Bhuvana Iyer, Mumbai Uncensored, 10th January 2022
Amazon has moved the National Company Law Appellate Tribunal (NCLAT) challenging last month’s Competition Commission of India (CCI) order that suspended the regulatory approval for its 2019 deal with local retailer Future Group. The NCLAT is likely to hear the matter this week. Separately, Amazon also filed a Special Leave Petition (SLP) in the Supreme Court last weekend, against a Delhi High Court order on January 5 staying the arbitration proceedings initiated by it against Future Retail over the latter’s Rs 24,713 crore merger deal with Mukesh Ambani’s Reliance Retail.
The Competition Commission of India (CCI) last month suspended its approval of Amazon’s 2019 deal with Future, denting the U.S. e-commerce giant’s attempts to block the sale of Future’s retail assets to Indian market leader Reliance Industries. The anti-trust regulator had said an approval granted to the US e-commerce giant over two years earlier to acquire a 49% stake in Future Coupons (FCPL) would ‘stand in abeyance’, as the firm suppressed information while seeking clearance. The CCI also imposed a Rs 202 crore penalty on Amazon.
The CCI’s December 2021 order followed complaints filed by FPCL, Future Retail’s independent directors and the Confederation of All India Traders (CAIT) alleging Amazon, in its plea before CCI, had not disclosed the intent to indirectly control Future Retail, the parent firm of FCPL, via its 49% acquisition in FCPL.
On January 5, a day after receiving a set back from a single-judge bench of the Delhi High Court, Future Retail got a reprieve from the Court’s division bench, which stayed the arbitration proceedings initiated by Amazon before the Singapore Tribunal till February 1. Future Retail and Future Coupons had sought stay on the arbitration proceedings.
Background of the case:
Amazon NV Investment Holdings (“Amazon”) purchased a49 percent equity position in Future Coupons Limited (“Future Coupons”), which is a promoter group entity of Future Retail Limited (“Future Group”), in November 2019. The transaction was estimated to be worth Rs. 2000 crores. Future Coupons owned 7.3 percent of Future Retail, implying that Amazon would indirectly own 3.5 percent of the company as a result of the acquisition.
The transactions triggered three agreements:
1. Future Coupons’ shareholder’s agreement with Amazon (FCPL SHA)
2. FCPL’s shareholder’s agreement with Amazon (FCPL SHA)
3. FCPL’s share subscription agreement with Amazon (FCPL SSA)
Apart from the transactional component, Amazon had gained some credibility because of the ‘call option’ it was given. The ‘call’ granted Amazon the right to purchase all or a portion of the assets of marketing business Future Retail. According to reports, the arrangement also included a list of 30 businesses with whom the Future Group would not be able to do business, namely Reliance Retail, a Reliance Industries Limited affiliate. This was meant to be another special arrangement with Future Group, similar to the one Amazon signed with Shoppers Stop in 2017 when it bought a 5% interest for INR 180 crore.
The clause on Restricted Companies/Competing Businesses: One of the requirements was that Amazon would present a list of industrialists/businesses, and Future would not sell the interest to these entities without Amazon’s permission. The agreement prohibited 15 (fifteen) corporations from engaging in or purchasing holdings in Future Group’s retail assets, including Reliance Industries, Walmart, Alibaba, Softbank, Google, Naspers, eBay, Target, Paytm, Zomato, and Swiggy.
Call-option: Amazon was offered a call option to purchase all or part of Future Coupons’ stake in Future Retail, which may be exercised from the third year onward till the tenth year of the deal.
Reliance Industries Limited purchased Future Group’s retail and wholesale divisions, as well as the logistics and warehousing companies, as a going concern on a slump sale basis in August 2020 for a lump sum aggregate value of Rs. 24,713 crores. Future Retail, which holds Big Bazaar, FBB, Foodhall, Easyday, and Nilgiris, Future Lifestyle Fashion Limited, which operates Brand Factory, a fashion discount chain, and Future Consumer Limited were also bought as part of the agreement. Future Groups’ finance and insurance operations, on the other hand, were not included in the acquisition. Reliance’s investment in Future Group was primarily motivated by the need to grow its offline retail footprint and boost profitability through economies of scale.
Amazon claimed that the Future Group-Reliance acquisition was illegal because it violated an agreement reached between Amazon and Future Coupons in 2019. The deal, according to Amazon, disturbed with Amazon’s call right to purchase Future Coupons’ shareholding in Future Group, which could have been implemented between the third and tenth anniversary of the agreement, and it was also in violation of the competitive company clause in the agreement, which stated clearly Reliance as a restricted corporation for the reasons of the competing business clause.
The Singapore arbitrator decided in Amazon’s favour and issued an interim injunction, suspending the Future-Reliance deal for 90 (ninety) days but later being extended. India’s Arbitration and Conciliation Act, 1996 will serve a decisive part in this issue. The issue is that even if the Singapore-based arbitrator rules in Amazon’s favour, the ruling will not be legally binding in India. Amazon contacted the Competition Commission of India (CCI) and the Securities Exchange Board of India (“SEBI”) as a result of this. It also went to the Delhi High Court to have the arbitration order enforced and to stop the Future-Reliance deal, which the Delhi High Court upheld. Future Group then appealed to the Singapore arbitration to have Future Retail removed from the interim order.
