Spencer's Retail plans to enter the ecommerce segment within the next six months and has hired consultancy Ernst & Young to structure an online venture
Spencer's Retail plans to enter the ecommerce segment within the next six months and has hired consultancy Ernst & Young to structure an online venture, two senior industry executives said. The retail flagship of the RP-Sanjiv Goenka Group is considering operating the online business through a separate company, so that it can raise overseas funds whenever the government allows foreign investment in ecommerce ventures selling directly to consumers.
The venture will operate as a marketplace model but, according to the plan, Spencer's Retail will be the dominant seller on the platform and account for as much as 95% of the business across food, home improvement and basic fashion. The balance 5% will be through sellers who are in adjacent segments such as consumer electronics. Deliveries will be made the same day.
Spencer's is seeking to keep two entities - one for brickand-mortar and the other for ecommerce - as such an arrangement will allow it attract foreign direct investment in the ecommerce entity separately from offline retailing, where FDI is restricted to 51%.
A person familiar with the plans said Spencer's is seeking to leverage the existing network of its around 130-strong brick-andmortar stores to push its omnichannel strategy.
"The Spencer's ecommerce venture will initially cater to consumers only to those cities where they have their offline stores since the orders will be fulfilled by the stores and delivered on the same day itself. This model will make the ecommerce venture asset-light - there will be no need to carry any inventory - and also ensure faster breakeven," one of the executive said. The pilot may be in Kolkata, Gurgaon, Lucknow, Hyderabad, Chennai and Bengaluru.
Spencer's Retail had reported a 14.5% jump in sales to Rs 1,688 crore in 2014-15, even as its loss widened to Rs 114 crore from Rs 111 crore a year earlier.
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