‘SHOPCLUES AIMS TO BE PROFITABLE BY THE NEXT FINANCIAL YEAR’

BY admin

Harneet Singh, VP Marketing, ShopClues explains what makes the portal a preferred platform in Tier II and Tier III markets, and talks about efforts to encourage more merchants with smaller businesses to embrace e-commerce

By Samarpita Banerjee

Q] ShopClues has recently shifted focus to fashion. What led to this shift, considering the fashion e-commerce segment is already cluttered?

Currently we are catering to four broad categories - fashion, electronics, general merchandise and home & kitchen where fashion is the largest segment for us. Almost 50% of our business happens in the fashion category. While fashion is a crucial segment, the other three categories are equally important, since we have to look at driving repeat purchases. We have to be present in our consumer’s life for different requirements. Our intent is not to become just a fashion platform like the vertical fashion platforms. Most of our communications talk about all four categories. We try to strike a balance between all our categories, in terms of communication and want to be present in multiple categories to have a broader relevance in the consumer’s life.

Q] How important is the unbranded fashion segment for ShopClues?

By unbranded, I mean brands that aren’t national, but might be well-known locally. While it’s an unstructured industry, these brands are all about offering great value. We operate with 500,000 sellers from across the country and 70% of our products are from smaller merchants. We sell products that cater to a customer’s needs and aspirations, but they are also about affordability.

Q] How are you encouraging smaller players to join your platform?

We have a merchant marketing team which engages and works with such merchants. This team also works on new merchant acquisitions. We get a lot of inbound interest from small merchants who see a lot of other merchants on the platform being successful. This has led to a strong word-of-mouth. We provide these people a national visibility which leads to a lot of value-ad. We are also trying to make more merchants digital savvy to help them become a part of the e-commerce revolution. Our team runs programs like Saarthi or Sales Booster. We also partner with government agencies that work with small artisans and weavers who are creating products but are not savvy enough to go on a digital platform.

Q] What is the ShopClues Surety program all about?

When it comes to popular brands, people are aware about what’s on offer, in terms of quality and variety.  However, when it comes to unbranded products at affordable price points, consumers are apprehensive because they don’t know the seller or the product. We realized that there was a need to add a layer of trust which can only come once you trust the platform. We have been working on building our brand equity by getting involved and giving a sense of quality to our customers through ShopClues Surety where we do extensive five-point quality checks of products. A team checks the products and rates them based on different quality parameters. We tag products with badges like great buy, value buy or a brand authorized buy depending on the quality and price. This has led to increase in consumer engagement and conversion rates. Customer complaints have come down and the ROIs of our marketing investments have gone up.

Q] ShopClues focuses on Tier II and Tier III markets. Has it helped you differentiate yourself from other players?

The tonality of our communication, pricing, sales promotions is targeted at consumers in smaller towns. They are able to relate to us and engage with us. They don’t feel alienated coming on our platform. In such places, people might be aspirational but might lack the means. On ShopClues, they find products of good quality at reasonable prices. Our communication is very local too, we use a lot of Hinglish. Currently, we have a ‘super bargain sale’ which comes from the insight that when consumers buy from local markets, they bargain. Our TG is not the consumer who shops from malls but from local markets. One of our campaigns said ‘Mall Nahin, Market Hai’ where we said we are not about mall-like prices but are closer to local markets. Typically brands hold End of Season Sale, but earlier this year we did a Start of Season Sale. We told consumes there was no need to wait for the end of the season to own products.  We call our TG the blooming aspirants, people who have aspirations but have limited means. These people are not only residing in Tier II, III or IV towns but even in metros. We target these people too.
 

Q] ShopClues is not very visible in terms of marketing communications, unlike players like Flipkart and Amazon…

Our marketing spend is nothing compared to big e-commerce platforms. We firmly believe that the money we are investing has to generate a measurable return for our business. The metrics that are key to building our business profitably is revenue, contribution margin and order. With every dollar we invest, we want to optimize these variables and thus we look only at channels that give us maximum ROI. Our TV campaigns might not be long campaigns, but they are tactical and strategic, designed to either drive a tactical sale or to establish a category. We also invest a lot on digital channels like Google and Facebook, among others. Our marketing strategy is to have shorter, more frequent bursts of campaigns. Also, we make sure that the campaigns have a strong call-to-action in terms of consumers, platform trials and driving sales.

Q] Is your media mix campaign-specific?

We do a mix of all platforms but are campaign-specific. It’s really about reaching the correct TG. Almost 70% of our investments go to Digital.

Q] Most e-commerce players go overboard with the discount game. In such a scenario, how do you meet your numbers and make a profit?

Since we are a pure play marketplace, we have zero investment in inventory. Close to 20 million products available on our platform are sold by the merchants directly. The price-points and discounts are offered by the merchants. We have no cost associated with our platform when it comes to discounts. We might run sales for 4-5 days in a month, but the remaining 25 days, we run everyday value pricing. Discounts are given when platforms fight to show that they have a better pricing on the same branded product. Since 70% of our products are unbranded, there is no real competition on those brands. The ballgame is different here.

Q] What are the most crucial challenges that the e-commerce ecosystem is facing currently?

Today around 70-80 million people are on e-commerce and while the number is growing, the pace is not what it was a few years back. Consumers have to see the benefit of buying online, and the reason needs to go beyond discounting, which is no longer an attractive consumer pitch. The narrative has to evolve to convenience and benefits of online platforms, in terms of selection, convenience, home delivery, variety and ease of shopping. Moreover, the total number of people on the internet itself is not very big, it’s around 300-400 million. Additionally, due to slower bandwidth in smaller towns, the experience of online ordering was not that great. However, with Jio bringing in a lot of democratization of the prices of data, a lot more people have started spending time online, which is good for the future of e-commerce. There are logistical challenges too; how do you structure your business to be able to deliver across the country profitably. We don’t promise one-day delivery because unless you invest in warehousing and in being closer to customers, delivering to remote places in one day with a profit is difficult. The way most platforms are running today, it will be difficult for them to become profitable. However, we aim to become profitable in the next financial year.

Q] Isn’t logistics a problem while delivering to remote corners in the country?

We deliver to 30,000 pincodes and a lot of places demand logistics of a different kind. These are places where you can only go by road, places that can only be approached by small vans. There have been instances when deliveries have happened on bullock carts. You just need to find a different way of reaching out to those locations.
 

@ FEEDBACK samarpita.banerjee@exchange4media.com

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