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National Flipkart has unveiled its FlipTrends 2023 Report, sharing insights into the evolving landscape of online shopping in the country. The report is derived from the behaviours and preferences of over 500 million registered users.
The report unveils that the saree has claimed the spotlight as the most-shopped clothing item on Flipkart in 2023.
Most shopped items Sarees overtook oversized and unisex fashion wear to be crowned as the most shopped clothing item. Women’s clothing across ethnic, contemporary and western wear remained at the top of shopping lists.
Cities like Trivandrum, Patna, Lucknow, Ludhiana, Varanasi, Ernakulam, Guwahati, Cuttack, Medinipur and Bankura emerged as top-tier shopping destinations.
Flipkart witnessed a significant boom in baby care and infant formula products, with a 100 per cent growth in infant formula and a 50 per cent increase in premium skincare baby products in 2023. The purchase of gift cards soared, with a 40 per cent growth in third-party brand gift cards, particularly in categories like gold and diamond jewellery and gaming.
In a recent report by Flipkart, Swift Money’s founder, Saksham Bhagat, highlighted the significant role that Cash On Delivery (COD) plays in fostering customer trust. Speaking at the Internet Commerce Summit, Bhagat emphasized that the online shopping giant, Flipkart, has played a crucial role in customer acquisitions and enhancing customer experience by offering the Cash On Delivery option.
He explained that the Cash On Delivery option has not only attracted customers to Flipkart but has also proven to be instrumental in customer retention and increasing repeat customers. The flexibility provided by the COD option has significantly contributed to Flipkart’s success in retaining and expanding its customer base.
Grooming and self-care took centre stage, with premium styling products experiencing a 3X growth over 2022. Face care products, especially those with glycolic acid and salicylic acid, emerged as the most sought-after items, followed by hair care and body care products.
Flipkart also witnessed a surge in demand for premium laptops, with a 3.2X growth, and a 100 per cent increase in tablet demand in 2023. Action and adventure cameras experienced a 4X growth, possibly fuelled by the growing interest in outdoor activities and the expanding universe of content creation and social media opportunities.
Shoppers spent an average of 7 hours on the platform and over 41 million new customers joined Flipkart’s user base until November 2023.
Lenskart, a powerhouse in the eyewear industry, has found itself at the forefront of an unexpected revolution in the realm of omni-channel retail. What started as a digital journey has transformed into a pioneering success story, rewriting the rules of engagement in the eyewear retail landscape.
The revelation unfolded during an engaging conversation between Ramneek Khurana, Co-founder of Lenskart, and Ashish Dhir, Executive VP at 1Lattice, at the Internet Commerce Summit 2023 in Bengaluru on December 12.
The turning point came when Lenskart, known primarily as an online platform, was identified as an omni-channel player by investors around 2015-’16. This unexpected characterization marked the beginning of Lenskart’s unplanned but groundbreaking foray into omni-channel retail.
“Our omni-channel journey was very simple. We started Lenskart as an online platform because that is the easiest and most cost-effective way to figure out our journey,” explained Khurana.
The shift to omni-channel was prompted by Lenskart’s responsiveness to fundamental consumer concerns. As an online platform, the brand faced challenges such as customers hesitating to make purchases due to uncertainties about frame fitting, appearance, and prescription issues. In a swift response, Lenskart initiated an unconventional omni-channel strategy, starting with the establishment of a few physical stores.
“We stumbled upon it, but were prompt in addressing the consumer problems,” Khurana added.
Lenskart’s transition from online to offline was marked by inventive solutions. The brand introduced features such as infinite trials and omni-channel returns, directly addressing specific pain points that hindered the online shopping experience. Unlike traditional retail approaches, Lenskart’s journey involved a shift from online to offline, bringing attention to products not physically present in stores.
Khurana shed light on Lenskart’s evolving omni-channel strategy, emphasizing the pivotal role of Artificial Intelligence (AI) and Machine Learning (ML). The brand leverages these technologies to tap into regular CCTV footage across stores, obtaining valuable insights into customer behavior and decision-making processes.
Discussing the ongoing evolution of their strategy, Khurana highlighted the use of AI and ML to study the online conversion funnel. This includes understanding demographics, time spent on product selection, and various other factors aimed at making the customer journey frictionless.
The brand aspires to bridge the gap between online and offline experiences, bringing online features into the offline shopping journey and vice versa. By deploying AI and ML, Lenskart aims to provide personalized assistance based on anonymized data from millions of purchases.
Khurana concluded by acknowledging Lenskart’s commitment to unlocking new data use cases, making the brand adept at collecting and utilizing data to enhance customer experiences. This accidental revolution from digital ignorance to omni-channel mastery positions Lenskart as a formidable player in the eyewear retail landscape, rewriting the rules of engagement in the industry.
