The Mahindra group has become the latest conglomerate looking to use the surge in online commerce as a way to expand the market for its products.
The group said on Monday that it will launch an e-commerce venture called M2ALL.com, which will offer the entire range of Mahindra products and services. It will be operated through a separate wholly-owned subsidiary called e-Marketplace Pvt. Ltd.
The entity, said group chief financial officer and chief information officer V.S. Parthasarathy, will enable all Mahindra group firms to sell their products and services as a way to complement existing sales channels. In addition, non-competing products could also be offered through the platform. “The idea is to bring Mahindra World on a digital platform,” he said.
The complementary products and services could be anything from helmets and biking gears to furniture, interior decoration and accessories. Mahindra will also tie up with firms to offer the complementary products and services. The company neither disclosed the investment amount nor shared any revenue targets from the new venture. It also did not elaborate on marketing and advertising spend to support the venture.
Vijay S. Mahajan, head, e-Marketplace said, to begin with, the focus will be on the so-called consumer-facing businesses and it will eventually be expanded into business-to-business ones as well. For instance, it has already started accepting online bookings for the TUV300, the sport utility vehicle Mahindra’s auto division launched on 10 September.
Mahindra’s existing partnership with e-commerce firms such as Snapdeal and Flipkart for its products and services will continue, said Parthasarathy. “Eventually, its the customer who decides how she wants to reach us,” he said.
At present, customers of M2ALL can browse through over 400 products and services, the company said.
“I think e-commerce play in India is underestimated. Everybody’s thinking there is bubble building up. No. I think e-commerce is going to explode in this country,” Mahindra group chairman and managing director Anand Mahindra told the Press Trust of India on 30 August.
The e-retail market has been expanding 47% year-on-year and the group expects it touch $50 billion by 2020. Parthsarathy said the new entity, unlike other e-commerce companies, will not resort to “deep discounting” and would focus on creating value for the visitors. To begin with, the group’s 200,000 employees and dealers will be the anchor customers.
The three major e-commerce companies operating in India—Flipkart, Amazon and Snapdeal—all operate as marketplaces. That’s primarily because Indian law doesn’t allow foreign direct investment in e-commerce sites that sell directly to customers, but allows it in marketplaces that link sellers and buyers. The marketplaces also provide services such as payment, storage and delivery. Mahindra has tied up with CCAvenue, the online payments gateway solution provider.
Experts said the success of conglomerates such as Mahindra in the e-commerce space will largely depend on their ability create a differentiation. “There is no homogeneity across the product and services the group offers. Also, the e-commerce space is very competitive. The success, therefore, will depend on their ability to create traffic on the site and offer unique selling proposition,” said Harish H.V., partner at Grant Thornton, a consulting firm.
The Mahindra group is not alone in trying to add e-commerce to its portfolio.
The $108-billion Tata group, with businesses ranging from salt to software and tea to telecom, plans to add e-commerce to its portfolio and has earmarked Rs.1,000 crore for these ventures, Mint reported on 7 August.
Nirmalya Kumar, member of the group executive council at Tata Sons Ltd, told Mint that a planned e-commerce website from the group will offer both Tata and non-Tata brands across lifestyle, electronics and other segments. The group has signed up 80 brands, which will be offered on its website as well as through omni-channel options, he added.
Kumar Mangalam Birla, chairman of the $40-billion Aditya Birla Group, which is engaged in businesses from mining and financial services to telecommunications, is open to either acquiring e-retailers or building one from scratch, Birla said in a 10 November 2014 interview to Bloomberg. “There’s a lot of ground for new ventures in e-commerce,” he said. “I am not saying that we can take an Amazon head-on. But there are a lot of green spaces.”
In the past, the Mahindra group has selectively invested in online commerce ventures. In February, Mahindra Retail bought baby products retailer babyoye.com, which was later merged into the group’s own portal Momandmeshop.in.
Indications of a wider foray into e-commerce came when the group hired Jaspreet Bindra, former chief executive of Askme.com and a founding member of Bazee.com, as senior vice-president for digital innovation and e-commerce in July. Bindra will help individual companies plan their e-commerce strategy, said Mahajan.
An additional 200 million Indians are likely to have Internet access in the next three years, with the majority of them coming online through smartphones, according to a study titled Law & Technology: Evolving challenge as a result of fraud in e-commerce sector, released last month jointly by the industry body Associated Chambers of Commerce and Industry of India and Grant Thornton.
This article was first published on Livemint.com