No funding crunch for differentiated ecommerce companies: Manoj Kumar, CEO & Co Founder, eDabba
That the ride on the gravy train is over is common wisdom for e commerce players. Fifty two e commerce companies raised close to $700 million venture capital over the past 3 years and out of them, only 30 % could raise the next round of funds. Venture Capitalists are sending e commerce companies back with nothing more than a pat on the back. But for differentiated e commerce companies, the money is still out there, says Manoj Kumar, CEO and Co-Founder of eDabba. The “brick and click” e commerce venture which raised $1 million from angel investors last year is looking to do sales worth Rs 60 cr next year. In an interview with NextBigWhat, he explains the company’s model and its plans to become a Rs 1000 cr company in 3-5 years. He was the Chief Executive Officer of the popular eZone electronics chain and grew the company from scratch to $320 million in sales.
How is your approach to e commerce different?
We have a brick and mortar presence as well as e commerce. By this, we are trying to bring the benefits of e commerce to small town customers. The idea is to develop a large franchise network through our eDabba trust points. The consumer, who does not have access to technology, can come to our trust point and the franchise will place an order on his behalf. This gives them access to a huge range of products which include items that are traditionally not stocked in smaller towns.
Any self-driven entrepreneur can become a franchise member with a small fee.
We have been hearing that Venture Capitalists aren’t interested in ecommerce any more, how do you plan to go about your next round?
You need to have the right model to have the investor interest. We will certainly. Investors are interested in ecommerce but maybe there have been too many me too sites. That will see some consolidation. The differentiated models should not have a problem.
Why do you think this will work?
In smaller towns there is a huge issue in terms of range availability. New products don’t reach them fast enough. Because of sporadic and disparate demand, retailers don’t stock many things out there. In those places, we are giving them a big variety to choose from. We don’t have to invest anything to set up a trust point and it can be scaled very fast. Within a year, we have nearly 200 trustpoints across the country. We are in Uttarakhand, Rajasthan, Bihar, Jharkhand, Andhra Pradesh, Goa, Punjab and Haryana. We have already entered Karnataka and are planning to enter Maharashtra, Madhya Pradesh and Chhattisgarh.
What targets are you chasing?
This is our first year of operations and we will be closing Rs 25 cr in business (end of March 2013). The next year, we want to do business of more than Rs 60 crore.
We aim to cross Rs 1000 cr as fast as we can.
Is that like a 3-5 year plan?
What are the challenges in Tier II and Tier III cities?
Always the logistics. That is what we are trying to solve through trust points. There is a lack of national players being present. Third party and small players are already there but its easier to deal with lesser number of service providers.