ZopNow pivoted to zero-inventory model early this year, clocking over 1,000 orders a day: Co-founder & CEO Mukesh Singh
Bangalore-based ZN Retail Pvt Ltd, which runs online grocery property ZopNow, has pivoted its business model from an inventory-based warehousing model to one where it has partnered an offline hypermarket chain and now focuses on the digital consumer interface and handling deliveries. It is in a business vertical which is seeing a flurry of activities with new players joining in and raising large sums of VC funding. ZopNow itself has recently raised $10 million (Rs 62 crore) in a fresh round of funding led by San Francisco-based Dragoneer Investment Group. Having seen through a fairly public exit of one of its co-founders in not-so-amicable terms, the firm has expanded to Navi Mumbai, Hyderabad and Pune after starting off in its home city. Techcircle.in spoke with co-founder and CEO Mukesh Singh, who dropped out of MIT around 15 years ago to work in a startup, among other ventures, before floating ZopNow, to understand its journey, business traction and how it plans to grow.
What led you to drop out of PhD in MIT after securing an engineering degree from IIT Kanpur?
The idea of working for a startup and leaving the glamour attached to an institute like MIT was less of passion and more of money. At the age of 21, I felt that there were people who had less grey cells than mine but were sitting on a better bank balance by doing a startup. I was of the opinion that with more grey cells, I will have an even more healthier bank balance. My first startup taught me in less than a year that passion is more important than grey cells. Ever since then I have realised that I was passionate about solving the problem â€“ be it making an animated movie or a search algorithm or fine-tuning payments or selling air tickets or selling grocery. Interestingly, all ventures helped the bank balance grow too.
Take us through user traction numbers and how you have been growingâ€¦
We are happy with the growth of 25 per cent month over month in Bangalore where we have been operating for three years now. In new cities, we are applying our Bangalore learning to scale faster. What took us three years in Bangalore, we would do in six months in new cities.
Bangalore has seen 4x growth. With the new cities (around 10 more this year), the growth for the next year would be around 10-15x.
We are seeing upwards of 1,000 orders a day. In the beginning of the month, the average basket size of orders goes to Rs 1,500 and by mid month it drops to Rs 1,100. The basket size for the new cities is lower.
ZopNow pivoted last year from an inventory-led model to a partnership with HyperCity with an asset-light strategy. How is it working out?
We have done a warehousing model in the past and realised the pros and cons of both the models.
We did the mix (inventory and partnership models) during July-December 2014. This year we are no longer carrying our own inventory. Right now, we are happy with the quality of inventory at HyperCity and continue to stick to this model. We deliver from 7AM to 10PM and to achieve this goal, we need to have a partner like HyperCity which can provide quality grocery. We deliver our products ourselves.
What is the current team size? How do you plan to scale up?
Technology and operations are two key teams. The operations team consists of around 250 people and the technology team has 10 people. We plan to enhance the tech team to 25-30 members.
With ZopNow eyeing partnerships with retailers of apparel and other categories, is it aiming to become a horizontal market place?
This is an open question and we do not have the right answer at this moment. What matters is providing a good consumer experience and following a reasonable business model.
How do you plan to use the capital raised through the latest round of funding?
This money would be used to expand to 10-15 cities.
By when do you aim to achieve break-even?
At an operational level, Bangalore is at a break-even point. The new cities won't be profitable this year but we hope to bring them to operational profitability next year.
ZopNow had launched a separate site ShopStr for selling smartphones. The site is not active currently. Has it been shut down?
ShopStr is getting rebranded—the recall of the brand name was low and we felt that the name was a bit of a tongue twister. The rebranded site will come out shortly. Hopefully like ZopNow, the new brand name for ShopStr would be easy to remember.
(Edited by Joby Puthuparampil Johnson)