The internet has transformed the retail experience for consumers by activating their emotions and sparking the desire to buy through imagery, videos, virtual try-ons, real-time feedback and free home delivery. Online retailers who aggregate products from vendors are turning to startups for support at the backend, as they shed inventory in favor of the marketplace model which brings the merchants and the buyers together. The shift towards this model is taking place as companies try to find a new balance between maximizing capital efficiency, maximizing customer delight and minimizing logistical complexity.

To partake in this revolution Sanjay Sethi made his way to India from U.S. where he was working as the Global Product Head for Shipping & Logistics, Payments & Billing at eBay. Identifying the ripe opportunity to build a managed market place in India, Sethi along with three other friends founded ShopClues. Headquartered in Silicon Valley, the company provides a managed marketplace that caters to both, the merchants and the buyers. The company wanted to incorporate the feel of an Indian bazaar in their platform. Their idea has clicked well with the customers and vendors alike as the 35th entrant in the market has today reached a coveted position among the top five players in the industry. The company has joined the 'Red Herring Asia Top 100' winners list for this year in the Online/Internet category. With over nine million monthly visitors on the site and more than 2.8 million products worth Rs.6400 crore in listed merchandise value, the company has fast emerged as a preferred destination for shoppers.

ShopClues figures among the Top 60 names in Alexa ranking - it is the only company to have achieved this stature with no investment in above-the-line promotions and has the lowest customer-acquisition-cost in the industry.

Leaving the Inventory Model Behind

ShopClues' success can be attributed to the core team's fundamental understanding of the market. Recognizing the fragmented nature of Indian retail market, the company came into being with a firm belief in the marketplace model where buyers and sellers come together to interact seamlessly. "For those who want to be horizontal players in all categories of retail market, the marketplace model is extremely beneficial as they can scale up quickly and conveniently," explains Sethi. In the Indian retail market, the supply side is hugely fragmented as is the retail distribution system. The managed marketplace platform aggregates the supply side and connects it directly to a vast pool of buyers. This is why in most emerging markets in the world, the biggest e-commerce companies are marketplaces. "India is all about small and medium businesses where retail is very fragmented with under-developed logistics and payment infrastructure. The managed marketplace model covers up all these need gaps," Sethi adds.
Once a marketplace builds a reputation for credibility, it scales organically. Essentially, marketplaces are technology platforms that provide tools for buyers and sellers, and offer a trusted environment that enables price discovery and easy transactions. "Online marketplaces should have a very large number of merchants, with greater representation by SMEs who bring wide selections and large amounts of inventory to the site. This helps to offer a plethora of options to customers and that is where we fit, i.e. managing this complex ecosystem of merchants and value seeking buyers," adds Sethi. Nearly 21,500 merchants sell on the ShopClues platform, with representation from every state in India.