FutureBazaar.com, the online shopping portal by the Future Group has reported a net loss of Rs. 1.4 million in the financial year 2008-09 (ending March 31st 2009) compared to a profit of Rs. 39.5 million in 2007-08. The company invested Rs. 25 crores in a technology platform for multi-channel commerce by ATG.
FutureBazzar’s income from operations rose 4.6 times YoY from Rs. 156.2 million to Rs. 718.8 million. In August 2008, the company announced its turnover was expected to treble from Rs. 620 million to Rs. 1.82 billion following initiatives such as its website redesign, the addition of regional brands and new products, and going offline. It also invested in putting up e-commerce enabled sites for Big Bazaar, Pantaloons and E-zone. These investments are expected to yield results in 2-3 years.
MediaNama spoke to Pankaj Tibrewal, who replaced Sankarson Bannerjee as the CEO in August 2009, to discuss the challenges facing current online shopping scene and FutureBazaar.com’s plans. On its fiscal performance, he said, “Last year was very tough due to reduction in discretionary spending but we managed to grow.”
FutureBazaar.com claims to receive half a million unique visits per month and 200,000 page views/day. The portal was set up in 2007 and currently delivers to 1500 cities and towns in India. Electronics and small to medium ticket items such as memory drives, mobile phones, tee shirts and home & kitchen products (when deals are offered) are products the company claims are doing well. The prime time for shopping on Futurebazaar is afternoons during weekdays. Tibrewal says online shopping is currently facing challenges on two fronts – supply and demand.
Till a year ago, FutureBazaar.com’s internal supply chain was struggling to keep up with its online store’s growth and was not geared to support online sales and keep stores stocked. Since then, Tibrewal says, the company has invested in its physical infrastructure and software for warehouse management, but the experience it wants to create for users is still around a year away. FutureBazaar.com also had to deal with immense competition from retailers as “no market goes un-served in India where entrepreneurship is sky-high.”
The challenges for online shops on the demand side are more to do with consumer behaviour. Tibrewal said, “Consumers have had no reason to buy online compared to other countries.” He offers a glimpse into a shopper’s mind: “Indians love shopping..it’s entertainment for them. They are not necessarily looking for convenience.” The lack of needed broadband infrastructure is also contributing to lack of awareness and discovery of online shopping and deals.
He notes that some residents of large cities have started valuing convenience of online purchases if only to avoid parking, and smaller towns are waking up to it now with broadband connectivity increasing. FutureBazaar.com is focussing on the more enthusiastic smaller town buyer to drive its sales. “We have seen a lot of orders from Bhuvaneshwar and Port Blair in the last month,” he said.
FutureBazaar.com, rather than take the eBay route, wants to be like BestBuy.com – it will co-ordinate with (its own) physical retail stores (eZones) to offer an online-offline experience. The reason – “Shoppers do not want separate online and physical shopping experiences; regular shoppers are still not buying online, but they perform research and then go to the nearest offline store to make the purchase. This is BestBuy’s model but a very difficult one as inventory has to be accurate.” Futurebazaar will require complete integration with eZone stores and ensure stocks are available to both online and offline shoppers. We asked Tibrewal how many eZones will the company be adding to ensure reach through the BestBuy model and if it would not be faster to partner with local, smaller, independent retailer stores. There are currently 36 independent eZone stores and 18 cut-ins; in addition, the company has an electronics bazaar inside 117 Big Bazaars. “Growth will come from new stores, eZones as well as Big Bazaars, which we plan to have 245 by 2013,” said Tibrewal.
But what are online shops doing to encourage more users to try buying online – are there any exclusive deals or incentives? “Currently, FutureBazaar.comdoes not offer any online-exclusive deals – our offline store eZone handles the partnerships and deals are not made in isolation,” he said. Tibrewal expects online shopping to pick up following RBI’s introduction of 3rd party authentication systems.
Status of FutureBazaar & The KPCB & Sherpalo Investment
In 2008, KPCB and Sherpalo had announced that they had picked up 15% in Futurebazaar. However, according to the Pantaloon retail annual report, Pantaloon owns 99.74% in Futurebazaar. Then in which entity have VC forms KPCB and Ram Shriram’s Sherpalo Ventures invested? Sandeep Murthy, Partner, Sherpalo Ventures clarified to MediaNama that they’ve invested in the back-end technology business that also happens to power the platform for FutureBazaar. Tibrewal confirmed that Sherpalo and KPCB have about 14% stake in Future Ecommerce Infrastructure Limited.
Download For FutureBazaar’s Financials:
– Pankaj Tibrewal Is Futurebazaar.com CEO; Sankarson Banerjee Joins India Infoline
– FutureBazaar.com CEO Sankarson Banerjee Resigns
– Future Bazaar Turnover At Rs. 62 Crores; Needs To Get Real On Savings, Reduce Delivery Time