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We're not building Shopclues for a sell-off: Cofounder Radhika Agarwal

Shopclues expects an exciting year ahead as it plans to launch smartphones. Cofounder Radhika Agarwal spells out the company's strategy for 2017.

January 02, 2018 / 05:20 PM IST

Gurgaon-based online marketplace Shopclues has braved quite a turmoil in the last few years, with a change in management and surviving considerable periods without an external round of funding.

Started in 2011, the company has raised close to USD 231 million in funding including a USD 7.73 million debt round in 2017 from Innoven Capital.

Despite an infusion of billions of dollars that rivals Flipkart and Amazon have bagged, Shopclues continues to be steadfast in its strategy — to cater to India's tier 2-3 towns.

Shopclues cofounder and chief business officer Radhika Agarwal enumerates the company's strategy for 2018 and discounts the rumors that Shopclues is on the block for a sell-off. Excerpts:

Q. How was the year 2017 for Shopclues? What are your expectations and strategy to compete with bigger rivals Flipkart and Amazon in 2018?

Close

2017 has been a year where Shopclues has come of age.

For us, anything that we work on today shows us the results two or three quarters and that's really the way it works.

The fact is that we have moved away from GMV (gross merchandise value) as a reporting number completely. For us, our topline starts from orders. Our number of orders have doubled over the last year.

If you average it out for the entire year, then it would be around 70,000 orders per day. Right now we are doing about 100,000 plus orders daily.

The four metrics that we look at first is that our orders have more than doubled. Revenue has more than tripled and that's not GMV, our transacting customers have more than doubled. About 80 percent of our orders come in from Tier 3 and Tier 4 cities. And finally, our burn rate has less than halved over this entire period.

We focused more on unstructured categories in 2017. Categories like lifestyles have done phenomenally well for us.

Categories like home and kitchen are fundamentally tough categories to solve since their average selling prices are low.

The question is how do you get to start making money.

We, on the other hand, are now making money on each and every order that is being shipped out right now.

Q. So fashion still constitutes over 50 percent of the total orders?

Yes, and in revenue terms, it is more than that.

It comes to about 60 percent and fashion being a higher margin category has done phenomenally well for us.

We have launched an exclusive label too. One of them is Meia which is especially for women. Baton is the men's brand. All that is done in-house completely.

The design and brands team sit in-house while the manufacturing is done by our merchants for us. They own the inventory and we are the marketplace.

We want to be the number one retailer in terms of the orders being shipped out by 2019 and we are very confident we are getting to that. We own these brand and our margins are higher.

Q. Shopclues reported a mere 5 percent year-on-year growth to have Rs 188 crore in revenue during the FY17. What sort of growth can be expected in 2018?

It should double. We have actually focused a lot on categories that are high in revenue. Losses will also come down very very significantly. We have a very clear vision of profitability.

Q. What will be the key focus areas in 2018?

The three things that I am most excited about include our exclusive labels. We have Home Berry for the home decor segment. What we have not launched as yet which is a kitchen and small appliances. So all together we have five exclusive labels.

The other thing is that I am very excited about is the rural entry. That is something which is aggressively under the radar. There are multiple partnerships that we have rolled out. We will be talking about them shortly.

It will broadly be an assisted e-commerce market. There we will be going in with electronics and mobile accessories in a big way.

Feature phones, small appliances etc will be the key entry point products for us. The starting price point will be Rs 199.

Then there are a lot of products that we have rolled out that helped the merchants increase their business offline and online. One of them being e-karobar. So that really gets the ability to digitise the business of small and medium merchants as well.

Q. What is the strategy to expand the exclusive label base?

We won't necessarily be launching any more of these. But one thing which we will launch for sure will be smartphones. So you will see us do smartphones as well as feature phones and we are expecting them to work really well for us.

Q. Will the components be imported from China and assembled in India?

We will deal with our merchants. These will be the best value for money phones. We currently have merchants who do exclusive launches with us such as Swipe.

Now we know what the customers are looking for and what works better. All manufacturing will be done by the partner merchants.

Currently, pretty much everything that they are doing is being manufactured in India. A basic rule of thumb is that margins would double.

Q. In a few previous interviews your cofounder Sanjay Sethi has said that he would not categorically deny the possibility of a merger with a larger player. Can you please elaborate?

That has always been taken out of context.

I think Sanjay's point has always been that we are very focused on reaching our goal and we will reach that and the goal is really to focus on own the Tier 3 and Tier 4 customer segment.

We are focused on an IPO and that is how we are building the firm.

Along the way, if there's somebody who has a strategic interest ..sure.. we will talk to them, if it works for the company, sure. But will it be a buyout? Highly unlikely...that is not what we are building it out for...the focus is to continue to grow the business strongly.

E-commerce in India even today consists barely 2-3 percent of the entire retail. There is enough room for everybody to grow.

priyanka.sahay@nw18.com
Priyanka Sahay
first published: Dec 29, 2017 07:08 pm

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