Craftsvilla.com, which is India's largest online marketplace for Indian products with more than 300,000+ products including wedding sarees, salwar suits and handicrafts, today revealed their four pillars of profitability based on which they were able to achieve profitability in this year. Craftsvilla.com recently announced their profiability of Q2 quarter 2013 in contrast with other ecommerce companies in India who are burning millions of dollars every month.
Below is how Manoj Gupta, CEO/Founder of Craftsvilla.com and a former Venture Capitalist, summarized their four pillars of profitability:
1. Capital Efficient Marketplace Model: Before everyone jumped onto the bandwagon of marketplace model, Craftsvilla.com launched it in early 2011. The sole reason was that inventory models require lot of capital investment and lot more operational bandwidth that in the long run it becomes unsustainable and therefore has a longer path to profitability. While cannot be done offline, in online virtual inventory can be sold as long as customer trusts the brand and gets great customer service. By aggregating supply from all over India virtually onto a single platform from artisans, designers and retailers, Craftsvilla.com pioneered the marketplace model in India way back in 2011. We have raised only seed fundiing of $1.5 million in last 3 years which reflects the capital efficiency of the marketplace model we operate in.
2. Extensive Use of Technology vs Manpower: While sounds unrealistic, Craftsvilla.com headcount is only 10 employees which we internally call "Super Ten" of Craftsvilla. Why we are able to grow without increasing the headcount is because of extensive use of technology to replace any manpower need. For example, we have made our customer care scalable by creating an online mechanism for dispute resolution and by enabling direct customer-seller communication. We have made our finance function scalable by creating automatic payments to seller and by integrating SAP with our webstore for automatic invoicing and accounting of payments.
3. 100% Organic Traffic With Zero Paid Digital Ad Spend: We are probably the only ecommerce company in India which is not spending anything on paid digital advertising and still growing at healthy rate of 10-15% month on month. Our monthly ad spend is "Zero". We attract customers primarily through active blogger community, active search engine optimization and heavy usage of social media platforms like facebook, pinterest and tumblr. We also recently started our referral agent model whereby housewives and students can sell Craftsvilla.com products online or in their neighborhood with zero investment. In just short period of 3 months, we have signed up more than 1000+ agents.
4. Open Marketplace Model vs Managed Marketplace Model: At Craftsvilla.com, we have adopted a different version of marketplace model - "Open Marketplace Model" - compared to other online retailers who primarily operate a "Managed Marketplace Model". Our philosophy is that frictionless and touchless marketplaces are more capital efficient rather than managed marketplaces operated by retailers like Snapdeal and Jabong which requires these retailers to help sellers in uploading products, appoint key account manager for seller on boarding, provide sellers with logistics support and packaging material and so on. We, on the other hand, put the onus of all these on the sellers themselves. The sellers can register on Craftsvilla.com in a minute and start uploading products on their own within hours. The next day they are live on Craftsvilla.com and start selling with zero manual intervention from us. We believe sellers are part of our extended team and regularly look forward to them for help - in training other sellers, organizing events in other cities, writing blogs about us etc. This fundamental shift in philosophy is what other marketplaces will also graduate to since managed marketplaces are not scalable beyond a point unless supported by continued heavy venture capital investment.
We believe ecommerce is a consumer business and profitability is a key benchmark for any sustainable business. We hope other ecommerce players also achieve this goal in reality rather than on paper for healthy "real" growth of ecommerce in India.
Company Name: Kribha Handicrafts Pvt Ltd
Contact Person: Manoj Gupta
Email:Send Email
Phone: +91 9920175041
Address:21, Centrium, Lokhandwala, Kandivli (E)
City: Mumbai
State: Maharashtra
Country: India
Website: www.craftsvilla.com
Source: www.abnewswire.com
