E
COMMERCE SPECIAL Discovery Channels
A clutch of internet ventures are
helping consumers find their next hot outfit, holiday or stumble upon a
happening party -and are getting investors interested
Inspiration struck Suchi Mukherjee,
co-founder of Limeroad, a fashion discovery startup for women, in the middle of
a busy store for Zodiac, a mens wear label.
She was astounded by the sheer
number of women making purchase decisions for their male counterparts -well
over half the shoppers in the store were women taking the final decision.
Riding on a perceptible increase in women's purchasing power –off line and
online -Mukherjee and her two co-founders, Prashant Malik and Ankush Mehra,
decided to set up Limeroad, a venture which would allow women to use a
combination of social media, fashion advisors and word-of-mouth to piece
together their own style statement.
Mukherjee, an alum of big-ticket
internet ventures such as eBay and Skype, wanted to move India's internet
commerce industry -pegged at $15 billion and growing 30% annually -in a new
direction. Already, white-hot companies such as Flipkart and Snapdeal had shown
that multibillion dollar businesses like Amazon in the US could be built back
home.
If Flipkart and Snapdeal set the
benchmark for much of the past decade, these discovery startups leaning on the
explosion of mobile users could paint a picture of the future. If the current
generation led by Flipkart is built on a strong supply chain to locate and
deliver products from a massive catalogue or inventory of products, discovery
startups are beginning to snare consumers because they are finding products
suiting narrow specifications at affordable prices.
Two Waves to Discovery
Rather than chase a crowded and
increasingly commoditised business, Mukherjee rode two waves to steer Limeroad
in a new direction -as a social discovery startup -in this case in the field of
fashion. “Buying a lifestyle product is not like buying a USB stick or even a
phone,“ says Mukherjee. “No woman wants to say I will find the cheapest little
black dress online.“
If Limeroad is laying the foundation
along with the likes of Wooplr and Roposo in the fashion discovery space, then
others such as Tripoto are doing so in travel, Truly Madly in dating and
relationships, Nearify in events, FreshMenu in food; and PhoneWarrior uses
mobiles to drive mobile discovery of services, such as discovering a friend's
trusted doctor by connecting and networking address books.
The two waves Mukherjee and her team
are betting on are a massive growth of mobile phones (and the use of mobile
data) and a booming market for social media in India. India is expected to have
519 mobile internet users by fiscal year 2018, according to a study by Morgan
Stanley; and another report by Nokia Networks stated that there was a 74%
increase in mobile data generated by both 2G and 3G networks in 2014 compared
to 2013.
What's more, a billion mobile
connections are expected to be active in the country this year. India's social
media usage too is going through the roof (109 million Facebook users, 33
million on Twitter and 70 million on WhatsApp), pushing startups such as
Limeroad to leverage this sharp growth.
“Social discovery means that you can
leverage the power of communities and your social graph to discover beautiful
or new products that you might not otherwise find,“ says Bejul Somaia, managing
director of early-stage investor Light Speed Ventures.“It's no different than
seeing something a friend has bought and asking where it came from ... that
ultimately leads to transactions for reasons other than discounts and price.“
Limeroad (a combination of Lime for
purity and road referring to the Grand Trunk Road) is hardly the only one
sensing the shift in the industry. According to entrepreneurs and investors
(including the founders of older ecommerce ventures such as Binny Bansal of
Flipkart and Kunal Bahl of Snapdeal), firms across segments such as fashion,
lifestyle, retail, travel, events and even new-age dating ventures are all
hinging their bets on these twin bets.
Avnish Bajaj, who co-founded Baazee,
an early ecommerce company in India way back in 2000 and is today a venture
capitalist, says this market is highly scalable and a compelling investment
opportunity. “Social commerce mimics our offline buying behaviour online and
also the viral loop associated with it brings down the cost of customer
acquisition and increases the lifetime value of the customer,“ says the
managing director of Matrix Ventures. “This is the next evolution in the
industry since it adds the layer of mobile, social and discovery to commerce.“
In a Flat-out Sprint
As investors sharpen their knives to
dig into this opportunity, startups in this space are now in a flat-out sprint
for users.
