E-commerce and aviation industry are similar in many aspects. The piling losses posted by venture backed e-commerce firms like Flipkart, Snapdeal and Myntra among several others, reminds us of the glittering rise of Kingfisher Airlines on investor’s money without any focus on sustainability.
Over the past few years, many e-commerce retail companies in India have struggled with profitability and continue to burn capital. Even after five years, companies continue to spend on consumer acquisition and freebies (discount) at times with negative operating margins resulting in huge losses.
While venture backed e-commerce firms are posting losses every year, Ahmedabad-based Infibeam broke even in the last fiscal year and posted profits for the financial year 2013-14.
In 2013, Infibeam’s total transaction value across thousands of merchant sites built using its B2B platform ‘Buildabazaar’ exceeded the value of transactions on Infibeam.com. “The GMV (gross merchandising value) generated collectively across thousands of merchant presence contributes largely to company profitability,” says Vishal Mehta, Founder and CEO, Infibeam.
To track the various business aspect of Infibeam, YourStory spoke to Vishal Mehta in an exclusive interview. Vishal shed light on the company’s decision of not raising venture investment, Buildabazaar’s global expansion and Odigma acquisition among others.
YS: When major e-commerce companies in India are piling up huge losses, how has Infibeam been able to hit profits this year?
VM: Since the beginning, Infibeam has forward invested in building retail and e-commerce platform business with steady and profitable growth. The customer acquisition cost is one of the lowest in the industry and we continue offering the best selling products at attractive prices and make margins on the long tail. In all the years, we have invested in developing Buildabazaar software platform and process optimization to deliver value to clients.
Thousands of merchants using our Buildabazaar platform benefit hugely by adding our retail products to their online selection, which further reduces our acquisition and operational costs. Merchants also generate huge demands by listing their products on e-commerce sites built on our software platform, including Infibeam.com complementing our retail product assortments and providing customers with a great selection and price.
With this network effect of platform and retail, our business continues to grow across many online channels; the company is tracking break-even in the last couple of quarters and full year profits this year.
YS: Besides B2C business, Infibeam’s B2B face Buildabazaar seems to be going good. How was its growth in 2013?
VM: In 2013, the total transaction value across thousands of merchant sites built using Infibeam B2B platform ‘Buildabazaar’ exceeded the value of transactions on Infibeam.com. The GMV (gross merchandising value) generated collectively across thousands of merchant presence contributes largely to company profitability.
In FY13, we expanded the platform presence internationally supporting local languages, including Arabic for the Middle East regions, and we expect that this year, we will add three to five more countries.
YS: Can you give some sense about the growth of Infibeam’s B2C business like the number of orders per month, average transaction size etc in the last financial year?
VM: While we have not disclosed specifics of operational metrics in public, what I can tell you is that the company processes a few thousand crores of GMV across the platform; transactions have increased around 3X on a yearly basis in our B2C business.
YS: Buildabazaar recently went global with footprints in the Middle East. How is it faring in the global markets?
VM: Buildabazaar is the only cloud-based software platform that supports both e-commerce retail and online ticketing business for large enterprises as well as SMEs with local language support, mobile responsive with logistics and payment gateway integrations.
Today, Buildabazaar is internationally accepted e-commerce platform implementing some of the major international retail brands in the UAE region and more launches coming shortly. This year, we plan to expand across other GCC countries and MENA market.
YS: According to you, what’s the outlook for e-commerce space in 2014?
VM: Hybrid formats with physical and online presence will compete with incumbents fiercely as more people shop online. There will be further consolidation in e-commerce space and existing e-commerce companies with piling losses will start looking at avenues to become profitable.
Smartphone penetration will continue to grow and number of transactions on the phone is expected to increase significantly year over year.
YS: Is Infibeam planning to raise capital this year?
VM: We have a strong internal accruals and cash flow and recently acquired one of the leading digital marketing company, Odigma, to service our retail and platform clients in domestic and international markets. As the regulatory environment in Indian e-commerce evolves, we will continue evaluating opportunities for funding our growth plans. Infibeam has plans to raise capital this year and weexpect to share some strategic development shortly.