Just after an year of making its tentative entry in India via Junglee.com, world’s largest online retailer has now launched an online marketplace Amazon.in to tap the $400+ billion retail market in the country. Though for now its offering is limited with books & movies but will soon go into categories such as mobile, cameras and more, and as expected it will spur the Indian e-tail market and create buzz among the online sellers especially the marketplaces.
Iamwire caught up with Sandeep Aggarwal, founder and CEO of ShopClues.com, a ‘managed’ marketplace, for his views on Amazon’s launch & its affect on overall scenario of online retailing in India and how will Shopclues deal with the same.
Here is the detailed interaction
With the entry of Amazon in India, Indian ecommerce is expected to take a new shape. What’s your take on this?
India presents secular growth adoption in E-Commerce and I am not surprised by Amazon’s decision to enter into India. This is a good endorsement for the E-Commerce opportunity. However, i personally feel that Government of India should have given two more years to start-ups before opening the doors for Amazon. This can back fire in terms of opening retail market to such a large E-Commerce company this early and how it can affect 30 million SMBs in India. It is like opening up Indian market to the largest car, banking, or retail players prior to having strong domestic market development.
How will Amazon’s entry will affect Indian ecommerce players?
This will slow down new capital investments in E-Commerce industry by VCs and angels. The industry is at very early stage evolution and bringing 800 pound gorilla this early does not make sense. China did not open doors for foreign Internet giants for many years and look at China, it created a whooping $350 bn in incremental market capitalization from home grown Chinese Internet companies or start-ups and the most of this happened in E-Commerce. India will likely miss or limit this wealth creation phase. That being said, Amazon has consistently struggled to make it big in emerging markets such as China, Latin America, Turkey, Russia etc., where local players compete on selection, price and local focus vs. convenience Amazon offers.
(Amazon may disrupt the Indian online market, as the major challenges faced by the e-tailers in the country include fulfillment, payment & delivery, and its an accepted fact that Amazon is the leader specially when it comes to fulfilment, supply chain and delivery innovation. But whether the launch of Amazon will work in India, or it is just the hype being created around the global brands, let’s know what Sandeep thinks about it.)
What will be Amazon’s impact on overall competitive landscape in India?
Amazon’s entry in India will likely impact E-Commerce companies with heavy dependencies on books, mobile, electronics and computers. However, we believe that Amazon will not be able to compete on pricing, unless it is willing to loose money on every transaction for many years.
Being an online marketplace yourself, do you think Amazon will affect Shopclues anyway?
I do not think so. While, Amazon is a great company, you are giving them way too much credit in terms of executing locally in tough market like India. There are four things that we have that are distinctly different than Amazon:
1. Tail-end approach: As you know India is all about tail end and the tails are really long-end in this country, and that’s from where large percentage of our business comes from. 65% of our business is non-electronic or unstructured categories such as clothing, shoes, accessories, home & garden and so on. We cater more on unstructured part or tier-2 brands and tier – 2/tier -3 cities. 35% of our business comes from 3rd tier cities vs. national average at 10% for rest of the E-Commerce companies. Amazon may be focused on medium-to-large businesses and India is all about SMBs and that is what we are catering to.
2. “India only” focus vs. localization by an MNC: For us India is the only focus and we are laser focused on India. For Amazon, while they may have deep pockets and longer operating history, India is a localization attempt by Amazon. Because the emerging markets have their unique requirements and localization that is why, in E-Commerce Amazon has not won against Taobao in China, Mercado Libre in Latin America and so on.
3. Entrepreneurial fire vs. day job for professionals: Amazon in India is run by a professional team with a day job and ShopClues is run by a founding team that brings heart and soul.
4. Strong traction and true marketplace dynamics: We have sizable traction and true marketplace dynamics (e.g. 10K+ merchants, over 1.2 millions SKUs, 250k+ product reviews, and 150k+ merchant ratings). Finally, Amazon competes on convenience and we compete on selection and value for money and people of Indian can easily choose value for money over convenience.
Do you think Amazon will try to acquire any of the marketplace in India? In this case will Shopclues be interested in such a deal?
We can not make comments on Amazon’s plans, though Amazon is not as acquisitive in general as eBay or Google for that matter. As far as ShopClues is concerned, our plan is to continue to build pure play and completely independent managed marketplace exclusively focused on India. We want to take ShopClues as a public company in long-term horizon and we are not for sale.
(ShopClues.com started as India’s first managed marketplace in January 2012 has and currently doing average of 275k+ orders and Rs. 20 crore+ in GMV a month with over 7 million visitors and 35 million pages viewed. It had recently raised INR 54 Crore ($10 milllion) from two private equity firms Helion Venture Partners and Nexus Partners, along-with Teruhide Sato and CEO of Netprice.com in series B.)
What will be Shopclues strategies to deal with the growing competition?
Our strategy is continue to drive innovations, solve problems fundamentally, deploy capital prudently, and develop selection and cost advantage.
With so many marketplaces coming up, how will they differentiate themselves? How would you like to differentiate Shopclues from others?
We are differentiating with great selection, low prices and fast delivery. We have the 2nd largest catalog of products online (exl. books), we are the only source to sell products from SMBs or tier-2 products/brands, and 75% of the comparable products are the cheapest. In terms of fast delivery, we are the world’s first marketplace to offer fulfillment services right from day one.
We have heard that Shopclues is selling a lot of deodorants on the site?
It is not only deodorants, we sell lots of clothing, shoes, and accessories, home, kitchen items as well. Nearly 65% of our business is non-electronics type of categories.
What are Shopclues future plans?
We want to bring 1 million+ SMBs and 10 million products online in next 3-4 years and 5 million SMBs and 50 million products online by 2020. We will continue to build cost advantage and be the cheapest price source for the most items people buy online. We want to be India’s largest and most customer centric E-Commerce company and we keep our heads down and keep executing.
What is Shopclues fulfillment model?
We offer two fulfillment models — ShopClues Velocity Premium and ShopClues Velocity Basis. With Velocity Premium, we offer pick, pack and ship service and with Velocity Basic we offer Ship service. Currently 75% of merchants are catered thru Velocity Premium and 25% via Velocity Basic.
Do you think there now there is a need of ChannelAdvisor like model in India?
I think the market is still very early stage for Channel Advisory type of play. The marketplace model and the payment infrastructure have to improve further for a Channel Advisor type of play to take place in India.
Surely the launch of Amazon has led other players in the market develop their own source of confidence to compete with the global player. Also it may have glittered the eyes of few for $$$ by selling their company to Amazon. In the view of that, how far Shopclues or any other currently operational marketplace will stick to their USP’s or will dream of getting acquired by Amazon as a good riddance will have to be seen in times to come. But Sandeep do sounds like making a pitch in his own peculiar way.