We will cross $100M in revenues this financial year: GreenDust founder & CEO Hitendra Chaturvedi
Selling second-hand, refurbished goods may not look like a lucrative business proposition, but this company is bent on proving everyone wrong. Delhi-based Reverse Logistics Company Pvt Ltd (RLC), a reverse supply chain firm that also runs an e-commerce site called GreenDust.com to sell its refurbished goods, claims to be moving towards profitability at a break-neck speed. "We will cross $100 million in revenues at the end of this financial year and become the first e-commerce company to turn profitable," said Hitendra Chaturvedi, founder and CEO of RLC.
Founded by Chaturvedi in 2008, RLC has adopted a multi-layer and multi-channel distribution model. It collects second-hand, rejected or returned goods from OEMs (original equipment manufacturers), retailers and e-tailers. Products are either purchased from these vendors or procured on a consignment basis and later sold by GreenDust, and the profits are shared on those goods.
"Currently, the majority of our goods are purchased from vendors. But we opt for a consignment-based model for products that lose value very fast," shared Chaturvedi.
Once these products are collected, the process of refurbishment starts. The goods are meticulously checked and refurbished to be sold via its portal GreenDust.com and through its network of 170-plus franchise stores across India, and also to resellers. During the whole process, the entire backend IT and supply chain are managed by RLC with the help of a 400-member pan-India team.
According to Chaturvedi, the company will soon launch a buyback/exchange programme for end-users who can avail it at any of the franchise stores. Currently, RLC deals in categories such as mobile phone, laptop, camera, electronics, kitchenware and personal care items, among others.
Before starting RLC, Chaturvedi was a senior director at Microsoft and prior to that, worked as the VP & chief strategy officer at Newgistics, an IT-enabled reverse logistics company in Texas (it's the place where he first learnt the nitty-gritty of reverse logistics and the scope it offers). He holds an engineering degree from IIT Roorkee and an MBA from Southern Methodist University (Cox School of Business), Dallas. He clearly believes in the scope of reverse logistics in emerging countries and is keen to make this company a leader in that space.
Growth numbers Sharing the growth metrics of the company, Chaturvedi said that the online B2C business (GreenDust.com) contributes about 25-30 per cent of the revenues and it is doing around 20,000 transactions on a monthly basis (transactions amounted to 18,000 or so a year ago when we last spoke to him), with an average order value of around Rs 5,000. As for the remaining 70 per cent of the revenues, resellers and the franchise stores contribute 35 per cent each.
According to Chaturvedi, the average order value from the franchise stores and the resellers (who buy from RLC) amounts to about Rs 10 lakh and Rs 2-3 lakh, respectively, and these are monthly orders as the products are bought in bulk. As of now, the company has 170-plus franchise stores and it plans to take the number to 300 by the end of this year. Earlier, Chaturvedi said that the company had posted revenues of Rs 100 crore in FY2011-2012 and it should cross Rs 500 crore mark in FY13-14.
Where is the company headed? In terms of capital, the company is in a very comfortable position right now, the founder said. Last June, RLC raised a Series B round of $40 million from Vertex Venture Holdings Ltd and existing investors Kleiner Perkins Caufield Byers (KPCB) and Sherpalo Ventures. "But we don't believe in spending VC money that much. We have generated a lot of investor interest, but are not actively looking for funds right now. However, should a good opportunity come our way, we wouldn't say no," said Chaturvedi.
Since the company is already on its way to profitability (will reach break-even this quarter, it claims), the capital, which will come in now, will be used for the next leg of expansion in 3-4 key areas, said Chaturvedi.
First of all, the firm is keen to expand into other emerging markets where refurbished goods will have a significant scope. "We want to take it to other markets like Thailand, Bangladesh, the Philippines, Sri Lanka, etc. It's an imitable and adaptable model, which can be scaled in such territories," observed Chaturvedi.
The company is also looking at inorganic expansion for which it will require capital. And the third area will be category expansion. "We want to enter all possible categories for this business. For instance, apparels and medical equipment could be our next foray," added Chaturvedi. And finally, he would also like to invest more in IT which is the backbone of the company.
(Edited by Sanghamitra Mandal)