No point in spending on customer acquisition if you can't get your product right
At Shopo, since we were building a marketplace for craft sellers and artisans, the biggest challenge for us was to find good designers and plenty of them. While we did find them, most were hobbyists and couldn't produce bulk items on popular demand. I remember this case where we had a really popular saree designer but she was unable to cope with the demand generation. And that was creating problems in scaling. In addition, we had a watertight budget that meant the number of freebies that we gave or the free shipping that we offered was also very limited, as opposed to competition which thrived on offers and discounts.
Coming to logistics (which is most important for e-com companies), following up with sellers and getting them to ship on time was really hard. Unless you have your own logistics arm, it becomes really difficult. In some cases, sellers took up to two weeks to ship an item. Had we been doing it ourselves, we would have reduced delivery time to three-four days but relying on the sellers for delivery extended the window to 7-35 days.
So, why didn't we tweak the model having realised the challenges? It is because we were always sure about creating a platform for artisans and designers and just didn't want to bring on board resellers and brands. Hence, changing the core model was never an option. The other option that we had was to enhance Shopo from just a marketplace to a marketplace plus a platform for sellers.
We tried to be something like Shopify, a marketplace as well as a SaaS platform for sellers where they could open their own online shop. That was something we were working on before we realised that selling to Snapdeal might be a better option. Had we not been acquired by Snapdeal, we would have gone ahead with our SaaS platform. It is not as if we did not try hard enough before selling out. We were looking to raise funds for quite a long time but obviously investors had their own doubts. Their biggest concern was that it was still too early to launch a handicraft-focused marketplace in India. We just wanted to get more money to scale the existing business but investors were very cautious about the scale of the model.
I often think if I were do it again, how would I approach it now? I would definitely put my focus on building the sellers community first. I would focus on helping artisans and designers find customers online, rather than just focusing on customers. I would have also tried to become their partner both online and offline, rather than thinking in just a single direction—that I am building an e-commerce company that sells handicraft. Also, in hindsight, I would have managed my fundraising better. I would have not spent so much on customer acquisition and would have rather focused on getting the product right. Until you have a solid product and value proposition, there is no point in spending money on acquiring customers. It is only when you build the product right you will know who exactly your audience is. You have to spend time knowing who your real customer is.
For anyone going after the marketplace model now, I would sincerely advise that you should first focus on one side of the funnel. Don't go after both consumers and sellers. I think you should pick one first and build that very well. We would probably have gotten it right had we built the sellers' base first. One more advice to startups is that using software like Magento, etc. can hurt you in the long run. To attract better talent and better engineers, you should build your own thing from scratch.
(Theyagarajan S was the founder of Shopo, an online marketplace for Indian handicraft and artisan-made products that was recently acquired by Snapdeal. As told to Techcircle.in's Sonam Gulati)