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Interview – Tushar Kansal, Founder CFO, Indus B2C Global
India is the current world leader in the Startup space. This space has been blessed with CXO’s capable of building varied businesses. Tushar Kansal, one such CXO, was CFO with DLI, an infra company controlled by USD 170 billion US based PE-Fund Guggenheim. After founding KITES in 1995, Tushar went on to work for Deloitte Touche Tohmatsu, Brand Capital, Aircel, MTS and finally worked as CFO for DLI, Gurgaon. In 2014, Tushar, who is a Textile Engineer and MBA (Financial Management) from University of Delhi, renamed KITES to Indus B2C Global and launched unique Dot com ventures. He tweets at @TusharKansal and is on LinkedIn
In this exclusive interview, Tushar Kansal talks about his venture Indus B2C.
Q1. What was the main idea behind the establishment of Indus B2C? What kind of opportunity were you planning to capitalize on?
While I was on a vacation to Kashmir, with my wife Pooja, who heads Capital Markets group at SBI Caps; we were discussing the whole e-commerce play in India and current crop of companies. We saw the space primarily driven by deep discounting, extraordinarily poor seller handling and lack of a will to bring more brands to India from abroad (owing to broad focus on short-term customer acquisition). We realized that there is a big need for use of psychometrics to precisely analyze customer preferences (e.g a customer might look for discounts-only initially but subsequently, may go in for quality), a marquee quality play, need to being merchandisers and Quality assurance on board, to train Call Centre in the products one sells (for upselling and cross-selling) and lack of an e-commerce vehicle in the market which meets these criterion specifically in premium branded segment. Thus was born the concept of Indus B2C, a holding company with Dot com verticals.
Starting with Vithi.com – a backward integrated company which taps premium labels in India and then ventures on to building its own Private labels, with a dedicated in house customer care. Vithi was launched in October 2014 and seeks to tap premium brands available in India and subsequently venture into bringing those 70% brands to India, which are currently unavailable in India. It would be a Net-a-Porter of India, with a prominent first-mover advantage.
After coming back and researching the market, I came to the following facts - Indian Luxury market is growing at 25% CAGR & projected to reach USD 45 billion by 2020. Only 30% premium Luxury brands worldwide are present in India, that too with limited varieties. Additionally, Indians are preferring to buy Luxury premium brands within India, over abroad and most importantly, buying online. Since India trails China in behavior, fact to quote is that 67% of Chinese shopper's prefer to buy Luxury products online. A similar company “Coach” is valued at over USD 10 billion. I realized owing to my Textile Engineering background, it would be relatively faster for me to develop this play.
Q2. Tell us about Indus B2C Global?
Indus B2C, the holding company, has the following divisions:
http://www.Sportszoid.com – Sports info of 20 Sports, based out of Singapore. It is held independently and not through the holding company. The site would offer virtual scenarios to develop sporting instincts of each user.
Advisory Board of Indus B2C:
Mentors (Not a formal position owing to their company's internal compliance):
Q3. How is Vithi.com emerging in the e-commerce space? What kind of traction has it seen so far?
We are seeing very good traction with a registered customer base of more than 10,000 currently. Almost 7,000 visitors visit Vithi every month but with SEO maturing on hundreds of keywords, this will increase exponentially to more than 1,00,000 by November 2015. We are different from competition – Vithi has already tied up with premium brands Rajwada, Adara, LeModish and Calvadoss. Since we are bootstrapping till now and have self-invested close to Rs. 54 lacs, we can only grow at breakneck speed, once we get funded.
Indian Luxury market is growing at a CAGR of 25%. More and more Indians are preferring to shop in India over abroad, per CII – AT Kearney. India trails Chinese market by 15 years - TechInAsia.com research says that Chinese e-Luxury market is at USD 7.25 billion in 2015 and more than 67% Chinese prefer to buy Luxury goods online. Xiu.com, a Chinese premium e-tailor sees repeat purchase rate of 85% (per TechInAsia.com). Another observation is that Brands are witnessing more traction from Tier-2 & 3 towns in India!
In India, all research points to lightening growth beyond 2025 and we are fully prepared to tap into the opportunity.
Q4. What are the major challenges in the e-commerce space in India? How do you seek to tackle the same?
