Daily News Digest- 26th Nov'14

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• In India, Ma to Meet Snapdeal's Bahl: Alibaba founder Jack Ma is on a visit to India, his first to the country after a record-shattering initial share sale saw the ecommerce company Rs 1.5 lakh crore) in raise $25 billion (.September. Ma, who is China's wealthiest man with a net worth of nearly $30 billion, is in India as part of a business delegation and has met several Indian entrepreneurs, according to those familiar with the details of his visit. Sources said that in the list of entrepreneurs meeting Ma is Snapdeal's Kunal Bahl. SoftBank is an investor in both Alibaba and Snapdeal and ET reported in September that the Chinese firm is considering an investment in the Indian e-tailer to enter the country. Alibaba did not reply to questions about Ma's meetings. However, spokeswoman Pamela Munoz said, “Jack is in India with a business delegation and, together, will be participating in a number of meetings with local businesses.“ Ma is the latest in a long line of global business leaders who have travelled to India after the election of Narendra Modi as prime minister. Facebook's Mark Zuckerberg, Microsoft's Satya Nadella, Amazon's Jeff Bezos, Google's Sundar Pichai, Canadian investor Prem Watsa and SoftBank's Masayoshi Son have all visited since May, an indication of the increasing attractiveness of India as an investment destination. Son, who has vowed to invest $10 billion in India, has put $627 million into Snapdeal, led a $210-million round of funding in taxi aggregator Olacabs and invested an estimated $70 million in realty portal Housing.com. Alibaba, which is listed on the New York Stock Exchange and has a market value of nearly $280 billion, is being seen as a rival to Amazon in the US and around the world. While Amazon is rapidly scaling up its presence in India and vying with Flipkart and Snapdeal for market leadership, Alibaba has not yet set foot in what is one of the world's largest markets for online retail.

• Yum! Chickening Out of KFC Business in Western India: Yum! Restaurants has put its company-owned KFC business on the block in western India. The US chain, which has 700 KFC, Pizza Hut and Taco Bell stores in the country through a mix of company-owned stores and franchisee outlets, wants to sell the business to a franchisee to avoid real estate costs such as rents, staff costs and other overhead expenses that are corroding its profitability.Yum directly operates 18 stores in the western region. Slowing discretionary spends have been impacting same-store sales growth and profitability of restaurant chains despite low prices and value offers. The earnings statement of Yum! Restaurants for the quarter ended September shows a 14% increase in system sales in its India division, driven by 26% unit growth. But same-store sales declined 4% and operating loss stood at $3 million. Industry experts say operations run by local entrepreneurs bring down overhead costs substantially. A Yum! spokesman said in response to ET's query: “While we continue to explore opportunities in the course of business, as a policy, we do not comment on market speculation.“

• Jet Air Cuts Domestic Capacity to Feed Etihad: Jet Airways is shifting focus away from the domestic market by pulling out capacity from local routes and deploying more flights to international destinations in what looks like a strategy to feed the network of Etihad, the UAE carrier that owns 24% of the Indian airline. Government and industry data on daily available seat kilometres (ASKs) -measure of passenger carrying capacity --show that Naresh Goyal-promoted Jet Airways and unit JetLite have cut down on capacity over the past few months in the domestic sector. While Jet Airways and JetLite have been reducing capacity on local routes since June and April, respectively, Jet Airways has added capacity in the international sector by 16% between April and August this year -international ASK data are available only until August. All other airlines have increased capacity during these months.While IndiGo and GoAir are adding capacity in double digits, flag carrier Air India has expanded capacity by a single digit. SpiceJet's ASK fell in October, as the airline returned some of its aircraft. Officials at the Airports Authority of India (AAI), which operates most of the country's airports, have confirmed that the airline has been reducing flights from its airports. “Jet is reducing domestic flights from our airports. They have also discontinued operating out of five of our airports,“ said a senior AAI official, who did not want to be named. The airports where Jet has discontinued operations include Bhubaneswar, Agartala, Kozhikode and Rajkot. JetLite though still operates out of Rajkot.

