Online retail in India started with inventory-led model but later entrepreneurs realized the model was not scalable and capital intensive. Following this, we have seen e-tailers like Flipkart, Snapdeal etc. hopping onto a marketplace model. While most of them pivoted as they saw a huge potential in organizing the fragmented retail, Gurgaon-based Shopclues had the DNA of a marketplace right from its existence.
Backed by Helion Venture Partners, Nexus Ventures and Netprice’s CEO Teruhide Sato, the company has registered more than 600 percent growth last year over 2012. It has strong focus on bringing small and medium businesses on its platform and claims 80 percent of orders come from them.
Last year, Shopclues went through a major crisis when Sandeep Aggarwal, one of the founders and CEO of the company, was arrested and tried for insider trading in the US. But Radhika Aggarwal, CMO of Shopclues, says, “It did not impact the company much as other four co-founders came together.”
In an exclusive interview with YourStory, Radhika talks about Shopclues and the journey so far.
YS: How was the year 2013 for Shopclues in terms of business growth?
RA: Shopclues is the first player to evangelize the managed marketplace model in Indian e-commerce market. Marketplace is our DNA from the day of our inception and we see a huge potential in organizing the small and medium businesses through Shopclues. As far as Gross Merchandise Value is concerned (GMV), Shopclues has grow more than 600 percent in previous year over 2012.
In terms of daily orders we usually do 15,000 to 18,000 orders, while on peak days (during festivals, special occasions like Valentine’s Day) we do orders from 30,000 to 35,000. On the merchants’ front, we have close to 33,000 partners spanning across different geographies of the country.
YS: Shopclues talks a lot about frugality and its focus on profitability. When do you plan to become EBITDA positive?
RA: Shopclues has been making positive gross margin in every transaction from early last year. The combination of our business model, culture of frugality and data driven business make us achieve more from less money. About turning EBITDA positive, Shopclues is confident enough to achieve it by the end of 2015.
YS: At present, we see multiple players trying to crack the marketplace model. How is Shopclues still different from other marketplaces?
RA: As I mentioned our DNA is marketplace. If you see the e-commerce landscape in India, inventory-led models sooner than later realized that it will not work and pivoted to a marketplace model. Moreover, still none of the e-commerce majors are looking to scale (growth) and profitability, while Shopclues has focused on both from the beginning. We consider this as our USP and our secret sauce.
Also if you evaluate consumer acquisition cost (CAC), ours is less than one-fifth of the closest competitors. Though we can’t share the cost of acquiring a customer but it is in two digits figure.
YS: So far Shopclues hasn’t gone with the mainstream advertising channels like television and print. Why is it so?
RA: We don’t see mainstream advertising channel fit into our strategy. We are frugal and data driven venture and mainstream advertising seems to be over-expensive for us. Shopclues focuses a lot on marketing via social media, email and well targeted outdoor marketing to reach potential buyers.
YS: Almost every e-commerce player has a significant presence on social media channels. What do you do that is different?
RA: You know engagement is the most abused term as far as social media is concerned. Every business says engagement is very crucial but very few focus and stress on it. The fundamental problem is that businesses shy to experiment but we believe and are bullish in trying out new campaigns over social channels. On top of it we have a well crafted internal consumer acquisition and engagement strategy on social networks. Sixty to 70 percent of our marketing budget goes towards in-house marketing campaigns.
YS: Shopclues co-founder and CEO Sandeep was arrested for insider trading in the US. How does it affect the company’s operation and growth?
RA: Sandeep’s arrest was a nightmare for us. However, Shopclues was never a one-man show. Shopclues has five founders and after Sandeep’s arrest we all came together and worked like crazy for the company. As a result we don’t see Shopclues suffering because of one person.
YS: Is Shopclues gearing to raise Series C this year?
RA: We have enough cash to survive; however, we will raise series C soon.