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We could be the first Indian e-com firm to turn profitable: ShopClues CEO Sandeep Aggarwal

Gurgaon-based e-commerce startup Clues Network Pvt Ltd, which runs the horizontal e-commerce marketplace ShopClues, claims to be on par with e-com biggies like Flipkart and Snapdeal just after seven months into existence. It had also raised $4 million in a Series A round in January this year from an undisclosed but 'well-known' VC fund that operates across India and the US. The startup had raised another $2 million in angel funding in August last year from US-based investors. Curious about its story and strategy, Techcircle.in caught up with Sandeep Aggarwal, founder and CEO of ShopClues. Aggarwal, a former senior analyst at Caris & Company, claims to have seen an opportunity for a managed 'marketplace model' e-commerce firm in India. So he left his life and career in the US to come back to India and finally started ShopClues. Aggarwal wants to build a Taobao (China's largest online marketplace) in India and in a one-to-one conversation, has revealed his future plans, current traction and acquisition plans. Here are the edited excerpts.

ShopClues claims to be one of the top six e-commerce companies in India. Please share some numbers with us to back up the claim.

ShopClues is the first and the largest marketplace, and we sell everything. In terms of numbers, we have grown 110 times in a matter of seven months. When we started the venture, we were doing 25-30 transactions a day. And today, we are doing north of 2,500 transactions per day. That, considering we are just seven-months-old, we have spent way less on marketing and have less capital than our competitors, says all about our approach.

But why is ShopClues low on visibility if you are clocking such numbers?

We are a frugal company and very data-driven. We have not done any TV commercial or mass marketing other than the outdoor hoardings at some metro stations. That is the only offline marketing that we have indulged into and we plan to do it on an opportunistic basis. We are also big in harnessing social media marketing. Our guess is 8-10 per cent of the total traffic for any e-commerce company in India comes from the social media. But in our case, it is 22 per cent. We are harnessing the social media better than our competitors. Also, we believe in viral marketing.

What makes you different from other e-tailers?

We are a managed marketplace and there are three things that make us different. First, we restrict who can be a seller. We have our own rigorous process in place to determine that and we only allow businesses to sell, not individuals. Secondly, we don't give the money to the merchant until the buyer confirms receipt; so the payment is protected. Finally, it does not matter who the seller is or what the product is. We handle the fulfilment.

Then that makes you similar to Snapdeal and eBay…

Yes, but we are more similar to eBay than Snapdeal. At Snapdeal and in many other companies today, it is just the case of a very clever working capital arrangement. It includes mainly two strategies. The first is buying items on sale-and-return basis, which means if they are unable to sell those to customers, they will give those back as a supplier. The second is back-to-back approach, which means first the buyer places an order and then it is purchased from the seller. Both can be called a clever or even shrewd working capital arrangement. But it is not a business model.

Ideally, in a marketplace, the buyer knows who the seller is; the buyer has the ability to rate the seller and other buyers can see the rating and the feedback the seller gets. ShopClues has all these characteristics which do make us more similar to eBay but we are also different from eBay, on some points. At eBay, both businesses and consumers can sell; the product can be bought on auction as well as a fixed-price item and eBay doesn't do fulfilment on its own. But at ShopClues, only businesses can sell; products are not auctioned and we do fulfilment end-to-end.

How have you grown since you started? ShopClues has earned gross revenue of Rs 12 crore since its inception. We are targeting Rs 100 crore by December 2012 and a GMV of $1 billion by 2016. We also feel that we would be the first Indian e-commerce company to reach profitability. By Q4 2012, we will be fully profitable.

What are the revenue channels for ShopClues?

We have a multi-pronged revenue strategy plus a couple of areas where we are looking to venture for a revenue source. Currently, we earn revenues by selling fee which is a percentage of the sale value, fulfilment fee which is charged from the merchant and an EMI processing fee. Other areas for generating revenues can be a one-time setting up fee and store rental from merchants since we offer them individual web pages. Also, global brands have shown interest to advertise with us and that is another revenue channel.

Please share with us your plans regarding the last round of funding that was sealed in January this year.

We are aiming to build the largest catalogue of products in India in a year's time and will also expand to more cities. Currently, we are shipping to 4,800 cities but we plan to reach 7,000 cities.

Are there more categories that you plan to enter? We offer almost all the broad categories. In future, we would look to enter and expand into office supplies, party supplies, art and décor, home and furnishings.

Acquisition seems to be the buzzword in e-commerce these days. What are your plans? Our policy is not to go for an acquisition if it is only for category expansion to ensure customer acquisition. We will only acquire a company that will give us a great technology. So an innovative play on mobile or a payment company or logistics technology "these are the three areas where we are hungry and may consider acquisitions.

You have mentioned that you have a long-term view on things. So do we see ShopClues being sold out or floating an IPO in the future?

We took a long-term approach to e-commerce and came with a 10-year window to India. If everything goes fine, we would definitely like to take this company to IPO.

(Edited by Sanghamitra Mandal)

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