Daily News Digest- 21st Jan'15

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• WS Retail to Separate Logistics Arm into Wholly-owned Unit: WS Retail, the top seller on online marketplace Flipkart, is looking to spin off its logistics arm, Ekart, into a wholly owned subsidiary to make the privately held company comply with regulatory requirements of different states, two people with knowledge of the plan said. The separation could happen before Flipkart’s proposed US listing, expected sometime next year, according to one executive. WS Retail was set up by Flipkart cofounders Sachin Bansal and Binny Bansal in 2010. They sold off their stake in September 2012 and the company is now 46% controlled by former Flipkart employees and accounts for 85% of products sold on the etailer. “WS Retail will spin off their logistics arm as a separate entity and then do pretty much what US companies do, collect a fee for delivery,“ said a source on the condition of anonymity.

• Wanted, E-Comm Vendors: In India's flourishing online retail market one drag top players Flipkart, Snapdeal and Amazon face is the relatively low number of vendors, and they have come out with a slew of programmes to get millions of sellers from across the country to their marketplaces. E-commerce companies estimate that India currently has just over 1,00,000 active sellers on ecommerce platforms compared to millions of online sellers in China. To improve this rapidly, they have come out with several initiatives from launching dedicated YouTube channels and tying up with training institutes to teaming up with state handicraft centres to scouting for manufacturing hubs across cities. And the e-commerce companies have set ambitious goals. Amazon India, which started about 18 months ago with around 100 sellers, has currently about 16,000 vendors on its India marketplace site and is expected the build the vendors base multiple fold in the coming years. Together with its affiliate site Junglee.com, it has around 100,000 vendors. “We believe that with those numbers we have barely scratched the surface as there are millions and millions of small and medium businesses in India and I don't see an upper bound to the opportunity at this time,“ said Amit Deshpande, GM for seller services at Amazon India.

• Safari Storme, Scorpio Pass Army Test, Vie for Big Deal: The Tata Safari Storme and Mahindra Scorpio have cleared rigorous trials to participate in Indian Army tenders, people with knowledge of the matter said.The army is expected to shortly invite bids to supply vehicles under a contract that could be worth as much as Rs 500 crore to Rs 750 crore. The Army, which so far relied on Maruti Suzuki's Gypsy and the Mahindra Commander, had called for a new category of vehicles called GS800 -General Service 800. About 15 companies including Ford, Honda and Toyota participated in the initial discussions two-three years ago, but only the homegrown players, Tata Motors and Mahindra & Mahindra, took part in the following round. The Army is looking for vehicles with hard top and 800 kg payload with an air-conditioning option. The Gypsy and Commander had in the past qualified under GS500 category, which had a maximum payload of 500 kg. Vernon Noronha head of defence and government business at Tata Motors, said the company has received intimation from the Army that the Storme has passed the test and will be allowed to bid in a tender for more than 3,200 vehicles, expected to be floated shortly.

• E-tailers launch YouTube channels, rope in trainers to widen seller base: In India's flourishing online retail market one drag top players Flipkart, Snapdeal and Amazon face is the relatively low number of vendors, and they have come out with a slew of programmes to get millions of sellers from across the country to their marketplaces. E-commerce companies estimate that India currently has just over 1,00,000 active sellers on ecommerce platforms compared to millions of online sellers in China. To improve this rapidly, they have come out with several initiatives from launching dedicated YouTube channels and tying up with training institutes to teaming up with state handicraft centres to scouting for manufacturing hubs across cities.

• Amazon Forays Into Movie Biz: Amazon.com is making a high-stakes foray into the challenging realm of independent movies, the latest step in its attempt to move beyond simply distributing digital entertainment content to creating it. Amazon said on Monday it was aiming to produce close to 12 movies a year for theatrical release which would then be available on its Prime video service within two months, significantly faster than the roughly oneyear wait it normally faces to stream Hollywood releases. Amazon expects to focus on “indie“ movies with budgets of between $5 million and $25 million, spokeswoman Sally Fouts said.While modest compared with Hollywood blockbusters, the move will add to already hefty spending at Amazon, potentially unnerving investors concerned about the company's lack of profitability. Such films have proved challenging even for major Hollywood studios such as Paramount and Warner Brothers, which have bowed out of the business in recent years, said Jeff Bock, Box office analyst at Exhibitor Relations. “It's a tough, tough racket to play consistently,“ he said, pointing to the difficulty of getting good content and the competition for quality productions at festivals like Sundance.

