, a management-consulting firm, organised, brickand-mortar retail has 7-8% penetration and does not reach small cities. “E-tailing is less than $1 billion at present, with plenty of headroom to grown, in sync with growth of mobile Internet users,” says Singh, associate director, retail, Technopak. Singh believes the tipping point in e-tailing is three to four years away. “VC-funded models don’t have the deep pockets to match global companies,” he says. Amazon too is in no hurry. “We are driven for the long term,” says Agarwal. “We take a 7-10 years time frame for the seed to sprout and not three years or three months.” Sengar sees Amazon making an acquisition. “It costs Rs 1,200-1,500 to acquire a customer, while an average order value per year is $200 (about Rs 12,000,” he says. “An acquisition will help it obtain customers who are used to buying online, besides warehouses.” Agarwal deflects queries on acquisitions. “At, present we are focussed on customer experience,” he says. “I won’t speculate on future strategy. We are here for the long haul.”
For now, Amazon is content to build its marketplace model by adding sellers from the pool of 14 million small and medium enterprises in India who have something to sell. That model is what eBay is founded on—it does not own warehouses and products are shipped directly from sellers—and it’s what Flipkart, the largest online retailer in the country today, launched earlier this year.
While eBay, which has been in India for about a decade, has 30,000 sellers, Amazon has 500 currently. While sellers can express an interest to be on the Amazon platform, the company decides. “It’s a due diligence we do on the ability of a seller to provide a good customer experience,” says Agarwal. These, typically, include the kind of stock a seller has and its ability to complete an order on time.
The Building Challenge Amazon does not charge sellers for listing products and has no cap on how many products can be listed. For the first year of its operations, Amazon has also waived its monthly subscription fee and transaction fee (about 10-15% of the price of an item). “Buyer ‘footfall’ is the biggest advantage sellers get on Amazon,” says Dinesh Agarwal, founder-CEO of IndiaMart.com, a business-to-business marketplace.
Mumbai-based MX Information Systems has a retail outlet and 14 shop-in-shops or counters in large multi-brand retail stores or malls. It is also a seller on Amazon. Satish Bathija, its director, says that being on Amazon increases the catchment area for its products, helps sell on the back of a global brand, creates trust among buyers, and offers access to Amazon services like payment gateways, shipping and logistics. “We see online business grow faster than offline,” says Bathija.
A seller on Amazon can ship products directly or through Amazon, from its 150,000 sq ft warehouse on the outskirts of Mumbai. In case of the latter, buyers can see an FBA tag (‘fulfilled By Amazon’) alongside the product. “We don’t need to invest in manpower for shipping, packing and logistics,” says Bathija, “though we have to pay for payment gateway (for credit-card sales).”
Some retailers feel that if and when Amazon can sell on its own, it will threaten its portfolio of sellers, even as it promotes their interests. “Amazon does not share market research data with sellers and uses that data to push its own products,” says Bansal, proprietor of Old India Republic, a retailer of sarees on eBay. “Small sellers feel threatened by a giant like Amazon.”
Agarwal, today, emphasises on getting the basics right. “It’s just been three months since we launched, and we believe consumers care more about low prices, wide selection and reliable delivery,” he says. “We are focussed on that.”

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The Brightest Leaders...Management Tip!!

Management Tip:Bring Out The Best in Them

By Harvard Business Review

THE BRIGHTEST leaders don’t rely on their own intelligence just to succeed, but use it to help their people shine as well. Here are three ways you can help your employees not only feel smarter, but act smarter:
Look for ideas everywhere. Don’t assume you know where all the new and creative ideas will come from. Involve people on projects not because of their titles but based on their ability to contribute.
Encourage openness. 

 Create a safe environment where your people know they can—and should—think, act, and speak with reason. Have a high tolerance for mistakes so people aren’t afraid to take risks.
Challenge people to get better. 

 Offer opportunities for them to stretch their thinking and behaviour. Set the expectation that everyone, including you, should improve his or her skills.

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Umbrella Mentoring

Maruti Suzuki Kickstarts ‘Umbrella Mentoring’

RICA BHATTACHARYYA

The country’s largest carmaker, Maruti Suzuki, has embarked upon a structured programme called “umbrella mentoring”, aimed at developing mentors within the organisation who can grow a long-term relationship with employees. Though mentoring is not new to the organisation, this is the first time it is being taken up in a structured way in line with the company’s business expansion plans. As the name suggests, ‘umbrella mentoring’ is aimed at touching a large number of employees. It covers managerial staff across levels as well as shop floor workers.
The programme is aimed at giving employees across levels and functions such exposure early in their careers. Besides, it looks to help the employees prepare themselves for bigger roles in the organisation and to make them feel responsible towards the growth of their mentees.
 The mentors guide them to swim through the slowdown and prepare them for the turnaround with regular and open communication.  Mentoring in such cases is about managing expectations while still preparing for the turnaround.
It helps with introspection on “how we can improve ourselves, enhance our productivity so that we are better equipped to face the good times” . The programme will provide a platform for mentors to enhance their leadership competencies and help build an open work culture where people are respected and cohesively aligned with organisational objectives with swift two-way communication channels.
Each mentor has been assigned four to five mentees. Mentors undergo training. Some of the competencies considered while training mentors include communication, influencing, conflict resolution, and problem solving, decision making, team bonding. Training for mentees covers responsibility, optimisation, alignment, dedication, motivation, attitude, passion. The trainers deploy a combination of games and activities, video clips, discussions and role plays, self introspection, case studies. The company is also offering specialised trainings to the aspiring mentors and mentees. At each level, competencies have been defined and trainers have designed content on the basis of the competencies.

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Attrition : Causes & Effects...What should be done!!

