The journey of becoming a profitable online electronics marketplace via multiple pivots - Zopper story
After spending five years at a financial advisory and business consulting firm, Neeraj Jain decided to build something of his own. He casually shared the idea during a meeting with his client, Surjendu Kuila, whom he had been advising for some time on behalf of the firm. The latter was also planning to launch a venture — and this is how the founders of Reviews42 met each other.
After a lot of deliberation, they came up with the idea of addressing the shopping problem. They observed that there was a large demand for reviews of consumer products, but no single large platform for the same. The duo therefore decided to build just that.
In April 2012, they founded Reviews42, a community-based product review site. It aggregates user reviews across a variety of categories, including computers & accessories, mobile phones, home appliances, apparels & accessories, baby products, kitchenware and more.
“Our aim was to make the consumer products market more transparent with unbiased reviews of products. Our business model was to attract qualified buyers to decide on the best products via multiple channels like web and mobile. Reviews42 would provide them with reviews, price and availability information. It would eventually be monetised by directing this highly-qualified traffic to various affiliates,” says Neeraj, 37, Co-founder of the company that is now called Zopper.
The duo have, so far, invested around Rs 60 crore in the platform and expanded business in 28 cities, such as Delhi-NCR, Bengaluru, Mumbai, Kolkata, Chennai, Vadodara, Udaipur, Surat, Raipur, Pune, Lucknow, Bhopal and other places. The company employs over 300 people, with offices in Noida and Bengaluru.
Today, it claims to have five lakh offline retailers, with over 15,000 active sellers on the platform, clocks GMV at $100 million, with a $2 million revenue run rate. The platform has turned profitable on the gross level.
Road to profitability with three business models
The revenue model of Reviews42 was initially based on lead generation (cost per click), content syndication and branding activities, recommendation service, listing and display.
But few months after the launch, the first challenge appeared when monetisation became difficult.
“Review platforms work on the promise of trust. Customers read reviews on the platform, believing that whatever the platform is saying is non-compromised. Now, when it comes to monetising the platform, that trust gets compromised. When you start selling reviews to brands and companies, they ask for favours. We realised that the purpose of the platform will be defeated if we compromised on trust for monetisation. We decided to pivot the revenue model and added a price comparison segment on our website. The platform added a few e-commerce websites for price comparison,” he says.
The revenue model was still not cracked. They pivoted the model and leveraged the mobile to create a local price comparison platform. It turned into a classified platform and they started listing local consumer durables sellers and focussed on monetisation via lead generation.
However, it was still not the end of exploration vis-à-vis the business model.
The classified model was working well, with listing of over three lakh offline retailers. It was able to generate good leads as well.
In June 2014, the founders rebranded the company into a hyperlocal mobile marketplace and renamed it Zopper.
“It provides a hassle-free shopping experience by giving customers the convenience of finding all retailers in their vicinity via one app. It caters to the mobile-savvy consumer who wishes to find the best local deals through pricing and product comparison,” says Neeraj.
He explains that the platform’s core differentiator is that it makes consumers aware of the best prices from local stores, and that it delivers them the goods they desire within 24 hours.
Besides its marketplace model, Zopper runs extended warranty business and point-of-sale (PoS) business, both of which are profitable, according to the founders.
“We launched the country’s first e-warranty programme, where warranty is embedded in the Zopper app,” says Neeraj.
For the extended warranty programme, the consumer needs to pay six percent and 10 percent for one year and two years’ warranty extension, respectively.
Funding, investment and growth
Starting Reviews42 with an investment of Rs 8 lakh, the founders managed to raise funding within some months. In June 2012, they secured an undisclosed amount in funding from Blume Ventures and VenturEast Partners.
In April 2014, a few months before rebranding, the company raised an undisclosed amount in Series A from Nirvana Venture Advisors and Rahul Khanna (Managing Director of Canaan India, who invested in his personal capacity), as well as a few other undisclosed individual investors.
The funds continued to pour in. In July 2014, it raised $5 million in Series B funding from Tiger Global Management and Nirvana Venture Advisors.
Peek at the future
Zopper would be present in 100+ cities in five years, with 50,000+ local electronics retailers. “This should give us 10 percent market share of entire electronics market in India. We are bullish on the Zopper hyperlocal model being the ideal e-commerce model for India. We see ourselves as the largest electronics e-commerce offline-online marketplace in India in five years,” adds Neeraj.