Infibeam’s double-edged strategy

Infibeam’s double-edged strategy

Vishal Mehta, founder and chief-executive officer of Ahmedabad-based Infibeam, an Indian e-commerce retailer, says, “In the e-commerce world, you’re living on a whole lot of experiments every single day.” It is a mantra Mehta takes very seriously. His latest experiment, one that he launched earlier this year, is called build-a-bazaar. With this, he wants to open up online retail to various entrepreneurs, who want to sell online under their own brand name without the hassle of managing the technology backend. Mehta says, “The whole thought process revolves around empowering intermediation.”

 “Once we develop Infibeam Logistics to service infibeam.com customers, we’ll be renting out the technology backbone to small and medium sized courier companies.”

Prior to launching build-a-bazaar, Infibeam had already opened up its technology infrastructure to select brands including HiDesign, TTK Prestige, Crossword Bookstores and Kolkata Knight Riders, and helped each of them establish their online stores. It was an experiment that worked. Mehta immediately knew that this model had the potential to scale. Since launching build-a-bazaar in May 2011, the company has already signed up over 1,000 (under implementation now) brands and entrepreneurs who want to build their online store using the Infibeam platform.

Journey so far

Mehta’s early-stage story of founding Infibeam is rather typical or so he says. Educated at Cornell University and Massachusetts Institute of Technology in the U.S., Mehta went on to work for amazon.com in a corporate development role. Then, like several Indians in the late 2000s, the entrepreneurial bug bit him. He wanted to move back to India and start a business.

“For most Indians, who’ve gone abroad, there’s always this question about whether you will move back or not. The journey is typical for many – when you’re a student you think twice about buying a cup of coffee. Then you get a job, a home, and you’re well settled. And then, you start thinking about moving back. The India growth story, created by several entrepreneurs before us, was too attractive. I decided to moved back in 2007 and start Infibeam,” says Mehta.

Snap Shot

Infibeam
Founder: Vishal Mehta
City: Ahmedabad
Year: 2007
Products/Services:
• infibeam.com, multi-brand, multi-product e-commerce portal
• Pi2, an e-book reader
• picsquare.com, offers personalised product
• Build-a-bazaar, a platform on which other entrepreneurs can setup an e-store
Revenue: A little less than Rs. 100 crore for FY 2011

Mehta went one step further. Instead of raising funds from external equity investors, the early-phase was self-funded. Mehta sold several of his assets (including his home and some

long-term investments he’d made) to invest a few crore rupees of his money into Infibeam. Mehta says, from day one, the strategy was two-pronged – infibeam.com would sell everything from books and electronics to home and lifestyle products, and simultaneously, the technology platform that powered the portal would be rented out to various brands.

Mehta did deliver on his strategy for infibeam.com. The company is among the top few online retailers (in revenue and number of transactions) in the country. It is also among the top few online retailers in various product categories including books, mobile phones, portable electronics, appliances and lifestyle products and manages six warehouses across India. The company also launched its own brand of e-book readers, Pi (and later Pi2), modelled along the likes of Amazon’s Kindle and Barnes & Nobles’ Nook. It also operates picsquare.com, an e-commerce venture offering personalised products that it acquired last year.

The network effect

Like most e-commerce retailers, Mehta does agree that customer service lies at the heart of a successful venture. Following the path adopted by competitors like flipkart.com, Infibeam has also launched its own delivery network – Infibeam Logistics. “This is also a move focused on delivering better customer service and facilitating easier cash-on-delivery,” says Mehta. It is a last mile delivery network that was launched in November 2011, with operations in Delhi, Noida and Gurgaon. There’s a two-pronged strategy there as well. “Once we develop Infibeam Logistics to service infibeam.com customers, we’ll be renting out the technology backbone to small and medium sized courier companies,” he adds.

At a broad level, Mehta wants infibeam.com to become an ecosystem of sorts for online shopping. “It is the network effect we’re going after,” he says. Once a store is setup, in addition to selling one’s own branded products, various products from infibeam.com (from other brands) can be added to the store’s catalogue. Mehta is convinced that a network effect will be created when infibeam.com operates in sync with the various stores created through its build-a-bazaar platform. Infibeam will collect either 1 per cent or 5 per cent (depending on the product) in transaction fees for branded products sold through the platform.

In the long run

The company is now looking to raise its first round of funding from institutional investors (till date, the company has been funded by family and friends in addition to Mehta’s own money). According to Mehta, the decision was taken keeping in mind the tremendous scale he wants to build. The funding will be used to increase capacity across the board and will be used to enhance operations in delivery, warehousing and customer service. “Over the longer term, I do foresee online retailers contributing largely to the organised retail pie. Eventually, more and more transactions will happen online for reasons of convenience,” he says.

According to Mehta, in fiscal 2010-2011, Infibeam’s revenue was a little shy of Rs. 100 crore. A bulk of this revenue has come from infibeam.com, but Mehta is convinced the way forward is the two-pronged strategy he is going after. Mehta wouldn’t reveal exact revenue targets for fiscal 2012, but says it should touch a few hundred crores. He adds, “In addition to revenue targets, we also have customer experience goals and targets. These are inputs, which we can control and we’re focused on that.” However, over a longer term, profitability will become crucial for larger e-commerce players. Costs do come under control with scale, but operating margins and net profits will become important measures, as time goes by.

One thing is for sure – Infibeam is not only betting on its own offering (infibeam.com, the e-commerce portal) to build scale but also hoping to carry along several brands and entrepreneurs (through build-a-bazaar) in its growth path and let the network take effect.


 What’s next?

Infibeam’s most recent launch is build-a-bazaar, a platform to let brands and entrepreneurs establish an online store. Till date, the platform has attracted over 1,000 signups and this might just turn out to be a big differentiator of Infibeam in a crowded e-commerce market.

The company is also focused on delivering better service to infibeam.com customers through the recent launch of its own delivery network. The tracking technology that will power its delivery network will also be opened up to small and mid-size courier companies across India.

It is working towards scaling up each of its business units, including Pi2, the e-book reader. Recently, it offered the reader on sale for Rs. 10,000, with 10 infibeam.com gift coupons each worth Rs. 1,000 free, along with the device. The goal of this campaign was to propagate the habit of downloading e-books.


Prem Sivakumaran is co-founder & CEO of Growth Mechanics, a leadership and entrepreneurship-focused business content company in India. Growth Mechanics publishes The Smart CEO, a publication focused on enabling peer-to-peer knowledge exchange among C-level executives and board members. The platform reaches over 1.2 lakh CXOs across its website, app, print publication & CEO Round Tables, and has featured on the cover India’s leading business leaders/founders from Infosys, Mindtree, Tata Sons, ICICI Bank, Biocon, Yes Bank and several others. In addition of Smart CEO, Growth Mechanics also organises the Startup50 Conference & Awards, an annual event to recognize India’s top 50 startups every year. Startup50 Alumni include Freshdesk, Oyo Rooms, Urban Ladder, Capital Float, Paperboat Beverages, among others. Growth Mechanics’ primary business model revolves around linking CXOs and Brands around engaging content and has worked with India’s leading companies including Mahindra Group, Godrej & Boyce, BASF, Airtel, Tata Docomo, Fiat, IDA Ireland, Yes Bank, Prestige Estates, Frederique Constant, Indian Terrain