• Ride-sharing Co Tripda Arrives in India: Global ridesharing platform Tripda has arrived in India, joining a pack of local players who are betting on the growth of a service that aims to lessen road congestion and help office goers cut transportation cost. “We have just started to expand to emerging countries since we saw the great need for cheap, convenient transportation services here. India, Brazil, and the USA are our target markets,“ said Pedro Meduna, co-founder of Tripda. Started less than a year ago in Brazil, the Rocket Internet-backed company is already in 12 countries across Asia and the Americas. “Currently, we are looking at growing our customer base since we are essentially a marketplace,“ Meduna said. Tripda's launch in India is a validation to the many startups that are providing similar services in the country. “About 72% of cars in Bangalore only have one person in it every day,“ said Raghu Ramanujam, founder of sevenmonth-old PoolCircle. “When we looked at reasons why people don't carpool, we found that 87% was due to lack of trust.The second was not finding the right information at the right point of time.“ To circumvent trust and security issues, PoolCircle built in user rating systems.Let's Drive Along, launched last March, runs on invite-only micro communities of car owners acting as “carpool mates“.The latter has been endorsed by the Karnataka State Pollution Control Board and the Bangalore Traffic Police. “The carpooling technology solves the issues around identification and safety to some extent, but not fully,“ said Vineet Toshniwal, managing director of investment bank Equirus Capital. “If taxi aggregator companies start doing carpool taxis, it would probably take off and be more successful.“

• E-retail-Telco Deals May Hit Neutral Net: Some large online retailers and top phone companies have started talks on setting aside dedicated bandwidth based on a revenue-sharing model to allow their sites to be accessed faster than others, which experts see as being against the principles of net neutrality. “We've had exploratory discussions in various fora where e-retailers are willing to share revenue for their customers getting a certain amount of internet speed,“ said a top telecom executive on the condition of anonymity . E-commerce companies are concerned that patchy speeds could lose them customers, he said. “About 60% of the online subscribers abandon their in-cart purchases because of slow network or connectivity gaps.“ While net neutrality has not been clearly defined in India, globally it implies equal treatment for all Internet traffic, which means prioritisation based on payment would be seen as discriminating against others. India's biggest online retailer Flipkart.com said it has been approached by some telecom companies. “It is not something that we are currently pursuing but is something that we continue to evaluate as it has a larger impact on important issues like net neutrality,“ said Mausam Bhatt, senior director of mobile marketing. The issue is gaining in importance as mobile-based transactions for Flipkart.com have jumped to 50% of the total from 10% a year ago. Mobile bandwidth is constrained by various restrictions, the most significant of which is scarce spectrum. Bharti Airtel, the country's largest phone company, declined to comment specifically on talks with ecommerce players, but said such partnerships are being tested in parts of the world.

• Finally, Levi's Pockets Profit: Levi Strauss & Co has finally turned a profit in India, two decades after the US-based jeans maker set foot in the country's market. For the fiscal year through March 2014, Levi Strauss (India) reported a . 49 crore, compared with a net profit of ₹ 161 crore loss the previous year, ac` cording to its latest filings with the Registrar of Companies (RoC). Managing director Sanjay Purohit said the company has been “profitable at the operating level“ for the past 10 years. Operating profit is before tax and also usually excludes interest, depreciation and amortisation. What went for the company in the last fiscal year was its focus on the flagship Levi's brands, Purohit said. Consolidation of franchisees and product innovations also helped. He is expecting the latest performance to offer a fillip to the brand's growth here. “The strength of our 201314 results, with revenue growing at 24% over 2012-13, and strong profitability , reflects the profitable growth potential of the Levi's brand,“ Purohit said in an e-mailed response. While Levi Strauss took a long time to report its first net profit in India, some have turned profitable quite quickly .For instance, it took just two years for Spanish clothing and accessories retailer Zara. But the market that Zara launched into four years ago was different from what Levi Strauss encountered when it first set up shop here. “Zara came at a time when the market was large enough to take a brand like that. The market was ready and Zara could quickly open so many stores,“ said Harminder Sahni, founder of retail consultancy firm Wazir Advisors.Zara's growth is mainly from womenswear, which contributes 70% to its sales and where competition is feeble, he said. “Whereas men's denim-wear segment was crowded even 20 years ago and everyday it has become even more competitive. It is far more challenging to succeed. Almost 90% of Levi's sales come from menswear.“

• Justdial: the Internet wannabe: Every few months since mid-2013, Flipkart has raised hundreds of millions of dollars for its e-commerce operations. With each fund-raise, its valuation has risen considerably; a little over a year ago, it had a valuation of $1.5 billion, which has now reportedly risen to $10 billion. While it hasn’t exactly been a case of investors laughing their way to the bank, since the same set of investors seem to keep pouring in money into the cash-guzzling company, the sharp rise in valuations has undoubtedly generated tremendous interest in Internet companies among Indian investors. Just Dial Ltd is one of the rare listed companies in India that hopes to benefit from the growth in the use of Internet. It started as a phone- and Internet-based classifieds company, but is in the midst of transforming itself into an e-commerce company. But Justdial is just a wannabe; it’s nowhere near as cool as Flipkart. Its revenues grew at a glacial pace of 27.2% last year, and this improved to only 30% in the first six months of this year. But here’s the heart-wrenching detail about its finances, where all your hopes of mimicking Flipkart’s privileged investors get dashed: Justdial makes decent money on its classifieds business.

