E-commerce Wheel Is Not Turning Back In India

5 Apr, 2012

Fashion and lifestyle flash sales site 99labels.com has recently started bringing in international merchandise on its website and has been aggressively positioning itself in the market. Last year, the company raised $3.5 million from Info Edge India Pvt Ltd and it now looking for a second round of funding. Ishita Swarup, co-founder and CEO of the portal, gets candid with Techcircle.in and talks about the future plans, pace and pain points for 99labels in particular and e-commerce as a whole. Here are the excerpts:

What are the advantages of a flash sales site as opposed to other models of e-tailing?There are a couple of things which are very unique to this model. First of all, this has evolved as a liquidation channel for brands in the fashion and lifestyle space. If you look at the brands in this segment, you will find around 20 per cent of the stock is left even after end-of-season sales. And there are very limited avenues, especially in India, to liquidate excess stock without harming the brand's equity, identity and integrity. So providing that liquidation channel is the genesis of this model. Secondly, our site is all about impulsive buying and finding something unique every day. Each sale exists only for three days and after that, it's not there. Which means buyers will find fresh merchandise every day. It also brings in a sense of urgency and that works well for consumers, as well as for the brands.

Do you have any plan to partner with international flash sales sites?

We are already talking with some international flash sales sites and we would love to forge alliances with them as far as products are concerned.

Last year, you had featured close to 350 brands. What would be the number this year?

Well, we are not going to increase that number tremendously. Because anything more than that may confuse customers. And within that, we will focus on the products and the depth of the products. Also, we are posting around 350-380 sales a month and we can hold it there.

How did you utilise your last funding? When do you plan to go for another round?A chunk of it has gone into marketing. Plus we have done some hiring and also invested to improve backend support. As for the next round, we are looking to raise money right now and hopefully, that would last us till we become profitable.

What's your average ticket size?Actually, it has come down marginally but still hits Rs 1,500-Rs1,700 on a month-on-month basis. But of course, it's not static and largely depends on the products we sell.

Offline retailers are coming online now. How does that affect your business?What works for us is that we are a discount portal and we focus on last season's merchandise. As we don't sell what companies/brands are currently offering, we are not really competing with them. Also, more people coming online means better consumer awareness, more online spending and more consumers getting used to buying stuff online. And I think that is extremely important for all of us who are in this business.

What kind of repeat buying is there at 99labels?The percentage is very high. There are actually 50-60 per cent of repeat buyers on a month-on-month basis.

What's on the anvil for 99labels?On the product side, the clear focus would be to feature items which are not easily found elsewhere. So we will continue to source from India. We are also putting in a lot of efforts to source merchandise from all over the globe to make it available for our consumers.

Logistics or payment gateway – which is the bigger pain point?Logistics, for sure. Because there are quite a few payment modes, both online and offline, and those serve our purpose. There is also cash on delivery, which is the most preferred option for many. But logistics and reverse logistics happen to be the biggest pain points till now. Another key point is that all of us are servicing only about 2,000 of the potential 20,000 pin codes across India. To access the balance pin codes is another challenge.

Finally, a word for the investors from your side.The euphoria that was there a year ago was premature and the sudden gloom we see now across the industry is premature as well. I think it is going to be a longer-term play than they have imagined. Even brick-and-mortal retail in India hasn't taken off. So e-commerce may grow much faster but it will still take some time. In such a scenario, patient capital is what we need. E-commerce will surely drive retail in India; this wheel is not turning back. So invest in good e-commerce ventures and give it time.