Riding on the first e-commerce wave in India, Fabmall (now Indiaplaza) has survived the worst of it. And now, steeling itself with much needed re-invention, it hopes to coast to profits in the face of stiff competition. Predictably, online commerce in India is heading towards boom, and the space out there is going to be crowded.
“What we are doing now is to rebuild our supply chain model to ensure delivery within two or three days, without carrying an inventory/warehouse. We think this model can sort out the issues we face with competition in an economically satisfactory manner. This way, we meet customer expectation and make a small profit,” says K.Vaitheeswaran, co-founder and COO of Indiaplaza.
Furthermore, there will be a change in the user interface that will hopefully get simpler and more attractive, and the technology has to change for this, he notes. The site also hopes to broaden its depth across the various categories on offer now.
Mr. Vaitheeswaran's team is in talks with aggregators of e-books to see if there is a possible entry for the firm there.
Growth in traffic
The company has managed to access some funding for this, and with the changes, the effect is beginning to show. “Over the past six months alone, traffic has grown four times, and our revenue has gone up three times — clearly the result of our new supply chain.”
While a number of e-commerce units that rose nearly overnight folded up quickly in the bust, it took some time for Indiaplaza to stay afloat, but not without taking a few hits. “We have been through three difficult phases in 11 years. We had lined up some investors who had to withdraw with the recession setting in by 2006, and plans to expand had to be shelved. A whole lot of internal challenges cropped up; even as the financing fell through. Unfortunately, this coincided with the rise of competition, well-funded at that,” he says.
But then, the future is clearly one of hope in Mr. Vaitheeswaran's eyes. In 1999, when India had about three million Internet users, there were less than 50,000 shoppers online.
In 2011, the number of Internet users has risen to 60 million, with the number of shoppers going up to 10 million.
The number of potential transactors, even given the current Internet usage, is substantial, he explains. In addition, the nation is at a fledgling stage when it comes to mobile transactions. “Mobile access is happening, but transactions are far away. In fact, we are at a stage where the Internet [in online shopping] was when we first started.” Also, the NRI business, which is now just over 15 per cent of all orders, is expected to grow.
While the industry figures are rosy, it is his belief that at a certain point of time, over 50 per cent of all users would be using the Internet for their purchases.
“By 2015, India will be the second largest Internet economy in the world, and the mind cannot even fathom the tipping point when that actually happens,” he says.
For example, he quotes the mobile phone business. “That was like a tsunami; no one expected that scale. That is going to happen to e-commerce.”
