Raising a growth round before aiming for a NASDAQ listing by 2016: The ShopClues Story
I wasn’t aware of ShopClues until earlier this year. Contrary to how it usually works, someone else was telling me about an online business I should have known. I snooped around a bit and stood surprised. These guys had traction.
Ever since, we’ve been tracking the company and the numbers have looked impressive. Serendipity put me in touch with the founder and CEO of ShopClues, Sandeep Aggarwal and this is how the story unfolded.
The Genesis lay in the opportunity
Sandeep Aggarwal did his MBA from Washington University and has been in the US for more than 15 years. Sandeep was a stock market analyst and provided research coverage on global Internet giants such as – Google, eBay, Amazon, Yahoo!, Microsoft, Expedia, etc. In 2010, Sandeep wrote a sector defining report for the India Internet and also launched research coverage on MakeMyTrip.
Coming to India for this, Sandeep identified the room for eCommerce in India. “The opportunity was green and it was the perfect time to do it. I decided to come to India along with three others who are a part of the core team,” says Sandeep. The inventory, group buying and daily deals model were already in place and ShopClues decided to go ahead with the managed marketplace model. “We would allow only merchants and not individuals to list products on the site,” says Sandeep. (Snapdeal also pivoted and works on a marketplace model)
He built on the technology front while in Valley and came to India by September 2011 and subsequently launched ShopClues in November along with his core team.
The Chicken and Egg problem
For sales to happen, buyers need to be on the site for which you need merchants. And to convince merchants, you need to show that you have buyers on the site. “Yes, this was the problem we faced initially but persistence is all you need. I went from merchant to merchant with my laptop convincing them. It took 4 months to get the first 100 merchants but the growth has been smooth since then,” says Sandeep.
Merchants don’t have to pay anything to be on ShopClues as a platform. There is a 5-18% selling service fee that ShopClues charges. The merchant onboarding has been fast since the initial months and currently ShopClues has 13k+ merchants selling products on the platform.
How much are they selling?
Shopclues came a bit late in the game. “We were the 35th entrant in the eCommerce space in India and now we are amongst the top 5 in the country,” says Sandeep. A 350 people team headquartered in Gurgaon, ShopClues is currently selling around 10,000 products a day. 70% of these products are in the apparel, health, jewellery, footwear, gifts and flowers segment. ShopClues has about 650,000 SKU’s and the average ticket size is INR 750.
Shopclues also provides logistics services (has its own fulfillment centers) to all the merchants on board via 3 offerings and it might open the services up for other merchants soon as well.
“We are on track to rake in INR 350 crores in revenues in the financial year closing March 2014,” says Sandeep.
The Funding Journey:
Shopclues was started with an initial seed amount of $250,000 which came from Sandeep’s savings. Shopclues then raised a $2 million angel round from angels based in Silicon Valley. Most recently, Shopclues raised $10 million from Helion Venture Partners and Nexus Venture Partners. This brings the total funding to $16 million for Shopclues.
“We’re expanding aggressively and are planning to raise another $50 million growth round before we shoot for the NASDAQ listing,” says Sandeep.
One striking thing about Sandeep that came out of our conversation was the staright forward mindset. “I saw an opportunity in India with eCommerce in India and hence I came back. There’s no romance here,” he says. A hard core focus on numbers and a clear thought process of building the company is something that left a deep impression on me. “I’m here for the longer game. eCommerce is currently what the IT services industry in India was during the late 80’s. There’s a chance to make some huge companies,” concludes Sandeep.
We’ll surely be having an eye on them. Check out Shopclues here.