Also in this letter:
■ Short-video apps and small-town content creators
■ Startup India 2.0 coming soon
■ Esports firms may cap player payouts
Flipkart may trim rolls by up to 7% in yearly refocus
Flipkart, the country’s largest ecommerce firm, is in the thick of the action in the New Year. Even as it moves to close a billion-dollar funding round, significant changes are underway at the Walmart-owned etailer.
Optimise, realign: A workforce reduction has begun at Flipkart that could see its staff count decrease by around 5-7%, according to people in the know. The resizing exercise will be completed by March-April as part of performance reviews that are currently on. Flipkart–excluding its fashion portal Myntra–has 22,000 employees.
Clear priorities: The proposed changes come at a time when Flipkart is reassessing its priorities across existing and new lines of businesses such as Cleartrip. The travel portal — where Adani group holds 20% — has hit $1.5-1.7 billion in gross merchandise value, or GMV, and is expected to be a key area for the etailer.
Last September, Flipkart merged key technology and product roles at Cleartrip (travel) and Flipkart Health Plus (epharmacy) into the core commerce team to streamline operations. Shopsy and grocery will also be in focus in 2024.
Others under pressure, too: Large Indian internet firms have been rationalising teams after they aggressively hired in 2021, aided by record fundraising amid the Covid-19-led demand for technology services.
ET reported on December 25 that digital payments major One 97 Communications, which runs Paytm, has laid off over 1,000 employees to cut costs and realign its businesses.
Paytm will downsize its workforce by 10-15%, people in the know said. Amazon shut multiple smaller businesses in India in 2023 and fired around 1,000-1,500 here as part of global layoffs. Meesho—backed by SoftBank and Prosus—also cut its workforce by 15% last year despite adequate cash in the bank.
In the making: Flipkart’s efforts to drive various synergies internally have been in the works for months now, people aware of the changes said. “This has become an annual practice now. As part of the appraisal cycle, they (Flipkart) are restructuring teams. The overall business in 2023 also had its ups and downs for the overall ecommerce industry—including Flipkart. So, corrections are being done now,” a source told us.
Flipkart said in February last year that it would not roll out increments for the top 30% of its senior officials as it wanted to be ‘prudent’ in managing resources.
Ads get cash counters ringing at quick-commerce and food-delivery firms
An increasingly diverse list of brands are advertising on food-delivery and quick-commerce platforms, industry executives told ET. At the same time, advertising income is quickly becoming an important and high-margin source of revenue, too.
Attractive margins: About 10-12% of revenues for food-delivery companies come from advertising, people in the know said. For these firms, advertising revenue often offers the highest margins of 90% to 95%.
Steady rise: Swiggy, for instance, is now at an annualised run rate of Rs 1,000 crore in advertising revenue, and is likely to bump that target up to Rs 2,000 crore next year, a senior executive at the firm said.
Also read | Amazon, Flipkart generate Rs 8,705 crore ad revenue in FY23
Essential diversification: For firms, expanding ad monetisation opportunities on their apps is increasingly becoming a lever to improve their take rates—the percentage of the money earned per order. This is also important as restaurants often push back if the platforms charge them higher commissions.
Also read | Quick-commerce, food-delivery firms log order surge on New Year’s Eve
Short-video apps fuel big ambitions for small-town content creators
Short-form videos (SFV) have seen a major spike in India, with the Covid-19 pandemic being a catalyst. A report from Redseer suggests that influencers have been able to earn a sustainable income from platform payouts, brand deals and virtual gifting. But what’s behind their success, and how sustainable is it?
The big picture: According to Redseer, the effectiveness of Indian SFV apps can be attributed to two key factors—they reach users in Bharat and are increasingly being considered integral channels within large-scale branding and reach campaigns. Indian SFV platforms are dominated by people from tier-II cities (about 65-70%) and about 64% of the user base comprises individuals under 25 years of age.
Influencer evolution: This can be attributed to the huge boom in 5G and smartphone penetration in India, which boasts over 900 million smartphones and 250 million feature phone users. Take, for instance, 27-year-old Ajay Sharma, a popular motivational speaker and content creator from Jaipur. He’s one of the top creators on Josh with 56.9 million fans.
The challenge: While the opportunity is massive and the space is seeing several creators across genres and cities breaking the mould, some experts ET spoke to said the buzz around the ecosystem is misleading and that for every successful influencer, countless others struggle to find their feet.
Also read | New-age endorsement deals: Virtual influencers now making real money
Deep tech in focus as Startup India enters second phase on January 16
The government will launch the second phase of the Startup India programme on January 16 with a focus on deep tech startups, officials told ET. These firms will work in areas including semiconductor chips and related research and design areas, quantum and high-performance computing, AI, and cybersecurity.
Quote, unquote: “The first phase was all about consumer internet and consumption or service-based startups. In the next wave, in India and globally, startup innovation and value are going to come from deep tech. They will be fewer but much more valuable,” an official told ET.
The first phase: The Startup India initiative, launched eight years ago, was aimed at supporting young entrepreneurs. Between 2016 and 2021, more than 41,000 startups were recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) across 54 sectors and 224 sub-sectors. The Centre amended 39 policies to enhance the ease of doing business, raise capital, and cut down on compliance norms.
Esports companies may cap player pay at Rs 2.5 lakh per month
As poaching of top players becomes commonplace, top esports teams such as S8UL, Revenant Esports, GodLike Esports, Enigma Gaming and Global Esports are mulling a cap on the salaries of players at Rs 2.5 lakh per month. Owners of as many as 15 esports firms met last month to discuss salary packages and perks for top players that are pushing many of them into the red.
Business economics: “The entire poaching practice amongst us is disturbing the economics of the business,” an owner told ET. “Every organisation spends a huge budget in running gaming boot camps in posh locations of Mumbai, training players, building team strategy, managing their branding, travel expenditure as well as taking care of their nutrition and mental well being.”
Expenses rise: This spending could be anywhere around Rs 15-20 lakh per month, depending on the number of athletes on board. The earnings for these organisations come from either the prize money won in tournaments or brand endorsements.
It’s unfair, say players: “These same team managers capitalise on our growing popularity and can offer us higher packages. Capping salaries is like limiting our worth, no matter how good we perform,” a top egamer said. Some players have also taken to social media to voice their grievances.
Also read | ETtech Explainer: Esports set to reach new heights in India in 2024
Other Top Stories By Our Reporters
Voice actors air their fears about voice-stealing AI: AI voice cloning is now deeply hurting voice-over artists. A GenAI model trained over 10-15 sentences in a person’s voice can create a five-hour-long audiobook within minutes or even dub an entire OTT web series in 10 different languages.
Tamil Nadu signs multi-billion-dollar deals at Global Investors Meet: The Tamil Nadu government signed a host of deals with Tata Electronics and Pegatron among others during the two-day Global Investors Meet. Here are the top developments:
Insurtech startup Riskcovry gets $4.5 million in bridge round: Insurtech startup Riskcovry has raised around $4.5 million in a bridge round of funding led by Dubai-based business-to-business fund Morphosis Venture Capital. Indian financial services player IIFL also participated in this round.
Global Picks We Are Reading
■ What’s the value of 3 million LPs in a digital world? (Wired)
■ The internet copyright machine wasn’t made for Mickey Mouse (The Verge)
■ Thrive Capital plots new fundraising as it doubles down on tech (FT)
Originally posted 2024-01-08 01:22:21.