• Everyone Wants to Woo the Boy who Delivers: Ram Singh's daily beat is a 40-km stretch of Gurgaon's sector 31,45,46,39 and Jharsa `gaon'. The 26year-old Flipkart delivery agent dropped off 242 parcels on October 9, 2014, three days after the mega sale. He started delivering packages at 4 am and kept at it till 10pm. He was approached by rival Amazon, but spurned the offer. With millions of consumers now ordering about $10 billion worth of products ranging from food to furniture and from lipstick to lingerie online, demand for ace delivery boys like Singh is rising. About 2.5-3 lakh are already delivering goods ordered online all over the country, according to estimates by Ikya Human Capital Solutions. Large ecommerce companies like Flipkart, Snapdeal, etc, are all looking to double the number of such delivery agents they source from staffing firms. “High-performing team members like Ram Singh are an essential part of our success story,“ said Neeraj Aggarwal, senior director, Last Mile Deliveries.Flipkart has more than 12,000 dedicated delivery agents, largely provided by major vendor Ekart.

• Screwvala Returns to Media Space with a Digital Brand: Entrepreneur Ronnie Screwvala, who sold his erstwhile UTV Group to The Walt Disney Company last year, is returning to the media and entertainment sector by launching a digital media company in partnership with B Saikumar, former group CEO of Network 18. While Screwvala will bring in the initial investment of `. 150 crore, Saikumar will head the company as its managing director. The two have also roped in Ajay Chacko, former COO at Network 18, as the CEO. Based out of Mumbai, the company will start off with a digital brand offering multigenre, multi-lingual content across video, audio, text and other traditional and newage forms, the two founding partners said. Video content will be a key part of the offering and to create that the company will source talent from the broadcasting sector across the globe, Saikumar said. He said the company will carry out a global talent hunt across tech, design and content space. He is also bul ish on global syndication.

• InMobi to be `Pivot'al for Better Connect: Mobile advertising network InMobi is all set to woo large enterprises with a new analytics service that will mark a crucial shift in the business model of the eight-yearold company that is looking to revive growth and investor interest. The move, termed as a “pivot“, will see InMobi -combine data from clients with insights on consumer behaviour that it has gathered -create new marketing strategies for enterprises. This will pitch the company into direct competition with global players such as Google, Acxiom, Experian and Harte Hanks. “The trials have already begun,“ said a person with direct knowledge of the development. “This pivot will make InMobi an early mover in this space.“ Experts are of the view that for mobile advertising networks that are increasingly dependent on algorithms that churn out programmed output, looking beyond is proving to be crucial. “Companies like InMobi have to pivot because of the complex channels of data involved (online, offline, beacon, mobile),“ said Michael J Becker, managing partner of mCordis, a consulting firm that advises companies on mobile trends and advertising strategies.

• Lessors Want SpiceJet to Return 15 Boeing Planes: Cash-strapped SpiceJet’s troubles aren’t quite over even as its new promoters, led by Ajay Singh, plan to infuse funds to revive the carrier. Aircraft lessors want 15 of the airline’s 20 Boeing planes to be returned, possibly stalling the government’s plan to relax SpiceJet’s advance booking limits beyond March 28. The lessors have asked the Directorate General of Civil Aviation to deregister the aircraft that they want to repossess. However, sources close to the new promoters say they are in talks with the lessors and a solution will be found soon. BOC Aviation, which has leased three aircraft to SpiceJet, met DGCA Director General M Sathiyavathy on Friday and requested her to deregister their aircraft. “The lessors fear a Kingfisher kind of situation and they might not be able to take their aircraft back,” said a government source aware of the development. Kingfisher Airlines, grounded since October 2012, had leased its entire Airbus fleet, which consisted of over 100 planes at one point. SpiceJet has returned 20 aircraft in the past few months because it couldn't make lease payments, halving its Boeing fleet size. The airline is said to owe about ₹ 400 crore to lessors, although some sources peg the dues in the range of about ₹900 crore, a number the carrier has contested. The Ministry of Civil Aviation had in a letter dated January 17 asked the DGCA to reconsider an earlier order on booking curbs provided the airline is capable of carrying out uninterrupted operations.

• E-tailers seek sops to set up data centres: Amid growing concerns over Indian startups and entrepreneurs moving to tax-friendly countries such as Singapore, the poster boys of ecommerce -Flipkart, Snapdeal and InMobi -have pointed to the concessions on offer for setting up data centres there among other suggestions that the government is trying to respond to in the Budget. Sources said Flipkart's Sachin Bansal, Snapdeal's Kunal Bahl and InMobi's Naveen Tiwari had raised the issue of setting up data centres within the country during a pre-Budget meeting with finance minister Arun Jaitley and his team at North Block and underlined the need for retaining Indian intellectual property within the country . Data analytics is crucial for e-commerce companies since a huge amount of information is crunched regularly to deter mine consumer trends -for instance, the categories of products that sell more during Diwali or New Year.

