Builders Called the Shots, Not Anymore!! Internet Heavily Influences Real-Estate Decisions In India

Builders Called the Shots, Not Anymore!! Internet Heavily Influences Real-Estate Decisions In India

From security risks to connectivity, real-estate sites are filling information gap for buyers 

With a rising number of property portals entering the market, the online real estate business is expected to improve gradually as these websites bring transparency by providing high quality information about projects, believe industry experts.

Property portals are increasingly becoming a tool for research on buying, selling and leasing residential or commercial properties in many parts of the country, as the amount of information listed on these sites is increasing. 

In a first of its kind survey of real estate transactions being influenced by Internet, Google India has come up with some interesting findings. Picture this: Right now, $43 billion or Rs 2,58,000 crore worth of real estate transactions are being directly influenced by the Internet!

Considering that India now has the world’s 8^th most expensive office location, these new findings on Internet influencing real estate transactions is certainly a very exciting to observe and analyze.Nitin Bawankule, Industry Director, Google India said, “It is estimated that the real estate industry will grow to become a 140 $ billion by 2017 and the Internet audience base is expected to reach over 450 million by then. There is tremendous opportunity for both online real estate aggregators, brokers and developers to engage the buyers online by providing rich, meaningful and immersive experience to buyers on the Internet, including mobile ready online assets as the trends are consistent both in metro and tier 2 cities.”

Some of the interesting findings from the report: 

1. Organized retail market in India will double by the time 2017 ends. Right now, its $79 billion which will become $140 billion by 2017. Overall, 75% of real estate transactions are of residential nature and 25% is commercial.

2. 53% of overall real estate transactions are being influenced by Internet today, which makes it $43 billion worth of real estate deals. $31 billion worth of residential real estate and $12 billion worth of commercial transactions are right now happening on the Internet!

Why does a person go online to search real estate? Because they are now more informed and aware. 52% of Internet users want ease of comparison between different real estate properties; 49% want an easy access to contact details of owners and developers; 60% want easy access to in-depth property information and market trends and 43% wish to have easy financing and processing documents. This is a goldmine of information for anyone wishing to start a new real estate company!

A. 89% of the targeted audience of real estate developers are already online (households worth more than Rs 5 lakh annual income)

B.  If given a choice between different sources to find information, 53% of them chose Internet meanwhile 54% chose newspapers and 52% chose broker/developer’s office. 

C. When asked about the brand recall value among real estate advertisements, it was found that 58% of respondents remembered newspaper advertisements while 49% remembered Internet advertisements.

Based on this survey results, Google India has some pretty solid recommendations for those who in this business of real estate:

• Focus on mobile platform; create apps and make a mobile presence
• Go beyond Tier 1 cities as Tier 2 cities are equally active in real estate research and purchase
• Create rich and engaging content for best results
• Focus on both primary and secondary real estate markets as there is very less difference between new property and resale property

Do you check Google before buying a real estate asset? If you don’t you are actually in the minority!

When Sameer Rana was looking for a dream property last month, he was spoilt for options in the real estate market. Yet the 44-year-old investment banker was not sure whether he had all the information to spend .

`2 crore on an apartment. “Is the area safe? Are the nearby schools good? Will the builder give possession of the house on time? All such questions worried me and I did not have the time to go through every property myself to decide,” Rana said, adding, “Brokers could not be trusted.” Like most potential homebuyers, Rana felt he had skewed and incomplete information that was supplied mainly by the builders and brokers. But now online start-ups including Housing.com, PropTiger and CommonFloor are setting up their own teams, data science labs and open forums to provide such information. 

“Technology and analytics will be the biggest differentiator and game changer in the online real estate industry in the future,” said Rahul Chowdhri, partner at Helion Venture Partners and an investor in real estate portal Housing.com.

Softbank and Accel backed PropTiger has collaborated with social enterprise SafetyPin to provide information regarding safety quotient of new projects in Delhi and National Capital Region. “The parameters used to come up with this score include presence of street lights, visibility of vehicles, crowd at important times and access to modes of pub lic transport, among others,“ said Prashan Agarwal, co-founder of PropTiger, which is set to expand to other cities soon.

