The Gurgaon-based company is also planning to introduce international brands to India from Southeast Asian countries
Bengaluru: ShopClues, the Indian e-commerce platform owned by Singapore-based Qoo10, has entered the next phase of its rebranding as a cross-border e-commerce platform, now targeting the North American and European markets, Anuraag Gambhir, managing director of ShopClues told IndiaRetailing.
The company’s export business currently makes $12 million per year, which it expects to increase to $100 million by the end of 2024.
ShopClues was founded by Sanjay Sethi, Sandeep Aggarwal and Radhika Aggarwal in 2011 as a wholly-owned subsidiary of Clues Network Inc. Until 2019, it focused on domestic e-commerce, partnering with over 40 courier companies to achieve the highest pin code coverage in India, primarily targeting tier 2 and tier 3 markets.
In 2019, global e-commerce platform Qoo10 acquired ShopClues in an all-stock deal, with the aim of making Indian brands available to consumers in Southeast Asia.
The Gurgaon-based platform currently handles around 2,000 cross-border orders daily to countries including Korea, Japan, and Singapore. It has approximately 1.1 million registered sellers and receives about 5-7 million consumer visitors each month on the domestic side.
The company also plans to introduce international brands to India from Southeast Asian countries likely next year and aims to revamp ShopClues’ domestic platform to boost marketing efforts and start importing global brands.
In an exclusive interview with IndiaRetailing, Gambhir discusses the company’s changes post-merger, cross-border business strategies, strategic priorities, and more.
Edited excerpts…
What changes occurred following the acquisition?
Following our merger, we were aiming to expand the presence of Indian brands in various international markets, using the Qoo10’s network of around 10 e-commerce companies worldwide. These platforms attract substantial consumer demand daily.
For instance, in Korea, its platform We Make Price is among the top e-commerce sites, with 80% of transactions between Korean sellers and buyers. Now, as part of the Qoo10 group, we are working to bring in 20% of business from other countries, allowing Korean customers to order products from Japan, Singapore and India. We are trying to reach foreign customers through our global platforms and introduce Indian brands to those markets.
In India, what is your current target market?
Since the beginning, our core market and value proposition have always focused on tier 2 and tier 3 cities. However, we are not spending too much money on customer acquisition domestically anymore, as our focus has shifted to taking the Indian brand to foreign markets.
What is your percentage distribution of each product category?
Domestically, our product distribution is roughly 60% fashion and 40% electronics. However, high-cost items like smartphones and consumer durables are challenging due to their pricing and the associated costs of customer acquisition and delivery. Therefore, we are shifting away from these categories and focusing more on accessories and refurbished mobiles.
For our global business, we are concentrating almost entirely on fashion and cosmetics, as selling electronics internationally is quite complex.
Which market do you see high demand coming from?
Currently, Asia is our largest market for Indian product sales, with Korea, Japan, and a bit of Singapore being the top-performing countries.
The products performing well include Ayurvedic and herbal cosmetics, as well as 100% cotton items. We are also concentrating on traditional Indian handicraft products.
Recently, Qoo10 acquired Wish.com, a US-based online marketplace which is also known as the world’s most-downloaded e-commerce app with a strong presence in the US and European markets. This acquisition, finalised at the end of April, is still undergoing integration. Over the next two quarters, we expect to expand our reach and introduce Indian products to Western markets as well.
How do you connect buyers and sellers?
ShopClues is one of India’s first marketplace models to establish a connection between buyers and sellers in a managed environment. The e-commerce model in India involves minimal intervention from the platform in the transactions between buyers and sellers. But, since inception, we have offered a technology platform that facilitates direct transactions between buyers and sellers without interference.
The platform enhances sellers’ ability to market their products effectively, ensuring they can communicate their value propositions clearly to potential buyers. Buyers can easily browse, select, and purchase products they prefer. This approach extends Shopclues’ geographical reach and increases the number of sellers using the platform.
How do you see cross-border e-commerce trade evolving?
The government’s charter for 2030 aims for $2 trillion in exports, with $1 trillion expected from services and $1 trillion from products. Out of the product export target, $200 to $300 billion is projected to come from e-commerce exports. Currently, e-commerce exports stand at around $3 billion, so the goal is to increase this seventy-fold to $200 billion by 2030. This ambitious target is supported by visible government initiatives to enable businesses and educate micro-small and medium enterprises (MSMEs).
Any challenges in cross-border business?
The biggest challenge in cross-border transactions is often logistics. Unlike local transactions, cross-border shipping involves additional complexities, such as compliance with export customs in India and import regulations in the destination country. This requires handling a lot of technical information.
Additionally, shipping a single item internationally can cost around $30, whereas the average sale price of such products is typically $5 to $15. Customers are unlikely to pay $30 for a $10 item, so achieving efficiency of scale is crucial, which is what we are working to accomplish.
Qoo10 has a dedicated business arm called QXpress which aggregates all goods in India and ships them in bulk, reducing the per shipment cost to $6-7, making it more affordable for customers.
How are you managing returns?
Once a shipment crosses borders, it’s unlikely to be returned, so we ensure that the products we sell are of high quality. In the rare event of a return, we have warehouses in most target countries. Returned products are sent to the respective local warehouse rather than being shipped back to India. If the product is in good condition, it is reused for future sales. If a refund is requested, we process it and manage the returned inventory locally for future sales.
Currently, returns are not a pain point for us since product quality has been maintained, with claims being less than 1%. People are experiencing Indian products, and we want to ensure they form a positive impression.
How are you integrating AI in the business?
For now, artificial intelligence aids in our customer service, with 70% of queries handled by an AI-based WhatsApp chatbot. This tool effectively generates responses and, when necessary, escalates issues to human agents.
Interestingly, the AI has proven more adept at detecting subtle emotional changes in text compared to human agents, identifying nuances in communication that might otherwise be missed.
Top three strategic priorities…
Our first priority is taking Indian brands to global markets and expanding their footprint across all the geographies within the Qoo10 network. This is a huge potential in this area with a few players offering Indian brands.
The second focus is our enterprise business. ShopClues now has a separate enterprise division that collaborates with both government and private entities. Over the past decade, we have developed various technology solutions that facilitate e-commerce, which we are now offering to government departments and initiatives focused on digitising MSMEs and other sectors. Currently, about 80% of this business comes from government projects, with 20% from private entities, and we expect this ratio to remain stable.
The third priority is improving back-end support for the entire group, which includes technology support, customer support, marketing, and maintaining catalogue hygiene.
