Launched in July 2011, managed marketplace ShopClues recently received Series E funding from Singapore-based sovereign wealth fund GIC and existing investors Tiger Global and Nexus Venture Partners, enabling the e-commerce brand to enter the Unicorn club with a valuation of over $1.1 billion. On the occasion of International Women’s Day, BrandWagon’s Chandni Mathur catches up with Radhika Aggarwal of ShopClues to discuss the company’s strategy ahead which includes achieving profitability, followed by an IPO. Excerpts:
ShopClues is the latest e-commerce company to join the Unicorn club. Given that a majority of the company’s revenues comes from unstructured categories, with an average ticket price of just `700, how do you look at the feat?
Unicorn club members in India are known to cater to urban India but ShopClues caters to the real masses. We work with the mindset of putting our merchants first and it is our constant endeavour to deliver an impeccable shopping experience for all our customers. We owe this feat to our solid management team that has paved the way for us to achieve this milestone. Although on our website, the average ticket price is low, our gross merchandise value (GMV) has grown over four times since January 2015. ShopClues gets over 100 million monthly visitors and we ship more than 3.5 million items every month. Our goals are clear for the future. We expect to be profitable by the first half of 2017 and are eyeing an IPO hopefully in the same year.
Your target segment consists of mainly tier II and III shoppers, and your focus is on unstructured categories. What percentage of your business comes from these towns?
Our customer acquisition is majorly focussed on tier II and tier III cities due to the price-sensitive behaviour of shoppers. Our primary goal has been to promote SMEs in India. Approximately 70% of our business transactions are from tier II and tier III cities, and out of this base, 70% is through our mobile app. Our conscious decision to target these regions is our key differentiator.
What percentage of your customers are women? Tell us about their unique shopper behaviour.
Today, almost 23% of our total buyers are women. This figure stood at 5% in January 2015. The rise can be attributed to increased mobile penetration across mass markets especially in tier II, III and IV towns. Women usually shop for their homecare needs and also make a lot of purchases in the lifestyle category. Almost 80% of women prefer using smartphones over a desktop.
Tier II and III customers also buy a lot from home shopping channels. Do you see a need to foray into that medium? Or do you see a challenge/opportunity in converting those customers?
There will always be numerous mediums to lure customers. The fact remains that e-commerce in India is going to be e-commerce; home shopping channels cannot encroach that and tap into that consumer base. With the ever-increasing penetration of smartphones in India, the game has barely begun in tier II and tier III cities. We have a tough task lined up for us and a long way to go, even in the e-commerce space, so focussing on TV shopping is not a part of our agenda for the future.
The managed marketplace model has always been preferred over the inventory-led one. How has the ecosystem evolved? What are the challenges that still persist in the e-commerce space?
We have positioned ourselves as a fully managed marketplace with strong technological support to back us. Such a business model has worked in our favour and we have not only achieved tremendous traction but also attained an unmatched cost advantage. Amongst all the key players in the e-commerce space, we believe that we have the lowest customer acquisition cost (CAC) and also the lowest marketing spends. Statistically speaking, about 85% of our customers prepay for their orders, which enhances the overall operating efficiency. Whereas, cash on delivery (CoD) accounts for fewer than 15% of our sales as compared to the national average of 80%.
E-commerce players are refurbishing their mobile websites, launching app-like versions of m-sites to combine the best of app and web experiences. What is your app strategy?
Both our mobile app and desktop site make an important part of our engagement strategy. Since ShopClues caters to customers across demographics, we strive towards providing a seamless and enjoyable experience to our consumer base. In the past also, we have continuously initiated campaigns that target the smartphone generation. Since the internet consumption on mobile devices is very high in our country, we wanted to tap into this particular demographic as well. Having said that, our focus on the desktop site doesn’t waver as it continues to drive a significant portion of the traction on our marketplace.
What is your GMV to net revenue ratio? Which category do you see getting sold the most on ShopClues?
ShopClues clocked in $750 million GMV in the year 2015. The revenue stood at $11 million, which is approximately a 155% increase as compared to 2014. The best-selling category on ShopClues has been home and kitchen. It has always seen immense traction and leads the popularity list on our marketplace. Keeping the customers preferences in mind, we have constantly worked towards innovating and adding new categories to better the online shopping experience. We will definitely be adding more categories to our mix in the future.