$231 million in 5 rounds: That’s how ShopClues entered $1-billion clubbusiness Updated: Jan 15, 2016 08:57 IST
ShopClues is set to reach $1.2 billion in gross merchandise value by the end of 2016, and $3 billion by the following year. (HT Photo)
ShopClues on Tursday joined Flipkart, Snapdeal, Paytm and Ola in the club of Indian startups valued at over $1 billion (Rs 6,670 crore). But the ecommerce firm has achieved the feat by raising the least amount of money -- just $231 million in five rounds of funding including the $100 million (over Rs 670 crore) it raised on Tuesday.
ShopClues’ co-founder and CEO Sanjay Sethi said after this round of funding the company is set to reach $1.2 billion in gross merchandise value by the end of 2016, and $3 billion by the following year.
ShopClues, which is focuses sharply on small cities and towns, will spend $50 million in advertising and marketing, $25 million on acquisitions and $25 million to build technology. Discounting, something Sethi is averse to do with money from fund raisers, will be taken care of by money that the firm has in the bank -- about $50 million.
Sethi is not looking at any big acquisitions. “We will be doing small acquisitions to fill our gaps, in the field of technology, data analytics and payments,” he said. The company does not have that kind of cash in bank for a big ticket acquisition. A large deal will have to be a mix of stock and cash. “If we do all cash deal, we will have to do a small fund raising,” Sethi added.
Between Sethi, and co-founder Radhika Agarwal, the duo has met more than 40 companies, but is yet to shortlist the final ones.
The largest pie of the funds will used for brand building. A range of television and print ads are planned, and Agarwal, who is also the head of marketing, has planned a number of community-based activity to make ShopClues a more “recognisable” brand.
Moving forward, ShopClues will have to address a disconnect. Only 40% of the company’s merchants are in smaller towns and cities, which compromise 70% of its buyer base. As ShopClues is more of a non-branded products online marketplace, it is important, says Sethi, to do regional delivery, to keep cost low.
“We use cheaper logistics, and our regional delivery needs to go up from 25% to 50% of all deliveries. It reduces our cost by 50%,” Sethi said.
First Published: Jan 15, 2016 08:57 IST