On a lazy Sunday afternoon, Paresh Rajde was faced with impromptu travel plans. With most travel agencies closed, he had to struggle with buying a ticket at the airport counter. This personal experience prompted Rajde to draw up the blueprint for a neighbourhood services-commerce (s-commerce) boutique that functioned on the basic principle of convenience. His idea was fairly simple: under one roof, you as a customer could purchase anything from a railway ticket to an insurance cover or simply choose to pay your telephone bill. Thus, the year 2006 saw Suvidhaa Infoserve (Suvidhaa) commence operations in the city of Mumbai.
Almost 95 per cent of our Indian population does not make use of technology and they comprise our target audience. From poor to rich, students to the working class and even homemakers, our model is for everyone,” says Rajde.
Today, Suvidhaa has established its presence across the country with a total of 15,000 outlets spread across 20 states and 400 cities and towns with plans to add another 25,000 outlets to its tally by 2010. Rajde, the founder and chief executive, has struck upon an idea that connects with every Indian, across socio-economic stratas. “My initial thoughts were about the common man who perhaps cannot afford a computer and the difficulty he faces in availing a basic service such as bill payment or booking a railway ticket,” says Rajde. And this aggregation of services through a single platform has been instrumental in Suvidhaa’s success. Suvidhaa’s greatest strength lies in capturing the attention of a vast majority of India’s population. “Almost 95 per cent of our Indian population does not make use of technology and they comprise our target audience. From poor to rich, students to the working class and even homemakers, our model is for everyone,” says Rajde.
The winning model
Suvidhaa functions on a franchise basis, which works in its favour as it significantly reduces capital expenditure. It has established a robust service distribution network with close to 4000 terminals simultaneously offering an array of services, handling up to 1,20,000 transactions per minute. So your neighbourhood provision or medical store now bears Suvidhaa branding and can offer its customers numerous options including lifestyle, travel, payment collection, financial, educational and healthcare services. This is done through a technology platform that seamlessly integrates these neighbourhood convenience stores to the various services provider’s systems. The technology was designed keeping in mind the average retailer who would be operating it. “We provide the retailers with training to use our technology. If the retailer has handled computers previously, he could master the technology in less than two hours,” assures Rajde. Even though the technology’s user interface makes use of the English language, Suvidhaa has ensured an icon representation of each of the services that allows even a semi-literate person to operate it. And as Rajde states, when the retailer sees financial gains, his motivation to adapt to technology is that much higher.
Suvidhaa shares up to 70 per cent of its gross margins with the distributors and the end-retailers. “Suvidhaa is a win-win situation for all its stakeholders. We connect the service providers with a large customer base of the neighbourhood stores and spare them the hassle of recreating a distribution network while our customers just walk into an outlet and have access to multiple services,” says Rajde. The retailers also stand to benefit as the model does not require any inventory maintenance or deal with the disposal of dead stocks. They also have a part to play in identifying the location of a Suvidhaa store. “While we take into consideration the retailers input, we prefer locations on high or busy streets where footfalls are higher,” says Rajde.
Suvidhaa does not charge its customers any fee for availing a service. It generates its revenue from commissions collected from the service providers, wherein each commission differs based on the service provided.
While Suvidhaa boasts of a good growth rate now, the early days were rough. “Everybody thought we had gone plain crazy with this idea. The service providers and especially the retailers viewed us with suspicion, as is the case with most first timers. They refused to believe that so many services could be integrated through a single platform,” says Rajde. Rajde and his team stuck to their guns by integrating five to six services before taking their concept to the market. It was only when they saw proof that people accepted Suvidhaa’s proposition to be a reality.
Ever since, the going has been easy. Suvidhaa currently enlists over 200 service providers and has a customer base that is growing stronger by the day. When asked if brands competing in the same space posed an impediment, Rajde states that Suvidhaa has never faced a problem in this regard. “A lot of the services provided are complementary. For instance, the airlines would like to align with us and present those searching for railway tickets with an additional option,” says Rajde. He goes on to assert Suvidhaa’s positioning as an independent brand: “We are only the distributors of these services; we do not market or promote any specific brand.” And there is no competition from the unorganized sector too. “The unorganised sector has limited reach which again becomes very specific to one or two services. While the customer will obviously prefer access to a number of services, the retailer is also happier with Suvidhaa. He can forget about dealing with 10 different people and maintain just a single account with a single balance,” says Rajde.
Bringing in the money
Rajde’s confidence in his idea convinced those with the money to invest. Initially, Suvidhaa had an angel investor in independent entrepreneur and construction tycoon, Pallonji Shapoorji Mistry. Six months into operations, it received funding from two leading global venture capital firms, Norwest Venture Partners India (NVP India) and Reliance Technology Ventures.
“Suvidhaa is using its funding to aggressively expand its pan-India footprint and empower more retailers and service providers with its scalable services platform. In addition, the company is using the capital to grow its portfolio of service offerings and enhance business development and marketing efforts,” says Niren Shah, managing director, NVP India who is also on the board of directors for Suvidhaa.
Shah also expresses his excitement at Suvidhaa’s rapid growth to date and believes that the company is poised for continued growth and success in the years to come. But, NVP India seems in no hurry to exit the venture as of now. “We are not looking at an exit in the immediate term. In the long run, we will look to exit through a strategic sale or initial public offering,” states Shah.
On the right track
Recognition for Suvidhaa’s success has also come by way of awards with the latest being the ‘2009 Red Herring 100 Asia Award’ at Red Herring’s Asia 2009 Conference and Awards held at Shanghai, China. The company has also been a part of Indian government’s rural initiative, the e-governance project. It has helped establish kiosks that provide a services platform to about four lakh villages in India.
While recent trends have seen companies embrace the Internet for business opportunities, Rajde says, “Suvidhaa’s objective remains to service the common man for whom the Internet is not yet an option.” With the statistics tilted heavily in their favour, Suvidhaa certainly seems to have adopted the right strategy to introduce s-commerce to India’s common man.