International:

• Yahoo CEO poised to make fateful decision on Alibaba stake: Yahoo CEO Marissa Mayer is facing her biggest business decision since she left Google two-and-a-half years ago to lead its struggling rival: how to manage Yahoo's most valuable asset, a 15 percent stake in Chinese Internet star Alibaba Group worth nearly $37 billion. "This is a defining moment for her," says Eric Jackson, managing partner of hedge fund Ironfire Capital, a long-time Yahoo shareholder. "Marissa has a chance to really boost the stock if she plays her cards right." Mayer has promised to outline her Alibaba plans on or before Jan. 27, when the company will release its fourth-quarter earnings. Most investors are hoping Mayer will spin off the Alibaba stake to ease Yahoo's tax bill after the company sells those holdings. Mayer also is under pressure to return windfalls from Yahoo's Asian investments to shareholders instead of plowing more money into an acquisition strategy that some think hasn't paid off. Activist investor Jeffrey Smith has threatened to lead a shareholder rebellion aimed at ousting Mayer if she proposes a plan that doesn't maximize Yahoo's tax savings or risks squandering money on far-flung acquisitions.

• Netflix shares up on strong earnings: Shares in internet TV streaming service Netflix have risen over 12% in after-hours trading after the company reported better-than-expected fourth quarter earnings. Netflix made $83m (£55m) in net income during the three-month period ending in December, versus $48m a year ago. The company also reported growing international subscriptions that beat its estimates. Netflix has 57.4m global subscribers, with 18.28m from outside the US. The company said that it would complete its international expansion efforts in two years - ahead of schedule - and that that expansion will be profitable. It also added it expected to offer Sony's controversial film, The Interview, to subscribers only 30 days after its release, on 24 January. Netflix added that revenue rose 23% from to $1.48bn during the quarter. While the company also issued rosy predictions for 2015, it nonetheless added that competition in the sector - from HBO's newly announced Go streaming service to CBS's offerings - was increasing. Netflix also said that piracy remained a big problem for the company. 

• Robert Graham to Open Columbus Circle Store: Robert Graham will open its second retail store in New York City in The Shops at Columbus Circle at Time Warner Center in early April. The 743-square-foot shop will carry men’s sportswear, premium denim, furnishings, accessories, outerwear, eyewear, footwear, jewelry and women’s sportswear. In addition, the brand’s fragrance, loungewear and tailored clothing will be added when they launch this fall. Michael Buckley, chief executive officer of the company, said the door would complement the brand’s existing Bleecker Street location in the West Village. “The Shops at Columbus Circle is a fine retail destination for fashion and style,” he said. “We are very confident the center’s dynamic reputation, paired with its incredibly fashionable customer base and central location, will serve the Robert Graham brand well.”

• Margarita Arriagada, Maureen Watson to Leave Sephora: Calvin McDonald, president and chief executive officer of Sephora Americas, reorganized Sephora’s management structure Tuesday following the decision of Margarita Arriagada, chief merchant of Sephora, to retire. Her decision to step down was part of a series of changes, involving three top positions. Another senior executive is leaving the retailer and a third is being promoted to a high-profile position within the organization. In a memo to brand partners, McDonald noted that Arriagada and Maureen Watson, senior vice president of merchandising, are leaving the company, and Artemis Patrick, senior vice president and general manager of Sephora inside J.C. Penney Co. Inc., will assume Watson’s role.

• Carbon38 Celebrates Two Years in Business: Professional ballerinas Katie Warner Johnson and Caroline Gogolak hit on something with high-end, activewear e-tailer Carbon38. The two celebrated the two-year mark of their company Saturday at a private residence in the Hollywood Hills as they evaluate new projects this year in a bid to grow the business and give it a leg up on competitors in the rapidly growing activewear market. “Spandex is the new denim,” Warner Johnson, who serves as cofounder and chief executive, said. Carbon38 offers a curated mix on its site of 35 to 47 brands, including Michi, Lorna Jane, Pilot Athletic and Vie Active. The idea is to offer fashion that takes the wearer from the gym to a night out — hence their hashtag, #RuninRunway.

