Letsbuy – bought! Now what?

Early this year when Flipkart acquired Letsbuy, we had our fair share of analysis (read: Why Flipkart’s Acquisition of LetsBuy is a Great Story for the Startup Ecosystem , Letsbuy and Flipkart – A marriage of INCONVENIENCE!! ). We have been watching LetsBuy and Flipkart synergy for sometime and here are  a few observations:

• Letsbuy has killed the buyback option (http://buyback.letsbuy.com/)
• There have been no Letsbuy ads in recent times.
• There have been no mailers as well.
• Their Twitter account (@LetsBuy) was last updated on April 24th. There are way too many complaints/order status requests regarding Letsbuy and none of them are being addressed.

And now some rumors

• All warehouses of Letsbuy except at Delhi have been closed down. Whether its “shut down” or “under renovation (for Flipkart)” is unknown.
• It seems an announcement was made last week at Letsbuy, Gurgaon office that by May-end all 250 odd employees would be laid off (with no visibility into severance package). The story at BusinessWorld also corroborates this.

While the details haven’t been confirmed by either of the two companies (we have sent an email to Flipkart for the official version), we have heard the layoff details from LetsBuy employees as well.

So what really happened?

When Flipkart acquired Letsbuy, the official release mentioned 3Cs (Computers, Communication and Consumer electronics) category expansion as the main reason for Letsbuy acquisition:

“This acquisition fits into our strategy of building dominant shares in all categories we operate in. We are already leaders in the books and media verticals. Given that we managed to build a leadership position in consumer electronics as well since its launch in early 2011, it made sense for us to consolidate when we saw this opportunity. This acquisition opportunity came at a very attractive price for us and the timing has also been ideal. The synergies will now allow us to accelerate faster and get to a share similar to what we enjoy in the online books category”. [source]

Which translates to acquiring the warehouses, integrating the backend/supply chain etc. But none of that has happened so far and now Letsbuy has shutdown all warehouses, except for the one in Kirti Nagar, Delhi.

Flipkart vs. LetsBuy: Exploring Synergy

Let’s chalk down the strength of the two companies:

	Flipkart	LetsBuy
Brand	Way stronger – 9+ of 10	3-4 of 10
Geography	North+West, mostly. Expanded post TV Ads	North, North-West
Popular Verticals	Books, mobiles	All consumer electronics
Service/Delivery	Wow	Meh
Logistics	Of course well done	Hmmm
Consumer Sentiment* (we used a flaky tool)	+67%	-82%

Sentimental Analysis : Flipkart vs. Letsbuy (May 19)

So why did Flipkart acquire LetsBuy ?

Was it to address new markets, and get a new user base? Or to get better access to deals in consumer electronics space (no doubt that Letsbuy was much cheaper than Flipkart pricing, when it comes to electronics space). And all of this probably made sense in the short run, but not something Flipkart could not have figured out on its own steam.

The need to add more warehouses could have been an immediate pain point that (also) got solved with this deal – but on its own its too expensive a proposition.

Was it – as believed by many – driven by a financial restructuring of its portfolio at the VC’s end? Given other such signs at Accel’s end, this cannot be totally ruled out. Of course, this is pure speculation.

What Next?

That must have been a tough one. Not just for us, but for those involved.

LetsBuy is a bit of an expensive hot potato. Let’s remember they were probably bleeding when Flipkart bought them.

So first up – a smart thing to do would be to reduce costs! The ads, emailers disappearing from the online world point to that. Integrating Flipkart with Letbuy would be a medium term process – and doing it at the service/logisitics level would be pointless, painful and risk dilution of Flipkart’s famed service levels. So it would make sense for just the inventory, vendor relationships and the like.

The above doesn’t need too many Letsbuy people, of course. The grapevine is abuzz about many Letsbuy-ers interviewing at other places – so the murmurs of a “restructuring” in there are not unbelievable.

Is the Letsbuy brand hurting Flipkart?

Will the Let’sBuy brand stay alive? It does have a certain amount of recall. However, using it as sub brand for product categories doesn’t make sense especially given the strength of Flipkart’s own brand. But as a new property/direction – say a deals site closely affiliated with Flipkart, or an outfit managing and forging affiliate/channel alliances – perhaps yes. Flipkart must be looking at moving deeper into the hinterland and addressing markets on the fringes to expand.

