Two founders of Zovi have now founded a new venture, Little, a discovery platform with geo-location based hyperlocal deals and discounts. Manish Chopra, one of its founders, talks about his plans for building the platform into a sustainable business in India, cash conservation at a time of funding lapse in India’s startup ecosystem and the art of juggling two businesses
In India, there was a time when availing discounts meant tearing a leaf out of a coupon book and handing it over to the retailer. Eventually, with the advent of technology, the concept of coupons transcended to the mobile and digital platform as well, with customers being allowed to redeem cash through loyalty cards or e-coupons. Yet, when players like Snapdeal and the like attempted to scale a similar model in 2008, it didn’t quite pan out as expected.
Fast forward to today and there are companies like Little, Niffler and CouponDunia doing just that and scaling quite speedily. So, what has changed in the last five years? “The change has emerged on three fronts,” points out Little’s co-founder, Manish Chopra. He believes that the Internet has changed with information being accessed predominantly through smartphones and apps. This, in turn, has changed the way consumers view and avail products and services. “Today’s consumers are more adept at quickly searching for and buying products online. They also have a higher degree of comfort in doing so,” he adds. As a result, merchants have been led to adapt as much to technology as consumers have, to keep pace with their buying behaviours and cash in.
Higher internet, data and smartphone penetration, changing consumption behaviours of customers and in turn, change in merchants’ attitude towards building customer loyalty and customer base has given an opportunity for the discounting model to become viable in india
In fact, these were the three premises on which he and his co-founder, Satish Mani, founded their venture in 2015. Little, the iOS, Android and Windows compatible app, serves up deals for customers in restaurants, gyms, spas, salons, movies, hotels and similar segments. The app is geo-location based, meaning, every time a customer switches on their location and accesses the app in a particular area, it throws up deals that the retailers nearby are offering at their stores. In fact, the app also allows merchants to customise their offers, depending on whether they are targeting first-timers, repeat or loyal customers. “Earlier discounts used to be about unplanned ridding of excess inventory. Today, because of high market competitiveness, brands are going the extra mile to either retain customer loyalty or acquire new customers by offering relevant discounts,” states Chopra.
Typically, with each successful transaction, Little takes a fee of 8 per cent to 14 per cent from the merchants. Until now, it has 15,000 merchants registered across 11 cities in India, and has a customer base of a million registered users since founding. “The app is demographically targeted at customers who are comfortable with smartphone usage particularly in metropolitan cities. We are not looking at targeting the Tier-II and Tier-III regions for now,” indicates Chopra.
The culture of trust
Acquiring new customers is just one part of the growth challenge for Little. As Chopra points out, what is more difficult is to build a culture of trust. Some of the best strategies that have worked for the company are a combination of relevant deals from merchants, and in turn, word of mouth and referrals from customers who have earlier used the app.
In fact, to fuel customer acquisition and improve backend infrastructure going forward, the team has recently raised an undisclosed round of funding from the Singapore Sovereign Wealth Fund GIC Pvt. Ltd. “At a time when ‘Winter is coming’ is the attitude towards fundraising in India, having investors who are focussed on the long-term growth of the business comes as a welcome change,” says Chopra. This does not mean the team is operating on a long leash in terms of cash burn. “We are consciously creating this app as a low cost marketplace instead of playing the arbitration game,” he clarifies. Chopra elaborates that Little doesn’t want to buy numerous vouchers from a large company and sell them on its platform. Instead, it wants to enable merchants to generate additional business by giving them access to customers to whom they can offer relevant discounts. “At the same time, we also want to keep our margins low so that the merchants don’t cut us out,” he adds. The January 2016 round for Little was preceded by a US $50 million funding it raised from PayTm, SAIF Partners and Tiger Global, at the time of founding the business. “PayTm, particularly, will be using the Little platform to power deals on its platform,” says Chopra.
With multiple anchors in place to deepen customer ties, and record a steady growth, the team is clear that going forward, its focus will remain on selling the physical capacity the merchants are offering on the platform, before it can think of supplementary models.
Founders: Manish Chopra and Satish Mani
Concept: A hyperlocal deals and discounts app compatible on iOS, Android and Windows phones
Investors: Singapore Sovereign Wealth Fund GIC Pvt. Ltd., PayTm, SAIF Partners and Tiger Global
Impact: Signed 15,000 merchants across 11 cities, has one million registered users since founding
From Zovi to Little
With the formation of Little, Manish Chopra and Satish Mani are now juggling two ventures; Zovi, an online shopping platform and Little. They founded Zovi in 2010, along with Kavindra Mishra and Satraj Mehta, and the venture is backed by Tiger Global and SAIF Partners (and MakeMyTrip’s Deep Kalra), with the first two being the same investors who backed Little when it was founded.
Chopra indicates that while the both are promoters at Little, they will remain on the board of Zovi, without getting actively involved in day-to-day operations. Here, Chopra shares key lessons the founders learnt from Zovi and some they had to unlearn when they founded Little
What We Learnt:
We prioritised customer acquisition
Spending a lot of time on digital marketing and other promotional activities at Zovi taught us how to keep the customer acquisition costs low. We learnt how to be pragmatic about costs.
Even though we raised good money, we learnt not to splurge it on exorbitant grand offices and other luxuries and instead focus on cash conservation.
What We Had to Unlearn:
Mobile-based businesses face several challenges like data costs, smartphone performances, managing too many apps, average phone quality and such. These were things we discovered that might affect our app downloads and we had to work around these as we began promoting Little.