Fabmart Hopes To Double Sales This Fiscal

Bangalore, July 30: | Updated: Jul 31 2002, 05:30am hrs
Indian Internet retailer Fabmart, backed by the Reliance group, expects to double sales this fiscal year and turn profitable the next, helped by a chain of stores to back its online business.

Aided by brick-and-mortar franchises, the lean “shop on the Internet”, which sells goods ranging from grocery to jewels, would get a chunk of its revenue this year offline, Kothandaraman Vaitheeswaran, Fabmart’s marketing head said in an interview.

“We are hoping to do about Rs 200 million in sales this year, (to March 2003) of which about 100 to 120 million should come from online,” said Mr Vaitheeswaran, one of the six technology experts who co-founded Fabmart three years ago.

Privately held Fabmart posted sales of Rs 95 million in the past year, and groceries form its biggest and fastest growing chunk, accounting for 25 per cent of sales volume.

Reliance has a significant but undisclosed minority stake in Fabmart, which has a lean staff of about 40 but delivers goods in more than 1,000 locations with the help of a network of partners.

Venture capital firm ChrysCapital also holds a stake in Fabmart, which plans to set up 25 to 30 grocery stores along with franchises by March 2003, up from the current five.

“A lot of prospects (for franchise) are interested. So, we think we will be able to scale this up fairly agressively,” said Mr Vaitheeswaran.

In addition to the financial centre of Mumbai, Fabmart sells grocery items in the southern cities of Bangalore, Hyderabad and Madras, which have huge communities of software engineers comfortable with online buying and often too busy to visit shops.

The company currently handles about 1,000 orders per day, nearly twice as many as a year ago. An average order yields Rs 600 to Rs 650, up from Rs 350 to Rs 400, Mr Vaithees waran said.

“Existing customers who have shopped a few times with us have become more comfortable with the medium,” Mr Vaitheeswaran said, adding that buyers were stepping up orders and going beyond groceries to buy other items.

In online sales, Fabmart competes with shopping sections run by indiatimes.com, which is part of the cash-rich Times of India Group, Satyam Infoway’s sifymall.com and Rediff.com, a leader among India-focused Web portals.

All are battling a stagnant local Internet user base, with only an estimated 150,000 out of India’s three million Web users shopping online.

One billion-strong India, where labour is cheap and shops abound in neighbourhoods, ranks far below Singapore, Hong Kong and China in its Internet penetration.

But Fabmart’s ties with Reliance might make it a key link in Reliance’s ambitious plans to hook up 115 cities with a fibre optic network adding up to 60,000 km (37,500 miles).

Mr Vaitheeswaran said Fabmart and Reliance currently had separate plans, with no clear picture on future linkages. “We know obviously, we will get some advantage of being part of that group. There’s obviously an opportunity,” he added.

Mr Vaitheeswaran said Fabmart’s challenge lies in convincing more and more Internet users to shop online.

Reuters