Alibaba cannot enter India with a magic wand: Shopclues CEO
Gurgaon-based Shopclues is likely to get into a battle with Chinese e-commerce mammoth Alibaba in the B2C category when it enters India, expected next year. Shopclues CEO Sanjay Sethi elaborates on his strategy to battle Alibaba and existing rivals Amazon, Snapdeal and Flipkart.
In order to distinguish itself from rivals Flipkart and Amazon, Gurgaon-based e-commerce firm Shopclues plans to expand its base to 400 million customers with an annual household income of Rs 4-10 lakh, in the next five years.
The company claims to have reached about 12 million of the 400 million users as of now, who reside in tier II and III towns, besides metros.
“There are about 150 million people who make Rs 10 lakh or more in annual household income in India. However, our vision is to reach to 400 million consumers, that we call Bharat who make between Rs 4 lakh to Rs 10 lakh annually," said Sanjay Sethi, co-founder and chief executive officer, Shopclues in an interaction.
"That population is less than 400 million right now. But I am also taking into account the GDP (gross domestic product) growth. An economic flywheel will pump more people in this segment," he added.
Unlike its bigger rivals Amazon and Flipkart, Shopclues is not targeting the upper segment of the urban population which is currently the most active on e-commerce sites and is targeted via ads both online and via Television.
"It is a bet on India's future. The growth on Indian economy and ecosystem will come from that middle India," said Sethi.
Talking about concerns getting swamped by Chinese e-commerce giant Alibaba's entry into the India market, he said that Shopclues is gearing up by capturing the mass consumers early on.
"Many a times, we talk in terms of winners and losers as if there's a finish line. But the point is that it is a continuous game, season after season, day after day, this battle is to be won. So Alibaba cannot come in with a magic wand, they will break and path blaze like anyone else," he said.
"So far there is no serious competition in what we are doing. Alibaba will take some physical time... it will at least take a year or two. That gives us an edge today. Two years from now, we should be a having a much deeper interest in merchants business. Businesses can't switch from one provider to another provider that easily, which means that they will have to compete on our turfs," he added.
The company on Tuesday launched an initiative called ‘Reach’ which will allow offline merchants to opt for cashless transactions through a payment gateway.
It does not require either the merchant or the customer to download a Shopclues app. The transaction happens through SMSes and web browser. It will charge merchants a monthly fee of Rs 99 for ‘Reach’ service.
The process also eliminates the need for an e-wallet as the money will directly be transferred to the beneficiary's bank account at an introductory rate of zero percent TDR.
Shopclues' move to compete in the lower segment of shopping strata is likely to pitch it against Snapdeal and Paytm which are also targeting younger populace in small towns of India. Like Paytm and Snapdeal, the company also has a payments platform. It acquired mobile payments firm Momoe Technologies in July for an undisclosed amount to add a payment service to its platform.
The latest offering ‘Near’ has been launched by leveraging the same platform.
It claims to have achieved a valuation of USD 1.1 billion when it raised an undisclosed amount in its last round of funding, early this year. The money had come from sovereign wealth fund GIC Pte Ltd with participation from existing investors Tiger Global Management LLC and Nexus Venture Partners.
In August, Shopclues had announced that it is planning for an initial public offering on NASDAQ in 2017. The company in 2014-15 reported a loss of Rs 100 crore from Rs 38 crore recorded during the year ending March 2014. It did not immediately share to what extent the losses have widened, this year.