Wednesday, September 24, 2014

How India Online Shopping Giants made it BIG?

Three top online e-retailers… All have IIT connections, all started small, all made some brave (read crazy) decisions, all of them made swift adjustments to their business model to make it “BIG”. From same day delivery to hassle free returns, from cash on delivery to monthly EMI, these companies have changed the way we shop, forever. All of them were able to sense the market and overcome their mistakes. They constantly “Check & Adjust” to survive & thrive in this very competitive world.

I have been an online shopper for a decade. My first online order was a memory card reader from Ebay. Since then, I have ordered laptops, camera, apparels, furniture, even smart TV and Air conditioners… yes that too. You can imagine my passion for online world. Let me show you the journey of these top e-retailers. Remember these companies started much later than Ebay, Indiatimes shopping & Homeshop18. Yet, they not only left all these mega brands behind but are also giving Amazon a run for their money.

Year 2007; Mukesh Bansal, Ashutosh Lawania and Vineet Saxen, all IITians started an online venture with a focus on personalization of gift items. I believe I was amongst the first few to register to their site. It mainly operated on the B2B (business to business) model during its initial years. Between 2007 and 2010, the online portal allowed customers to personalize 15 products such as t-shirts, mugs, mouse pads, calendars, watches, teddy bears, pendants, wine glasses and jigsaw puzzles. Customers could order for these online and these would be home delivered in 3 days’ time. It seemed like a perfect gifting option back then. Within the initial 3 years, it became India’s largest personalization platform with more than 50% of the market share. Company was eyeing for more. It started offering personalization of jerseys of various cricket and football teams including the Indian cricket team, the IPL teams and the Premier League football teams. By 2010, this company shifted its focus to the online retailing of branded apparels. Fast forward to May 2014, another e-retailer acquired this company in an estimated $300 Million deal.  If you haven’t yet guessed it, I’m referring to “”. Company, which started with selling customized mugs and t-shirts, was valued at $300M in 6 years.

This second venture wasn’t even intended as an online business. In 2007, its founders started with an offline couponing business. They convinced few investors to support and sustain their business. In 2010, couple of their merchants suggested them to go online. Its founders and key investor agreed to convert their business to an online venture. Start wasn't great. Kunal, one of its founding members, in an interview said; the site sucked initially, and we made a lot of mistakes. However, we were extremely agile, we obsessively tracked the customer preferences, and continued to rapidly revise and improve the platform. We evolved and learned from our mistakes and kept moving forward by taking intelligent risks, eventually things started working out pretty well. Their business, probably inspired by, offered discount coupons to restaurants, hotels, health clubs etc. They expanded in September 2011 to become an e-commerce company via a marketplace model. Fast forward to May 2014, this company has raised $100 million (INR 600 crores approximately) in yet another round of funding. This round of funding valued the company at $1 billion (INR 6000 crores approximately), WSJ's Digits reported. “” is the name of this company. From an offline couponing business to a billion dollar worth, Snapdeal is in talks with for further investments.

Moving on to the third and the biggest one; “”. I knew most of you would guess it, hence started with its name. Let me start with some fun facts. Did you know, legally, Flipkart is not an Indian company since it is registered in Singapore and majority of its shareholders are foreigners? Because foreign companies are not allowed to do multi-brand e-retailing in India, Flipkart sells goods in India through a company called WS Retail. Other third-party sellers or companies can also sell goods through the Flipkart platform. Founded in 2007, the business was formally incorporated as a company in October 2008 as Flipkart Online Services Pvt. Ltd. During its initial years, Flipkart focused only on books. It soon expanded to electronic goods & electrical appliances. Flipkart kept accumulating funds through venture capitalists & other investment firms. Today it is known as an online mega store. From apparels to books to electronics to exclusive product launches. In July 2014 Flipkart launched its own set of tablet, mobile phones & Phablet. Month later they launched their router as well a personal healthcare brand called Citron. Flipkart’s current valuation is estimated to be $7 Billion. Don’t even try to convert it to INR, you will end up with endless zeroes. And yes, Flipkart owns Myntra. (Remember Myntra was sold to another e-retailer)

I did not list Jabong as I feel it had an undue advantage. It started late, in 2012.” The company, backed by Berlin-based Rocket Internet GmBH – a venture arm of the Samwer brothers – which is known for cloning several successful online business models of the US in other markets, is reverse-engineering the success formula of Flipkart in India: Add as many categories as possible; acquire customers at any cost; build a logistics arm from ground up and delight the customer. Nevertheless, Jabong is a force to reckon with.

As you can see, most of them started with a small idea & big hopes. These aren't completely unknown stories and I’m not sure if this article will inspire you to take risks. But I think it’s worth mentioning this; it’s OK to start small but keep your antennas up and change constantly. Hopefully you enjoyed reading this article. At least, you will know who are you dealing with, the next time you shop. Remember - Once there was Heaven & there was Hell, today its either Online or Offline :)

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