The primary challenges in Indian e-commerce space arise out of 2 facts: One, India thrives on “Small is Beautiful” - unorganized “Islands-of-Excellence” market built around trust and relationships. And second, in Western markets, the online journey was for 40 years - initially one had organized big-box retail, then catalogue shopping, then TV shopping, Internet and then the mobile shopping. In India, this entire journey got compressed into 15 years, and especially e-commerce into 10 years. It means that:
One of the biggest reasons why the monstrous market potential in India remains untapped is that the software so far in the country is English specific – Think about this – Most middle and lower class sends their wards to Government School – no person who can afford Private Schools, sends his children to Government Schools – The generations coming out of Government Schools is poor in English. But can anyone say that they don’t carry necessary IQ (Intelligence Quotient), EQ (Emotional Quotient) or SQ (Social Quotient)? But what happens to them in their career - Automatic Apartheid! No Private company considers them since they lack English proficiency. And they end up becoming clerks or enroll in some petty jobs! India’s treatment of these own citizens is one of a kind worldwide and in direct contrast to peer emerging economies like China, Russia, Brazil, Germany, Japan etc, which have grown on back of their own languages by tapping the resource mass in Villages. Many would have observed while taking interviews - one finds candidates who lack substance but try to show off their English! – Such useless attitudes have been built over the years by us Indians only by treating English speakers as superior to vernacular language speakers! Just look at the vernacular social media, mainstream media market or the local language software market in India – its booming! But vernacular speakers are not, and sadly lagging behind on most indicators! How far can local language markets develop, depends on Government action on this politically sensitive issue.
We are successfully tackling these problems by charging nominal Rs. 100 on each COD transaction, by utilizing India Post for far flung addresses, by offering only end-of-season Sale discounts, utilizing psychometrics in delivering a Curated experience by analyzing each customer while keeping Customer’s point of contact (Customer Care) well versed in each product (for upselling and cross-selling) and ensuring Customer loyalty through a responsive UI, great service and own Mobile Apps. Technology seems to have no pricing standards in the industry and so we have an in-house website development and maintenance team. I am a certified Digital Marketer and we have an in-house Digital Marketing team. On Taxation, we keenly await GST and feel it will go a long way in simplifying business. The most critical aspect neglected by old e-commerce players is the dealings with Seller ecosystem – we take great pains to accommodate the Sellers on most issues of importance to them.
Lastly, for us, poor knowledge of English is not a hindrance – we have kept the manpower costs significantly compressed by giving a chance to Government School/ College graduates in a big way. For us, what matters is integrity of the candidate, his ability to express himself in any language, attitude of wanting to learn technology and to innovate and improve upon processes. The Customer Care guys, however, are chosen from among those who can answer in simple English effectively.
Q5. How is Modi Government promoting entrepreneurs in India? Is the market conducive for Startups in India?
From the perspective of a Startup entrepreneur, I can vouch that India is probably the only market worldwide which offers so much to entrepreneurs right now. I give all credit to Modi Government for this.
Here is how some Government initiatives are helping the Startup space:
By the look of things, Funds are pouring in Indian PE’s & VC’s – PwC expects it to reach USD 40 billion! – One thing is for sure, this trend is only going to accentuate.
Q6. What kind of demand have you seen for Luxury goods in India? How is the Luxury phenomenon shaping up on e-commerce?
India mirrors the emerging economies of China and Asean nations – not in business processes, but largely in the market size and direction. India is witnessing exploding traction in the online Luxury e-tailing space!
Look at why Exclusively was bought by Snapdeal - Fashion brings 65% of Snapdeal orders, per their Management. Snapdeal itself projects that by 2017, Exclusively will be a USD 1 billion business! 10 million Indians earn more than Rs. 10 lac annually, per McKinsey. A small business as Darveys says their average transaction size is seen at Rs. 21,000!
The luxury phenomenon is shaping up to be a category leader in the e-commerce biz.
Q7. What are future plans and projects in pipeline? What growth numbers are you projecting?
Apart from e-commerce venture Vithi.com, the education venture IndusTutors.com is ready and content work is in process. The first game of UIXinteractive.com – BlackQueenGame.com, would be launched by last quarter of this year. AstroLifeQs.com website is fully functional and we are projecting a blockbuster business - few people know the huge demand for Astrology in China, Asean, Americas, apart from India. Sportszoid website will be operational by end 2015.
Specifically at Vithi.com, we foresee 3 million monthly visitors, 100 employees and USD 50 million turnover by CY 2016.
We see overall customer database for all of Indus B2C ventures at 50 million 2017-18.