 "Arun Chandra Mohan")
Rural India already accounts for 60 per cent of Jabong.com's revenues but the e-commerce player wants more. Arun Chandra Mohan, co-founder and chief executive officer, tells Reghu Balakrishnan that he's exploring the idea of joining hands with coffee shops, petrol pumps and ATMs, beside India Post. Jabong also plans to launch its own fashion label in March 2015. Edited excerpts:
Jabong has many plans to expand business in rural areas. What's the potential?
Natural growth will happen in tier-II and tier-III towns, where the presence of shopping malls is relatively less. So, the demand from us (e-commerce players) is much higher than the supply. With the increasing usage of mobile phones and tablets, Jabong makes the products readily and easily available.
What's your strategy to improve the supply?
It's really about logistics, building the infrastructure and delivery systems. We have partners and our own delivery systems which can effectively reach out to these places. We invest a lot in people systems and processes to be able to deliver.
What are the new delivery models?
We have to think about delivery at nearby petrol pumps, ATMs. We are trying to do something with India Post. We are in talks with a few of those networks that have the reach in those areas. We are in discussions with them on how they can support us. If there is a player, can we get the service levels we want, how much time do they take, etc. These are complex questions. Right now, we are concentrating on petrol pumps and coffee shops.
What's the potential of postal services? Are you looking seriously at this model?
We are exploring the options but it's at a very exploratory phase. We have to see which model suits us the most. We have not gone to that level of discussions. It's still very early days.
These days, a few e-commerce companies are getting billions of dollars in funding. Is there any rationale for such heavy investments?
Funding is a function of what you want to do, accomplish. For us, the heavy investment area is building the supply chain. Technology is also important as we scale up, as user experience on our website is important. We are also investing in marketing, procurement etc. And, then, there is need for investment in talent. We are also scaling up our warehouse two times.
But everyone seems to be spending money on giving away discounts. How long can this model survive?
Discounts will come down for sure; I think it's already stabilising. For a very small player without that scale, it will be difficult.
Do you see consolidation taking place?
You will have four-five large players as the market evolves, You need to have either something very unique or a unique property. There will be a few strategic buys and we will also look at this if it makes sense for us. Internet is less than one per cent of the overall retail industry; in the US, it's eight per cent. I think the future is bright for companies with the right fundamentals and strategies. For others, it's going to be a difficult journey.
Jabong is tying up with global brands in the fashion space. Will you have more such partnerships?
We are in the business of providing good fashion in every region. Apart from developing our own brands, we have got three international brands now - Dorothy Perkins, River Island and Miss Selfridge. We are constantly looking at how to provide exceptional quality; where am I going to get my brands from; how are we going to get our supply chain required in order to get it moving? That's the core of our business.
You also had plans of launching your private labels?
We have our new design team in London who will be able to provide expertise. We are in the final stages of naming our brand, which will be in apparel and accessories. We are expecting it to be launched in March 2015. The designer team is built from leaders like Zara, River Island and Mango. We have hired top-notch talent for the studio. Ours will be different because we are developing and designing outside India. We are sourcing it from all over the globe.
Are you looking at launching your own offline stores?
We will look at it as things come. It's too early for us to comment.
