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The big boys of Indian e-commerce are eating out of Patanjali’s hands

India-Patanjali
AP Photo/Rajesh Kumar Singh
Cannot stop.
This article is more than 2 years old.

The poster boys of India’s $15 billion e-commerce sector are ready to jump through hoops for a piece of Patanjali—the fledgeling fast-moving consumer goods (FMCG) brand that has taken India by storm lately.

On Jan. 16, Patanjali promoter Ramdev, the yoga guru, and CEO Acharya Balakrishna went on stage to announce the company’s big-bang entry into online retail. As they did, Alibaba-backed Paytm’s Vijay Shekhar Sharma and Softbank-funded Flipkart’s Kalyan Krishnamurthy sat alongside cheering.

Indian billionaires are known to flank gurus, but this was a different bond. ”We are now buying directly from Patanjali,” Bigbasket’s chief Hari Menon said and he beamed, despite having to share the stage, and the bounty, with bitter rivals Grofers, Flipkart, and Amazon. The sales opportunity is over Rs1,000 crore a year.

Ramdev shared his business plan and some yoga moves for applause. Patanjali already sells online through third-party distributors across multiple websites. The company that has been looking to strengthen its distribution on the internet for the last few months, will now feature its products directly on eight such websites—ShopClues, Netmeds, and 1mg being the other three. This way, it hopes to reduce its dependence on distributors and enter households beyond its reach so far.

Patanjali currently reaches Indian households through 1.5 million to 2 million retail stores and wants to raise the number to 5 million. “We still have 75% of the retail landscape to cover,” Ramdev said.

Patanjali’s online “trial run” in December 2017 through a little-known website of its own clocked a turnover of Rs10 crore. ”For Flipkart, FMCG and groceries is a big focus over the next three-to-four years. This resonates with our plans to bring quality and affordable products to millions of Indian households,” Flipkart’s top chief Krishnamurthy said.

Patanjali crossed a turnover of Rs10,500 crore in the financial year 2017. It has an ambitious goal of doubling its turnover to Rs20,000 crore in the financial year 2018, which the company hopes to achieve after a debilitating jolt from the rollout of the goods and services tax.

The free run may now be over for multi-national players like Unilever, Colgate, and Procter & Gamble, who took punches from Patanjali on the ground but faced very little competition online.

It was only a matter of time before Patanjali made a splash online, given that online FMCG sales are expected to jump six-fold from the current $1 billion, according to a report from Google and Boston Consulting Group.

In recent years, Patanjali has shaken up India’s consumer market. CEO Balkrishna made it to the Forbes billionaires list recently. This meteoric rise stokes intrigue in some, and the fear of missing out on others.

That would explain why the biggest names in Indian e-commerce made a beeline for Ramdev. Yoga and Ayurveda are known for good health. They are generating some good wealth, too.

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