Demonetisation and GST pushed our IPO plans to 2019, says ShopClues CEO Sanjay Sethi
On ShopClues’ sixth anniversary, CEO Sanjay Sethi speaks to YourStory about the effect of GST, the online marketplace’s plans for an IPO, and the future of ecommerce in India.
Gurgaon-based online marketplace ShopClues has been in the news for all the right and wrong reasons.
Since its launch in 2011, the company has got the backing of prominent investors including Tiger Global Management and Helion Venture Partners, and joined the startup unicorn club by achieving $1.1 valuation in 2016. Having focused on “Bharat” – the consumers outside India’s metro cities – through a pure-play marketplace model (holding no inventory), ShopClues managed to create a differentiation in Indian ecommerce.
But on the other hand, despite claiming to have turned profitable in 2017, the company is still struggling with revenue. In FY17, total revenue rose by only 5 percent to Rs 188 crore.
However, six years down the line, ShopClues seems to be content. Co-founder and CEO Sanjay Sethi spoke to YourStory on ShopClues’ sixth anniversary. Edited excerpts from the interview:
YS: When you look back at the last six years, what are your biggest successes? What are your fondest memories?
SS: ShopClues was born out of passion, and we continue to nurture it with the same passion. The last six years have been an enriching journey for all of us. From acquiring the first merchant and first customer to becoming a Unicorn, the journey has been fulfilling.
We have taken every success and failure in our stride. We learnt from failures, but didn’t allow success to slow us down.
For me, the fondest memories will definitely be out there on the road, personally meeting merchants to bring them onboard. Sitting with them, sharing chai and samosa, explaining our model to them…. I can never forget those days and experiences.
When we say we cater to Bharat, we actually travel to Tier III and Tier IV towns and beyond, to meet merchants and consumers.
YS: How close are you to going IPO and becoming profitable? How do you plan to reach there?
SS: We were on track for an IPO this year, but demonetisation and GST have pushed our plans to 2019. We are on track for an IPO. As for profitability, we are on a strong wicket and on the verge of hitting profitability.
YS: What role do you think ShopClues will play in shaping Indian ecommerce over the next five years? How will you bring the next 100 million customers online? What are your views on assisted ecommerce strategies like Amazon’s Udaan?
SS: Five years is too long a period in today’s changing dynamics. Deep penetration of internet, cheap smartphones, and cheaper data plans have increased internet consumption. Add to this the UPI and we have a complete digital market.
There will be a natural progression for new consumers to embrace digital. The challenge for all will be to increase share of pre-paid model than cash-on-delivery.
Assisted ecommerce will play a greater role. It will also, in a way, make people more comfortable with the idea of online shopping, as they can now see a familiar face dealing with them.
YS: What was 2017 like for ShopClues? How have GST and FDI regulations affected you?
SS: 2017 was a very eventful year for us. We introduced a series of exclusive labels in the Home and Décor, Fashion, and Electronics category, and these have seen a phenomenal growth. Our exclusive labels contributed 12 percent of total revenue this fiscal. The GST rollout had an initial impact but processes have been streamlined now.
The 100 percent FDI in ecommerce is a great initiative for players with the marketplace model. It will ensure more investments, innovation in technology, and higher service quality.
YS: In your opinion, where is Indian ecommerce? What troubles it? Do you expect more funding/consolidation/shutdowns in the industry?
SS: The Indian ecommerce space is all set to catapult to a whole new level in the coming year. Ecommerce in India has become a prime catalyst for brands, big or small, to have an online presence and grow business digitally by penetrating geographical boundaries across the country like never before. Consumers are increasingly becoming impulsive in their shopping. Even people in Tier II and Tier III towns and beyond have taken to online buying.
The digitising of the concept of flea market shopping is certainly a trend we foresee growing further in the C2C ecommerce space.
Another trend we see is the further empowerment of MSMEs to do business online. ShopClues has a merchant base of over 6 lakh, of which 90 percent are SMEs and 70 percent are from Tier II and Tier III towns.
YS: What have you planned for 2018?
SS: We will be increasing our footprint in more Tier IV cities and go beyond geographies in the country. We will remain committed to serving both merchants and consumers of Bharat.