According to research, the approximate size of Indian office products market is $20 billion. As with other major retail categories, the market is largely unorganised and has huge scope for organised players. An interesting aspect from a suppliers perspective is that demand is concentrated around metros and tier 1 cities and that too in commercial/industrial pockets. This makes it easier to cover large cities and build capacity.
Iamwire spoke with Deepak Batra, Director and Co-founder at 1Click1Call.com, a recent entrant to the office supplies market, which has plans of becoming a key player in the office supplies market pan-India. In this interaction, Deepak shares his company’s vision, business model, growth plans as well as some of the key challenges facing his business.
Tell us something about 1Click 1Call and the vision behind the company…
I (Deepak Batra) and a long-time friend (Pankaj Arora) started this venture with the vision to become one stop shop for office supplies. 1Click1Call.com was incorporated in last quarter of 2011 but kicked off operations through the e-commerce portal in January 2012. The option of choosing e-commerce was driven by the fact that it increases catchment, service area and also it gives you visibility and sales from retail segment all over the country.
What opportunity do you see in the Indian online retail scenario currently and where do you see it going?
I think opportunities are huge and wide – I have heard many a times that Flipkart or Snapdeal are going to run the show and other players will get squeezed. That will not be true. That hasn’t happened anywhere in the world. If you look at top 500 internet retailer list on http://www.internetretailer.com/top500/list/, you will find enough niche players, generic players etc. As long as you strongly believe you have a value proposition that is difficult or time consuming to replicate by bigger players, you have good chances of doing well.
I think next 5 years are very important for the online retail industry – Once (and when) FDI comes in there will be lot more competition but lot more focus as well from supporting industries like payments, logistics etc which will push operations cost lower. Also, at the same time people will look for convenience, accessibility, better brands and not just deals – that is where niche players need to ensure that their product offering is properly positioned.
How much money does it take to create a niche player such as yourself and what are the key areas that need investments?
It depends on what category you are operating in and what area are you operating out of. For our category – office supplies – it has traditionally been a Delhi/NCR hub so it has been beneficial as we can get away with not keeping a huge inventory especially at this stage of our business. However, as we go along, managing and warehousing the inventory will be a major investment.
You can start with an investment of around 10-15 lakh (and then with a monthly expense of 1-2 lakhs). However, this would include zero expense on marketing so this is just about developing your internet product, getting your feet in and testing the waters which is what we have done till now over last 3-4 months. I think the next steps would require substantial investment. We are working those numbers right now and will be happy to share when they are ready.
When do you think the etail market will reach an inflection point in India?
Inflection point will be when e commerce reaches around 2-3% of retail market. The journey from 2-3% to 8-9% will be a lot faster. Right now it is less than 1% if I have my figures right. Let’s be frank – for various reasons, organized offline retail hasn’t been able to do a great job of converting footfalls into sales due to various reasons. Also, high property, man power and inventory costs associated with them will always give them some sort of disadvantage. So, online retail has some sort of advantage.
India, unlike US, is at a stage where organized retail has just found its foot. In US, by the time e commerce took centre stage, organized retail had a strong hold. Therefore, people had to be pulled away from malls to internet. Here, you need to pull them from small shops or unorganized markets to internet which should be relatively easier.
Share some insights on the B2B office supplies market and how different is it from selling in a B2C space?
Sales process is quite different but more straightforward for B2B market in comparison to B2C market. In terms of different variables involved:
- Price: B2B and B2C is equally challenging. Both customers do their thorough research and demand the best price. B2B purchase is slightly more competitive due to bulk ordering
- Product: B2B customer is not looking for too much variety and options when it comes to office supplies products. This allows the retailer to maintain a good sized inventory for limited number of SKU’s
- Promotion: Traditionally, B2B customer has been less promotion conscious as he is looking for good service at best price rather than a known brand. However, this is changing as MNC’s and other companies are looking to procure products and services from a known office supplies retailer
- Place: If its e-commerce, its everywhere. However, B2B customer looks for local dealers and suppliers and since their requirements are meant to be met in 24 hours therefore local major city level presence is necessary.
