Wednesday, December 14, 2016

E COM SPECIAL...... Meet the folks who really RUN E-COMMERCE

Meet the folks who really RUN E-COMMERCE

Behind The Scenes Are Small Startups Slicing & Dicing Data To Keep E-tailers Selling
Four days after Ankit Mahesh wari spent Rs 70,000 on a coffee machine, he got an email from the e-commerce site offering a 25% discount on the same gadget. “I was so angry . I returned the product and bought it again at the discounted price,“ says Maheshwari.
Apart from getting a good deal, it made him realise that e-commerce companies had poor marketing channels. He started Betaout, an e-commerce service company that provides targeted marketing for online marketplaces. And the same website that gave him the idea is now one of his clients.

The growth of online marketplaces and e-commerce in India has spawned the need for companies that provide tools for marketing, logistics, search, cataloguing, analysing customer behavior and more. These e-commerce service companies are making their money by helping online retailers make theirs -and data shows that the number of such companies in India is second only to that in the US. According to data analytics firm, Tracxn, there are 258 Indian startups in this space and in 2015, more than $280 million was pumped into them.
Pune-based e-commerce solutions provider Shoptimize started out in 2013 by building websites for offline merchants. They soon realised that the merchants needed more than just an e-commerce platform, and now provide end-to-end services, including marketing and merchandising, says co-founder Mangesh Panditrao. Betaout, which works with 160 online companies, including Lenskart, and Paytm, has reduced marketing costs by 20% to 45% for clients.

Shopclues is an e-commerce company that works with 10 smaller start pany that works with 10 smaller startups, which help it optimize its business. “As they do this across e-commerce companies, they bring in expertise. So we can work on what we do best and leave other functions to them,“ says Utkarsh Biradar, vice-president of products, Shopclues. Biradar's own payment company, Momoe, was acquired by Shopclues earlier this year.

Intelligence Node, a Mumbai-based retail analytics startup, works with 75 e-commerce companies by tracking about 1 billion products across 1,100 retail categories. “We look at the external scenario and help the companies strategise on their pricing,“ says Sanjeev Sularia, who started the venture in 2012 with Yasen Dimitrov.

Most of these enablers follow a SaaS (software as a service) pricing model, where a company pays only for the services used. Biradar says that most clients think twice before signing up if the cost is mentioned up front. If the service is completed and successful and you see the results, you pay .
“If you tell a company that you can improve website performance, they don't understand. But if we say costs could reduce significantly, they get it,“ says Shoptimize's Panditrao.


LOOKING TO THE WORLD

Many of these companies are looking towards building a global client base.“The possibilities of mergers and acquisitions happening in the industry is minimal, and the product has to be international for the company to have a chance to get acquired,“ says Karthik Reddy, managing partner of Blume Ventures, which has invested in Dataweave, a Bengaluru-based company that works with online marketplaces and retail brands to help them determine strategies for pricing, selection and promotions.

Dataweave gets 55% of its revenue from India but is looking to diversify .Co-founder Karthik Bettadapura says, “Many US brands are launching in India through online platforms and are looking to get insights about the Indian market.“ He says cracking the US market is crucial to grow.

Intelligence Node has 90% of its customer base in India, with sales offices in US and UK. Around 40% of Betaout's customers are outside India, and contribute to 35% of its revenues.



BEHIND THE US

In terms of the total number of companies founded, India remains second or third to the US ecosystem. However, the gap between them remains wide. For instance, in the marketing space, the total number of US startups is 131, compared to India's 42.This widening gap could be attributed to the fact that the amount of investment on R&D and technology infrastructure by the e-commerce companies is limited.

According to Sanjay Parthasarathy , co-founder of Indix, which collects and refines product information, e-commerce companies and brands used investments to acquire customers and build operations. “However, the attitude is changing but the rate of investment infrastructure needs to be greater,“ he says.

Reddy says that unlike in the past Indian startups are looking at foreign markets in their early stages of growth. “Earlier, we used to see startups looking at the US market after three years. Now, they are going to the US as soon as the product is ready ,“ he says.

Shalina Pillai & Anand J
TNN



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