When investor interest was at an all-time low, ecommerce market Shopclues managed to break into the famed unicorn club of India by raising $100 million in early January this year.
On the eve of presenting the ET SmallBiz and Tracxn ‘State of Startups’ report that showcases the year’s top fundraiser and chronicles their innovative spirit, Shopclues co-founder Radhika Aggarwal is confident of turning her company profitable by July next year.
“In India a lot of companies have focused on scale and not profitability and are now running backwards trying to catch up. In some ways, we have sacrificed on some scale in order to build strong fundamentals,” says Aggarwal.
Supporting merchants, supporting growth
However, with over 5 lakh merchants on its platform (which the company aims to double by year-end) and services in 30,000 pin codes, the scale seems titled heavily in favour of ShopClues. Aggarwal claims that ShopClues is one of the largest marketplaces in the world in terms of its merchant base. The company is investing heavily in providing value added services to its merchants and treats it as a separate business.
“90% of these merchants do not even have a point of sale system so we are trying to digitise the business of these SME merchants. Our purpose is to make them digitally savvy by introducing them to marketing and cataloguing services, auto management, merchant mobile banking. This is a huge opportunity that exists and we are very excited about it,” she says.
Although Aggarwal expects its marketplace business to turn profitable much before its merchant value added services (VAS) business, she is confident of monetising it to add to its revenue. “We treat our five lakh merchants as five lakh warehouses so our capital expenditure is very low,” she adds.
Fulfilling hyperlocal needs
While ShopClues focuses on developing VASfor its wide merchant base, its marketplace business seems to be growing on the basis of its several focussed initiatives. One of the biggest initiatives which has transformed into a flagship brand for the company is its Sunday Flea Market. It replicates the model of hyperlocal weekly markets seen in almost all the small towns of India and with its astounding success (4 million visits every Sunday) has even encouraged copycat initiatives by other ecommerce companies.
“With around 1.95 lakh orders on every Sunday and an average selling price of Rs 800, the Sunday Flea Market is one of the biggest marketing properties of ShopClues. It is a very strong, new consumer acquisition tool for us,” says Aggarwal.
Unstructured markets for structured growth
ShopClues has worked to strengthen its presence in Tier II and III cities and today 70% of its orders are placed by customers residing in these unstructured markets. While several startups have pivoted from their original paths, ShopClues’clarity in its approach towards the unstructured markets has paid off.
“We are happy to follow the trail of ecommerce companies like Flipkart and Amazon in Tier I cities. They are doing a good job of telling people to come online and shop, we prefer to reserve our marketing dollars for the heartland of India,” says Aggarwal.
She promises several initiatives for her small town customers and value added services to her SME merchants – two of ShopClues biggest growth pillars.