Co says new guidelines have created a level-playing field for young players who see themselves as an enabler for brick-and-mortar merchants
By Vishal Dutta, ET Bureau, 4th April, 2016
AHMEDABAD: The new ecommerce guidelines have boosted the growth prospect of upcoming mobile ecommerce players that connect brick-and-mortar merchants directly to customers.
Players like Orderr, m1-Order, Goodbox and SnapBizz say that the new ecommerce guidelines have created a level playing field for young mobile ecommerce players who see themselves as an enabler for brick-and-mortar merchants. It has also opened the gateway for more merchant acquisitions, faster scaling and funding.
While last week’s government announcement has left some large ecommerce players flummoxed, upcoming mobile ecommerce players are in a celebratory mood. “I was very thrilled after the government came out with the clarification,” said Abey Zachariah, CEO, Goodbox adding that while ecommerce giants would find replicating its model difficult, younger players will grow faster now.
“The new guidelines seems to be in our favour. Scaling up would be faster,” says Nipun Arora, founder, Orderr. According to Arora, the enabler business model does the same thing what the large ecommerce players does, but with less staff, less capital, no cash-burns and no discounts, which will allow enablers to scale faster.
The new rules have not only barred ecommerce players from giving discounts directly but they may also not be able to offer cashback offers to draw customers. Moreover, the guidelines restrict ecommerce players to get only 25% of sales from one vendor.
“Discounts going away is a major relief for small merchants as this gives them a level-playing field,” says Tejinder Oberoi, founder director, m1-Order, an Ahmedabad-based startup.
Oberoi expects more merchants to join his platform as fear of discounts and cashback offers by biggies will fade away soon. SnapBizz, which focuses on grocery retailers, believes that now larger ecommerce players will have to embrace hyperlocal (merchant) players in order to scale up. They will need the merchant to be digitalised and for that, they will need to join hands with enablers.
“We were already running pilot projects with large ecommerce players, but with this new development we now expect to see accelerated moves from them,” says Prem Kumar, CEO, Snapbizz. These startups are also hopeful of using the FDI route to quickly raise funds.
“There was a funding crunch in the market. This won’t be the issue anymore with FDI allowed in marketplace ecommerce players and we are the one (mobile ecommerce) who are completely compliant with the new ecommerce norms” said Abey Zachariah of Goodbox.
Last year, GoodBox raised funds from Nexus Venture Partners and in its pre-Series-A round it had raised funds from Manipal Group, with participation from TaxiFor-Sure cofounder Aprameya Radhakrishna and redBus cofounder Charan Padmaraiu.
Similarly, SnapBizz in recent years has raised funds from Jungle Ventures, Taurus, Konly Venture, Blume Venture, Qualcomm and others. In February, Ratan Tata invested in SnapBizz.
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