Its larger rival Housing.com was the first online real estate company in the country to launch its in-house data science lab in 2012. The portal focuses on lifestyle rating, locality scores, connectivity scores, child friendliness index and price heat maps across categories including rentals, resale, paying guest accommodation and new projects across 40 cities.“The real estate industry has forever lacked an authentic source of information which gives deep insights to people, using accurately collected data,“ said Advitya Sharma, co-founder of Housing.com, which has more than 500 people in its data collection team. “Our algorithm takes into account the most basic needs and sought-after luxuries, and weighs them according to their importance. We use around 50 parameters to get this data.“

Real estate start-ups are also aggressively focusing on new projects since they expect this segment to generate most of their revenues in the coming years. “The average subscription fees the developers generally pay is about Rs 3 lakh per quarter, per pro ject,” said Sumit Jain, co-founder and CEO of CommonFloor.com. The company’s portal hosts an open forum for users to exchange feedback and queries on new listings and properties. “Sometimes our builders come to us to request us to pull out customer complaints, but we ask them to resolve with the customer directly rather than interfere,” Jain said, adding, “It may hurt our business in the short term but it helps build trust in the long term.” Experts say the Indian industry is likely to see a lot of consolidation in the next few years following the trend in established markets. 

Ref: An ET Article & A Google Report

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Aggregators dropping rates, triggering a low-fare revolution in the Taxi Market : A battle b/w Owners & App-based Aggregators, like the Online Vs Offline Retail war!!

Fare Game: Who’ll Grab the Bait? 

 Mobile app-driven service providers, which aggregate taxis instead of owning them, are forcing radio taxis to tweak their business model.These Aggregators dropping rates, triggering a low-fare revolution in the taxi market. 



Taxi service marketplaces are giving auto rickshaw drivers a run for their money, offering almost matching fares in the rough and tumble of the country’s vast but unorganised urban commuting sector.

Companies including  Uber, Olacabs and Taxiforsure — most of which are flush with venture capital funds — are aggressively dropping rates, catalyzing a low-fare revolution in the taxi market. This strategy had started with the entry of San Francisco-based Uber into India in 2013. Uber, which had lowered fares in Bangalore by a quarter in August, last week reduced it by another 20% in the city. Close to Diwali, it had slashed fares in Delhi by a fourth.

The company attributed the move to increased efficiency in their marketplace, but clarified that the offer is only for a limited period.“The more people ride with Uber, the longer we will be able to sustain low prices,” said Bhavik Rathod, general manager of Uber Bangalore. Uber is backed by Google Ventures and Fidelity Investments, among others.

Hindustan Unilever couldn't kill Nirma,“ says Kunal Lalani, with an impulsive grin and a customary twirl of his moustache. 

“Goliaths might have had it easy in other countries but in India Davids like us won't let that happen,“ contends the managing director of New Delhi-based Mega Cabs, taking a swipe at the $18.2-billion Goliath Uber, a taxi booking app. The Davids, it seems, have drawn first blood.

The Association of Radio Taxis, a body of taxi providers headed by Lalani, rushed to the Reserve Bank of India (RBI) in July alleg ing that the San Francisco-headquartered car-sharing service provider Uber was not following the two-step verification process required for credit card transactions and was flouting foreign exchange norms.The RBI issued an order in August, stating that a local service payment must have a two-factor authentication and be routed through domestic gateways.

As Uber stares at an imminent shutdown if it doesn't tweak its payment model to meet the RBI deadline of October 31, its rivals surprisingly are not gloating over their victory.

The self-realization of urgently putting their house in order. “Thanks to Uber, it's a wake-up call for us,“ confesses Lalani. “We need to be responsive and focus on consumer connect or else we will perish.“

It's indeed a do-or-die situation for traditional Indian cab operators that have had a bump-free ride so far. Uber has not only shaken up the industry, it has also forced the companies to tweak their business models and quickly slip into reboot mode.

Changing Gears

“We haven’t taken a price cut in the past six months,” said Kunal Lalani, chairman, Mega Cabs. “Since we are not private equity funded, we don’t have the luxury of subsidising the ride, which most of the PE-funded car operators are doing.” Lalani, for sure, has stepped on the gas. Mega Cabs, which has over 3,500 cars across seven cities, has set an ambitious target of taking its fleet size to 25,000 by 2020.In six years, it plans to pump in `4,000 crore, expand to 40 cities, take its revenue to `6,000 crore and leverage more technology in its operations. Mega Cabs follows an ownership model but of late has been influenced by the asset light aggregation model that is the USP of apps such as Uber, TaxiForSure and Olacabs. In addition to its owned fleet of 3,500, it also relies on some 700 cabs that it does not own. But clearly it believes in a strategy that is different from the aggregators: of expanding its `owned car' fleet and working with a committed set of drivers.

