MUMBAI: India’s online retail market has grown multi-fold in the past couple of years, courtesy the growing use of the internet and smart phones. According to a Crisil report, e-retailers have earned revenues close to Rs 139 billion ($2.24 billion) in the financial year ended 31 March, 2013.
However, to succeed or for that matter survive in an exceedingly cut-throat online environment, these companies have to time and again generate money through equity funding or merge with other online players.
One such player is LimeRoad, an online social discovery platform for women, which has raised a second round of funding of $15 million, led by Tiger Global, with participation from existing investors Lightspeed Venture Partners and Matrix Partners India. The company had in 2012 raised $5 million through its first round of funding, with participation from Lightspeed Venture Partners and Matrix Partners India.
LimeRoad’s advisory team helped it build a strong proposition to get the right kind of investment partners for its business. The team comprises Ahti Henla who is the founding architect of Skype and Michael Swaiij, who is credited with the launch of e-bay and AOL in Europe.
So what is on the agenda now? The website will be investing a large part of the funds in technology to further build the user interface on the platform and on mobile. “We have a great team on-board and we are looking to build it further with the help of these funds. So far, we have kept marketing flat, but we are now looking to increase spends on some intelligent marketing,” says co-founder & CEO Suchi Mukherjee.
The blueprint of the marketing is a work in progress but the focus will largely be on social networking websites. “Currently, our primary focus will be on building our mobile app further. We intend to make the LimeRoad experience for women nothing short of addictive. Our plan is to win over women mobile users across the country with our mobile app that is light, super-fast and extremely easy to use,” adds Mukherjee.
What made Lightspeed Venture Partners invest in the e-commerce site for a second time? Says Lightspeed Advisory Services India MD Bejul Somaia, “We continue to invest in what we believe is a truly exceptional team that consistently refuses to take short-cuts and instead, focuses on finding scaleable, long-term solutions to difficult problems. The LimeRoad team has already disproved many accepted notions in the world of Indian online commerce. For example that it is not possible to grow without offering heavy discounts or that Indian users aren’t savvy enough to embrace deep social activities like scrapbooking, curating collections or sharing.”
However, there are experts who feel that it is not easy to raise money. Seedfunds’s founding partner Mahesh Murthy says, “It is getting increasingly difficult for e-retailers to raise money these days and the only ones who seem to manage it these days are those doing second rounds. This is not because of a paucity of new retailers - but because of the belief - not necessarily true - that it takes a lot of money to build a successful retail brand. Conversely, the raise of a big round is no guarantee that your brand will survive - just ask those who have been purged or merged into nothingness.”
With an already overcrowded online retail market, how does LimeRoad plan to break away from the clutter?
LimeRoad.com believes that unlike the rest of the players which are still using conventional methods of ecommerce, LimeRoad uses Web 2.0 elements. Through these, it has engaged with consumers with its proprietary Scrapbook feature. “We measure our success basis how well we engage our users and today, we have a community of 5000 + Scrapbookers who have curated more than 75,000 looks and our most avid Scrapbookers create between 5-7 looks every week,” says Mukherjee.
About the TG, Mukherjee feels it is no longer about appeal but more about ease and convenience. “Since youngsters are more socially active, they like to discover new websites, new products and share with their friends. So, they are the ideal shoppers for e-commerce sites. However, at LimeRoad, we see an equal traction from shoppers aged 18-25 years and in the 30+ category, as our large collection of unique and exclusive products appeal to a more discerning, mature audience as well,” he says.
The site isn’t scared of competition either and is aware that with too much competition, many try to woo and acquire customers through discounts. “Our approach is different, we believe in acquiring customers and creating brand loyalists through engagement. If you simply put up products on discounts, the customer loyalty is towards discounts,” states Mukherjee.
The lifestyle online retailer promises its customers products from the deepest corners of the country, and to fulfill this, promise, it has 60 per cent vendors who retail exclusively on the platform. To give you an example, DAMA, which is Dastkar Andhra Marketing Association, closely engages with the weavers through handloom co-operatives. The fabrics and garments are hand woven and flawlessly handcrafted from natural fibres and dyes. They retail exclusively with LimeRoad.com and are not available anywhere else online.
“Also, our vendors update stocks every 15 days, which fulfils our promise of enabling discovery and freshness,” says Mukherjee.
On the e-retailer business model, Murthy opines, “LimeRoad follows the Pinterest-type model, with a mobile app front end. While UI will go some way -and is easy to replicate, it is your mastery over margins, unique designs and supply chain that will help you win in the long run. Executing on those fronts will be LimeRoad's key challenge.”
The e-commerce space in India has grown exponentially over the last couple of years and has witnessed a growth of 88 per cent in 2013, as compared to 2012 alone, as per various reports.
Talking about the purple patch the e-commerce sector is enjoying these days, Mukherjee says, “e-commerce is here to stay and grow. Increasing internet penetration, fast adoption of 3G, and smart phones in tier II & III cities, and more retailers entering the e-commerce space will ensure that the e-commerce industry will remain a sunshine sector.”
The year 2013 was a good year for the site and this year, its goal is to be the largest platform for social discovery of lifestyle products in south East Asia. LimeRoad aims to cater to everything that interests women when they are browsing online.