E-commerce firm Shopclues recently tied up with online Chinese wholesale marketplace DHgate to provide Chinese products in India. In an interview with Vidya Ram, Shopclues CEO & co-founder Sanjay Sethi says the partnership is just a beginning and the company is looking at technology-related acquisitions in days to come.
What are your expectations from the DHgate partnership?
Shopclues was started for global merchants to conduct business online and B2B transaction is the genesis of wholesale that we plan to do. DHgate fits into the world of B2B and B2B2C transactions because of which we decided to have them on board. While I do believe that as and when the supply chain and infrastructure improve, B2C transactions across the border will happen, right now, the required infrastructure is not in place. This is where partners like DHgate can approach Indian consumers directly and we are trying to help DHgate get in touch with consumers through us.
It is a huge opportunity and we are here for the customers to avail of services from big international players such as DHgate. The partnership is definitely a beginning in this space and we will partner with more companies wherever we have our visions aligned.
Are there any acquisition plans for this fiscal? What kind of companies are you looking at?
Yes, acquisitions are part of our strategy and we are looking at both talent and technology acquisitions. We, as a platform, provide tools and services to small and medium businesses for them to become successful, online and offline. The series of services that we provide includes cataloging, fulfillment and customer support services.
Payment becomes an important area while providing our merchants with these services. Advertisement monetisation is another important area because we are at a point where we get 45-50 million visitors on our site on a monthly basis, which is a huge amount of traffic. And one of the services that we provide is how they get this footfall to their store funds; and that requires a robust ad network that merchants can use on their own. We will focus on B2B businesses and, then, will look towards technology hirings in mobility and analytical data.
Are you looking at more rounds of funding and when do you think you will break even?
Right now, we are comfortably capitalised but, strategically, if there is an opportunity that we want to go after, then we will raise funds. As of now, there are no such plans. We will be the first one to break even. We aim to break even by 2016.
Since Tiger Global is a common investor in Flipkart and Shopclues, there are rumours that Flipkart may buy you out. Is that true?
Nexus is a common and a bigger investor in Snapdeal and Shopclues, but there are no truth in rumours that Snapdeal will buy us. On our board, we have two big investors — Nexus and Tiger. Tiger invested only four months ago, whereas Nexus has been there for a long time. Moreover, Nexus is a bigger investor in Snapdeal and Shopclues, so if there is no question of Snapdeal buying us out, I don’t think there is any point talking about Flipkart. And to be frank, Tiger’s entry has made our board more balanced.
Can you give us an idea of your market share ?
We look at our market share in multiple ways. Category wise, we hold 20% in home and kitchen; in terms of transaction value, we hold 10%, and when it comes to GMV, we have about 5 % of the market share.
In an increasingly crowded space, what do you think is your differentiator?
Features differ from one marketplace to another, though we all are online businesses. I think a single market place can never emerge as a ruler of the e-commerce sphere as a single market cannot cater to all needs of the consumers. Every market has something special to offer. There are days when I want to go to Paranthewali Gali or Chandni Chowk in Delhi to taste the delicacies, but there are days when I would want to try a different cuisine at a five star.
Every marketplace in this country has created a brand for itself. It is odd to believe that a single player can rule the entire market. All the marketplaces and brands stand for something. As a differentiator, I am the Sarojini Nagar of the e-commerce sphere.
How much are you spending this fiscal on expansion and technology up gradation?
We spend a significant amount of money on technology because, at the end of the day, we are a technology player, we are the operating system in the cloud, which means we build tools, technology and services that are available to merchants from across the globe on their devices. I think around 20% of our revenue goes towards technology upgradation and expansions.
You have been reportedly pampering employees with big hikes. Don’t you think you are unnecessarily burning investor money?
We are just being fair to the market. Moreover, human resources are the only capital we have. We don’t have warehouses or inventory, we are a capital/asset-light company. Our only asset is human asset. Shopclues has become a strong training ground, that’s the kind of reputation we have created and that’s the kind of training we provide. It is not that the money that attracts them, it is the training we provide that makes all the difference. We have to be fair to our employees, in terms of what the market is offering them but I don’t want to be on the top stratum, maybe the middle stratum when it comes to salary. We also make sure that our investors’ money is not burnt in any way.
What are your short-term goals and challenges?
There are many short-term goals for this fiscal and you will be hearing about them soon. Our prime focus is to empower the merchant community and we are working on many programmes. We had recently signed an MoU with the ministry of minority affairs and we also partnered with National Scheduled Castes and Scheduled Tribes Finance and Development Corporation (NSFDC).
Our aim is to bring small and domestic merchants online. We want them to be digital and make the most of the e-commerce market. We help them with every aspect of their businesses like payments, merchandising, customisation and marketing; with that thought process, we run the Shopclues academy. This also stands as a challenge for us, but our training is such that it will help the small merchants compete effectively against the organised retail of the country.
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