“Letsbuy employees are, however, certain that the brand will be wiped out. “From the looks of it, Flipkart is going to kill Letsbuy,” says a senior officer at Letsbuy on condition of anonymity. “Our orders have come down drastically and we only get new inventory after orders are placed,” he adds. Incidentally, Letsbuy is still receiving about 1,500 shipments a day against Flipkart’s 30,000 a day” [reports BW]

LetsBuy's blame is on Flipkart

The one thing that’s clear is to either do a 100% brand integration and ensure that LetsBuy experience is as good as Flipkart, or simply kill the brand and own the logistics. The more Flipkart delays this, the worse will be the impact on its own brand perception.
And this is just one of the several tweets that expresses frustration over LetsBuy’s bad support (and a new trend we have observed is that people are now putting the blame on Flipkart for Letsbuy shipping mistakes/delays).

Given that Amazon is probably feverishly working on its India strategy and Jabong is on an aggressive growth plan (read: Rocket Internet in India: What’s the Big Deal?), we wonder if this isn’t just a huge, expensive distraction to Flipkart? There are sporadic reports of older players like Indiaplaza and HomeShop18 working on improving their logistics and delivery. Everyone must have Flipkart on their radars, and surely, the ecommerce battles are just about warming up.

What’s your opinion?

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Healthkart acquires Madeinhealth, its biggest rival

Healthkart has acquired Madeinhealth for an undisclosed amount. Madeinhealth.com was founded in early 2011 by Maniraj Singh Juneja, who graduated with a B.Tech. degree from IIT Delhi and an M.S. degree from MIT, USA; and Jatin Modi, a B.E. from Mumbai University who has been an entrepreneur since the age of 19.

Madeinhealth.com is among India’s largest health nutrition e-store and began by selling authentic health and sports nutrition online, delivering to all parts of India. The market was extremely fragmented and unorganized and the online store gained traction very quickly.

“Healthkart, founded by IIT alumni Prashant Tandon and Sameer Maheshwari, will now gain access to an online community of over one lakh fitness enthusiasts and bodybuilders through this acquisition.It is a good strategic fit, said Sameer Maheshwari, co-founder of Healthkart.com. In January,the company had raised $7.5 million from Omidyar Network and existing investors Sequoia Capital and Kae Capital. As the e-commerce sector sees huge growth with nearly 100 million Indians online now, increased consolidation is expected. Healthkart’s co-founder Prashant Tandon estimates this newest acquisition will help the company tap into the $1 billion sports-nutrition market in India.” [PR]

The founding team of Madeinhealth will not join Healthkart, post this acquisition.

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China Mobile’s 4G TD-LTE Network is Really Fast

We’ve written quite a bit about the testing of China Mobile’s 4G TD-LTE network that’s currently underway in Guangzhou and other cities throughout China. But how fast is TD-LTE really? Pretty freakin’ fast, according to a Sina Tech reporter who tried the service out yesterday on one of Guangzhou’s 4G-equipped test buses. The buses are equipped with a WiFi router that connects to the internet via China Mobile’s 4G TD-LTE network.

According to Sina Tech, when the bus was parked the reporter was able to achieve blazingly fast download speeds: an average of 102.43 Mbps and a peak speed of 112.2 Mbps. To put things in perspective, that’s about 56 times faster than the ADSL connection I’m using to write this post. After the bus got moving, the speed dropped significantly, down to an average of about 40 Mbps with a peak speed of around 60 Mbps. That’s still pretty fast!

Now, will we be experiencing speeds like this when 4G networks finally come to China? Probably not. The reporter was testing the network on an empty bus; my guess is that the speed will take a major hit when millions of people are all trying to use it at the same time (although between then and now, China Mobile will also probably beef up infrastructure well beyond what’s being used for these tests). Still, the numbers are impressive and suggest that 4G will be a major step up. They also suggest that China Mobile is improving the TD-LTE network’s performance, as a similar test last year returned lower (though still quite fast) results.

[via Sina Tech]

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KDDI and Global Brain wants to fund young startups worldwide

The KDDI Open Innovation Fund, a 5 billion Yen (US$63M) corporate venture capital fund from Japan, is seeking to invest in promising mobile startups in the seed and growth stage.

Started in February, the fund is a collaboration between KDDI, a major Japanese telecoms operator, and Global Brain, a VC firm. The fund will invest in companies in Asia, Japan, and the United States, providing not just funding but also service development, platform for cloud services, and promotional initiatives.

Global Brain sees Singapore as a center of their upcoming activities in Asia, having already partnered with the NUS Entrepreneurship Centre. They have been managing several corporate venture capital funds for 11 years.

Startups can apply for the fund through the Global Brain website.

