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70-75% of 123Stores’ sales came from Amazon US in FY17

123Stores (IntraSoft Technologies Limited), a multi-channel e-commerce retail platform, got 70-75% of its sales from Amazon.com in the financial year ended March 31, 2017 (FY17), managing director of IntraSoft Arvind Kajaria said during the company’s earnings call. He added that eBay was the second largest, accounting for “about 10% to 15% and then we have from our store as well and then we have Sears, Rakuten (formerly Buy.com) and the others (such as Bestbuy.com).”

Some of the other highlights include:

On product categories

Kajaria said, “Home improvement and home products is where a strong focus of 123stores [is] and that market is increasing faster than the other categories. We are very well poised, the maximum number of vendors that we have is in that category, so we see that doing very well and our focus on that particular category. Also a category which is doing very well is toys and games on the Internet. If you heard my earlier commentaries we are very focused on that but the January to March quarter, generally toys and games are little subdued. If you see the October to December which is the holiday quarter the toys and games increase. [Besides home and toys] we are very focused on sports and we are very focused on musical equipment, pet supplies, anything to do with pets.”

Note that the top selling categories of products in Q4 FY17 were a) furniture, patio, lawn & garden, b) home improvement & art crafts, c) sports & outdoors, and d) toys, games & babies. In the previous quarter (Q3 FY17), the top three selling categories of products were furniture, patio, lawn & garden (30%), toys & games (25%), musical instruments & gadgets (15%), and home improvement & art crafts (13%).

On commission to e-commerce marketplaces

“The commission to the marketplaces is very difficult to negotiate and it’s almost consistent for everybody. So I don’t believe that anybody gets a lesser commission than 123stores on a financial basis. That said as your number and your importance on the marketplace goes up, you get other benefits like maybe a human contact there or your receivable days can reduce or you could have some other operational benefits. But I’m not aware of any financial benefits or a reduction in commission. From time to time the marketplace on their own, do some promotion for categories they want to internally project or increase their presence in those categories and they reduce the commission but that reduction is for everybody not only for 123stores. To the best of my knowledge [commission] has been consistent at about 15% for Amazon [for the past 5-7 years],” said Kajaria.

On Working Capital

He mentioned that they “do not anticipate relying much and hopefully none at all on any external capital or any equity dilution and slowly moving to the best possible terms available from supplier’s credit”…”but it is going to take few quarters and maybe couple of years to reach that.” He added that they’re in a position “to continue to ask for more and more credit. As that happens and I have full reason to believe that will happen, so we will continue to fund our business through this financial mechanism.”

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