 "Shopclues")
For many companies demonetisation has meant slowdown in business and cash crunch. However, for online marketplace ShopClues, the government’s decision has turned out to be positive as it has helped the company prepone its profitability targets.
According to Sanjay Sethi, chief executive officer and co-founder, ShopClues demonetisation has helped it pre-pone its profitability target to late next year instead of 2018. He said that though the top line is getting affected, the bottom line is seeing an increase which would help company achieve profitability sooner.
“Post demonetisation our back-end costs have gone down, as there has been a drop in cash on delivery. If the bottom line continues to grow then in order to be profitable we may not have to chase $2.5 billion figure, instead we can achieve our targets at $2 billion. I think we would be the first ones to achieve overall profitability among industry players. We are on track to reach profitability by the third quarter of 2017,” Sethi said.
Sethi said that though there have been inefficiencies in the first few days and costs overrun due to drop in traffic. “This year’s targets will not get affected adversely as we are nearing the end of the year. The impact on top line is not going to be more than five per cent and as regards to bottom line we don’t see any major impact.
For Shopclues, demonetisation helped in preponing their targets. “Two things have happened; it has taken away the pressure from top line, if I can achieve profitability at lower top line that would be great. Also the market is not clamouring for gross merchandise value (GMV) as it used to be, so at least companies such as ShopClues do not have to compete on GMV, now we can compete on bottom line also,” he said.
The company is also planning to enter the hyperlocal sector and is on boarding local offline merchants, grocers, mom and pop stores to increase reach. “We are now focusing on offline merchants because of two events goods and services tax (GST) and demonetisation. I think we have a tailwind, it is important for us to disproportionately focus on offline,” Sethi said.
“Reach is our first initiation into the hyperlocal plan. Grocery is an important segment because it results in repeat purchases thus bringing the consumer back, but our approach to grocery would be via merchant. We want to get deeper into the merchants business,” he stated. At present the company has around 500,000 merchants and it wants to double it in 18 months to 10,0000.
The company launched an SMS-based payment service ‘Reach’ for merchants after the demonetisation drive to help facilitate cashless transactions at a monthly subscription fee of Rs 99.