 

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Clault Keeps Guard of Your Most Confidential Business Documents

Most of us are well aware of the risks involved in losing or not protecting sensitive data. That’s why many organizations opt to purchase expensive document collaboration tools equipped with security solutions. The team at Clault basically saw the opportunity and developed an easy-to-use cloud document sharing tool with built-in enterprise-grade security – and it looks pretty stellar from its video demo (embedded below).

How does Clault work? First, it provides security solutions when you are sharing documents with internal and external parties. So when you are storing, transferring, or using the documents, Clault protects the integrity of the documents throughout its usage cycle. Second, the company has implemented its own enterprise-key management solution, which allows users to own their security keys. There are tools in place to assist in key creation, exchange, and lost key recovery. With the ownership of the security keys, it safeguards the confidentiality and authenticity of your information. Three, the Data Loss Prevention (DLP) technology service prevents leakage of information that was unintended for external eyes, which guarantees the privacy of valuable documents.

Clault also keeps guard of your documents as they’re emailed, and so it is somewhat complementary to the Dropmyemail service, from the makers of Dropmysite, that we looked at earlier this year. Marcus Tan, co-founder of Clault, explained to us how his startup product differs:

Our differentiation is security, and our competitors will be traditional IT security vendors instead of Dropmysite.com. No IT solution is 100 percent safe, but our service gets you really close to state-of-the-art protection in IT.

The Singapore-based startup is co-founded by another security scientist from A*STAR, Li Qiming, and is currently funded by SPRING Technology Enterprise Commercialisation Scheme (TECS) Proof of Concept (POC) grant that it received in 2011. It is also looking to launch a new secure document sharing service at the upcoming CommunicAsia, an event which caters for corporate development teams and organizations.

Here’s Clault’s own demo video:

(Direct video link for mobile readers).

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Events For The Week – 19-26 May

For a one-stop to all events related to or concerning entrepreneurship, certain industry-meets-business forums and seminars in Southeast Asia, check out our Calendar. If not, you can also follow our bite-size updated posts for upcoming events for the week.

Events range from simple get-togethers to full-blown conferences. Get to meet fellow developers, entrepreneurs, startup CEOs & founders, and meet & learn from CEOs of established companies who have seen it all.

Our aim here at SGE is to make it easy for you to pick & choose from the event buffet. Enjoy.

Here are the events for this week. Events are mostly in Singapore (generally 30 minutes drive from anywhere), but we also include key events from around Southeast Asia and beyond.

Saturday 19th May:

(1) [Singapore] Red Dot Ruby Conf

(2) [Singapore] 13th Start-Up@Singapore Awards Ceremony

Wednesday-Saturday 23-26th May:

(1) [Malaysia] Asian Business Angel Forum

Wednesday 23rd May:

(1) [Singapore] Web Wednesday: The Past, Present and Future of Location Based Media

Thursday 24th May:

(1) [Hong Kong] TEDxMongKok

(2) [Singapore] Singapore TechMeetups

Friday to Saturday 25th – 26th May:

(1) [Australia] One More Thing Conference 2012 in Melbourne

Image courtesy of joyosity.

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Book Review: Only The Paranoid Survive by Andy Grove

Although the case studies from this book are already outdated (as it was written in 1996), the lessons learnt and the concept of a strategic inflection point together with its implications for the high technology industry by Andy Grove, former CEO of Intel Corporation, are relevant for today.

This is a highly recommended book even for those who are thinking about their own career strategic inflection points at this moment of time.

A strategic inflection point is a time in the life of a business when its fundamentals are about to change. That change can equate to an opportunity for a company to rise to new heights or tumble down to collapse. While it is obvious that strategic inflection points are likely to be caused by technological change, they can also be caused by competitors when they deliver more value or become more efficient.

A strategic inflection can be deadly when it is unattended. We have seen how big bookstores like Borders fell because they did not see the threat of the Amazon Kindle. A similar insight can also be applied to one’s career.

Though a very short book, Andy Grove drove home the point about changing rules and how leaders in companies have to find their way through uncharted waters.

He narrates the story of how Intel navigated through the changing computer industry brought about by the personal computer revolution in the 1980s. While the present generation may not recall the days of the 386, 486 to the Pentium chip, he explained how the industry has dramatically changed from 1970s to the early 1990s, with his thoughts on the Internet (at its nascent stage) in the 1990s.

Using those examples, he explained  how companies need to steer clear of strategic dissonance. Using data, he shows that the demographics of customers can change and how this could lead to a strategic inflection point.

He also reckons that the timing for a resources shift towards new technology has to be just right, not too early or too late. He also noted that the strategic change has to be clearly communicated to rest of the company.

