Being a computer savy student (read pet of computer science faculty) I was one of the few students chosen from 12th standard to attend this seminar.
I then asked a question "sir what do you think is the future of E-commerce in India?". My question was a deeply felt question because I was then fascinated by the idea of online shopping. That was the time when I was browsing foreign online shopping websites in my school.
The faculty answered "Have you been to T Nagar Saravana stores? Have you seen crowd there and how indians buy things? Indians want to touch, see and feel the things which they buy. Will you buy a dress by seeing pictures on a website?". In india it won't work.
The faculty had crushed my idea with a simple answer and every one smirked at me. I too was almost convinced that perhaps india wasn't the place for E-commerce but the idea stayed on.
Five years later, it was 2008 I attended a Franchise Business fair at Hotel ambassador Pallava in Egmore just casually. I met a Delhi based supplier of us consumer products like chocolates, shampoos, kitchen wares etc who wanted to sell his franchise rights to a chennai agent. Some how the idea fascinated me and I decided to take it up.
So I caught the next flight to delhi happazardly paid Rs 2 lacs as franchise non-refundable fees, signed franchise agreement. While they wanted me to open a physical store I was trying to suggest an idea of online portal shopfromhome.in
By then i had bought few web domains like shopfromhome.in and shopfrmhome.com
I wanted to setup an online store with all the products and pictures put into it and connected by a online payment portal. This idea looked simple as I would not have to invest in a physical store incur huge costs of rent, investments in shelves, stocks, employee cost etc.
So i presented a plan that I will use their central ware house for supplying merchandise to all over india using their tie up courier service and profit will be shared between both of us.
Somehow they didn't buy this idea and like many others online shopping was not an viable business model to them. Morever they didnot want to trample on the rights of other franchise owners who had setup physical stores. I walked out of greater kailash, Delhi office dejected but still optimistic that I would set up the system on my own.
But as simple as it looked the issue was very complex. To start with the website which sells products should be very sophiscticated, requires lot of coding, constant updation which all means a lot of cost. The quotations I got were depressing. Some one said 5 lacs, some one said 2 lacs. How could I pay so much upfront for a website? So I decided to develop my own simple website.
Then the issue was how to take pictures of so many products and reduce, reshape it for the website size. The professional photographer wanted 50k so I used mobile camera took pictures all day, night, reshaped and uploaded it.
The next issue was "payment gateway". There is this company which has tie up with all banks and they allow you to embed a code in your webpage which allows your customer to pay online using their tieup services. But the fees to be paid to gateway was mind boggling. They demanded 5 percent and also a monthly rental fees. That was ridiculous because retail has very low margins, we need to add our profitability and also load the courier cost on the product
If the cost of the product becomes too high because of all these costs, the customer has no incentive to buy online. As such online purchase was risky to indians. So I embeded the paypal gateway code which was free and didn't use the payment gateway of banks.
This was my first mistake as net banking purchase was completely taken out. After this the website was up and running but nobody visited it at all. Yes nobody at all.
Some one from usa ordered I wrote back to them saying single product can't be shipped to usa due to very high courier cost. Morever all these are imported products from usa only.
I tried to unsuccessfully negotiate with courier companies but no one was interested to join us for tie up because we were small and start ups. Later I discovered that the courier cost was prohibitively expensive, the margins non-existent and logistics plan a dismal failure. The business idea was almost over.
Even if I started getting many orders, there was no way I could profitably supply them the merchandise because I simply couldn't get the logistics setup right. I tried hard for venture capital but no one seemed to be interested.
After this stage I must confess, I did not have faith in myself and in my own idea. That perhaps was the main reason I did not yes I did not actively pursue marketing efforts or try creative ideas for logistics management.
With advice of my partner, franchise owner delhi and others that online system and E-commerce will take some more time to catch up in India.
I dropped the plan and in early 2010 by then I was busy with my physical departmental store in Arumbakkam tchennai.
Today a couple of years later, I find flipkart has cracked the logistics code of E commerce. It is a run away success. Some one had successfully and profitably accomplished what I had dreamt of for long.
Please read wikipedia article of Flipkart to know about this great company. In this next post I shall tell you why I failed and why sachin Bansal of flipkart succeeded when both of us had almost the same idea.
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