‘We want to open 100 stores in 3 years’ says Nakkyun Chong
With over 67 per cent repeat customers and over $8 million in funding in their kitty, Avenue is determined to be the number one e-grocer in Bengaluru.BY Shwetha Satyanarayan | October 11, 2018 | comments ( 0 ) |
For most egrocery startups like BigBasket, Grofers, Bengaluru has been a favourable test ground. The latest to experiment is Avenue11, founded by Korea’s popular serial entrepreneur Nakkyun Chong. With a unique O2O model, the online player has a customer base of 35,000 people and is strongly growing by the day. With over 67 per cent repeat customers and over $8 million in funding in their kitty, Avenue is determined to be the number one e-grocer in Bengaluru. In a candid conversation with Indian Retailer, Chong shares the roadmap to their vision. Excerpts:
How did Kirana11 become Avenue11? Walk us through your journey and vision.
Earlier, with our venture Kirana11 we wanted to connect kirana stores with the online community and we wanted to enable them with the operations. Our target customers were those buying from these stores. However, during the course we realized that not all kirana stores were ready for this proposition,and we were not ready in a way to leverage them. Also, according to them, we did not bring enough business to them.
Solast month we incorporated Avenue11with the idea of directly reaching out to customers through O2O (online-to-offline) model. Although the end goal is to reach out to kirana stores, it will happen once we have more customers and when we are confident of bringing more incremental revenue to them. Until then, Avenue11 will focus on premium customers, expats and other tech-savvy customers who do their grocery shopping online. We have a customer base of over 35,000 and a monthly GMV of Rs 90 lakhs. The long time vision is to become the number 1 egrocery store in Bengaluru.
You have headquartered in South and plan to expand here. Why have you chosen Bengaluru and why do you think India needs an Avenue11?
Well, Bengaluru is an ideal market and represents the true ‘urban India’. The city is a perfect testing ground owing to its cosmopolitan nature. It is an assortment of people from different parts of India and country’s 10 per cent of expats are present here, who have diverse tastes and preferences when it comes to food and grocery. Also, the earning capacity and spending capacity is high which is why we started here. Needless to say, the city offers great challenges to the eGrocery sector.
Bengaluru has been the golden turf for online grocery startups – be it BigBasket or Grofers. Now, Flipkart and Amazon are vying the segment too. What’s your strategy to take on them?
While our O2O model is completely different from their model, although we won’t compete with BigBasket since they are big; our post-inventory, design, logistics and supply chain will be completely different from these players.Our model promotes synergy between egrocery and small stores. In order to successfully meet customer requirements, we will only partner with local stores that are bigger than 2000 sq. ft. and stock at least 3000 SKUs. Also, we will apply a meshed logistics and service structure, a great hub and spoke network model, to tackle the distribution challenges. By giving customers an option to either pick up their order or get it delivered home, we will reduce delivery costs by nearly 40% while boosting delivery efficiency at the same time. Also, in a bid to increase footfalls, we will implementGiftiicon, a gifting service that allows people to gift a barcode to friends and family, who in turn can use it to pick up a product.
What are your offline expansion plans?
Our offline strategy is completely unique and that’s what sets us apart from our competitors. While most online players have one distribution centre that caters to all its customers, our stores and products will be area-specific, placed as per the customer requirements. Our product database will be matched to the area capability and requirement and that’s our biggest strength. Each area will have about 3-4 stores at a distance of 2 km or a little more that will meet the demands of both online and offline customers. We plan to open 100 stores in Bengaluru alone. Our stores will have state-of-the art facilities (similar to the stores in Korea) to maintain the freshness of fruits and vegetables and high hygiene standards.
You have been recently backed by Times Group. Tell us about your funding and investment plans.
We recently raised Rs 26 crore ($3.6 million) from Brand Capital, the ad-for-equity arm of Bennett Coleman & Co. Ltd (BCCL). We are planning to launch an offline store in a few months and the funds will be utilized for the expansion of our stores. So far we have raised $8 million and we hope to raise funds more funds shortly for further expansion. Also, talking about collaborations I would like to partner with GS Retail, a global player, but that of course would happen only after we scale.
Your marketing strategies including shake-shake11made some noise. Tell us about your customer engagement initiatives.
The shakeshake11 campaign was one of our fun marketing strategies that clicked with our customers. So basically, our customers can shake their phone for 11 seconds and the app will give them a coupon, which can be redeemed when shopping with us. Customers can shake their phones three times a day and get three coupons in a day and use them at different times. Through this campaign our orders increased to 45,000 orders and the app downloads too instantly increased. Further, we want to introduce individual, customized coupons that will have exclusive offers based on the segment of the coupons- Gold, Platinum and Silver. We want to engage our customers with games to make the app more fun while shopping.
What next for Avenue11?
The immediate vision is to be the number one player in the egrocery segment in the next three years. We are beefing up our online presence and will aggressively expand offline also with 100 stores in different phases in the next 3 years. We will look for franchisees to scale and will look for profitability. We will close Rs 17 crore this financial year and our fiscal target is to close Rs 300 crore next year. We have one simple strategy for this- we just have to deliver 20,000 orders a day (both online and offline) and we should be able to meet our target.