MUMBAI: With logistics one of the biggest challenges in the country, physical delivery of products is not feasible in a number of villages and rural communities. Coming up with a solution to the concern and an opportunity to increase its consumer base, one of India's biggest fashion retailers, Jabong.com has come up with a new 'Next-Door' service.
The service will enable customers to pick up their order at the nearest coffee shop, petrol station or tour operator. The trial for the pickup service is going to start soon in 39 towns, including Murshidabad in West Bengal, Chandausi in UP, Dahod in Gujarat and Udhampur in Jammu and Kashmir.
Talking about the new initiative, Jabong’s cofounder and managing director Praveen Sinha says, “This will open channels for the consumers in the rural areas. The pilot for the pickup service will be launched in 469 pincodes and 114 pickup points.”
Piloting the most extensive initiative of its kind by an Indian company, the Delhi-based online fashion retailer, Jabong.com gets about 55 per cent of its revenue from non-metro centres and Sinha expects a double digit contribution in sales from this new scheme once the services scale up.
“We are expecting about 20 orders a day in the first round of the service while anticipating it to go up to 200-1000 orders a day within a year,” he adds.
While the revenue model for the new collaboration is still undecided, Sinha said that it is most likely to be a mixture of giving some per cent out of the revenue to the partners or on the number of orders it receives. It will find a balance between the two so that no one is at a loss.
With 700 per cent growth in mobile usage, Jabong is banking more on the smart phone users in the non-metro regions for the success of this new venture. At Jabong, mobile users now contribute 25 per cent of its orders and Sinha expects it to cross 50 per cent in the next five years.
Even though Jabong declined to share financial details about the partnership Sinha reckons, “The company is growing 100 per cent year-on-year and was valued at $26 million in the month of December 2013.”
Since e-commerce in India is still booming, 60-65 per cent of its customers use the cash on delivery (COD) mode of payment and according to the co-founder, it will still be open to the customers in the pickup service launched by them.
E-commerce sector companies are now beginning to experiment with newer techniques, mergers and acquisitions. While companies like Flipkart-Myntra are already in collaboration, Jabong is not currently looking at any mergers or acquisitions but is not closed to the idea.
E-commerce space in India has been growing like gangbusters with an annual growth rate of 56 per cent. Over the past four to five years, competition from online retailers such as Flipkart (in books, music and electronics) and Myntra and Jabong (in apparel) has hurt physical retailers. Commenting on the advancing E-commerce industry, Sinha states, “Indian e-commerce space will increase up to eight times by 2018-2020 to $30 billion.”