UK-based digital media business group Logicserve was co-founded in 2007 by its current CEO Rohit Chugh (former marketing director at online poker firm PartyGaming UK, which last year merged with Bwin to create online gambling giant Bwin.Party Digital Entertainment) and Prasad Shejale (who heads the Indian operations). After establishing its presence in the UK, it has launched a couple of Internet properties in India starting with couponing site Couponraja.com and price comparison site Compareraja.com. In an interview with Techcircle.in, Chugh talks about his company, the Indian e-commerce market and the potential of comparison sites in such a market.
There are basically three businesses under the Logicserve umbrella group. Broadplace Advertising Ltd provides advertising services to clients, CK Net Ltd manages our own as well as our clients Web properties and the third one Logicserve Digital provides back-end support and services to clients in the UK and Europe and our websites. As of now, we provide services to about 500 clients in the UK (including the companies own web properties).
The biggest revenue generators are our own Web properties, since they account for around 70 per cent of our total revenues. All our businesses are profitable, with the exception of the India properties, since they are still in the nascent stages.
What about your presence in e-commerce?
We are present in the e-commerce space with our own Web properties but we are not retailers ourselves. Instead, we have chosen the market where we can build technology and products that would help make the consumers decision making process easier- by providing them information like what to buy, where to buy and how to save money on what they are buying. Basically we are supporters to the e-commerce market.
Why the role of supporters instead of players?
For us, the decision depended on one factor-what did we understand best. In my case, it was online marketing while Shejale's expertise lies in building technology and technology related products. None of us had any expertise with regards to logistics, customer service, etc. so we decided on playing the supporting role instead of becoming a retailer ourselves.
What sort of spread do you have in Web properties and which is the most successful of them?
Our first offering was Voucher King, a dedicated voucher code website in UK. We later expanded into other product/ticket comparison sites like Big Ticket Shop (present in 7 markets), Big Perfume Shop, Big Camera Shop, Big Laptop Shop- all UK, Coupons Codes Bay (US), etc. and the recently launched Compare Raja and Coupon Raja for India.
As of now, the most successful one is Big Ticket Shop. There are other sites that are also doing well but they are present in only one or two markets.
How do you generate revenues from your sites?
For our comparison sites, the revenues are generated on a commission basis (somewhat similar to a travel site). Whenever a comparison is turned into a transaction, which basically happens when a customer selects a product from our site and visits the seller's site to make the final purchase, we get a commission from the seller for sending a transaction their way.
We also get a commission for the coupons used from our sites but coupons are a very niche segment because it's only when customers have already made up their mind about buying something that they look for a coupon. But while comparison is a much wider space, conversions are low (only one to two per cent conversions happen in the developed markets, for India it will be even less) since visitors are still contemplating as to what to buy and where to buy it. Hence, in coupons you see sales coming very fast whereas in the comparison space it is a longer cycle.
What is the traction on each of your sites? What is the total number of visitors that you get for all your sites combined?
We record visitors per vertical (instead of individual sites) that we operate in since the visitors are split across multiple countries. Tickets, retail, digital TV/broadband and Vouchers are our core verticals. The number of visitors on them (on an yearly basis) are 5 million each for tickets and retail, four million for digital TV/broadband and two million for vouchers.
The total number of visitors that we get across all our verticals on an annual basis is over 20 million.
How much revenue do you drive for your partner sites?
Out of the total number of visitors on our sites, we see a 2-4 per cent conversion rate depending on the category and seasonality. In total, we drive over £120 million (around $193.1 million) worth of revenues annually for our partner sites through over four lakh transactions.
Why did it take you five years to come to India?
We started the company in March 2007 but the real action started in the latter half of the year when we acquired a UK-based company called Broadplace Advertising. Also, in a way, we were always present in India. Even when we started back in 2007, we had an India office (in Navi Mumbai) that handled back-end operations like designing sites for our UK clients and managing their marketing campaigns, etc. But till about the start of this year, the Indian market was never a revenue source, only a support centre to our UK and European businesses.
The reason we did not bring our offering in the country till now was because we did not think that the market was big enough and that there were not enough players in the market that would require a comparison site.
How big is the team?
We have around 150 plus odd employees out of which a majority (around 130) are based in India. Out of the total number, a dedicated team of 8-10 people focus on our Indian properties.
Share some numbers on your India focused properties?
Compare Raja offers comparison between 30,000+ products from most (around 20) of the leading e-commerce sites. We are also planning to add new product categories to the mix. The hottest segment for comparison as of now is mobile phones. For Coupon Raja, the number of listed merchants is close to 150, although only 60 of those are active. The most selling coupons are from verticals like retail, travel and web hosting.
What is your game plan in India?
We are trying to combine couponing with comparison because at the end of the day, for the customer, it is the end pricing that matters most. What this means is if A is offering a product at Rs 9,900 while B is offering it for 10,000- but with a Rs 200 off coupon, customers will still buy the product from B since they are getting it cheaper from B. This is why we are integrating Coupon Raja and Compare Raja, with the goal of providing all the information required by the customer to make an informed purchasing decision at one place.
But the reason that we are also offering Coupon Raja as a separate site is because there are some segments where you can't actually compare prices. For example, if you want a Dominos pizza or an Inkfruit shirt, all you need is a coupon.
What is the potential of the Indian market?
We reckon that in the next 4-5 years, the Indian market opportunity could be in the range of $100 million.
Also, while UK and US are big markets, they are also mature markets and very competitive, hence the revenue base is split across a number of players. But in India, we can command a much bigger market share since we are not a startup and instead bring an understanding of this space. Ours is a tried and tested business and because of that, I believe that by 2016, our India revenues could easily surpass our Europe business.