India to become one of world's largest markets: CouponDunia's Sameer Parwani

In the e-commerce space, we have seen that even as the gross merchandise volumes (GMVs) have grown robustly, profits have mostly been elusive. How much of a dampener is this for a digital coupon business?
There are digital coupons that help online commerce while physical coupons are for offline commerce. Offline commerce is the one with much longer gestation period. It takes several years to build a large team on the street but coupons for online shopping is a high-margin business. We have been running CouponDunia since 2010. In the first few years, we were making profit as we were focusing only on online shopping, which is a business that doesn't require a lot of resources. There is immediate gratification for online coupons. When it comes to offline, it takes longer, or coupon may never get redeemed. And so, conversion rates for coupons are lower in offline commerce. We are focused more on online, which makes our business pretty healthy.

Are you profitable today?
Our first two-and-a-half years were profitable. After that, we have fluctuated. We wanted to invest in growth. So, we are not profitable.

What commercial value do investors see in coupon business?
The commercial value of coupon business lies in the fact it is a predecessor to any commerce. When people want to buy something, they want to get a great deal. Indians, especially, are price sensitive. If you help consumers get a good price, they are much more likely to make that final purchase.

Has it caught on in India?
Yes, when it comes to e-commerce, it has. Online shoppers are always looking for discount or cashback. So, often if they don't find a discount for a product online, they may not buy.

Some time back, you forayed into offline coupon space. Do offline and online have synergies between them? Or would it be a challenge to operate in both areas?
We have been in the offline space for about a year-and-a-half but our focus is still on online business. We are doing offline as add-on. However, it is supplementary to our core business. Our goal is to help people, who shop online, to save money. Our offline component helps a small portion of our users.

What about hyperlocal? Are you looking at that too?
We are several years away from seeing a very strong hyperlocal discount business. I don't think now is the right time for us. Of course, everyone has a different opinion on it. There are few companies, which are targeting that very aggressively. Right now, the amount of redemption in the offline space is not enough for it to make commercial sense across the country. It (hyperlocal) is very concentrated in tier I cities and some verticals. Margins in it do not justify it becoming the centre of our business.

How is your mobile app doing?
We launched our mobile app in July last year. Since then its seen 2.5 million downloads.

How has your business and revenue model evolved?
Business model has been remarkably steady for us. It's a very simple business model – we send users to Amazon, where he makes a purchase and Amazon pays us a commission. The commission, of course, keeps changing. Sometimes it's high, sometimes low. It depends on the category. Like electronics fetch lower commission than clothing. Sometimes, stores give us better commissions for new users than old users. The challenge is how can we add value to the e-commerce ecosystem. How do we drive more purchasing decisions? That's the harder part. You need to add more tools and value propositions on your website. That part is constantly evolving and we keep adding new verticals. Many verticals have emerged and fallen over time. Last year, food ordering had become quite big. When we started, in 2010-11, travel dominated everything. Electronics was very small then. Today, it has become very big while travel has remained steady.

How do you handle investor pressure for target achievements?
The pressure comes from ourselves. We are trying to build a healthy business and have our own projections. There is secondary checking at the investor level. It's you who needs to look at the daily matrix and see that it is not going in the way you want it to. It's not the investors who need to do that – to come and tell you that your matrix's not going in the right direction. There are 150 people who are all working together and the pressure needs to come internally, investors are secondary. You don't become an entrepreneur to make investors happy. You are an entrepreneur because you desire to make a successful company.

How much have you grown since you launched your venture?
Last year, our revenues were Rs 20 crore. Today, we are doing 10 million sessions a month between mobile app and our web platform. This has grown tremendously over last year because of our mobile app. In our first year, we saw 50,000 visits a month, the second year two lakh sessions a month. Our business has grown in parallel with e-commerce.

You are from the US. Why did you choose the Indian market for your venture?
I was born in the US and did my graduation from Cornel University. I started my company in December 2010 in India because I thought that India was a virgin market with huge potential. I shifted to India in 2012. India is a foreign country for me – I don't even speak Hindi. It's been an interesting journey for me till now. Also, US is a few years ahead of India and, in some cases, a decade ahead. Having been in the US and seen how things have transpired there I was able to adapt some of the lessons in the Indian context.

India is a country of 1.3 billion people. Very small number of people are right now are shopping online but it will get there over time. It may take 10-20 years. Over the next several years, it is going to become one of the largest markets in the world. This is something I am focused on.