A Remote Retail Business – guest post by Sanjay Mehta of Homeindia.com

Written by: Madhur

On Feb 15th, 2007

In this guest post written by Mr. Sanjay Mehta – the president of Homeindia.com, he shares his experiences and insights from doing online retail business geared towards Indian customers. He describes Homeindia’s journey over the period of last 7 years, that has seen it all – the start, the boom, the bust and today’s rising wave. The article presents excellent all-rounded points on various business aspects including but not limited to product positioning, customer focus and sailing through the highs and lows of economic conditions. Needless to say, the article has lots to take home for entrepreneurs in the Indian Internet space. Many thanks to Sanjay for sharing this with our readers. Feel free to present your thoughts and even ask questions to Sanjay, if you have any. [If you have a story to share which fits the theme of iLeher and would like to publish, please contact madhur at iLeher dot com]

Here goes the story in his own words:

When you think retail, you think walk-in, you think proximity. And yet, we are running a retail business where we are thousands of miles away from our nearest customer!

Yes, I refer to our e-retail business, running at Homeindia.com, where we have focused exclusively on customers outside of India. Even today, nearly 7 years after starting this business, it fascinates me that sitting in a small office in Lower Parel, Mumbai, we are selling ethnic Indian products to customers located in far flung areas, all over the world.

We evolved into this. Starting from a pioneering, first of its kind web-to-snail-mail service (“Online Post”) that we launched in 1998, then extending to other services for NRIs, and then to a gifting service for NRIs, and finally evolving into this present state of an e-retailer, catering to NRIs and non-Indians, outside India.

I thank Madhur for inviting me to make this guest posting, and I take the opportunity to share some stray thoughts emerging out of the learnings of our journey of the last 6-7 years:

1. While we could have opened up our store to the Indian customer, it is clear that the customer in India is very different from the customer outside India. A single brand, a single URL will be hard pressed to do justice to both of these customer types, at the same time. From merchandising, to presentation, to pricing, and to the key value proposition offered, these will be entirely different for the two customer types. Even the quality of service that one needs to give to the customer, and which one can afford to give to the customer, varies a lot, between these two markets. As an organization also, this means two different cultures or attitudes, which cannot co-exist easily. So where we see many others attempting to address both of these markets simultaneously, it is our firm belief that we need to be focused to a market, and ensure that we have the best offering for that market.

2. Back in 1998-99, the decision to go NRI or India, was a simple one. There was no serious user base or market in India, and the NRI space certainly appeared far more attractive. Today, one may actually sit back and think – where should one rather be. And of course, each one will come to their own conclusion. For us, it still remains a relatively simple question to answer. The Indian consumer still has a distance to go before he embraces online shopping, especially for products that are otherwise in easy reach of his, in the offline world. There will be some early adaptors, and there will be specific unique product niches, where traction will happen. However on a mass acceptance front, I believe, it is still a while away. On the other hand, the market outside India has got only more attractive. In addition to the NRI, we see an increasing interest in things Indian, from foreigners – Americans, Europeans, etc. With the increasing interest in India, there is an increasing interest in things Indian. And while finding the specific customer/s for Indian products in the large global population may be like finding needles in a haystack, yet, once found, these needles are made of gold and diamond tipped – essentially in terms of what they buy, the transaction size, etc. So the search is worth the while!

3. Depending on the stage of the economic boom (overall or category wise) that one gets in at, an entrepreneur may see a rollercoaster of experiences, or she may not. We have been ‘privileged’ to have seen it all! The Internet curiosity phase of 1998-99 got us tons of invites to seminars and conferences and Rotary Club meetings, as speakers. Everyone was intrigued by this monster called the Internet. Then came the boom phase of 1999-2000. Here we saw investment bankers chasing us, suddenly our own focus shifting from running a business to raising money and potentially making quick, large money. Rajesh Jain and Indiaworld helped raise our emotions (we managed to raise angel funding during those days; also got 2 acquisition offers within one year of getting funded!). Then came 2001 and the bust. A huge anti-climax. Took a while to sink in. Cutting costs dramatically (A/C usage, Internet usage, switching to cheaper dot matrix printers, downsizing team, etc.) and other corrections followed. 2001-2005 was the toughest period. More than once, we thought of winding up the business. And such phases would come and then go! We stuck it out. Did all that a typical ‘startup entrepreneur 101’ course would prescribe. Delayed gratification, working with one’s own hands, going from 2 VPs and 4 Managers to 1 Manager, 7 Executives and 5 peons, occasional challenges of meeting salary dates, etc. We saw it all. Through it all, we kept the faith – for ourselves and for the team that was left. And slowly nudged our way back into the black, conserving the little cash that was left over after the dot com bust. And on to 2005 and a new tomorrow. We just about tipped the tape on the profit line. And that gave us hope to experiment again. We ventured into tradeshows in the US and Canada, we got into high ticket product offerings (bridal wear, etc.) and also some overdue technology investments. This brought us to 2006 and now 2007. The investment climate looking better. An interest in e-retail and India based Internet consumer businesses returning. So we are geared up with an exciting business plan, and hopes of the ‘dyed in the wool’ experience finally giving us another opportunity, to have a shot at growth and leadership in this space. Yes, we could have not asked for more excitement, if we had gone to an amusement park! But I guess these are the realities of being an entrepreneur.

4. A lot of times, we have been asked if our level of customer service, or offering customized clothing, etc. is truly scalable. It is an interesting point, undoubtedly. We have worked hard at converting most of our services into processes, with the necessary checks and balances, and also converted the entire operation into a modular structure. Already we handle a 30:1 level of peak seasonal periods – which means, for periods of time couple of times in a year, we successfully scale to 30 times our average levels. It is on account of the processes that we invested into, even when our size did not necessarily demand those to be in place!

These are just a few thoughts that may make for some debate or discussion here.

– Sanjay Mehta

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Entry Filed under: ecommerce,homeindia,online retail

3 Responses

  1. 1. Vivek Garg said on February 15th, 2007 at 8:52 pm

    wow. Very interesting account of lifetime of a dot com company. we all can learn perseverance/faith from you.

    What would you do different this time?

    Along with sticking it out, knowing when to cash out & market timings are important. We can look at Hutch/Essar deal as example. Superman Li is an excillent market timer.

    For HomeIndia, what are the next steps? Building a great business and cash out , or keep building to an IPO and risk another bust? What are the factors, according to you help make decisions like this?

  2. 2. vijay said on February 17th, 2007 at 12:24 pm

    Good article, india has too much to offer to global audience/consumer. when u travel overseas its still very surprising and painful to know, they hadly know about things which come out of india than few software engineers.

    I agree its very difficult to target a service only for indian market and survive and thrive. There are very few online business which manage to breakeven in indian scenario even today.

  3. 3. Sanjay Mehta said on February 19th, 2007 at 8:50 am

    Vivek and Vijay,
    At this time, there continues to be a huge untapped potential in the international markets, for ethnic Indian products. We continue to focus on the same, while at the same time, finding a way to seed the India e-retail market. In that sense, we seem to have a good opportunity – not to burn a lot of money in shouting ourselves hoarse, in a relatively small e-retail market in India, and yet, staying in the business, building up numbers and seeding the India base slowly. At an appropriate time, when market looks interesting, we can devote more resources and focus on the India base. Perhaps in a couple of years, I would believe.

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