Sulekha.com was the first mover in the online classified business. Founded by Satya Prabhakar, it lists local business from across 40 Indian cities. More than a decade old, it has seen fierce competition from the likes of Just Dial and Ask Laila. Sulekha raised $10 million from Norwest Venture Partners in 2006 and has been profitable in last two years. CEO Prabhakar spoke to Avanish Tiwary about the changing online eco-system, competition and mobile presence. Excerpts
How has Sulekha adapted to the changing online ecosystem?
We have focused on trying to help users find relevant local businesses across 200 categories like coaching, home and office service, entertainment, health and wellness, moving and packing, training, etc. These are complex needs and it is difficult to find businesses meeting the requirements.
We are doing well — last year, we served 60 million needs across. With over $200-billion of local services transacted value and less than 5% of it digitally intermediated, the opportunity is enormous.
Are payment services on the radar?
That is some distance away. The chunk of our listed services, such as food catering and training, are contracted, and prices are negotiated offline. As such, it is tough to interpret it into online payments. Our listings may not always be a commodity service for which you have a fixed price.
Tell us more about the competition. There are some new sites selling hardware — the kind of products that were not sold online except on Sulekha and AskLaila. What’s your strategy for such startups?
Our focus is purely on being India’s biggest platform for connecting users with local service providers. We do not seek to sell products, either new or used, on our site as this does not fit with our strategy. The opportunity in local services is sufficiently massive for us not to get distracted.
Are you present in smaller cities?
We are in 40 cities, but most of the action happens in the top 15.
Why do the remaining 25 lag?
The need for a platform like Sulekha is most acutely felt in larger metropolitan cities than in smaller towns. As these tier II cities grow in size and commercial activity increases, they will become significant. We are investing in assets, marketing and sales to cultivate these markets.
What’s your revenue model?
The services are free for consumers, but local businesses pay Sulekha for qualified leads. We also earn through advertising but the focus is on ensuring that qualified leads are delivered to businesses.
About 70% of our revenue comes from qualified lead deliveries and the rest from advertisements. We broke even two years ago and are one of the few online companies that are able to grow fast and remain profitable.
What steps have you taken to strengthen the mobile platform?
We have made our design responsive to make it easy for mobile users. Our new app dramatically reduces time, cost and the hassle of local service need fulfillment. About a third users come to us through the mobile platform. About 20-25% of our responses and leads come through mobile, which we expect to rise to over 50% in 18-24 months.