• Freecharge, Pepperfry Look to Tank up: Bengaluru-based Freecharge, a mobile recharge and couponing platform, is in talks with investors to raise money. Sources with direct knowledge of the development said the round could involve anywhere between $50 million and $100 million ( 300 crore and 600 crore). The company raised $33 million in September from Sequoia Capital, Belgian firm Sofina and Russian Internet and technology investor ru-Net. In Mumbai, Pepperfry, an online marketplace for furniture and home products, is also in the market to raise a $50-million round, said sources with knowledge of the development. It last raised $15 million in May from Norwest Venture Partners and Bertelsmann India Investments. Pepperfry founder and CEO Ambareesh Murty did not respond to emailed queries from ET.

International:

• Duncan MacNaughton Departs Wal-Mart: Duncan MacNaughton, Wal-Mart’s chief merchandising officer, has resigned, just as the world’s largest retailer enters the crucial Black Friday through holiday period. MacNaughton, who became chief merchandising officer of Wal-Mart U.S. in January 2011, was responsible for all merchandise categories across more than 3,700 stores. MacNaughton was instrumental in developing what Wal-Mart dubbed as Black Friday Week, an extended shopping period from Thanksgiving to Cyber Monday. The retailer upped its promotional posture this year with more doorbusters and deals, a price-matching policy and a holiday “newsroom,” possibly to fend off Amazon.com. Wal-Mart U.S. chief executive officer Greg Foran sent a memo to Wal-Mart associates today informing them of MacNaughton’s departure to pursue other opportunities. The ceo also announced a restructuring of the merchandising organization. “Duncan’s departure has allowed me to relook at our merchandising structure and the incredible talent within the team,” Foran said. “At this time, I have chosen not to name a new chief merchant. I would like to use this opportunity to get closer to the merchandising organization.”

• Saks Fifth Avenue Unveils Holiday Windows: Saks Fifth Avenue's Christmas window ceremony Monday night was a quick and splashy mix of 36 Rockettes high-kicking on the avenue, then fireworks cascading down from the top of the flagship, just before the windows unveiled a series of fairy tales interpreted Deco-style amid New York City moments. There was Sleeping Beauty getting some shut eye "in the city that never sleeps" and Rapunzel and her long, long braided hair roped around the Empire State Building.

• Charming Charlie to Hit Manhattan: After 10 years and more than 330 retail locations, Charming Charlie is setting up shop in New York City. “Our customers often describe us as their best-kept secret, but now I think it’s time for us to really announce that we’re here,” said founder Charlie Chanaratsopon. Though its nearly $500 million in sales to date suggests that the secret is not so well-kept, the brand is in expansion mode, beginning with a Manhattan flagship. Due to open in April, the store will be located at 445 Fifth Avenue, just a block away from the New York Public Library. “It has a lot of foot traffic and tourists, so it’s a great showcase for us,” Chanaratsopon said of the space. “A flagship needs to have high impact for the brand to wow the customer.” The 16,000-square-foot store will include three levels and feature a two-story, 30-foot-tall glass facade illuminated with LED lights with the brand’s signature hot-pink hue highlighted throughout the space. The store will carry the brand’s full range of products, which includes fashion jewelry, handbags, small leather goods, scarves, watches, sunglasses and select footwear and apparel. The flagship space will also house the brand’s press relations office and showroom. Chanaratsopon declined to provide specific store revenues, but noted that of the 330 stores in North America, only one loses money, with the Northeast consistently coming in as the most-popular region for sales.

• Derek Lam 10 Crosby Opens in SoHo: Three years after launching his diffusion line Derek Lam 10 Crosby, Lam today has opened the contemporary collection’s first stand-alone store in New York. Named for the company’s former headquarters on Crosby Street, the store is located a few blocks away at 115 Mercer Street in SoHo amid a row of other hot contemporary labels, such as 3.1 Phillip Lim, A.P.C., Rag & Bone and Carven. Further north on the street are Marni, Marc Jacobs and Balenciaga. “The adjacencies are very much part of this,” said Lam of the location. “It’s an important street in SoHo. I used to live right on Mercer, so when I got our new puppy, I was constantly walking up and down and I realized it’s where the locals were shopping.”

• Wired Retail Conference Returns to London: The worlds of social media, e-commerce and online content are becoming increasingly intertwined, delegates at Wired Retail in London argued Monday. Speakers at the U.K. title’s inaugural conference on the future of retail included Tracy Yaverbaun, head of brand development, EMEA at Instagram; Chris Morton, chief executive officer and cofounder of Lyst; Amber Venz, cofounder of RewardStyle, and Runar Reistrup, ceo of social marketplace Depop. “People are looking for inspiration in the way that they would look through a magazine, but now it’s on a small screen for 24 hours a day,” said Yaverbaun of how Instagram’s users view the app. “People are walking into stores with their Instagram feeds,” she added. But Yaverbaun noted that the firm isn’t planning to add a commerce element to Instagram yet. “We feel like focusing on inspiration first is the most important thing to do, then we can figure out the rest later,” she said.