The app-based model is prone to abuse, alleges Lalani. “Tomorrow some antisocial elements can use this aggregator platform to do a lot of things like gun running or drug trafficking. Then who would be held responsible -the driver or the one who is running the app?“ he asks.

It's turning out to be a battle between owners and the app-based aggregators, quite similar to the online versus offline retail war that India is witnessing now.

Olacabs, which last week received a $210-million infusion from Japan’s Softbank, has cut the rate for its lowcost segment to `10km.While Uber has lowered rates in its affordable car segment by 25% in a few cities , Bangalore based TaxiForSure has run aggressive promotional offers, as has radio-taxi operator Meru.

TaxiForSure co-founder Aprameya Radhakrishna said demand has increased ever since the discounting started. “For three years, we have not discounted at all. It’s only now that we are giving out offers like `1 Re ride to our customers , ” he added. He also believes aggregators take over mind share and market share globally. “And that's surely not a great feeling for the traditional cabbies, which is causing a lot of heartburn,“ he says. Their mindset has to change from eliminating aggregators to competing with them. Radhakrishnan also contends that aggressive pricing is sustainable in the long run. “The biggest plus for us is that we don't own the cars.“ This, coupled with the fact that we just charge a 10.5% commission, helps us in drastically cutting the price, he explains.Radhakrishnan is also quick to dismiss any doubts about the safety of the cabs provided by aggregators. “Why would one model be safer than the other,“ he asks.

The company is backed by investors including Accel Partners, Bessemer Venture and Helion Venture. “The game at this point is customer acquisition, and if that means putting in more cash to back the company and win the market, so be it,” said an investor who did not wish to be identified.

Tech Check

Rajiv Vij is not bullied by Uber and is ready for the fight. Says the managing director and CEO of Carzonrent, which runs Easy Cabs.“Uber is a fantastic opportunity for us to emerge even stronger. We implemented Oracle in 2004-05 when most car rental companies in India were still taking down bookings in long registers,“ he says. Carzonrent has a 35-member technology team, boasts of a national command centre that tracks every car across India and has an app for radio cabs, car rentals and self-drive.“That's big for a car rental firm that is not a technology company,“ says Vij, taking a dig at Uber.

Carzonrent started its aggregation model in 2004. Of the 3,500 cars under the car rental business, only 500 are owned by the company. The rest are owned by the drivers who work for the company. “But the aggregation model doesn't mean that you won't pay service tax,“ he says, taking another jibe at Uber, adding that there are limitations with a foreign brand operating in India.Vij, who was the master franchisee of Hertz in India in 2008, has assigned his daughter, Sakshi, the task of streamlining the technology part of the business. “We are working on a system to bring down the waiting time for consumers to just 5-10 minutes,“ says Sakshi, executive director of Carzonrent.

Such is the demand that, according to industry executives, taxi companies are unable to accommodate about almost a fifth of potential passengers. But since the long-term strategy for most aggregators is to attract first-time riders and lure more drivers into the system, profitability temporarily takes a backseat in the backdrop of support of investors.

Industry sources estimate that all aggregators are making a loss of between 20-40% on every ride, but with the support of investors, margin pressures are eased.“Companies are spending lots of money on marketing and discounts, since there is no pressure on any of these aggregators to make immediate profits,” said Jaspal Singh, co-founder of Valoriser Consultants, which provides market research services for transportation companies. “They are all backed by large patient investors.” The strategy is paying off. “We have seen demand go up five times since we cut our prices, with most traction coming from our app,” said Siddhartha Pahwa, CEO, Meru Cabs, which cut rates by a fourth in its lower-end Genie segment. Executives at Ola, Uber and TaxiForSure concur.

“A rapid scale-up in demand and supply is resulting in fewer dry runs for drivers, lower wait time for customers, more rides per hour and, hence, higher driver earnings,” said Tarun Davda, vice-president at Matrix Partners and a board observer at OlaCabs, which has over 33,000 cabs in its fleet.Anand Subramanian, director of marketing communications at Olacabs, too feels that pricing by aggregators has not been predatory.With aggressive discounting, it’s not just consumer demand but also driver income that rises. Since Ola cut rates to Rs10km for its mini segment, it claims that average driver revenue has risen by 30%-40%. “Ultimately, we want our driver partners to see the value of staying on the Ola platform for longer hours. In turn, customer stickiness to book a cab fro m us goes up, ” said Anand Subramanian, director, marketing communications, Olacabs.