The last chapter about managing an individual’s career strategic inflection points is an addition to the original book. Andy Grove, advocates having a mental fire drill that lets you spot incoming threats or red flags which might harm your industry, build the relationships around, find the right timing to make the transition, and get in shape for the change. It sounds simple, but given how most people prefer taking less risk and staying comfortable in their own domains, they probably would not see the problems arise until later.

Of course, this book is a good read and I do recall many successful entrepreneurs and investors in today’s world citing the title of the book as a lesson for them to be wary of their competitors, navigate into new territories and change the landscape of the industry.

Andy Grove is right: “Only the paranoid survive.”

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Video: How to make customers pay more for your product

Grant Cardone, an international sales training expert, talks about how lowering the price of your product is often a mistake: Only one product can win the price battle. Instead, convince customers that your product is solving a real problem. Grant dishes out some advice on how you can increase the value of your product in your customer’s eyes.

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NetEase to Make Smartphones Pricing under RMB 1,000

NetEase reportedly will be marching into the Smartphone market to launch a joint-force smartphone characterized by 4.3 inch display, 1.5 GHz dual-core processor and most importantly Android 4.0 system and a price tag under RMB 1,000. If this turns out to be true, then it’ll make NetEase the sixth Chinese Internet company which shows interests in developing a proprietary phone after Xiaomi, Alibaba.com, Baidu.com, Shanda Interactive and Qihoo 360.

 Ding Lei, CEO of NetEase told Wall Street in the conference call for its latest earnings report that they paid much attention to the popularization of smartphones in China. Ding acknowledged that a NetEase-branded smartphone focusing on its core users would be beneficial to its business. The company itself has a lot of popular apps, such as NetEase News, NetEase Reading and Youdao dictionary.

However, Kaifu Lee earlier commented on the frenzy of “making your own phone”, claiming he’s not that into this idea that Internet companies struggles to make hardware instead of developing their core business. At the end of the day, Internet and smartphones are two totally different industries, and internet companies hardly can be successful, take a look at the company behind Android, Google.

photo credit: BigStockPhoto

Related posts:

1. Live Blog: Collide – Powering the China Cloud
2. Microsoft China Director: Windows Phone Has Chance To Win in 3–5 Years in Mobile
3. Over 65% Chinese App Developers Are Newcomers To The Business

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A New round of EComm War: Tencent and 51Buy Show Confidence

Yesterday we reported that Tencent was restructured into six groups, through which  the Penguin Emperor set up a wholly owned subsidiary called Tencent E-Commerce Holding Company. It seems that Tencent’s grander plan of intensifying the Chinese e-commerce competition just surfaces.

On May 16th, B2C site 51buy.com (Yixun in Chinese) announced that Tencent had taken major stakes in it and it will be an independent operation. The two have the same ambition of reaching a 10-billion sales volume. According to an analyst from Zero2IPO the Bejing-based think tank, since the average price of 3C products in China remains high and all the etailers are trying to increase their turnover, a price war on 3C products is just around the corner. How will the Tencent/51buy alliance survive the battle?

 

500M Investment and 51buy’s up trend

Data form iResearch showed 51buy’s turnover of last year reached RMB 2.37 billion, ranking No.3 after 360buy and Suning in the domain of 3C products. 51buy last week initiated a big SALE for its 6th anniversary in which it claims to put over RMB 500 million for sales incentives and marketing together with Tencent. All home appliances are sold 50%. And the sales seemed well received, 51buy generated more than 80,000 orders and a sales of over RMB 50 million in the first day.

51buy now has been integrated into Tencent’s QQ Wanggou (buy.qq.com) platform with OKBuy, Kela.cn among other Chinese B2C services that Tencent has stake in.

 

More to Expect

Bu Guangqi, CEO of 51buy said that the company’s extensive experience in supply chain management, logistics and warehousing plus Tencent’s development power and abundant data would help the company grow at fast pace this year.

He also revealed that in the near future Tencent’s ecommerce effort will be consisted of self-operated and open-platform business. 51buy falls under the first category while Okay comes under the latter.

Currently, over 60% of 51buy’s inventory are directly supplied by manufacturers, the number will keep on growing.

3C products have definitely become a battleground for etailers this year with so many price wars declared by X on Y. However, 51buy seems to be confident and determined when it comes to price war. “In the short term, we won’t set any target for profit, we just want to ensure our price advantage. Mostly the cost of marketing will account for 10 – 20% of the gross margin, we’re saving that part to offer a more competitive price.”

screenshot of 51buy homepage

Dual Strategy

Tencent’s input into e-commerce has never stopped, but it still hasn’t found a unique and feasible mode for itself.

