India's e-commerce is complex and is in its formative years: Arvind Kajaria

Roughly around $600 billion a year in sales, grocery is by far one of the largest segments in retail in the US. Like India, the United States has also seen a disruption in the segment by eCommerce over the decade. Though the comparison from overall offline sales is as low as 2-3 percent, but the trend has surely started picking up.

Leveraging this drastic change in the shopping habits of consumers, online marketplace for grocery items in the US, 123Stores has gained the momentum in the online grocery market in almost no time. The company with its robust distribution network has not left any stone unturned to gain that consumer trust.

Sahil from Retailer Media spoke to Arvind Kajaria, MD & Co-Founder, 123Stores, a subsidiary of IntraSoft Technology Limited to know more about the turmoil that’s happening in the US grocery market. He also spoke his is e-Card business which is operational in India and how has been the response so far.

Talk to us about 123Stores and the business model?
123Stores is an e-commerce subsidiary of Intrasoft Technologies Ltd. Our business model is to create a large distribution network wherein we can offer our customers a better shopping experience including a better price point by leveraging our technology, our efficient supply chain and our deep relationships with our suppliers.

We have shop in shop partnerships with leading retailers and sell our products on their marketplaces along with our own website.Based on our partnerships with different marketplaces, we are able to reach a large percentage of the online US population.We sell our products on our own website, as well. As on 30th September, 2015, we are present on various marketplaces such as Amazon.com, Ebay.com, Amazon Canada, Alibaba’s 11main.com, Sears.com, New Egg, Bestbuy.com, Rakuten (Buy.com) and Jet.com.

We are selling more than 265,000 unique SKU’s(Stock Keeping Units) in our catalog covering more than 1440 brands.All our products are available to USA & Canada customers only.

Being an India-based company, how tough is it to sell abroad?
U.S. market is largest in the world.We continue to maintain the sales momentum driven by the large opportunity available in the US e-commerce market and the increasing need of 3P sellers like us. Additionally, U.S. retail is more matured, where marketplaces such asAmazon encouragesthird party sellers to participate in their growth. Amazon’s stated policy to grow their 3rd party network and expand the percentage of items sold by 3rd party sellers and hence the confidence in our business model.

How was the response from Black Friday and Cyber Monday sales?
We witnessed impressive sales over the long holiday weekend from Thanksgiving Day through Cyber Monday of over $4.4 million, a 122% increase over last year. Wesold more than 85,000 units during the 5 day period, as compared to around 32,000 units last year, a growth of 160% Y-o-Y. We are continuing to see an industry-wide shift to ecommerce that is evident especially during the peak retail season and we are benefiting from that shift. We had expanded our catalogue to cater to this Holiday Season demand, and ran successful promotions for a large number of products.

What were your top selling categories during the sale?
The highest growing categories were Home & Garden, Electronics and Toys & Games. Amongst the Company's marketplace channel partners, the Amazon Marketplace, the eBay Sales Channel, the Sears Marketplace and the BestBuy Marketplace saw impressive gains. The Newegg Marketplace witnessed the highest growth; and Jet.com, Intrasoft’s latest marketplace partner, saw a great start.

How is US different than India, in terms of consumer behaviour and demands?
The market and the customer in the US are both very mature. We understand the consumer behavior and demands of the US customer and hence are a fully US focused company. India is a high potential market which is yet in its formative stage for us to be a meaningful player.

E-card business in the country
Our E-greetings subsidiary 123greetings.com is the world's leading online destination for human expressions reaching 95 million visitors annually. Its offering of over 42,000 ecards across multiple languages covers a mix of 3,000 seasonal & everyday categories. Its presence is ubiquitous with its Mobile App, Mobile Website and Facebook App catering to users on mobile and social media respectively. Its Connect feature is a relationship management tool enabling users to actively manage their expressions to both personal and professional contacts. It also operates 123Greetings Studio, a unique platform for artists, to upload and monetize their own ecards.Revenues are that of a typical media company. We earn through advertising generated by the visitors who come to our website. More the visitors, higher the revenue. Additionally, we offer gifting solutions to our users and other market places which earn us our revenues.

123Greetings.com continued to see increased Mobile Application usage Y-o-Y with increase in the number of cards sent, from 2.40 Lakhs in Q2 FY 2014-15 to 2.52 Lakhs during Q2 FY2015-16. Mobile application downloads reached 7.63 Lakhs as on 30th September, 2015. E-Greetings business revenue for Q2 FY2015-16 was Rs. 3.39 Crs.

Do you plan to start extensive operations in India anytime soon?
Our strategy is to expand to cover all marketplaces in the US first, so that our distribution network reaches 100% of the US online shoppers. Once we establish a leadership role in the US, we will expand our coverage to othermarkets. Our business model is more suited to a market where the marketplace model itself has already been developed. We believe that India is going toget to that phase in the near future.

In FY 2015-16, we are looking to add 2 to 3 new marketplaces in the US.During Q2 FY 2015-16, 123Stores Inc. integrated with Jet.com, an ecommercemarketplace, making it the 9th shop-in-shop partnership for 123stores.com.

Share with us your SCM and logistics mechanism. 
We ship from 800 different locations every day in the US. So, we have a strong technology backbone that combines supply chain logistics with real time customer data to create a compelling shopping experience. For instance, let’s say a shopper comes to Amazon and orders a product. The order goes to Amazon which places a back to back e-mail order to us. We do our checks and we place a back-to-back order with the supplier and in the e-mail is the customer’s name and the shipping label. When the product is ready as per the contract, let us say, between 3 to 5 business days, the supplier puts the shipping label on the box that is packed by him, calls the UPS number, who is our logistics partner. UPS comes and collects it and delivers it directly to the users’ home and the moment the users finds it, the chain is complete and everybody knows that the transaction has been completed. The relevant stakeholders get their money, whatever is due to them.

Share with us the potential of US market for a business like yours
U.S. is one of the largest online retail markets in the world and we see enormous head room for the growth of third party businesses like us in the market. Additionally, 123Stores is selling products through 11 prominent US marketplaces, which virtually means the almost-complete coverage of the US e-commerce space. This has helped us to be among 13th fastest growing online retailer in the US, 392nd on the top 500 Internet Retailer list and 1,654th on Inc. 5,000 fastest growing US companies. 123Stores is growing at 100% every year and we expect the momentum to continue.

There are still thousands of vendors that do not have online presence or a strategy to go online. So as we reach out to more of these vendorslocated across the U.S., we will be able to achieve good growth going forward.

E-commerce in India v/s to that of US, your take
IntroSoft is a totally US focused company and we understand e-commerce in US very well. In India, e-commerce is complex and is in its formative years and therefore we only have the view of an observer in India – that is seeing bustling activity. We generally tend to take a closer view of markets nearer when we are about to enter them.

However, some general trends are getting visible in the e-commerce space in India. Last mile logistics in India will determine the growth of e-commerce, due to the vast and sometimes inaccessible geography. Mobile penetration will also be a driver for growth in India providing easy access to millions of customers.