One of the biggest e-commerce deals in the country took place between Flipkart and Myntra recently. The estimated Rs 2,000 crore deal was extensively reported and analysed in the media.
YourStory brings to you the story of another e-commerce company, launched much before Flipkart in 2005 – which has grown slowly, steadily, and carved its own niche.
Ashutosh Pande founded Bajaao.com as a 26 year old, which is today the oldest and largest e-commerce retailer of musical instruments in the country. According to the company, the site lists over 12,000 products for sale and ships about 15,000 orders each month. Ashutosh started the business by boot-strapping with a seed capital of Rs 2,50,000 from friends and family, and registered a turnover of Rs 13 crore last year.
We caught up with the entrepreneur to understand his motivation behind Bajaao.com and his early bet on e-commerce.
Ashutosh worked briefly at a publishing house in London, before he decided to launch a startup. In college, Ashutosh was the guitarist for a band he started with friends called Xenon, and another one called GrooveLab. “We toured the whole country back then, and I am happy that some of the band members are today part of successful bands across the country. As for me, I play successfully in the bedroom,” he laughs. Ashutosh attributes his passion for music as the inspiration to start his venture.
But his entrepreneurial outing shut down almost as soon as it had started, because the first order that Bajaao shipped – worth Rs 80,000 – was done using credit card fraud. “That was a bad experience, we got a call from the bank for a chargeback and that’s when we realized it was a fraud,” recollects Ashutosh. The equipments that made up the first order was purchased on credit by Ashutosh from the supplier, and when he told the supplier about the fraud, the supplier encouraged him to go in search of the fraudsters.
Ashutosh managed to track down the criminals, recover the musical instruments, book them for their offence and even earned appreciation from the police department for his help in tracking them down. Ashutosh’s background in IT helped his track down the credit card fraudsters and was also the reason he veered towards e-commerce.
Bajaao.com took birth in 2005 and Ashutosh identified Tier 2 cities, non-metros as the opportunity to tap into, because it was easier to access and buy musical instruments in metros. “Sometimes our pre-sales period runs into as long as six months, because our customers have many doubts and want to take time to make their decision,” he says. For many people, the Bajaao.com purchase is the first e-commerce transaction they are doing and Bajaao has to educate these customers about e-commerce, the medium and such.
“Customers who have never even bought a toothpick online are making purchases with us, and that is a long process,” says Ashutosh. The average value of transactions on Bajaao is Rs 8,000 and many from cities like Kanpur or Mizoram. The online model has been very conducive to Bajaao and therefore they have stayed away from offline retail.
“Across the country, there are only about 150 offline retailers while we are able to cater to 2500 towns in the country. Big cities already have big offline stores, while in small cities there are no offline stores because it is not sustainable there. It is ok for me to get a business of Rs 10 lakhs from a small town in Aizwal, but if I were to put up a store there, I will go broke,” reasons Ashutosh.
The company remained self-sufficient for five years before it took external funding in 2010 from JMD Telefilms. “The market that we operate in viz musical instruments and professional video is a very small and niche market. There were a lot of small PE companies and angel investors who were always interested. But I was not very comfortable with anyone entering the company who were not from the industry and did not understand the business. Also I wanted to do it alone as much as possible,” says Ashutosh. JMD Telefilms had always been in the music business, and therefore the partnership appealed to Bajaao. As JMD Telefilms picked up 51% stake in Bajaao, the company is now a subsidiary of the investor. As JMD Telefilms is a listed company, and Bajaao its subsidiary, it is today a deemed listed company.
Very recently, two individual investors have pumped in additional Rs 18 crore in Bajaao – the details of which will be revealed soon, promises Ashutosh. “Both are music leaders in their own rights, one of them is a former Jazz musician. They have impeccable credentials and have graduated from Wharton and Harvard each. The addition of these two people to our management team really strengthens it,” is all Ashutosh reveals at this point.
Along with selling musical instruments, Bajaao has also entered into allied services related to the music business. They entered the studio equipments business in 2008 and moved into public broadcasting systems in 2009. Bajaao has been helping conduct a lot of musical events – including underground music events such as Jack Daniels Rock Awards (21st March 2014), International Jazz Festival, Raagasthan, Red Bull Tour Bus and had even tied up with Bollywood movie ‘Aashiqui 2’.
They have also conceptualized and executed work with brands like Superdry, Diesel, Converse, Ray-Ban and True School of Music. They have also been handling artist management for a number of outlets of Hard Rock Cafe since Feb 2014.
Bajaao.com had also started a 24/7 Jam Room in 2006, which could be hired by bands to practice by the hour. Bajaao also powered and ran B69 an underground independent venue for Hard rock and Metal. Over the two years that B69 was up and running, it hosted around 200 independent shows. B69 was instrumental in getting Bajaao up close and in the mix of the Indian independent music scene and eventually led to the formation of the live sound division. However, with many similar jamming rooms mushrooming in the city, B69 was shut down in 2009.
The live sound division today continues in a different avatar as a separate business vertical for Bajaao and helps host many musical events. “Its two different businesses, they are two different models that use the same brand name. Bajaao is the primary business and is the main driver of revenues. The e-commerce business is growing well, while the consulting business is not focused on revenues. We are picking and choosing clients we want to work with on that side,” says Ashutosh.
The latest initiative up their sleeve is the launch of ‘Vault’ – Bajaao’s own brand of musical instruments in March 2014. Ashutosh plans to push these products aggressively and hopes to get a good part of revenues for the current year from the sale of Vault products.
Ashutosh is quite happy with his journey so far. “I am the only guy in my family to have done business. I never looked at myself as an entrepreneur; I always saw it as a day job. For me owning the company was not very important, I have always looked forward to working for the company,” says the musician-entrepreneur philosophically.
Bajaao.com pegs the musical instrument market in India to cross $96 million by 2017, and as the first and largest direct online retailer, Bajaao is in an advantageous position.