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| Hitesh Dhingra (right) and Amanpreet Bajaj of Letsbuy.com expect the number of deals on their site to shoot up to around 5,000 a day during the upcoming festive season |
It’s a rundown office in an unfashionable part of Delhi. But Hitesh Dhingra and his partner, Amanpreet Bajaj, the youthful founders of Letsbuy.com, aren’t planning on hanging around for much longer. They’re preparing for a giant shift to a glittering, multi-storey tower in Gurgaon where they’ve taken the whole building and where they can accommodate the scores of young staffers they’re hiring every month.
Letsbuy is one of the dozens of young Internet companies that are growing explosively and which are trying to change the way Indians do their shopping — and indeed run their lives. Click on to Letsbuy.com and you can snap up anything from mobiles and computers to microwaves and toasters and even hair straighteners.
Click once more and take an online tour of the solitaires and gold jewellery on offer at cyber-jeweller CaratLane. Or if you’re in the market for a piece of real estate, check out Groffr which brings together groups of buyers and then negotiates with the real estate companies for discounts. It also deals in other high value purchases like automobiles. Says Sandeep Reddy, co-founder, Groffr: “It’s very logical. If we can get 10 buyers together, we can get a good rate.”
Welcome to the cyber-bazaar. You can snap up almost anything on these sites. At sites like Mydala or Snapdeal you can pick up the discounted deal of the day at a restaurant, spa or store near you.
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Or, if you are thinking about the future and want to take out an insurance policy, look up Policybazaar for the best advice on which policy to buy. Says Yashish Dahiya, founder, Delhi-based Policybazaar: “We’re disrupting the insurance business and making it transparent.”
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| Redbus’s Phanindra Sharma has developed software to help bus companies manage their operations |
These e-commerce sites have, in the last two years, torpedoed the myth that Indians need the touchy-feely experience of walking into a store and buying over-the-counter. Indians, it appears, are quite happy to whip out their credit cards to buy something they’ve only seen on a computer screen. “Nobody thought e-commerce would happen this fast. There’s been an insane jump. In 2011 people have suddenly woken up,” says Mydala founder and CEO, Anisha Singh.
To understand just how fast Indians have taken to buying on the Net, look at Bangalore’s Flipkart, which started as an online bookseller and has become the industry trailblazer and role model for all others that are following in its wake.
Flipkart started out selling books because it was a relatively inexpensive product which people wouldn’t mind buying without seeing. But its business model clicked faster than anyone expected and it recently raised $20 million from venture capitalists (in fact, there are rumours that it is about to raise a whopping $150 million but the company refuses to comment on this). Now it’s using the money already raised to go on a massive expansion spree spreading out across India and expanding its product range to everything from cameras to mobile phones, DVDs and video games.
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| Apart from selling gold and diamonds, Mithun Sacheti’s CaratLane offers advice on high-value purchases to its customers |
Flipkart, which started from scratch in 2006, now has 2,500 employees around India and it’s stepping on the accelerator. One estimate is that sales are growing 25 per cent a month. Says CEO and co-founder Sachin Bansal: “We are continuously expanding. We got the model right with books — our books business helped us to connect the dots as far as learning the business is concerned.”
Or look at an even newer player like two-year-old Letsbuy which nine months ago had only 15 employees and which now has 250. In December 2010 it received $6 million from a clutch of venture capitalists and it has been growing at a blistering speed ever since. It’s now selling 300 brands and doing 3,000 transactions daily. Dhingra and Bajaj reckon the number of deals done daily will zoom to around 5,000 during the festival season that’s round the corner. The two entrepreneurs (they are 31 and 30 respectively) are moving to their new 24,000sqft office to make room for the people they’ll be hiring in the coming months.
Then, there’s Delhi’s Snapdeal, possibly one of the richest e-commerce ventures, which has a huge $52-million war chest raised from several venture capitalists and which is planning to spread itself around the country ahead of the competition. It recently expanded from selling cut price services and products to marketing electronic and other goods and it already has a 500-strong team. “Our team will probably hit 900 by year end,” says Sandeep Komaravelly, head, marketing. The company plans to reach out to almost 100 cities by year end.
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| Anisha Singh’s Mydala currently operates in nine cities and the figure will rise to 36 by year end |
At a different level, look at one of the early players, Mydala, started by Anisha Singh in December 2009. Singh returned to India from the US, sussed out the market and met everyone from spa and restaurant owners to retailers before launching the site. This month Mydala is moving office and doubling sales staff in the coming months. It currently operates in nine cities but that will rise to 36 by year end. Says Singh: “We’re growing incredibly.”