Sales process involves setting up meeting, walking them through value of our online portal etc and closing the contract which typically takes anywhere between 10-15 days.
What has been the response from the corporates and what value do they derive out of the business?
We have launched our services in Delhi/NCR (for corporate, however we are serving individuals and one off orders from corporates all over India) and the response so far has been encouraging. We have signed 3-4 companies and in process of signing more soon. The value they derive of 1Click1call.com is better service than the current unorganised suppliers, one stop shop for all office products as well as the convenience of online spend and order management.
Could you share some details around operations of the company, such as inventory management, warehousing and logistics, team size etc.
- Inventory Management: We are currently keeping inventory of around 100-150 SKU’s (mainly stationery which are most frequently usedin offices). In total we have around 3000 SKU’s on our website which are procured back to back in case of an order.
- Warehousing and Logistics: We are warehousing these at our own premises. For logistics, we will be managing Delhi/NCR through our own vehicles. Currently we own a van and a bike which are used for purchase and delivery in Delhi NCR. For ourtside Delhi NCR, we are using courier service providers such as First Flight etc.
- Team Size: Currently, apart from me and Pankaj, we have 5 people looking after backend, customer care (inbound and outbound), procurement/operations, technology and two runners for delivery.
What is your USP vis-à-vis other suppliers and companies?
Besides competitive pricing, we offer one-stop solutions for all office needs, as well as online spend management, benchmarking, and easy tracking of orders and deliveries
How do you plan to compete with larger players such as Flipkart and the rest?
While Flipkart also offers such products, we are a much more focussed and niche player and have a wider selection of products. Also, we are more geared towards fulfilling lower margins, higher volume orders and have built our capabilities accordingly.
Could you highlight the various payment and delivery options available to consumers and how do you handle reverse logistics if required?
- All payment options are available to B2B consumers (cash, cheque on delivery – registered corporate user, Credit/Debit card, online banking etc.) For B2C consumers, all options apart from cheque on delivery are valid. Reverse logistics are also handled by either our in house team (for Delhi NCR) or courier partners (outside Delhi NCR)
What is the ownership pattern of the company currently and do you plan on raising any funds in the near term?
Ownership is currently equally split between Pankaj and me (both full time directors). We do plan to raise funds very soon for geographic (to cater to B2B market) and portfolio expansion (for better choice and adding more categories for B2C market)
Currently you operate primarily in Delhi/NCR. Could you share your expansion plans for the business in terms of reach and geography.
We want to spend another 3-4 months targeting only Delhi/NCR but plan to enter MMR (Mumbai Metropolitan Region) and hopefully Bangalore as well before end of this year. We are currently serving individual B2C customers all over India but want to extend our corporate offering to all metros and Tier-1 cities as soon as possible.
Could you highlight some of the key challenges for your business…
Two key challenges for the business are logistics and Customer Acquisition.
- Logistics (of course!) – Especially in B2B market, where delivery time are far less – you need to have a city-level presence and your own delivery network to ensure things reach customers within 24-36 hours of placing the order
- Shortening the Customer Acquisition Process – Once we market 1Click1Call through right media, we should be able to create awareness about our USP which should cut down on time taken to convince decision makers about our value. Right now, they need to be convinced that we are actually more value better service at same price.
What are the different marketing channels being used by the company and do you foresee a change in the same going forward?
We are currently using direct selling approach for corporates (e-mailers, calling and giving presentation/demos) and using online marketing (through social media, google ads etc.) for attracting retail customers. Right now, marketing budget is extremely low and we want to acquire customers more through organic means such as SEO, word of mouth etc.
What are your growth and revenue projections for this year?
Revenue projections for calendar year 2012 (our first year – with an assumption of only doing Delhi/NCR, no external funding so limited team size and limited marketing budget) is approx. 55-60 lakhs. Split of 70:30 between corporate:retail
Any plans of moving to the B2C model in the coming years?
Yes, as I foresee that these will be two different business units with lots of synergies – the B2B model will follow more enterprise sales business model whereas B2C will follow a more traditional “e-commerce office-school” supplies model with even some offline presence in the way of catalogue stores.