Anirudh Gupta and Michael Lyngdoh,
classmates from the Indian School of Business, Hyderabad are betting big on
their travel discovery startup Tripoto. The firm, which raised backing from IDG
Ventures in March 2015, hopes to have 1.5-2 million users for its platform, up
from barely 10,000 now.“Unlike discovery in fashion, travel is much harder to
discover online,“ says Gupta.“There is no direct transaction route in travel
for hundreds of people in the ecosystem like small operators and guides.“
Tripoto, then, is taking the long
way around -using user-generated content -to build its business. Tripoto has
550 independent travel guides on its platform, and allows consumers to discover
them first hand and also allies with the likes of Expedia, Airbnb and Zomato.
“We feel we have a defensible business model,“ says Gupta. “It is very hard for
large businesses to change direction and compete with us.“
If Tripoto is taking the slow road
to building this content, another startup, Nearify, which provides discovery of
events across India and overseas, has taken another, perhaps faster, route. The
startup, founded by Mayank Kumar, Saurav Singh and Vivek Srivastava, uses
technology to help people find places to hang out. “Event discovery is an
inherently social process,“ says Srivastava. “You want to go out with people
you want to network with and we enable you to do this by using algorithms to
mine friends, public personalities you follow, your preferences and location to
suggest events.“
Using this process, he says Nearify
has built a personalised and curated engine for events for its users and in
September 2014 snagged half a million dollars from the likes of Seedfund and
India Quotient. The founding trio seem to have gained some traction for their
two-year old venture, with their platform listing some 1.5 million events around
the globe. “Instead, we have automated some 100 sources of event data and want
to grow our 10,000-strong monthly user base tenfold,“ says Srivastava.
Nimbleness versus Heft
Founders feel a discovery startup
offers consumers a more personalised way to go shopping online. “Large
ecommerce sites are based on catalogues with millions of items,“ says Praveen
Rajaretnam, co-founder of Wooplr, a fashion discovery venture, which netted $5
million in its first round of VC funding from Helion Ventures. “When I open an
app, I don't want to be flooded with hundreds of options for two items I want
to buy.“
Wooplr uses a combination of
technology and (human) stylists to piece together outfits for its women users.
“The system needs to learn the taste of individual users based on what we call
a taste graph -culled from a user's interests, stores she follows, age and
activity on the app -to curate a personalised stream,“ he adds.
The combination of discovery and
mobile works best at unearthing niche products or niche places for them,
executives say, with Wooplr adding some 14,000 assort ed fashion apparel and ac
cessories vendors to its roster in the last year. The firm has racked up
1,00,000 users in 12 months and says it targets to have some 5 million users in
the next 18 months.“We want to be the Bookmyshow or Zomato of fashion
discovery,“ Rajaretnam says.“We will be raising our next round of funding soon
[as quickly as the next six to eight months, per industry sources] to fuel our
growth.“
The three founders of Truly Madly,
Sachin Bhatia, Rahul Kumar and Hitesh Dhingra, have been part of India's early
ecommerce growth as co-founders of Makemytrip and Letsbuy (acquired by Flipkart).Now,
they think their latest venture, a dating startup called Truly Madly (the
founders call it the Facebook for Singles), will be part of a group of ventures
that will point to the future of this industry in India.
Truly Madly started as a
browser-based application in 2014, but the founders quickly moved to the mobile
to drive growth. Today, the firm has transformed itself; last month, some two
million messages were sent on it and users spent 41-42 minutes a day on the
app, looking for a hook-up. “Dating is a truly social experience and discovery
is central to the process,“ says Bhatia.“We have 5,00,000 users and expect to
have 3.5 million users by the end of this year and 5 million by the first
quarter of 2016, even as 97% of our business now comes from the mobile.“ The
firm raised `35 crore from Helion Ventures in March.
While this sounds good in theory,
the real world can teach entrepreneurs some cruel lessons. For example, the
social discovery space has already seen a couple of ventures, including Outsy,
a startup in Mumbai, run aground. Critics also say that ventures in this space
have yet to find their feet and don't have the muscle to outgun the big boys if
they choose to enter this space.
Early-stage investor Somaia however
thinks that at the end of the day, nimbleness will trump heft. “I don't think
the big fish have the DNA to easily build this presence,“ he says. “Facebook
innovated on the social graph, not Google. Pinterest innovated on social
scrapbooking and discovery, not Amazon.“ Indian entrepreneurs piloting these
ventures will hope that some of this stardust rubs off on their fledgling
enterprises and they can lead to a (re)discovery of India's ecommerce sector.
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Rahul Sachitanand
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ETM5APR15
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