Expansion into a full ecommerce store

Continuing Vishal's memoirs:

“As we have been discussing, we started out as a lead generator for selling cars and bikes. Customers started using our service and we started car rentals as well. Then customers started asking us for car accessories! This led us to look at expanding our store to other product domains.

“To understand that expansion, let's take a step back and understand how ecommerce is different from normal retail shops.

“The physical shops that you visit actually store merchandise (whether it is computers, CDs or books) that you can buy instantly from them at each location. The demand is local as well. Compare that to an ecommerce store – where we have a huge list of products that you can buy – BUT we do not have physical inventory repeated each location (in theory, we can satisfy country wide demand from one location and not have to replicate inventory at each location).

“It is very hard to forecast across lakhs of products when and how much inventory to order. In addition, order allocation across multiple locations is another big challenge. Initially, we started working with suppliers to reactively order the item after customer order is placed to reduce inventory risk. Across time, we had enough buying history to predictively order several products and we continue to fulfill merchandise across our many locations.

“These are some of the challenges of running an ecommerce store, and you can now imagine how many complicated it can get, and why technology is important to remain on top of things.”

This is the behind-the-scenes picture, let's see how Infibeam started building out that picture.

First we needed the list of 'things' that we can sell, the “catalog”. The bigger the list, the bigger the “selection” for the customer.

So, in early 2008, we acquired a small outfit in Delhi that created digital catalog for retailers. Subsequently, we expanded fulfilment operations in North India.

We soon added more categories such as mobile store, health equipment, and cameras.

In May 2008, we launched our books store with more than 3 million books in our catalog. We continued adding selection across retail categories like mobile phones, apparel, home appliances and many more. By the end of 2008, we were selling products across all retail categories and business was growing. We had the entire roster of products that we could possibly sell.

Going back to our history of how we started selling cars and then customers started asking for car accessories, we were mentally in the space around products, and we came across the customized products space. For example, people want to buy mugs or keychains, wouldn't it be more appealing if it can be customized? That is when we decided this is an exciting market and we should be part it. We then acquired an ecommerce company in gifting and customized goods – PicSquare.com in Bangalore. It was started by two IITians - Manish Agarwal and Kartik Jain, a fantastic team. Soon, we expanded our presence in Bangalore and started fulfilment operations in South India.”

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Struggle

Continuing from Building a Company, Vishal says:

"There are so many things that can go wrong in a startup. We had no experience of running a business beyond being employees. One of our partners quit due to personal reasons and the remaining team had to regroup. It was disheartening but we were patient and worked on rebuilding momentum. But, then, our office neighbour was drilling a common wall and hit a water pipe which flooded our office. Most of the equipment including our servers were soaked in water. We rescued much of the office; and our website still runs on the salvaged servers! :).  Similarly, to create digital product catalogs, we made significant investment in getting expensive automated cameras and related gear just to realize that we did not need to spend so much on the hardware in the first place and a simple camera would work just fine with software processing.  Such is the startup life.

"We learned that things will not go smoothly and that you have to be willing to roll up your sleeves and get the job done. You can't have a specialist to do everything that you don't know how to do yourself. If you go in with that attitude, then you will get paralyzed because you will run into things that you don't know how to approach. More importantly, you will make mistakes, and you have to learn and try not making the same mistake again.

"We worked day and night to create the software infrastructure. We wanted to create an experience which would exceed customer expectations. Launching with an automobile store was one way to fund our growth as there was monetization associated with generating leads, while we continued building our retail software infrastructure. We launched the automobile store in October of 2007. Literally, in the first few days, we had interest from customers across India and we were totally unprepared to handle volumes. We were shocked to see that customers showed interest in purchasing new cars and bikes online in India. While there was offline customer follow-up required in closing a transaction, we had tied up with dealers and, in some cases, manufacturers across all major cities. To take a step towards closing the transaction online, we launched a gift voucher program for major car and bike brands that could be redeemed across any dealer location across India. 

"One of the hardest things about the Internet is that you don't see your customers. When you don't have a store to go to, you're trying to find ways to understand what they're experiencing. So we made everyone on the floor take customer calls. The day job for everyone was to do customer service and the night was spent fixing software to make customer experience better. I think attending customer calls during our early days was a blessing and our company culture to care and obsess on customer requirements grew from there. We started fixing hundreds of small but annoying things that made the customer experience better. We still continue the tradition of answering customer calls.

