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Putting behind issues relating to legal matters that one of its co-founders got into, online marketplace ShopClues continues to bet big on its capital efficiencies and product portfolio, as the company is confident of turning profitable on an operating level by June 2015.
The company is eyeing a gross merchandise value (GMV) of Rs 1,000 crore during 2014-15 (FY15), with net revenue of around Rs 150 crore. For the current financial year ending March 31, 2014, the company is likely to clock GMV of Rs 350 crore and net revenue of around Rs 45.5 crore.
“We turned profitable at a gross level last year, which basically means that from the revenues that we made we were able to derive all our direct cost, and more. This is a very important milestone in our path to profitability,” Sanjay Sethi, CEO of ShopClues told Business Standard. “Going forward, it is just a matter of time and scale that we become operating margin profit. We believe that in the first half of 2015, we would be operating positive as well.”
Gurgaon-based ShopClues is one of India’s largest managed market places that connects buyers and sellers online. ShopClues ships in over 12,000 cities across India and has over 33,000 merchants using its website.
According to CrunchBase, an online database of technology companies, ShopClues raised $4 million in Series A funding from Nexus Venture Partners in 2012, followed by a Series B funding of $10 (around Rs 54 crores) million in 2013 from Helion Venture Partners and Nexus Venture Partners. In its earlier years, the company was also backed by several marquee angel investors like some early employees of companies like Google and Netscape.
Last year, ShopClues co-founder and former CEO Sandeep Aggarwal had pleaded guilty to the insider trading charges, in the federal court of Manhattan. He has since exited the company.
“It was unfortunate, but it was his personal matter, something that happened two or three years before ShopClues even started; at that time he was an analyst. It had nothing to do with ShopClues, and he is no longer a part of the company since August. He is neither on our board nor has any formal relation with the company,” Sethi said.
“When something like this happens, either teams fall apart or become stronger, the latter happened to us. Sandeep was the face of the company, but he was not the company. We have a very strong team; the remaining four co-founders continue to stand behind each other strongly.”
Asked if Aggarwal would join ShopClues back after his legal issues are solved, Sethi said, “we will cross the bridge when we get there”.
On the funding side, while the company was looking to raise $30-50 million (Rs 180-Rs 300 crore) in private equity (PE) investments in July 2013, the company has not disclosed any such investments as of now. The company was reportedly in talks with private equity players such as Warburg Pincus, SoftBank, Digital Sky Technologies and Goldman Sachs for this round of fund-raising, which was expected to close by end of 2013. Sethi said, ShopClues may look at a Series C funding soon but refused to share any further details on the same.
“Our point has always been that you can have hyper growth and a profitable structure, which are not mutually exclusive,” Sethi said. “We are comfortably capitalized and our investors stand very strongly with us. There will be no dearth of capital for a robust company and for the large opportunity that we are eyeing.”
According to an analyst who did not wish to be named, the legal issues surrounding co-founder Aggarwal may not be much of a deterrent for ShopClues to raise funds going forward, as the online marketplace model is seen very lucrative by investors and also because the company continues to have a strong team.
“The benefit for a marketplace is that the investments are much lesser than that for an inventory-model, and hence it’s a more beneficial space for investors to be in,” said the analyst who observes the online commerce segment closely. “The entire industry is booming and marketplaces are set to benefit just as much as inventory-based retailers.”
Separately, Sethi added that ShopClues is on track to meet its target of crossing about $1 billion in GMV with a net revenue of about $100 million by 2016 post which it will go for a listing on Nasdaq.
