Will move to marketplace model to scale up quickly: LatestOne.com's Ameen Khwaja

You launched LatestOne.com in August 2014, how has it grown till now?

When we started, we were doing around 100 orders per day. That has grown to 5,000 orders a day, today. In February, we did 1.5 lakh orders. We have also expanded our product offering from just mobile covers and headsets to a wide-range of tech accessories and gadgets like power banks, smart watches, bluetooth headsets, laptops batteries and chargers and others. Lately, power banks are selling like hot cakes. We sold 1.2 lakh of them in the last three months. Now, the hottest product is smartwatch. We sold around 75,000 smartwatches in the last two months.

How different is your inventory-based model from marketplace model of Flipkart, Amazon, Snapdeal and others?

The difference is we procure our products or get it contract manufactured in China or any other place for our private label PTron. Our products are imported and sold directly to customers. So it goes from the factory to the customer. In the marketplace model, it's the sellers who put their product for sale on platforms.

The recent guidelines on e-commerce put out by government has permitted FDI into marketplace model but has not allowed it into inventory-based model, how does this affect you?

We have sufficient funds for the next two years but we are targeting Rs 500 crore revenue in the next three years. For this, we will surely need funding. We will not be allowed FDI because ours is an inventory-based model. We will have to get funding from local vendors, our parent company and others. Some inventory-based platforms will have problem because they have already raised funds from the foreign investors. In the next two years, we will also be moving to marketplace model.

Why would you move to a marketplace model when you have healthier margins in inventory-based platform model?

I can do Rs 500 crore revenues on inventory-based model but to go to Rs 1,000 crore revenue or more than that I will have to be a marketplace player. It will help me to scale up more quickly. Of course, margins are much better for inventory-based platform operators.

When do you break even at the net profit level?

Currently, our burn rate is around Rs 70-80 lakh per month. If I scale up, I will be able to achieve my operational breakeven by next quarter. We will be making net profit by the end of the current financial year (FY17).

What about plans to foray abroad?

We are looking for funding for that. We have already identified countries like Indonesia, Philippines, South America and Turkey. We have already registered a company in Turkey but we will go abroad only once we are profitable. So, as soon as we get green signal for funding, we will tap the international market.

Are you lately feeling that investors are becoming cautious in putting their money into start-ups?

Now, investors are looking for profit. For so many years all e-commerce companies have been burning cash and very few have shown positive numbers. That's the reason investors have become cautious. Plus, the competition is very high.

If investors are making profitability a top priority, how will it impact the expansion plans of start-ups for whom scaling up is very imperative?

There is a pressure from investors to show both – I have to show growth as well as robust bottomline. It is difficult if you have to show high growth quarter-on-quarter and also the bottomline. In the past, we were showing 300% or 400% growth. That will not be happening now. It is not easy to do that but 100% growth and much better bottomline can be done.

Now that deep discounts and sale festivals will disappear with the new e-commerce rules, will you have a more level playing field against the marketplace platforms?

It will benefit us and obviously, there will be a more level playing field now. Also, we have better margins. So, anytime we can beat them (marketplace players). We have 50%-60% margins because we manufacture our products. We have that margin to play with.

How many of the products on your platform are your own brand and how many are of other vendors?

Today, 70% of the products on my platform are my own brand and 30% are from the local vendors. We are trying to make the number of our own brand higher to 90% to have better control over quality and stock.

Are you considering any offline model too?

From this month, we are starting a separate B2B (business-to-business) ordering plan to sell to offline retailers in Tier 2 and 3 cities on our platform. It will have dealer price. Today, not everything is online. In Tier 2 and 3 cities, you still have the small shops selling mobile accessories and gadgets. We will be supplying our branded products to them.