It’s been an amazing journey in a short space of time for all of these companies. The most crucial element for success in e-commerce is ensuring that one way or another the customer has a satisfactory experience of buying. Says Flipkart’s Bansal: “This is a huge market and we have only seen the tip of the iceberg. But for the e-commerce market to grow, Internet companies need to continuously focus on customer requirements and further improve the shopping experience.”
That’s easier said than done. When your sales are rocking by 25 per cent a month, how do you guarantee that each product reaches the customer in good condition and on time? So Flipkart, which right now is the leader of the pack, is buying new warehouses in different cities to contain its ever- expanding product line. Also it’s hiring its own door-step delivery teams — until recently it was using courier companies to ship its products.
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| Yashish Dahiya’s Policybazar offers information on insurance policies for prospective buyers |
“The biggest chunk of our funding will be invested in technology and supply chain to ensure a seamless order flow. We’ll be looking at larger warehouses, greater automation and 24X7 customer support,” says Flipkart’s CEO Bansal.
You wouldn’t reckon on people buying expensive jewellery on the web but Mithun Sacheti, CEO, CaratLane, figured differently. Chennai-based Sach-eti came from a family that is in the jewellery retail business and he spotted products — like solitaires and gold coins — that could be sold cheaper on the Net. Sacheti appears to have hit gold in more ways than one. Last year, he did Rs 50 crore in sales and he expects that figure to double this year.
Since he’s dealing in jewellery, Sacheti is doing business in a slightly different way from other online entrepreneurs. He has set up a 10-person call centre to offer advice on high-value purchases. “People like to reassure themselves about what they’re buying,” he says. Some 40 per cent of the purchases are by men who are buying for special occasions.
Says Sacheti: “We deal in gold and diamonds. We’re not in any non-gold categories. The Indian appetite for gold is 100,000 crore — why look beyond that?” He also reckons that customers save about 25 per cent on their purchases buying on the Net.
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| Binny (right) and Sachin Bansal of Flipkart are expanding their product range to cameras, phones, DVDs and videogames |
At the other end of the spectrum, there’s Redbus which has mounted an ambitious venture to sell bus tickets online all over the country. This means you can sit at your computer in Calcutta and even buy a ticket from, say, Coimbatore to Nagarcoil. You can also check schedules and seat vacancies. Obviously this has been a huge logistics exercise for the nearly five-year-old Bangalore-based company. It is now in partnership with 850 bus companies.
But Redbus has gone one mile further. It has developed software to help the bus companies manage their operations. “This way, we get access to their inventory live. In an industry that is unorganised and uncomputerised it was definitely difficult,” says Phanindra Sama, Redbus CEO and co-founder.
Most of these companies have grown without much advertising. “It’s all been word of mouth,” says Mydala’s Singh. But now some companies say they need to up their marketing spend if they want to reach out to a larger swathe of the public. Policybazaar’s Dahiya, for instance, recently conducted an informal survey of passengers at an airport when his plane was late. His findings were that only a tiny percentage had heard of his site. So he has just launched a big TV campaign to spread the word about his company.
Spurring the growth of these companies are a pack of cash-rich venture capitalists looking for the Next Big Thing. Sanjeev Bikhchandani, the founder of the highly successful Naukri.com is putting his spare cash on many start-ups like Mydala, Policybazaar and Zomato, which does restaurant listings in 10 cities.
Similarly there’s Sanjeev Aggarwal of Helion Ventures who has backed half a dozen e-commerce firms like Letsbuy and Exclusively.in and is looking at several others. Aggarwal reckons the companies he’s investing in are growing at such a pace that they won’t be affected much even if the Indian economy slows down in the coming months. Others giants like Tiger Global, Accel Partners and Bessemer Venture Partners have also invested heavily in the sector.
There are some veterans of the high-tech industry who wonder if it’s all a bubble that could burst at any moment. They recall the dotcom boom at the turn of the century that went bust almost overnight.
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| Sandeep Reddy (in blue) and Vikhyat Srivastava started Groffr, which brings together groups of buyers and then negotiates with the real estate companies for discounts |
But today’s e-commerce entrepreneurs point out that this time around sales are booming and it’s all for real. They also point to e-commerce sites in the US like Groupon which are doing spectacularly well. Even in China e-commerce sites are thriving.
Also, they point out that e-commerce sites can easily reach out to customers in smaller towns and cities. “You wouldn’t have a Nike showroom in many smaller towns for instance. But people in smaller towns have aspirations to reach out for products that were normally available in bigger towns. And they have the money,” says Kiran Gopinath, CEO, Ozone Media, an Internet advertising firm.
Nevertheless, scores of e-commerce companies are now chasing the same customers — take Flipkart which started in books and then moved to the lucrative consumer electronics sector where several other firms are already battling it out. So there will be plenty of losers — but that’s all in the future.