For now, this new combination brings more opportunities to 51buy with the new investment and Tencent’s huge traffic. It understands that price war can never be a long-term choice; the key to success is service.

The company now has built warehouses and distribution centers in Shanghai, Beijing and Shenzhen and logistics and distribution teams in over 10 cities including Hangzhou, Suzhou, Nanjing and so on. Yixun aims to set up an operation center of 800,000 square meters in the next three years.

It seems that 51buy is determined to win the escalated ecomm war with Tencent’s deep pocket and big traffic as well as its price edge and excellent customer.

Related posts:

1. 360buy Adds Game Recharge Support, Relaunches Female Vertical Qianxun
2. China Group-buying Cooled Down In April, Guangzhou Hit Hardest Down 25%
3. Meituan Came in First in October with Sales Over $27M

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Yahoo and Alibaba Reach Stake Repurchase Deal, Yahoo to Net $7.1 Billion

Yahoo (NASDAQ:YHOO), which currently owns 41.7 percent of Chinese e-commerce giant Alibaba Group, has come to a formal agreement with Alibaba to allow it to buy back 20 percent of that stake. With Alibaba worth just over US$35 billion, the repurchase will see Yahoo net approximately $7.1 billion.

Ross Levinsohn, the interim CEO of Yahoo, said in a joint press release that, “Today’s agreement provides clarity for our shareholders on a substantial component of Yahoo’s value and reaffirms the significance of our relationship with Alibaba.” It’s not clear how long this deal has been in the works, or how much it might’ve been delayed by the troubled search engine being on its third CEO so far this year. Levinsohn also thanked Alibaba CEO and founder Jack Ma and the other key players in “this successful outcome.”

The deal also outlines how Yahoo can monetize its ongoing stake in Alibaba – which runs online shopping sites such as Taobao and Tmall – in the future. It includes a framework for the event of Alibaba Group opting to IPO, in which case “Alibaba will be required either to repurchase one-quarter of Yahoo’s current stake at the IPO price or allow Yahoo to sell those shares in the IPO.” But a listing isn’t an apparent plan for the group. Indeed, its sole listed entity, the business-to-business trading site Alibaba.com, will almost certainly delist from the Hong Kong Stock Exchange this summer in a privatization move.

How will Alibaba raise all that cash? The joint statement notes: “Alibaba intends to finance the repurchase through a combination of its own cash resources, debt, equity and equity-linked financing. The transaction is expected to close within approximately six months.”

Also today, Alibaba’s contract to run Yahoo China has been extended for another four years. The Chinese version of the web portal and search engine is not popular in the country, its online search market share never even troubling the statisticians in a market dominated by Baidu, Google, and Sogou.

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mig33 business development VP, Chris Chandler, ventures to social networking/gaming startup

Chris Chandler, former VP of Business Development at mig33. Photo: Facebook

Chris Chandler, VP of Business Development at mig33, is now working on his social networking/gaming startup.

We have just received news that Chris Chandler, who used to handle business development for mig33, has ventured out to work on a startup of his own. According to Chris, he is working with a team and doing a lot of research in the social network and social gaming space.

mig33 is a mobile social network with over 50 million registered users around the world. mig33′s services includes integrated instant messaging, miniblogging, virtual gifting and sharing of photos.

Prior to joining mig33, Chris has headed mobile divisions at Microsoft and Yahoo! in the Asia-Pacific region. Chris is also the cofounder and spokesperson for Mobile Monday Singapore. With tons of experience under his belt, it would be exciting to see what Chris will be up to next. The team at e27 wishes him all the best and look forward to sharing more news from Chris.

Chris having fun surfing. Photo: Facebook

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mig33 business development VP, Chris Chandler, ventures to social networking/gaming startup

Chris Chandler, former VP of Business Development at mig33. Photo: Facebook

Chris Chandler, VP of Business Development at mig33, is now working on his social networking/gaming startup.

We have just received news that Chris Chandler, who used to handle business development for mig33, has ventured out to work on a startup of his own. According to Chris, he is working with a team and doing a lot of research in the social network and social gaming space.

mig33 is a mobile social network with over 50 million registered users around the world. mig33′s services includes integrated instant messaging, miniblogging, virtual gifting and sharing of photos.

Prior to joining mig33, Chris has headed mobile divisions at Microsoft and Yahoo! in the Asia-Pacific region. Chris is also the cofounder and spokesperson for Mobile Monday Singapore. With tons of experience under his belt, it would be exciting to see what Chris will be up to next. The team at e27 wishes him all the best and look forward to sharing more news from Chris.

Chris having fun surfing. Photo: Facebook

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