"While we worked very hard in early days, the income from leads and advertisement was not significant. The first problem was that customers who showed interest in purchasing were genuine but closing a transaction was not immediate (at a physical dealer location). The other problem was that customers who registered interest in vehicles almost never returned - people do not wake up and think of buying a vehicle everyday if you have recently purchased. That's when we started thinking of services tied to products and added a car rental section which started generating leads and additional revenue. We also started understanding buying patterns, analyzing information, and formed business decisions based upon this information. So that is where data warehousing and data mining and that sort of thing became very important to us, to help us build a strategy for our business. That is how we realized we needed to quickly build more online retail stores and develop a superb supply chain, because customers started asking us about music players for cars, navigation systems, bike helmets etc.

"There are a thousand little things that impact the customer, and we wanted to be at least 10 percent better than anybody else. I think that's exactly what we continue to do: stay focused on all the tiny little details that matter to customers."

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Building a Company

Continuing from The spark that started a company:

The five partners in the company had a vision - to build an excellent ecommerce platform. It was a huge vision for online retailing in India. It included both building world-class ecommerce software as well as building a vast catalog of products and services that can be sourced and fulfilled for retailers in India.

So what were the main hurdles in achieving this vision? Vishal says "There were three main business problems to solve. First, we did not have the technology infrastructure ready to show to retailers and brands; Second, we did not know much about retailing products in India and there was no digital catalog readily available. Lastly, we needed to fund our growth, and hence time to launch and making some income was important. We decided to build our own online retail presence for the consuming India after which, we can offer software as a service to retailers and brands."

Those sound like huge things to accomplish. How did you guys start? "Well, the first thing you do if you want to start a company is you write a business plan, and so, I did that. I wrote an 18-page business plan."

But... many startup people today say that writing B-plans are for wimps and it hardly survives reality? Vishal adds "Writing a B-plan was super helpful. You know that the business plan won't survive its encounters with reality. The reality will never be the plan but the discipline of writing the plan forces you to think through some of the issues and to get mentally comfortable in the space. Then you start to understand that if you tweak this knob, this will move over here, and so on. So, that was the first step."

But... where did you get the money? "The initial startup capital for infibeam.com came primarily from all my personal savings and from my family. This is one of the biggest strengths for an Indian - the support of family. My parents invested their savings in what is now infibeam.com. That was very bold and trusting of them, but made me anxious about making good on their investment! But you have to take risks when you want to chase your dreams, and we got started. We decided to start in Ahmedabad because I was familiar with the city living from my early days and the cost of living is reasonable. We also had some office infrastructure available at very attractive rental and moving to a city where there are some fine institutes like IIM, IIT and many other local engineering colleges proved to be a great decision."

Okay, now that you had some initial idea of the business, how did you tackle the required technical infrastructure? "We went to Bangalore which, in my mind, qualifies as one of the world's capitals for great technical talent. We interviewed many engineers and spent a lot of time on that because that was going to be an important investment - we needed to build the technology that would run the store. Over several trips, we found the best people, who turned out to be the most important colleagues and partners in our history of building Infibeam. I consider ourselves lucky in attracting the best talent at such early stage of the company. From day one, we wanted to build a business and not just earn a living. It's like this: If you get people who are focused only on earning a living, they will pull every bit of money they can out of the company. For me, it is about making something of value. If you want to build a business, take as little out of the company as you can to live on, and plough it back into the business. When the year end comes, if you’ve done well, then you get dividends. We were lucky to find people who understood this."

So what was the initial phase of the company like? "The early blank sheet stage is one of the hardest stages when there is no one in the office but yourself. A lot of work has to be done, just like building a new home -  finding affordable office furniture, initial hiring, getting the company incorporated, and all such simple but several pedestrian tasks. That's how we started - one step at a time. Everyone wants their house to have a good foundation, right plumbing, working lights, etc. right? In this stage of the company, you have to be willing to work hard, and you have to be willing to do a lot of the work yourself, even when you don't know exactly what to do. You need to have enough experience to draw on, especially related to how to build a successful product, how to organize a budget, and how to do those fundamental aspects of running a business."

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