Not just Another Marketplace
ShopClues may be much
smaller than the Flipkarts, Snapdeals and Paytms but it's also very different
from them
At first blush, it is easy
to be skeptical about ShopClues which, as an online marketplace, would tend to
come to mind only after the Big Four -Flipkart, Snapdeal, Amazon and
Paytm.Compared to the funding, buzz and headlines these etailers have
generated, ShopClues would come a poor fifth. And to top it all ShopClues
started on a bad note. In 2013, cofounder Sandeep Aggarwal -the man at the helm
then -was charged in a case of insider trading in the US. Since, Sandeep has
pleaded guilty and stepped down from ShopClues and has no active role in the
startup.
So why then are investors
still excited about the startup? In early 2015, for instance, Tiger Global -a
big investor in Flipkart that has also funded Amazon -invested in ShopClues.
And the buzz is that the startup is close to tying up another round of funding
-this at a time when the ecommerce space looks distinctly crowded, overvalued
and prime for consolidation.
Set up in 2011, ShopClues
has 950 employees and has raised $120 million so far (Flipkart in contrast has
raised over $3 billion and was last valued at $15 billion in 2015). It has 3
lakh merchants on its platform across 6,000 categories and 2.5 crore stock
keeping units (SKU), and ships 3 million orders every month.
But here's what
differentiates ShopClues in a crowded space. It is tightly focused on the unstructured,
often unbranded (or catering to local and regional brands) mass market segment,
a notch lower than the segments Flipkart, Snapdeal, Amazon are looking at.
About 70% of its orders come from smaller towns and cities, it says. “The
marketplace is part of our DNA. And that is our USP,“ says Radhika Aggarwal,
cofounder, ShopClues, comparing it with Taobao of the Alibaba group in China.
Shunning the bruising deep-discount driven model, the startup is focused on
smaller merchants where it has greater scope for margin negotiation.
In a world where gross
merchandise volume (GMV), valuations and large marketing-branding budgets are
normal, ShopClues says it prefers a more conservative approach. It has almost
avoided mainstream media, leaning on economical and efficient social media and
regional and vernacular outlets to reach out to its target segment. “We spend
110th the money that our bigger competitors do to generate similar returns on
investment,“ claims cofounder Sanjay Sethi.
Sethi says ShopClues isn't
focused just on consumers but also on enabling and empowering its merchants to
grow its ecosystem.For example, as soon as a merchant signs up on its platform,
ShopClues helps build a dedicated website for them and supports them with
branding and marketing tools. Now it is helping them go hyperlocal. This shows
up in the way it earns money -about 70% of its income comes from transactions,
and the rest from non-transactional areas like support and services provided to
the merchants. “Remember, nontransaction income is technology-based and
scalable without incurring any cost. We would like to see that go up to 40%,“
says Sethi, who honed his skills as senior director, products, at eBay,
California, before cofounding ShopClues.
ShopClues is confident it
will make an operation al cash profit by 2016 end. “They will never be the
volume player. They have chosen to fight the profitabil ity game. They have the
best margin structure in the indus try. Their cash burn is low,“ says Sanjeev
Aggarwal, co founder, Helion Venture Partners, one of Shop Clues' investors.
ETM3JAN16
No comments:
Post a Comment