We want to acquire more local talent to increase focus in India: Club Factory's Vincent Lou
Chinese ecommerce firm Club Factory last month announced its expansion plan for the Indian market, and said it plans to on-board 10,000 sellers on its platform this year. The company said it has even opened its seller’s recruitment programme for pan-India sellers offering products in the lifestyle, fashion, accessories, electronics, gadgets, and home categories, as it aims to have over half of its seller base from India.
Interestingly, the ecommerce company’s move comes despite the rising concern of government authorities and Indian customs authorities on Chinese e-tailers operating in India.
Speaking on the same, Vincent Lou, Co-founder and CEO, Club Factory, says, “We are 100 percent legal.” He adds that over a period of time, Club Factory has zoomed in on its focus on India and it is here to stay.
According to data analytics firm KalaGato, in June this year, Club Factory had around 30.49 percent market share by app install in the country, which was second only to Myntra (37.54 percent). While Jabong had 10.35 percent, Ajio stood at 8.73 percent, Limeroad at 7.68 percent, and Shein at 5.20 percent. KalaGato defines market share by app install as market share based on the number of installs relative to other apps.
Vincent speaks to YourStory on how the ecommerce major is reinventing its gameplay in India by luring local sellers, and what keeps him interested in cross-border business, and how it is planning to stay in India.
Edited excerpts of the interview:
YourStory: What prompted you to start a company outside of China?
Vincent Lou: My family has been in the cross-border business in China for decades. They used to manufacture products in China and sell them in the US, Canada, and other countries. This interested me in cross-border business. I have also spent a lot of time out of China. I went to Canada for under-graduation because my parents were living there, and then I went on to study at the Stanford University.
YS: Was India Club Factory’s focus since its launch in 2014?
VL: We first targeted the US, and then we started in India in 2017. In the beginning, we tried venturing into different countries. Because I have been in the US, it was the first choice. And then we tried the Middle East, India, and Southeast Asia, and also Europe, and apparently every possible origin in the world and we were doing fine.
But soon we realised that people wanted customer service in local languages, and at that time we had customer service only in English. Additionally, we did not have a local warehouse. So, we realised that we need more localisation, and we cannot do that all over the world, because we are just a startup and we don't have the money. That is why we decided to focus on only two markets, i.e, India and the Middle East.
YS: Can you tell us how much revenue India brings for Club Factory?
VL: We won’t be able to share the exact revenue split, but we can definitely say that India is our biggest market with over 70 percent of the total users coming from India alone.
India is the largest market for us right now, and our ambition is simple - we want to provide a product with better design to people in India at lower prices.
YS: What have you learnt so far from India, and how are you zooming your focus here?
VL: India is a very different market. For instance, in China, people care only about products and not the service. Sometimes, it is very hard to return products in China even if you buy them from top ecommerce websites. But in India, people care more about the service, which makes it a very different market from China.
It took me some time to understand that Indian people do care about service. That is why we started with services in India such as a customer service team and local pickup/ return of the order. If a customer is not happy with the product, we can pick it up, which is impossible in China. This is one of the key learnings from Club Factory operations in India.
YS: How are you localising your services in India?
VL: We are investing a lot of money in India. We have three warehouses in India and we recently launched the fourth warehouse. We have more than a thousand people as part of our customer service team here. We have also set up our office in Gurugram for business development and operations.
We don’t have a very large Indian team, but we have a very good team, and they are free to make a lot of important decisions and practices at Club Factory. This is an important way of localising. The local team manages logistics, customer support, warehousing, customer acquisition, marketing, and business development, and works closely with our China team. Now, we want to acquire more local talent in India to zoom our focus here.
And now, we have a lot of Indian sellers on our marketplace. We have on-boarded numerous local sellers and are in the process of reaching out to other sellers across the length and breadth of the country.
YS: Can you tell us about your latest programme for Indian sellers?
VL: We just started the Indian Seller Programme earlier this year, and it is growing very well. Unlike other ecommerce companies who charge a marketing fee from their sellers, to encourage them, we do not charge any marketing fee from our sellers.
The marketing fee varies and depends on the price of a particular product. It can range from 20 to 30 percent over the selling price, and in some cases, it can also go up to 40 percent, depending on the category of the product.
Our new strategy is to empower local sellers and meet with the increased user demands, and offer the best prices to the users. We have not only exempted sellers from paying any commission charges, but also made it cheaper to sell on our platform with the help of our lower rate of payment gateway and other logistics charges.
Our target is to become the leading ‘marketplace’ for fashion and lifestyle category in India as we continue to on-board sellers from across metros and non-metros.
YS: Do you think it is important to have an Indian investor for a Chinese company to expand here? Are you looking for investors in India?
VL: We will definitely welcome Indian investors.
YS: You said that Club Factory is investing a lot of money in India. Can you tell us more?
VL: We are looking to make significant investments in warehousing, delivery, technology, and marketing to strengthen our presence further by scaling up operations in an endeavour to further connect with millennials across the country.
(Edited by Megha Reddy)