 "Little co-founders Satish Mani (left) and Manish Chopra")
Gone are the days of making extra effort to find the best deal available in your neighbourhood for your next purchase - be it an electronic gadget or a good restaurant. Technology is bringing everything you need on a single screen, which is most probably your smartphone.
Little, an app-only location-sensitive online-to-offline (O2O) marketplace, is aiming for customers who are looking for deals surrounding them in food and beverages, hotels, health care, and entertainment.
The app, launched in July 2015 after the start-up raised $50 million from Paytm, SAIF Partners, Tiger Global and GIC, Singapore. It is looking at becoming India's largest player in the O2O space.
The beginning
Manish Chopra, former chief marketing and operations officer at Microsoft in Indonesia and chief executive officer (CEO) of online fashion brand Zovi, along with Satish Mani, chief technology officer and co-founder, launched the marketplace for deals in the burgeoning O2O space.
| FACT BOX |
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Area of business: Online-to-offline (O2O) market place Funding: Raised $50 million from Paytm, SAIF partners, Tiger Global and GIC, Singapore in July 2015 Reach: Merchant coverage in the top 11 cities to about 20,000 merchants Target: In 3 years, 100,000 merchant establishments across the top 55 cities in India |
The Bengaluru-headquartered company saw a lot of traction moving towards online marketplaces and the huge opportunity on the mobile platform in the O2O space. "We came to know that O2O was about to explode and with that smartphone growth was also exploding," said Chopra.
It built a team to create an app to connect merchants, who want to sell their services across verticals like health and wellness, food and beverage, entertainment, and last-minute hotel bookings, to the customers.
The app works as a connector between the customers who want a good shopping experience and better deals. The problem of lack of an organised national player was solved. Little feels the differentiator is the scale and depth of the merchant ecosystem.
Little has 10,000 merchants in Delhi, Gurgaon, Mumbai, Goa, Pune, Bengaluru, Hyderabad, Chennai, Kolkata, Chandigarh and Ahmedabad. It conducts around 30,000 deals every day. The company is building the largest O2O supply-side infrastructure. It has 400 employees. The app has been made available on Android, iOS and Windows Phone.
Users can download the app on the mobile. It checks if the number has a registered Paytm wallet. The app sends the customer a request to register the number on Paytm. Once it is installed, it tracks the location of the user and shows deals available on the Paytm wallet or any other payment gateway. Once a deal is finalised, the user can redeem it by showing the coupon code to the merchant.
Vijay Shekhar Sharma, CEO and founder of Paytm, said the app followed a close working relation with Paytm.
The company's merchant system is by far the largest and deepest in this space and its unique selling proposition is the personalisation of the app that allows users to see the most relevant deals, says the company.
Most of the deals in the marketplace are priced between Rs 200 and Rs 1,000.
Ravi Adusumalli, managing partner of SAIF Partners, said the combination of the team at Little and the platform that Paytm had built would enable the company to be a winner in this large untapped space.
"We see enormous potential for O2O in India with explosive smartphone growth and we believe that Little is uniquely positioned to become the clear leader in this space," he said.
The company adds that the market has huge potential. In eight months, after the initial phase, Little has 900,000 users. In the past five months, its revenue has been growing by about 25 per cent, month-on -month. Almost 66 per cent of all its orders are bought and consumed in the vicinity of the merchant outlets.
Many players have been trying to address the segment for the past few years, including companies buying deal vouchers in bulk and then pushing them through daily e-mails to small-ticket coupon distributors who use telecom channels to spray users with token discounts. While such old models do not address the primary need of merchants for time-sensitive capacity utilisation, Little's approach is different.
The company is a services marketplace, where it provides a platform to tens of thousands of merchant organisations to reach millions of consumers on their smartphones. Little charges merchants a fee of six-eight per cent for providing the platform, including payment facilitation.
Hiring the right kind of people quickly was a significant challenge, says the company. With a requirement of both senior leaders as well as young dynamic front line business development people, training and retention is a major challenge. Merchants are sceptical because they have seen many start-ups venturing into this space over the last five years and failing to deliver real business growth.
The company is aiming to make the app the largest deals marketplace in India. It will focus on sectors like entertainment, health, food and hotel bookings. It is planning to increase its merchant coverage in the 11 cities to about 20,000 merchants. In the next three years. For that it will rope in 100,000 merchant in 55 cities. The company is not looking for funds in the near term and has sufficient money to expand its business over the next few years. The company feels it is early to project a break-even point. It is yet to celebrate its first anniversary. The model is fundamentally a low-margin and low-cost one.
| EXPERT TAKE |
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We shouldn't let the growth of multinational retailers and e-commerce fool us. Retail remains a local activity. Differences of tastes among customers based on their locations and the immediacy needs, continue to drive diversity of shopping habits and the unpredictability of demand. Services and information based products might be delivered remotely but with physical products local retailers do still have a better chance of servicing the consumers. What has been missing on the part of local retailers is the ability to use web technologies to provide access to their customers at a time and in a way that is convenient. Visibility and ability to attract footfalls have been negatively affected by e-commerce in the past few months. So, a hyperlocal internet platform that focuses on creating better visibility for small businesses and connecting them with customers who need products and services is certainly an opportunity that is begging to be addressed. Various search-based and deal-based models have come up but today the conditions are far more conducive for location-based services due to the penetration of mobile internet usage across the income segments. A key metric for the success of an online platform for hyperlocal deals is the number of local merchants they can mobilise quickly. This, of course, depends on an intensive recruitment process to bring retailers on the platform. However, after the initial recruitment the merchants need to be equipped to use the platform optimally and also be able to handle the demand. On the other hand, there also needs to be enough critical mass of consumers to make the platform interesting for the merchants. Customer acquisition itself has become a very expensive proposition over the last couple of years, with marketplaces and online retailers having driven up advertising costs - on top of that, customer stickiness is very low, which means that the platform has to spend similar amounts of money to re-acquire a large chunk of customers for each transaction. Therefore, the acquisitions on both sides - merchants and customers - needs to move in step.
Devangshu Dutta is chief executive officer of Third Eyesight |
