In India, millions of businesses in smaller towns are still wary of online selling — although many have joined the bandwagon through marketplaces like Flipkart and Snapdeal — and are apprehensive about the costs involved.Singapore-based Shopmatic helps these businesses and entrepreneurs to sell online.
Shopmatic helps them develop their own web stores — complete with a user-friendly interface — listing them on a marketplace and social channels. It also advises them on the ways to get a better sales response online for a monthly fee of $20.
DEALSTREETASIA spoke to Anurag Avula, CEO & co-founder,Shopmatic, about existing competition from similar players and online marketplaces, working with people who are conversant with offline presence and apprehensive about coming online, and the startup’s plans of expanding to more Asian countries and raising more investment.
Tell us the challenges of trying to move a traditional offline business, to signing up with you for an online presence? How do you pitch to a traditional seller, who has been doing well offline for decades, to work with you?
Through time, established businesses have been habituated to doing business in a particular way- and have been drawing comfort from the brick and mortar environments (offline) that they have created. All of a sudden, their comfort world has changed- and they can see, that there is possibly another new way to do business- the online world. They are also beginning to see that their business is getting impacted as more and more customers are shopping online.
They are probably hesitant to move quickly enough to this new world, because of the fear of the unknown. Some think that it is complicated and don’t understand it and there’s also the fear of costs attached – they think that they are being fleeced or have to incur very high costs for adoption to the online world.
We are trying to address both of these challenges by democratising technology, as it were, and making it not only easy for people to avail of the opportunity to sell online but also, by making it extremely affordable. We are encouraging small and medium businesses and entrepreneurs alike, to tap the online world as an additional channel through which they can grow their business. There is no denying that there are larger opportunities of taking their business online – by way of better growth, newer customers and cross-border opportunities for doing business.
How big is the business you are looking at? In other words, what is the kind of business — in terms of revenue and number of subscribers you expect to sign up — do you expect in the first year of operations?
The size of the business opportunity is huge. We are looking at the market opportunity through 3 audience segments: There are existing small and medium sized businesses that are selling their products but are not online. Then there are existing small and medium sized businesses that are selling their products offline, with a minimal presence online or selling through marketplaces. And there is this big opportunity that sits with Individual entrepreneurs who are yet to realise the potential of doing business online.
If we just look at India, there are over 51 million small and medium businesses in the country and a significant base of untapped individual entrepreneurs. We believe that we are well-poised to onboard 1 million customers by end 2016.
Why would a startup go for your services instead of listing on a Flipkart or Amazon, where he is likely to get more sales because of the huge popularity of such sites?
Shopmatic is the only company to enable the entire ecosystem of selling online for our customers. We are giving our customers the advantage of building their own identity online as well as giving them the opportunity to sell through marketplaces/ social channels. In our model, there is no ‘either’, ‘or’ situation. People can do both: sell under their own name and sell through marketplaces/ social channels. We also have built a mechanism of giving merchants insights on how they can better sell their products/ services.
You’ve started from India. Which cities are you present in, and how many employees do you have? Any plans to expand to other Asian countries in the next six months?
Yes, our limited release launch is underway and we will be opening up our site to everyone in India, by mid-November 2015. We are launching in 18 cities in India, to start with. In parallel, we will launch in other Asian countries like Singapore, Hong Kong & Malaysia by the end of the year.
In 2016, we will roll out to other regions such as the Middle-East, Africa and Australia. Our head office is in Singapore and at the moment, we have offices in Gurgaon and Bangalore, in India. Other than our core team and e-commerce consultants we also have feet–on-street consultants signing up merchants.
Please explain your business model, including the monthly subscription charges, and services you provide. Since the value of what your client pays remains fixed, you must be expecting that average costs will remain lower than the revenue you will generate. How will that happen?
Ours is a subscription based model. We have no hidden costs and are charging $20 month for enabling the entire online ecosystem for our customers. You get three months free if you sign up for our 12-month plan and a month free with our six-month plan. And all our subscribers get the first month as a free trial period. We are also giving Rs 1000 towards shipping charges, for anyone signing up for our 6-month and 12-month packages. We don’t charge any additional fees per sale made by the customer. Ours is a SaaS (software as a service) model and average operating costs will come down with our growth in customers.
When do you plan to raise the next round of funding?
We will look at significant investments, given the potential of the Indian/other markets, and investors are in talks with us to invest in our growth strategy. Right now, we are privately funded with our angel investors from across the globe.