We will go for Series B round of funding in 12-18 months: Cbazaar founder Rajesh Nahar
Cbazaar.com is quite a veteran in the e-commerce space, changing business focus and repositioning itself over a span of 13 years or more. When it was launched in December 1998 as Chennaibazaar, the online firm intended to evolve into an online mall. But the idea didn't click and in 1999, it emerged as an online gifting portal, targeting NRIs who want to send gifts to friends and families back at home. The company later forayed into apparels and during 2000-2005, it built a considerable customer base in the UK and the US â€“ connecting with people keen to buy Indian ethnic wear. Finally, in 2005, Chennaibazaar became Cbazaar.com and a private label brand.
It was a self-funded company until it raised a Series A funding of $3.5 million from Inventus Capital Partners and Ojas Venture Partners last week. The firm had initially raised only Rs 12 lakh from friends and family but it would turn into a business worth Rs 24 crore by the end of this financial year. Currently, Cbazaar has nearly 100,000 customers across 54 countries and offers around 15,000 products. The company broke even in 2003.
In a candid interview with Techcircle.in, Rajesh Nahar, co-founder and CEO of Cbazaar, discusses the firm's core focus area, its plans to scale up the ethnic wear category and its global expansion strategies. Here are the excerpts.
You have been operational since December 1998. How did you manage to run the business for more than 13 years without any external funding?
To start this business, we had initially raised only Rs 12 lakh from friends and family and managed to break even in 2003. Whatever money we were making in those years, we were re-investing that in our facilities and marketing initiatives. Now we are on our way to make it a business worth Rs 24 crore by the end of this financial year. In fact, we are an organically growing company without any venture funding till recently. Moreover, we have been a profit-making company for some time.
Now that you have raised Series A funding of $3.5 million from Inventus Capital Partners and Ojas Venture Partners, what are your plans?
Our immediate focus is to build a large ethnic wear business in India and abroad. After all, that's our core business. Additionally, Cbazaar will be investing in technology front, infrastructure and marketing. We are fortunate to have investors like Inventus and Ojas, and we are working together to scale up and acquire talents. The current round of funding should last us another 12-18 months. We will then go for a Series B round.
Do you plan to add more categories or would you just stick to ethnic wear?
Right now a team of 200, our immediate focus is to scale up in the area where we are, which is ethnic clothing. Our ethnic wear would be varied "the range would include everything from Kashmir to Kanyakumari, from Bengal to Maharashtra. All region-specific ethnic wear would be a part of Cbazaar soon.
Tell us more about Chennaibazaar, which existed before Cbazaar.
We started Chennaibazaar in December 1998 for the residents of Chennai. At that time, there was only COD (cash on delivery) as cards were neither relevant nor popular. Also, we were selling a wide range of products â€“ right from groceries and vegetables to computers and electronics. In fact, we wanted to evolve into an online mall. But it didn't really click because of low Internet penetration.
When we were running Chennaibazaar, we used to get a lot of queries from the Indian diaspora living overseas. Most of the times, they wanted to gift things to their friends and families staying in Chennai via Chennaibazaar. That's when we realised that our model might not be too successful in India due to lots of challenges, such as low Internet penetration and low margins. So we decided to focus on the Indian diaspora and help them with sending gifts to their families in Chennai. Consequently, we re-launched Chennaibazaar.com in mid-1999 as an online gifting portal, selling cakes, flowers and chocolate, and later forayed into apparels. At that time, we were connected to the payment gateways in the US for online transactions and started making healthy margins from Day I.
In early 2000, we added apparels (saris) as a new category. While flowers were priced at $10-$20, apparels started from $50 onwards and went up to $200, which meant better margins. Moreover, products like sweets and cakes were perishable items and met with logistic challenges.
When and why did you shift from Chennaibazaar to Cbazaar?
During 2000-2005, Chennaibazaar built a considerable customer base in the UK and the US â€“ connecting with people keen to buy Indian ethnic apparel. Finally, in 2005, Chennaibazaar became Cbazaar and a private label brand. Of course, there's a reason for changing the name. We didn't want to sound region specific. We are a global company and want to go pan-India to cater to a larger audience.
When Cbazaar came live in 2005, we started contacting ethnic apparel manufacturers from all over India. Our aim was to provide a large variety of products to our overseas customers. We have even built an in-house production facility and have a team of fashion designers and tailors who can fix the garments as per custom measurements. For instance, if a customer based in New York buys a sari and wants to get a blouse stitched, it might be difficult back there as the labour cost is high. We would help such customers and get their clothes tailored here. We have pictorial graphics on our portal to determine the right measurements and sizes.
Cbazaar caters to both domestic and NRI customers. What's the business ratio?
We have recently started our operations in India (less than a year) and haven't done any marketing yet. But the company has managed to generate a lot of traffic. Nearly 7 per cent of the revenues come from India while the rest comes from overseas markets. Within the next one year, we expect our ops to churn out 25 per cent of the total top line.
Any interesting marketing activity planned for this year?
We have a couple of marketing activities planned to increase engagement with users. We will introduce the 'Bollywood' theme and partner with production houses to endorse apparels. Later, we will approach other regional film industries.
What are the other focus countries in the pipeline?
We plan to expand to South-east Asia including Malaysia, Singapore and Sri Lanka, as well as the Middle East.
How many transactions do you register per day and what's the average basket size? Also, what's the percentage of your repeat customers?
Our average basket size is close to Rs 7,500-Rs 7,800 for international transaction. For India, it is around Rs 3,000. Right now, we are selling close to 300 products a day and 40 per cent of our monthly transactions come from repeat customers. On an average, a repeat customer spends approximately Rs 12,000 per year.
How has your business grown on a month-to-month basis?
The average order value has grown from Rs 800 to Rs 3,000. In fact, people mostly want to buy less expensive products first and then move up the value chain. And we have been growing 100 per cent year on year. Three years ago, we were doing a top line of Rs 5 crore and in the last financial year, it went up to Rs 10.4 crore. It can be Rs 24 crore in the current financial year. We are also targeting Rs 60 crore in revenues next fiscal and intend to reach $100 million in the next three years.
How many products do you offer now and how many customers are there?
We have close to 15,000 products on our site and we keep adding around 150 products every day. Currently, Cbazaar has nearly 100,000 customers across 54 countries.
Have you set any milestone for 2012?
Our offerings will include as many as 20,000-25,000 products and we want to acquire 50,000-70,000 customers by the year-end.