Manmohan Agarwal always wanted to do his own thing. Even so, his first venture bordered on the outlandish: prospecting for gold. In 1995, he set up India's first private sector gold mining venture, taking over an old mine abandoned by the British in the forests of Jharkhand's East Singhbhum district, close to Jamshedpur.
But ambition alone does not make for successful gold prospecting. Agarwal soon ran out of capital and was back at a regular job. By 2009, the entrepreneurial bug was back; he had had enough of working for someone else. His next dive into entrepreneurship seemed even more bizarre: he decided to sell shoes online, after a chance meeting with Danish Ahmed Abdullah, who had started selling footwear on the Internet two years back to liquidate excess stocks from his father's manufacturing unit in Kanpur. "When we told some supplier brands we wanted to sell their shoes online, they thought we were mad," says Agarwal.
Sure, there was a roaring online shoe business that Zappos had built in the US - eventually acquired by online retail giant Amazon.com in July 2009 for nearly $1 billion, or Rs 4,838 crore then - but if someone wanted to sell pink pumps online he was seen as barmy.
It took Bigshoebazaar - the online site that Agarwal and Abdullah partnered with two Indian Institute of Technology, Delhi, graduates - a good six months to convince brands to come on board. That start with shoes has today grown into Yebhi.com - roughly translated from Hindi as 'this too' - a multicategory portal with some 250 brands spread over products like apparel, electronics, sunglasses, fragrances, bags, accessories, appliances and, of course, shoes.
Both Yebhi.com and Bigshoebazaar.net are portals run by Bigshoebazaar India, a private company part-owned by Agarwal, Abdullah, and Nitin Gupta and Rajul Jain, the two IIT-ians. (Bigshoebazaar.net is the businessto-business portal selling to retail shoe stores.) Bigshoebazaar India received Rs 50 crore funding in two rounds from Nexus Venture Partners and Catamaran Ventures, the latter owned by N.R. Narayana Murthy, Chairman Emeritus of Infosys.
In the next two years we may see one or two big e-commerce players and they will come from the first wave of successful single product e-retailers: Sanjeev Aggarwal
At a meeting three weeks before Diwali, Agarwal is busy readying for exponential growth this holiday season. In September, Yebhi sold an average of 4,000 to 5,000 products daily. Data from the Diwali sales will be in only early-November but the Yebhi CEO expects the spike to be 250 per cent. Private, early stage companies such as Bigshoebazaar India keep revenue figures confidential but a company insider says it closed financial year 2010/11 at Rs 20 crore and the current year is likely to see exponential growth. Competitors like Flipkart are far ahead - 2011/12 revenues projected at Rs 600 crore - but in India's e-commerce race, Yebhi is clearly a contender.
Sandeep Barasia, who heads the consumer products practice at consultancy firm Bain & Company's Gurgaon office, says the e-commerce industry in India has only recently taken off, and so most companies in the space are yet to devise a very clear online strategy. "In choosing an online retailer, consumers will prefer sites that have generated very positive word-of-mouth endorsements," he says.
For Agarwal, customers like Rajeev Suman are the ones spreading the word. A research analyst at the Noida office of Grail Research, an investment research company with its headquarters in Cambridge, Massachusetts, Suman wanted a gift for a close friend. He had never bought jewellery from small shopkeepers over quality worries and he couldn't afford chains like Tanishq.
He logged on to Yebhi.com for the first time after a colleague pointed him to it. He ended up buying a pendant for Rs 2,500 and was "pleasantly surprised when I got my packet on the fourth day", he says. On a subsequent order of shoes, he received a call from Yebhi customer care: would he like to buy other shoe colours in the same size, too?
Yebhi badly wants to build up customer loyalty and is willing to pay for it. It reports eight per cent returns of purchased goods that come about from a liberal 30-day exchange period. "I have instructed my customer care guys not to ask the customer why he wants to return a product," says Agarwal.
Ramping up sourcing of products, though, is a work-in-progress. The task in its initial days, says Agarwal - the other promoters of Bigshoebazaar India were not available for interviews - was getting mindshare of CEOs at suppliers. "The task was to convince Benetton, which operates through 300 franchise stores, that it can do business equal to 30 to 40 stores by going online with us," he says. Today Bigshoebazaar India has the single largest key account of brands like Puma, Nike, Red Tape, Reebok and Lotto. But there are still brands such as Metro Shoes who have not gone online with Yebhi.com for worries of being seen as discount brands.
For all his drive to run something on his own, Agarwal's stint at his previous employer is the most that is helping him in his current avatar. At supermarket chain Vishal Retail
in the two years before he quit as Corporate Affairs CEO in April 2009, he went around opening stores totalling some two million square feet in 110 cities. In the tough quarters of 2008, when retail chains in India went through the wringer, he helped Vishal Retail consolidate its backend - reducing 10 million sq. ft. warehouse space down to 400,000 sq. ft. Bigshoebazaar India is modest in comparison; it has a 100,000 sq. ft. warehouse in Gurgaon and plans another one sprawled over half a million sq. ft. nearby next year. That backend and the push to perfect delivery - Yebhi is customising logistics with seven providers spanning Bluedart to SpeedPost - Agarwal hopes will help Yebhi's drive into multiple categories.
"The moment you place an order at Yebhi, it is ready for shipping in 70 minutes," he says, adding that the time will reduce further as plans to run logistics in-house take off.
To be sure, Bigshoebazaar India still has footwear dominating its merchandise but he expects that to change. When that happens and the Yebhi team drives sales across products, it will run into competition with strengths in different categories: from Letsbuy and Flipkart in electronics, Fashionandyou in apparel, Myntra in gifting, or Seventymm in entertainment.
Yebhi wants to be a leader in all categories. How feasible is that? "We are only different on the customer side which is what differentiates us - giving him value in terms of experience, product range and convenience; all important factors to overcome the lack of touch and feel in online purchase," says Agarwal.
He knows the risks of unfettered expansion - Vishal Retail was sold for Rs 70 crore in March this year after it caved in under the pressures of debt and thin margins - and strictly keeps to a rule that Yebhi will not add any category for which it cannot promise a full range to the customer. For sunglasses which launched on Yebhi in late September, there are already 800 styles available at prices ranging from Rs 400 to Rs 800.
The bet that Yebhi, and the many funders hovering around the industry, are making is that there is a lucrative spot to be carved out by first movers in Indian e-commerce. Sanjeev Aggarwal, Managing Director at Helion Venture Partners, and not related to Yebhi's Agarwal, says: "India may see one or two big e-commerce players and they will come from the first wave of successful single product e-retailers".
Yebhi would like to believe it has put its best foot forward to take that spot.