The online used goods market in India is seeing action with players like Quikr and OLX India slugging it out for the top position. Pranay Chulet, founder & CEO of Quikr spoke to Manu Kaushik of Business Today about his strategy to take on his rivals.
Q- Do you think that the online classifieds market works on the principle of "winner-takes-all"?
A- The online classified market strongly favours the winner. Because you are large, you get more buyers and hence you get more sellers. It does help disproportionately if you are the largest player. We are very focused on it. Within classifieds, there are horizontal and vertical players. Horizontal cuts across categories; the consumers can use them across a variety of areas and hence horizontal is better.
Q- What's your business model?
A- For the first three years starting 2008, we kept the platform free. In 2011, we told users that you can come and do free listing, but if you are interested you can pay us the money and we will do premium listings for you. When we got more than 10 million unique visitors per month, we decided to go for monetisation of the platform.
We were able to do that because of leadership and enough grip on the market where some people-small businesses and consumers-were willing to pay us. The consumers pay when they want to sell cars or rent the house where the transaction is big enough. It takes Rs 300-400 for a listing on Quikr; a newspaper takes Rs 5,000. So, the cost benefit is strongly in favour of online listing. We have about 1 lakh small businesses paying us. We have over 8 crore listings active right now.
We still keep most of the website free. Today, anybody can use Quikr for free. We don't want to over-monetise the business. We want to strike a balance between leadership and making money. We don't want to compromise our growth and leadership. We will always make more money by being the biggest. If I tell people to pay us, fewer people will list with us but we don't want to do that.
Q- What is unique about Quikr?
A- The biggest difference between us and OLX is that they are only focussed on consumer-to-consumer business. We are a local company. We have thought a lot about how to make money in this business. It is not just about generating traffic. What makes the company valuable is how we are going to make money. In India, you don't want to avoid brokers. They are important stakeholders. Our categories are broader than OLX because they mostly focus on used goods. Our view is that used goods is good way for people to know Quikr, but we will make money by focussing on categories such as cars, real estate, jobs, education and services.
There are two approaches in the online classifieds business. One is developed market approach where companies focus on consumer-to-consumer segment and used goods, and over a period of time, people who are visiting your website will start using you in other categories -- real estate and jobs - where you can make money.
The story is playing somewhat differently in China, Russia and India where classified companies have to develop C2C and B2C simultaneously. A classified company cannot just focus on C2C because cars and real estate classifieds are big categories and some vertical player will come and capture that space. In China, there are classified leaders Ganji and 58.com who are doing exactly what we are doing. In Russia, the largest classified company is Avito which follows the developing markets strategy.
Q- What is the future of online classifieds business in India?
A- We have stopped thinking about desktop. We are only focused on mobile because the additional internet users in India over the next few years are going to mobile users. India is different than any other market in this aspect.
We have raised over $200 million so far. In our business, marketing is the only expense. We don't have to discount products. Marketing is about 75 per cent of the total cost. Our GMV (gross merchandise value) is $5 billion a month because we are selling high-ticket items such as real estate. We will break even in two years. I can become profitable today but I have to reduce my marketing costs. But I don't want to do that because if I increase my lead over others, then I can make more money in future. Our revenue has grown five times in one year, if I compare March 2015 and March 2014.
Q- You started a missed call service which is essentially an offline business. Isn't it somewhat different from your core online business?
A- As a local company, I want to make sure that we make people Quikr users before they become internet users. To keep this idea in mind, we started Quikr missed call service. We take listings on call.
Q- How do you maintain the quality of listings on your website?
A- In terms of product categories, electronics is the biggest category for us. That include phones, TVs, washing machine etc. Used car is another big category. We have launched inspection reports for used cars. In case of real estate, we have started highlighting listings that have more than four to five images where we know it is a verified listing. Our verified listings will be far higher than anyone else. We have a large team that evaluates listings that come on Quikr. We have hundreds of people whose job is to review listings. There are several layers to build trust. Secondly, we have asked sellers to verify phone numbers. When a platform becomes large, people come and do fake and duplicate listings. We delete as much listings as much we release. Initially, it was about building scale but quality is as important as quantity. For us, it is not about being the largest with poor quality.
Our biggest competition is not digital companies, but the offline medium. The biggest challenge is that since we are growing fast, we don't want to take eyes off quality.