HomeShop18, the online and on-air retail venture of the Network18 Group, is hopeful of a break-even in FY14, after witnessing a compound annual growth rate of 80 per cent in the past five years. The company, which is in the sixth year of its operations, had a more than 100 per cent growth in revenue for FY13 at over Rs 1,000 crore, and is hopeful of clocking similar growth in FY14.
According to the earnings posted by promoter Network 18 Media & Investments Limited, HomeShop18 more than doubled its revenues in the April-June quarter of 2013 on a year-on-year basis.
“We are on the path to profitability and we are very confident,” Narasimha Jayakumar, chief operating officer and e-commerce head of HomeShop18 told Business Standard. “The business is well capitalised and we are very close 2to profitability now, and hopefully by the end of this year, we should break-even.”
At a time when most industries are faced with challenges due to macro economic headwinds, Jayakumar said, e-retailers have grown as consumers look to benefit from the price and convenience advantages that this format offers. Additionally, the rapidly increasing internet usage in the country is also aiding e-commerce platforms. India presently has 150 million internet users, third only to the US and China.
HomeShop18, which witnesses 8 million unique visitors every month, considers its presence on television as an edge over its peers. The company had also launched a mobile application six months ago, which Jayakumar said, had already hit 200,000 downloads.
Quoting a CRISIL study, Jayakumar said, the overall size of the online product market was at Rs 3,200 crore in 2012, which is expected to grow 45-48 per cent in the next couple of years to touch Rs 10,000 crore..
As per industry experts, e-retailers have an edge above traditional retail as the lower capital investment and high scale of operations helps them offer 5-15% lower prices than what is sold in a 'brick and mortar shop'.
“Virtual retailing and the convenience of buying routine products from home or office is extremely attractive and is clearly here to stay. So virtual retailing or e-retailing is going to grow gallops as internet usage is also growing in the country,” Jayakumar said. “About three years ago, it was only about price, but now it is about convenience. People are ready to buy products online because there is no one-stop shop for many categories,” he added.
HomeShop18 is also investing to expand its call center and warehousing capacities. In April 2013, the company had raised $30 million from OCP Asia, which is being used to fund the expansion plans.
The company is in the process of expanding capacity at its 23 existing warehouses, and taking up the capacity of its call center to over 2,000 seater from 1,500 seater now. “The idea is to be able to handle 100,000 calls a day,” Jayakumar said.
HopeShop18 is also investing in enhancing its technology usage, as part of which it recently overhauled its website. The company is adding to its product offerings, and has introduced some new categories such as sports and gourmet food.
This expansion and overhaul might also be aimed at taking on potential competitor, Amazon, which entered India with an online marketplace earlier this year.
“We currently have 400 plus e-retailing companies in India, but finally I think only a few will survive. In three years of time, I see about two or three large, horizontal players, and probably five to eight vertical specific-space. The unit economics is such that you are not going to break even unless you do thousands of crores of revenue,” Jayakumar said.