 

On a Fast Track 
Uber, on its part, is unruffled at the belligerent attitude of the cabbies. “Change often brings resistance,“ says Allen Penn, head of Uber's Asia operations. Uber is bringing something fresh to a sector that is characterised by stagnation, he adds.For decades, it was commonplace to wait for an hour to get a ride in most Indian cities while drivers' time and gas were used inefficiently, he says.Penn brushes off security concerns raised against aggregators. When you use Uber's technology, he says, not only are you always connected with a fully licensed driver, you know exactly how far your car is, who is coming to pick you up and the aggregated rating of the drivers based on the number of trips they've completed. “We also have a safety feature in the app called Share my ETA, where a rider can share driver and car details with a friend or family member.

“Can traditional players take on the likes of Uber? Yes, says Aditya Rath, associate director and lead (customer impact) at PricewaterhouseCoopers India. Disruptions are only going to take the industry to the next level of maturity, he reckons.Indian cities have very low penetration in last-mile connectivity. “Hence, there is an opportunity for taxi players to continue to play a significant role,“ says Rath.The traditional customer engagement models will also evolve for taxi players. The heavy dependence on call centres, customer wait times and quality of cabs will have to be reviewed, adds Rath. The fight is not based on the medium but on the customer experience being delivered, he adds.

Nobody knows that better than Siddhartha Pahwa, who argues that the biggest differentiator now will be quality. “If you have to take a 5 am flight, would you wake up and order a cab from an app and risk a service that you're not sure will turn up?“ asks the CEO of Meru, one of the largest radio taxi operators with a fleet of over 10,000 cars.Pahwa is incensed at the predatory pricing adopted by most app-based aggregators.“They are offering services at a price which is not rational. If a product costs you `10, for how long you can sell it at `1?“ he wonders.

While owners and aggregators are embroiled in a high-pitched battle, experts believe that India offers room for all to grow and co-exist. “While the new model is giving a competition to traditional taxi operators, both have opportunity to sustain themselves,“ says Ashita Aggarwal Sharma, professor of marketing at SP Jain Institute of Management & Research.

A consumer may wish to book an Uber experience for official or business travel but may prefer the traditional cab when travelling for leisure, or reaching an airport early in the morning, she adds.

The fight, she believes, is good for industry as well as consumers. The traditional taxi experience will become more pleasing and professional to cater to competition. “Whoever loses, it's a win-win situation for consumers who are having a great time.“

Although customers are cheering the low fares, brand loyalty may be elusive. “I have four mobile apps and depending on the cheapest and fastest cab available, I book,” said 25-year-old Sakshi Sharma from Delhi.However, not all operators may be in a position to sustain the discounts for long, which may lead to consolidation and raise a barrier for newer non-funded players wanting to enter the field.

Ref: An ET Article

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Indian E-Commerce Milked A New Breed of Junglees !!

Price Comparison Sites Make Hay as E-tailers Slug it Out 

So if its only about price, then lets pay its cost!! It is still no one`s game and rules are so dynamic that players in the value chain are still to be christened. Online Biggies are just putting their everything into market creation that they have forgotten to set the rules of the game to their advantage. They didn't pay an attention to fix their position in the value chain and seal the chain. Customers can not be won only on Price and if at all they come, its opportunism and no stakeholder can be proud of and claim satisfaction out of it.

At a time when all online retail biggies such as Flipkart, Snapdeal and Amazon run big discount sales, how do you make sure you're getting the best price for a product you plan to buy? A growing number of internet shoppers are turning to price comparison portals to check out the best deals. Aggregators such as mysmartprice.com, buyhatke.com and 91mobiles.com say the number of visitors to their sites and gross merchandise value of sales through their links have doubled in a matter of days, which may have boosted their own valuations.


These sites get a small share of their users' purchases from online retailers as commission, which, according to industry sources, varies from 3-4% in the case of mobile phones and electronics to 10% for apparel and home furnishing.

 Besides comparing prices on different online shops, most of these sites provide mobile phone-specific information, availability of EMI facility and cash on delivery, and even offer cash-back on purchases.

So rite now, its customers who are having the last laugh. And E-tailers need to revisit their strategy of DEALS ONLY!!

Ref: An ET Article

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Internet Mobile E-Com - Global Start Ups Story & Their Bizarre Valuations!!

Internet Mobile E-Com - Global Start Ups Story & their Bizarre Valuations...

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Happy Diwali 2014!!

Happy Diwali 2014!!

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