Noida-based Knottykart Marketing Pvt Ltd, the company that owns and operates e-commerce website knottykart.com, has raised angel funding to scale up the business while it moves to a managed marketplace business model, a top company executive told Techcircle.in.
The overall funding commitment is around Rs 3 crore (just short of $0.5 million) of which the first tranche of Rs 1 crore ($160,000) has been received. The next two tranches of Rs 1 crore each will be received in the next six months.
"Till the time we get the complete funding, we have agreed on a non-disclosure of the identity of our investor. This can be considered as an angel funding by a Delhi-based financial institution," Mayank Kumar, MD and CEO of KnottyKart, said.
The amount received in the first tranche will be used in building inventory and products besides online marketing.
"After receiving the second and third tranches, we will use the money for working capital (inventory), expansion into other categories, improve logistics by providing multiple centres in the country for faster delivery of products and online marketing," he said.
He added the firm is also looking to raise $10 million in VC funding in the third quarter of 2014.
The startup was founded in middle of 2013 by three former Yebhi executives Mayank Kumar, Nitin Raj and Sonika Gahlot. Besides Yebhi, Kumar has also worked with Genus Electrotech Ltd and Videocon mobile phones division. Raj comes with a background in online marketing space and has also worked with Media International Ltd, SemanticBits and LLC Education. Sonika, the third co-founder, is said to be working with MyParichay.
It started commercial operations in November 2013 and is currently a pure e-commerce retail website for electronics with a just-in-time inventory management which helps it cut costs of upfront purchase of gadgets. However, it is looking to move on to become a managed marketplace. The firm is testing the tech system and should open the marketplace in two months.
It is also looking to become a horizontal marketplace with categories like home, footwear, lifestyle and accessories, innerwear, toys and games and fashion.
According to the firm it caters to almost 500 customers on a daily basis through its site. The 15-member team currently operates from Delhi, Gurgaon and Noida, and plans to open more centres in Bangalore and Mumbai.
The value proposition for an electronics only e-com site is strong as there the market lost its only significant player two years ago when Flipkart acquired LetsBuy only to shut it down later. Another player Timtara had to shut shop after its management was arrested for alleged fraud.
However, as the company moves into a managed marketplace model that too as a horizontal player it would come into a jungle with a bunch of firms, including heavyweights like Flipkart, Amazon and Snapdeal to name a few.
According to Kumar, Letsbuy was purely a price-driven online electronics store but Knottykart's focus will always be to remain cash positive in every single transaction.
"Most online retailers focus on selling. We have experienced that managing the category in terms of more efficient buying and inventory management is the key. This alone will take care of 80 per cent of the effort required to sell. Our long-term vision is to become the largest online B2B player," he said.
Talking about how the new venture is looking to navigate through a category which is heavy on capital given high ticket price of products, Kumar said there are many other factors besides price of products to make selling electronics online successful.
"Being update with the latest, providing value for money, offering the largest variety of products, providing as much information to customers to help them make a buying decision, delivering to doorsteps faster than competition and reaching out to his/her mind first every time when he/she thinks of buying a mobile or a gadget are tools which can make electronics a money spinning category and not a capital guzzler," according to him.
Kumar added that the venture is banking on its arrangements with vendors in terms of having an almost real time visibility of inventory. "Our just-in-time logistics works out to be more efficient than burning cash in terms of keeping high value inventory," he said.
(Edited by Joby Puthuparampil Johnson)