Tech:

• It's More than 140 Characters: Twitter Buys Indian Company: ZipDial has become the first Indian technology product startup to be bought by Twitter in what is the third such deal led by a global corporation following the acquisitions by Facebook and Yahoo last year. The ZipDial deal -appropriately announced in an official tweet on Tuesday morning -is expected to cost Twitter $34-35 million (₹215 crore), according to people aware of the transaction. ET could not independently verify the size of the deal. The four-year-old Bengaluru based startup -co-founded by Valerie Wagoner, an Americanorigin entrepreneur who gradu neur who graduated from Stanford University -has built a thriving business around the “missed call“. This feature is expected to help Twitter reach people who will come online for the first time in countries such as Brazil, India and Indonesia, mostly using a mobile device. “But the cost of data may prevent them from experiencing the true power of the Internet,“ said Christian Oestlien, vice-president for products at Twitter. “Twitter, in partnership with ZipDial, can make great content more accessible to everyone,“ he noted. Although Twitter does not disclose user numbers by geography , eMarketer pegs the number at over 22 million in India.

• Airtel, Idea, RCOM Likely to Make Gains in Q3 Riding on Data Wave: Bharti Airtel, Idea Cellular and Reliance Communications may report robust net profit growth in the three months ended December as subscribers made more calls and used more of their pricey data services, analysts say . Sequentially, all three companies are expected to report flattish voice revenue per minute, but an increase in call minutes is likely to drive revenue growth in the October-December quarter, they say. Robust revenue growth from data amid reduced competition has been a big plus for the sector, with pricing power returning after several quarters of tariff wars. Sector watchers expect margins to improve by about 20-30 bps due to reduced diesel prices and operating leverage, but accelerated network expansion and the associated increase in network operating expenditure will take away some of the benefits. “The three incumbents continue to gain share of hi-speed wireless broadband subscribers as data consumers in India continue to vote in favour of quality over price. This is a critical difference versus the voice market,“ Kotak Institutional Equities said in a report.

• Facebook's co-founder Eduardo Saverin, VC fund invest $11 million in local e-commerce site Hopscotch: Hopscotch, the Mumbai based babycare and kids products etailer, has raised $11 million in a second round of funding led by Facebook co-founder Eduardo Saverin and Los Angeles headquartered early stage investor Velos Capital. The funding comes amidst a wave of consolidation in the nascent babycare and kids products etailing segment that has already seen a couple of players shutter operations and others seek buyers. The investment in Hopscotch marks Saverin's and Velos Partners' debut investment in India. Singapore-based Saverin, whose net worth at the time of the 2012 Facebook IPO was estimated at $4.2 billion, has been a prolific angel investor in technology startups in Southeast Asia and North America over the past few years. He is also chairman of the advisory board at Velos Partners, which primarily invests in consumer and technology companies. Apart from Saverin and Velos Partners, other investors in this round include Rise Capital, Jabbar Internet Group and existing investors LionRock Capital and Skype co-founder Tovio Annus.

• Netflix to stream ‘The Interview’ on Jan 24 for no extra charge to subscribers: Few movies has had a stranger premiere than Sony’s “The Interview.” After being released online following a slew of hacks and unsubstantiated terrorist threats, there was one platform it was notoriously missing from: Netflix. Fret no more. During its earnings call today, the streaming serviced announced “The Interview” would be released on its platform on Saturday, January 24. That sucks a bit if you already paid to watch the movie, but should surely please those with a subscription who have been on the fence about watching it so far. Streaming will only be available in the US and Canada however. There is a theatrical release slated for February 6 in the UK.

• Facebook Now Allows You To Report False News: Everyone on Facebook has that one friend that posts outlandish stories that end up being a hoax, but usually they’re utterly convinced that it’s the real deal. Today, Facebook has added the ability to flag a news story as a hoax. When you see something that is obviously not real like a made-up celebrity death or fake startup, you can choose to report posts as a “false news story.” When many people flag a post as a false story, it’ll show less in the News Feed and eventually will show a warning that a number of others have reported it for false information. The company says that most people share fake news before quickly deleting it once their friends point out that it’s not real. This mechanism helps prevent the spread of those kinds of stories on Facebook. Facebook isn’t quite targeting satire sites like The Onion, however, saying “we’ve found from testing that people tend not to report satirical content intended to be humorous, or content that is clearly labeled as satire.”

• Starbucks Starts Wireless Charging Pilot in the UK: Following on from the start of its US rollout in June last year, Starbucks is today starting to introduce wireless charging stations inside certain London locations. Unlike Qi-based, NFC charging, Starbucks’ system uses magnetic wireless charging, meaning you’ll need a little adapter to plug into your phone. The dongle’s, pictured below, are available for free use in store, or you can buy your own for £10, a spokesperson told TNW. For now, the trial is contained to just 10 stores in London, and there are no plans to take it further afield right now.