Tech:

• India Largest Market for Viber: India has edged past the US to become the largest market for social messaging app Viber, backed by an aggressive marketing campaign and increasing smartphone users. At present, India has over 33 million people who use the Viber app to send messages and make free international calls to Viber users in other countries. US follows India with 30 mil lion and Russia is the third largest with 28 million, with Brazil at No. 4 with 18 million and UK at No 5. Globally, Viber has over 460 million active users. India is also amongst the top five countries by revenue and the largest user of the app's stickers that people send to other Viber users.Backed by Japan's Rakuten that bought the app for $900 million in February this year, Viber also plans to launch its game store and micro payments in India within the next quarter.

• Airtel prices 4G packages below 3G to counter Rel Jio: Data tariffs for mobile phones are set for a major fall with Bharti Airtel offering high-speed 4G packs below the prices of 3G plans. The development comes ahead of the launch of 4G services by Mukesh Ambani’s Reliance Jio and signals a high-pitched tariff war on the mobile data front, similar to what happened in voice tariffs, where prices in India are among the lowest in the world now. “We have decided to offer 4G tariffs below the 3G rates for high consumption users,” Srini Gopalan, director for Airtel’s consumer business, told TOI here. Also, the company will shift 3G customers to 4G at the same rates (provided they have a 4G compatible phone). Take this for an example. While the monthly tariff of a 10GB data plan is Rs 1,499 on 3G network for an Airtel postpaid customer, the same will be Rs 999 on 4G. And, the data trans mission speed on 4G is over 30 mbps compared to an average of about 1-3 mbps on 3G.

• Gionee launches its slimmest ever smartphone, Elife S5.1 at Rs 18,999: Gionee has launched the Elife S5.1, its slimmest phone ever, in India at Rs 18,999. The phone will be available by first week of December, 2014 in white, black, blue and pink colour options. In terms of build, the Elife S5.1 is similar to Gionee's Elife S5.5 and utilizes both glass and metal materials. The Elife S5.1 sports a 4.8-inch 720p AMOLED display with Gorilla Glass 3 protection. The phone is powered by a 1.7GHz MediaTek MT6592 octa-core processor, supported by 1GB of RAM and 16GB of internal storage. It doesn't feature a microSD card slot. The phone sports an 8MP rear camera with LED flash and a 5MP front-facing camera. The handset runs Android 4.4 with Gionee's Amigo 2.0 UI. Other features include 4G LTE connectivity, and a 2050mAh battery.

• Twitter introduces Twitter Offers with merchant deals right in your feed: Twitter wants you to keep your eye on your feed. To keep those eyeballs right where it wants them, beginning today deals from various businesses will start showing up in that feed. Called Twitter Offers, merchants can now embed offers into Twitter cards and tweet them to their followers. If you see a deal you like, you can add the offer to your credit or debit card and use that card to purchase the item or service. No coupons or need to bring up an app on your smartphone. It’s all tied to your card. Once you add you credit or debit card to Twitter, you won’t have to add it again and can use it for future offers that appear in your timeline. Currently Twitter Offers is a US only affair, but since the holiday shopping season is in full swing, expect to start seeing these embedded discounts from merchants starting today.

• Dropbox’s integration with Microsoft’s Office apps is now live for iOS and Android devices: It was only earlier this month that Dropbox announced a deal with Microsoft to allow document editing capabilities from directly inside Dropbox, and today it’s actually rolling out for mobile users. So now if you want to tweak that vital document while on the move without having to think about resyncing the changes to the file stored in Dropbox, then all you need to do is open and edit it directly. The integration works the other way too, allowing you to retrieve files stored in your Dropbox accounts directly from the Office apps. Currently, the functionality supports Office docs, spreadsheets and presentations. For now, the feature is a mobile-only (iOS and Android) affair though – a desktop version isn’t expected to arrive until the first half of next year.

• Mozilla Shows Off Firefox's New Search Interface: Mozilla recently announced that it was partnering with Yahoo to provide the default search engine in Firefox going forward. Today, the company has detailed what the future of search in Firefox looks like on its blog. Firefox’s search will feature an improved search suggestion design and buttons for alternative search engines at the bottom. The idea is that you won’t always want to use the default search engine and might want to directly search something like Wikipedia instead. Firefox allows you to toggle search engines as before, as well as adding more search providers as you please. Mozilla didn’t say when the new interface will roll out, but we expect it’ll land when the new Yahoo partnership kicks off this December.