Jabbing its way to the top

Written by Darlington Jose Hector | Darlington Jose Hector | Updated: Oct 14 2013, 07:30am hrs
When Manu Jain joined McKinsey & Co, he knew exactly what he was doing, in terms of his future course of action. Some valuable experience at a top notch multinational, before plunging headlong into entrepreneurship was the game plan. Manu spent five years at the company, imbibing the benefits of a process driven environment and carefully evaluating business opportunities. The IIT-Delhi graduate, who is still only 32 years of age, is today the co-founder and managing director of online retailer Jabong.com and believes his best phase is yet to arrive.

Jabong kicked off in early 2012, much after some of the other online retailers had come into play. So it certainly wasnt an early bird in the business, but hopes to learn from others experiences. The market is still very nascent. It is not like US or China where e-commerce is a few hundred billion dollars industry and almost everyone is shopping online. There are only 10% people who are online here and out of that only 10-15% does transactions online, says Manu, explaining why the game is still wide open in the country.

The biggest challenge is setting up the logistics, especially in e-commerce territory. Courier companies can only reach around 10,000 pin codes, while in India there are over 25,000 codes. With such restrictions, the reach became a problem. Hence we put up our own logistics network, says Manu. Jabong has grown, as a result. In fact, the growth has been significant. We have become one of the largest e-commerce companies in India. Word of mouth publicity has helped us a lot, he says.

This is not to say that there wasnt any difficulty in the beginning. The first 6 months were really difficult and challenging. Amongst us co-founders, its almost like a marriageneed to have faith in each other. Good understanding is important. Especially when you start off.

The name has clicked in the market. The company name Jabong was very carefully chosen. We wanted a name that could not be easily misspelled. When we came up with 15-20 names, and nobody misspelled Jabong. I always advise people not to think of a very specific name. It should be small, catchy and generic. The name should be flexible enough that when you want to change and expand your business, it should allow you to do so.

He says his stint at McKinsey has given the basic grounding required for this phase. While working at Mckinsey & Co, he had a chance to expand his horizons in terms of handling different aspects of a business such as strategy and sales & marketing areas for Indian and MNC companies in sectors such as retail, consumer goods, and automobiles. His belief is India will go from offline to online at a much faster clip now. It may not happen overnight but it will happen.

We think of ourselves as a retail industry. My personal belief is whatever is applicable to retail industry should be applicable to us as well. Initially we had some issues with sourcing. We were one of the few thousand e-commerce companies in India at that point of time. It took us some six months to reach a level where the companies were comfortable giving their products to us. Now we have associations with more than 1000 brands. It took us significant time to establish that trust and comfort.

His pitch to the clients was that Jabong was trying to be the biggest one stop destination in India while also building excellent customer service. We have more than 90,000 products live on our website today. We have more than 2X of our rivals product line. In India, its as much about availability, as much about convenience. So, assortment is a big story for us. Secondly it is the customer support, in house delivery, fastest possible delivery, etc.

The business model is slowly falling in place. There are different ways to work this out. One is, we buy products from companies at a certain rate and store it in our warehouse, and whenever it sells, it is our profit. We manage logistics and everything else. The second model is where the company stores their inventory in our warehouse and sells it through us. Whenever it sells, we ship it out and pay the company. The third model is the market place business model. Unlike the regular market place business model in other sites, ours is a very controlled and managed place. We have something called as managed market place. We take 100% guarantee on availability of products when it is on the website. We pick it, package and ship it across to the customer. We have different commission models for all the three models. All the logistics and customer service are handled by us within the commission rate, explains Manu.

But most e-commerce companies are yet to break even. It is the function of growth. Can I be profitable today Yes, I can, but for that I may have to sacrifice on my growth. I invest in logistics, customer care, marketing, etc which is the base for the future.

At Jabong, I notice that month on month, year on year, we are growing towards profitability, he says.

So does it worry him that someone could join his firm, learn the ropes and start another competing e-commerce firm

I would be more than happy to support them. We will be more supportive because a lot of people supported us. Unless people think of new ideas there wont be another Facebook or Google in the world. I would really love to see a new Facebook or Google happening from India. For that, we need to be supportive of people who think of new ideas.