TVC Skyshop, which claims to be the only profitable company in the virtual retailing space, has expanded its footprint into West Asian region where it is running a pilot project to test waters before making any serious investment.
During the pilot stage, TVC Skyshop is running “very low cost and very low risk” operations.
“It is difficult to estimate demand in a new region because every country has its own culture and market environment. This is a pilot foray and if it works well we will expand further,” said Raj Halve, Operating Partner at Samara Capital, which is one of the investors into TVC Skyshop.
“Though in terms of population the region is very small but given its high per capita income, in terms of potential it could be extremely big” Halve added.
TVC Skyshop was started in 2000 by Vinod Agarwal, and received investment from private equity firm Samara Capital in 2007. In August this year, private equity investor Morpheus Capital invested Rs 42 crore into the company. Morpheus also invested an additional Rs 10 crore in TVC Skyshop in October. The company currently has more than 50 lakh customers.
TVC Skyshop had reported revenue of Rs 69 crore for January-March 2013, up 80% on-year, and the company says it is currently valued at Rs 500 crore.
The company chose West Asia for its first overseas destination due to various reasons such as low costs, especially for delivery, and high penetration and usage of credit cards.
The pilot project in West Asia has received an “interesting” response, Halve said.
“Every market has its own nuances. Electronics have had a very big start, but in the gulf they are very particular about their electronics so we have had to tweak our communication of the product a little bit to communicate better. TVC's herbal cosmetics range will be launched later once we have all the necessary approvals. But overall the response has been very positive,” he said.
Even as TVC Skyshop gears to expand its footprint overseas, some other virtual retailers say catering to markets outside India is a “different ball game all together”.
Narasimha Jayakumar, chief operating officer and business head, e-commerce at Homeshop18 believes that an overseas expansion may not be financially viable for an Indian virtual retailer.
“Selling abroad requires a deep domain understanding because demands of consumers overseas are very different from those in India. It’s a niche segment as the designs and requirements of foreign buyers are different, the trends in those countries are different and even the regulatory challenges are different,” Jayakumar said.
While he agrees that there is a huge demand from the West Asian countries, especially during festive season, he believes there is a huge potential in the domestic market itself and Homeshop18 is unlikely to look at an overseas expansion anytime in the near future.
Separately, Halve said he does not see need for TVC Skyshop to raise any further funding, unless the company decides to look at an acquisition, which is unlikely in the near future.
