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a1Books Shinu Gupta's
Karthik Sundaram
Thursday, March 4, 2010
In a recent Ventureblog, David Hornik, partner at August Capital, writes, “...but fanatical devotion to your company. That brand of single-mindedness has long been the linchpin of success for entrepreneurs. While the term fanatic is pejorative in many circles, I love fanatics. Fanatics make first class entrepreneurs. You must be fanatical about that which your company does, not just about making money. Great entrepreneurs believe that they are changing the world for the better.”

Hornik, meet Shinu Gupta.
In 2003, a1books.com turned in a solid $24m in revenues, emerging as one of the largest sellers of books on Amazon.com, the online retail behemoth. Founder and CEO, Shinu Gupta runs a really lean company for this size of an operation. “Most of the orders drop through directly to publishers and are mailed off to the consumer within 24 hours,” he says. “Books are possibly the most finite of products anyone can buy online—people aren’t particular about touching it, feeling it and so on. The books have definite dimensions, and the quality of the contents is fairly standard. What we are seeing is only the tip of the iceberg—online retailing of books is bound to grow in huge numbers.”

Gupta speaks from experience. In the late eighties, the immigrant student was hard put to find books—new or otherwise—for his master’s program. In his first attempt to serve this large need, Gupta founded libhitech.com, a platform for technology publications, which was the grounds for today’s a1books.com. Gupta has developed other Internet tools in the past, an e-organizer that was sold to mail.com, where he then worked for some more time post the acquisition. Yet, the fanatical belief in book retailing was not shaken in him.

“We were retailing books online before Amazon was even heard of,” he recollects. “We were really running it from our living room.” Gupta was a Wall Street trader at that time, but was deeply hooked into technology. At a1books.com, he has spent hours in building the backend technology ground up. “What the customer sees is only a flake, there is so much automation that goes on behind those clicks, and we have rarely lost one customer in the past 5 years,” claims Gupta. The founder worked in all —literally all—the departments of the company, to see how he could leverage technology. “I still write code today,” he says. His belief in the Internet technologies has paid off very well. Operating from a single database, Gupta has shipped to over 2 million customers today, and has launched another division—a1overstock.com, bringing in Ben Archer from Book Club of America to lead the business. “Hurt books have really increased for remainder wholesalers because of the chains,” he says. “They return a lot to publishers and those books are available to us, so as long as the chains keep expanding their business, the future looks good.” Adding to that, Gupta sees many mom-and-pop store owners buying 100-200 books a month from him, to sell them on Amazon.

While growth was modest the first few years, and actually dipped in the 2001 quarters, Gupta has come back with a bang. “The Internet is coming back—more sanely this time. A lot more people are online, shop online and believe in its convenience.” Not just that, Gupta’s persistance in selling through online media has opened the publishers’ doors for a1books.com. “We get the best deals from the publishers for new and overstock books and are able to populate these low prices on Amazon within minutes—almost all automatically,” says the CEO. Spidering Amazon’s quoted prices has been a very smart tool for Gupta.

Just last week, the CEO ordered a score laptops from a barely-known manufacturer and is throwing them on to his site. “Students are a demanding, yet loyal population. If you can hook them in the beginning, there is a huge market that will stay with you for the next four years. And then some, even as they go out to work.” Gupta has demonstrated laser focus in understanding these needs of the student market and is now building a marketplace for them. “Fixed price markets have always found favor with this community that has access to high speed Internet, hard-earned cash, and soaring ambitions. If Webnotions can put together a marketplace for them, the market is simply explosive,” observes Gupta. He is also in touch with the Follett and Barnes & Noble stores across college campuses to expand his market size.

Shinu Gupta has made numerous contacts with the publishing world in India and is very firm about executing the online success in India. “Look at Nayi Sadak (Hindi for New Road, a street in New Delhi),” he invites. “Right there are over five of the largest publishing houses in India. But if each of them want to create an online business, they are bound to face uphill tasks. I want to be the Amazon for Indian publishers, and bring the thousands of mom-and-pop retailers online with Webnotions,” he says. He is also asking manufacturers to come on board with him, in e-tailing their products. “All they need is a central database—they do not want to mess with a server and Oracle applications,” he smiles. Gupta envisions creating this mammoth catalogue in India, off which small businesses can simply front end their webpages and develop sales.

Gupta is casting plans to set up a large operations base in India, where he foresees a team putting together the largest catalogue and database of products, “setting the standard for the Indian market place.” This involves at least a hundred-strong team that would do the scanning, build the code and deliver it into the database. “The young fashion designer in Lucknow can then simply dig into this database and find accessories that would go with her collection, put them all together on her website, and start sales. We will handle the logistics, pricing, distribution and deliveries,” he says. That needs serious capital. Gupta agrees, saying he is looking for an early stage funding of about $5m. “We are not a startup, and have the last year’s sales to prove it,” says Gupta. “Any venture capital partner would be happy to see our revenues.”

Gupta sees e-commerce on the rise in India. “ICICI and other banks are giving away credit cards to almost anyone, and are expanding the credit market. Now how difficult will it be for people to get on to the web and buy stuff? So far, Amazon has had issues in delivery to India and other countries, but with our experience, we can easily handle those logistics. We understand books, we understand e-commerce probably better than anybody in India today. That is a market waiting to explode.”

He is quickly adding DVDs, electronic gadgets, and music to the list on his marketplace. “These are the most successful lines in online retailing, as people understand the finite qualities of the products—they do not have to taste or wear a product.” His online concept leverages the brick-and-mortar presence and functioning of the supplier companies. Gupta says the company’s best strategy is its great technology. “We have really good data in place. We watch bestsellers by category. We can snap up books others might miss because we know what's selling well.”

He has added a small physical retail operation near his Netcong operations, which is currently catering to people who want to buy in person. With less than thirty people, Gupta has managed to pull off one of the most successful revivals of the dotcom days. “The misconception was that putting everything on the Internet would get purchase, and most companies failed,” remarks the wiser CEO.

a1books.com, a1overstock.com, and now a1 B2B marketplace are all robust businesses, and has won Gupta industry repute. “From a two-men show, we have received the most superior credit ratings from our suppliers, and have been diligent in resolving every seller’s needs,” says Gupta. And in all this, he says, he was ably supported by a team that stood by him. “In the days to come, increasing Internet connectivity is going to explode the e-commerce market. I am absolutely sure of that, and want to be there when it happens.”
Hornik and friends, are you listening?
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