HIGH STAFF TURNOVER

Attrition: The Ticking Time Bomb in Industry

Shiv Shivakumar: Former chief of emerging markets, Nokia.

Attrition is a complex, cultural and leadership challenge with no easy answers. In 2012, according to HR consultant Towers Watson, attrition in India was 17%, higher than the 11.2% salary rise. At this level of attrition, an organisation in 2020 will have only 22% of the employees it had in 2012. The salary rise in 2013 is expected to be 12.4%; attrition will be higher. Attrition is at all levels, more in junior customer-facing jobs. Attrition in the banking, financial and insurance sectors was 30%, in IT services 28%, retail and consumer goods 16%, retail store-level 30%, healthcare 10% and hi-tech 14%, according to the report.

 What is the impact of high attrition? It erodes consumer loyalty, hurting brand reputation. High attrition creates a vacuum at middle-management, which should handle execution. Attrition creates a middle management that’s tasted neither success nor failure. Weak middle management delivers faulty, corner-cutting processes. It forces senior management to work a level lower, forsaking the bigger picture. A weak middle management means poor mentorship of entry-level managers, hurting long-term leadership development.  

Why do we see high attrition? The first is economic; new industries open up when GDP grows faster than 5%. Talent in established industries is raided to staff newer industries. FMCG is the talent bank in India, funding telecom, retail, health and entertainment industries. The next reason is “hurried aspiration.” Everyone is in a hurry to be a young vice-president or a CEO, to own the latest car and television or to take that exotic holiday. This forces people to take risks with their loans, and anyone with an EMI payment greater than 25% of his takehome salary is constantly in the job market, to reduce that to below 10%. Hurried aspiration is fuelled by average headhunters who create insecurity and peer pressure by transacting CVs between managers and firms. Performance evaluation is loose and incomplete, based more on potential and less on merit. 

What do Indians value at work? The top five factors are: job security, career advancement, base pay and title, learning and development, and the reputation of the organisation. A company must grow. If it doesn’t, people leave. Learning and development is the Achilles’ heel in India. Companies do not invest much in training and developing talent: this is the first reason quoted by exiting employees. The cost of training and development is minuscule, but it is the first item cut in tough times. On-the-job learning from leaders is something young people value. Leaders in India must coach young employees; this will lead to higher engagement, better performance and lower attrition.  

 

The world will see a talent shortage by 2021. The US, Canada and Europe will see a deficit of 12 million people to fill roles. India with 2.1 million, Indonesia with 1.5 million and South Africa with one million will be the top three countries with a talent surplus by 2021. This is an opportunity to develop global leaders. Culturally, we need to change. We should value contracts, which we don’t do today. Our contracts are social in nature and less legal or economic. Employees will need a moral compass of right and wrong: joining competition, refusing to join a new firm at the last minute, burning bridges and so on. Companies will need to be flexible, using innovative policies for women, building alumni networks and designing customised career paths. Firms must differentiate on merit early to keep top talent. They should build a stronger middle-management pool by rewarding those who stay. Senior leaders must engage, coach and grow talent. Firms should start learn-andearn internships. Companies are good at identifying the needs, wants and desires of consumers; they should identify the needs of their employees. Finally, young managers must realise that a good career is a 20-year journey. If they do not develop strong general skills and industry competence, younger and less-costly managers will substitute them. A rolling stone career strategy is a short-term success and a long-term liability for individuals and companies.

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Socio-Economics: Some Interesting Statistics on India

Socio-Economics: Some Interesting Statistics on India:-

1. India has something like 9 million enterprises, only 1 million of them are corporations, only maybe less than 10,000 are listed and maybe less than a thousand are traded. It is a very shallow kind of market. 
2. Only 50 million Indians have a passport, which is 5%, only 30 million Indians pay taxes, which is 3%. 
3. Mobiles phones are 600-700 million, internet connection is about 140 million, growing dramatically with smartphones. Cable is going digital. Aadhaar will be about 800 million in the next two-three years. Bank accounts become universal. We are going to have millions of outlets with online connectivity. 
4. If you look at every market of ours, it is very, very shallow. It does not reach everyone – the stock markets in India probably have 15 million shareholders, 1.5% of the population. 
5. The currency has devalued because we do not have the depth in manufacturing; it is not big enough. It is only 15% of our GDP. It can create a lot of inclusive growth, given the combination of skilled and unskilled labour required. Indian manufacturing is actually getting a much better image abroad – products are getting accepted, our engineering depth is much better than it was a decade ago, Indian brands are doing well in international markets. We have a lot going for us in terms of potential and we need to address some of the problems whether it is infrastructure or supply chain or raw material bottlenecks.

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Retail Industry Landscape in India

Retail

Indian retail is one of the fastest growing markets in the world. The sector is experiencing exponential growth, with retail development taking place not just in major cities and metros, but also in Tier-II and Tier-III cities. Retail market in India is expected to reach US$ 866 billion by 2015 from the current US$ 516 billion.
The organised retail segment in India is expected to account for 20 per cent of the overall retail market by 2020. Net retail sales in India are also quite significant among emerging and developed nations.
India's strong growth fundamentals along with increased urbanisation and consumerism opened immense scope for retail expansion. Further, easy availability of credit and use of 'plastic money' have contributed to a strong and growing consumer culture in India. With growth in the E-commerce industry, online retail is also estimated to touch US$ 70 billion by 2020 from US$ 0.6 billion in 2011. The Government of India (GOI) has approved 51 per cent foreign direct investment (FDI) in multi-brand retail and increased FDI limit to 100 per cent in single brand retail and for cash and carry (wholesale) trading and exports.

Sectoral Presentation (August 2013)

http://www.ibef.org/artdisplay.aspx?cat_id=377&art_id=35018

Retail Industry Landscape In India  By IBEF

 

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