Today we meet Nitin Purswani, Founder of Zepo.in. Nitin founded Zepo three years ago to address issues he had faced while trying to set up an online shop and help small business owners in India make a smoother transition to the online space. In these three years Zepo has signed up more than 1500 customers and set up offices all around the country. Let’s hear all about it from Nitin.
Q: How was Zepo started?
I and my friend started manufacturing slogan t-shirts right out of college. We used to supply these t-shirts to 50 retail outlets across Pune, Nasik and Mumbai. In three years, we scaled to selling 5000 t-shirts per month. Then we tried to take this t-shirt business online. If someone wants to take their business online there are three main things to do it, one I need a web developer to build a website – that is, the traditional way of building a website. The second was if I get an order, I need a logistics provider; so when I started selling on eBay, whenever I used to get an order, I used a professional courier agency to get my order delivered. Then the third thing required for a business to go online is a payment gateway (to accept a debit or credit card you need a payment gateway), and that was very expensive at that point in time. Altogether these three factors almost stopped me from doing business online. So I started playing around with things in tech. I was interested in building tech products right from college, so we decided that we could build a company that is going to help small businesses go online.
Q: So you target businesses with a specific turnover; was it a segment of choice?
We focus on businesses who have 20 lakh to 2 crore turnover annually. Yes it is very much a choice. Any business doing less than 20 lakh would not be interested in going online in the manufacturing sector. In retail, we focus on retailers who have one or two outlets, not multi-chain enterprise retail outlets. So it could be retailers, manufacturers or traders as well. We solved the technology problem for small businesses as anyone can easily open their online store and operate it without having technical knowledge, or relying on web development agencies; so we made it very economically viable for them as well.
Q: From a payment gateway point of view, what’s your reach?
We have six integrated payment gateways which are CCAvenue, PayTM, Pay You, Pay You Paisa, EBS and Paypal. The next part of payment issues is COD payments because if you are selling online you have to offer COD. COD gateway problems are very closely related to logistics problem. So the third problem we wanted to solve was logistics. We tied up with multiple courier agencies and we got them to give good rates, something they would give to an e-commerce website with 1000 orders per month. We got them to give a pick up facility to all our merchants. Another thing we got was COD without any minimum transaction volume. For all this, we just aggregated demand. Then in the third challenge we did a very interesting thing. For example, we recently launched a product called Zepost. What Zepost does is, solves the problem of filling all those courier agency forms. Zepost with an integrated sales approach is the API for all these companies, and schedules couriers with just one click. These are the things that we focused on in this journey of almost three years. Getting websites up and running, going ahead and managing payment gateways and logistics delivery.
Q: What about returns delivery?
Returns i.e. reverse logistics also comes under logistics. Even if sellers want to schedule a reverse shipment they can do so via the couriers.
Q: Do stores get branded under Zepo or is Zepo a facilitator?
We are the back end. If someone has opened a store under Zepo, the customer would not come to know that you have opened a store under Zepo unless the seller advertises that the store is powered by Zepo. All the emails go from their own email ID, all the SMSs goes from their details. So Zepo doesn’t come into the picture for the customer. We are the powerful backend.
Q: Do you have any accessibility to the products sold by a seller on their website?
No we don’t any access to the products. We collect a specified subscription every month without looking at such details.
Q: So for how many customers do you have and what are your average rates from minimum to maximum?
The minimum plan starts from Rs 500 and the maximum goes up to Rs 5000 and so far we have 1500 customers live on the platform. When we launched in January 2012 we had 3 customers.
Q: Any reason you picked up this pricing range of Rs 500, Rs 1000, and Rs 5000?
Well, Rs 500 is a very straight and affordable number that a small business can start off with. We want people to give it a try because we know if they give it a try we are sure that they will like it. If they start bigger, it is, one, unsustainable for them, and second, a very difficult point to start off with. So if I start from Rs 5000, then no small business can make the leap.
Q: Are you witnessing competition?
We don’t see e-commerce retailers as competitors, in fact we encourage sellers to go and sell on Flipkart and other marketplaces. We see web developers as one set of competition, someone who is with Zepo may go with a web developer for a super customized website. The second set of competition is other players in the industry. Overall we see ourselves as either the number one or two in the market. We have partnered with companies like Browntape and Unicommerce. If a seller has additional requirements he can install such apps on Zepo. There are many companies whom we have partnered with to provide applications on their website.
Q: Are there any other players in the market like the web development companies, the ones who were focusing on enterprise?
There are big players and small players like eBay store, Amazon store. These are not branded stores but more like a page on eBay or Amazon, which is good but definitely not competition to us. What comes on Zepo is a store.
Q: Where are you located?
We have a national presence. We have offices in Bangalore, Noida, Delhi and Mumbai. We are a small team of 50-60 people and the reason we have different offices is because of the amount of business we get. 60-70% of our customers are from Bangalore, Delhi and Mumbai. The reason small retailers are coming online is because they want to go national. Social media and SEO is not very difficult but people in traditional business cannot find time for all this. They are just starting to digitize their business. These things take a lot of time. They happen in an evolutionary way and not a revolutionary way. For these small businesses going digital will need them to keep investing for 1-2 years, it’s only after that they will reap benefits.
Q: What challenges do you find in selling this concept to customers?
When we started in 2012, it was all about educating people; telling them that e-commerce is the future. Now it’s not about educating them about the advantages of e-commerce but about online marketing avenues. The pitch has changed from ‘e-commerce is good’ to ‘online marketing will get you business’. There’s acceptability now. But time is a major issue for them as they cannot take out 3-4 days to set up an online store and that’s how we can help them. The other question on their mind is, how will business start coming once they have set it up online.
Q: What is the potential size of this market?
There are around 26 million small businesses in India. Almost half of them are into creating apart from services. Right now, the big marketplaces have a target of getting 10 million sellers online by 2016, which is a huge thing. Imagine the potential when they even start selling outside of India.
Q: Which international markets do you think of treading further?
I would say Middle East and European markets first. Those are the right markets. The Middle East has such models and though Europe has, there is no market leader as such. As for Germany, we have seen that they prefer locally made goods more. That would be an interesting market to see.
Q: What’s the change you have seen in your target customers in the last 24 months?
Earlier people used to think that just get on an e-commerce platform and start making profits instantly. Now they have become saner and realised that this is just another medium to communicate about your product to your customer, just like a telephone. In the 90’s people had started using the telephone as a medium to get orders, etc. We would like to see the same happen with e-commerce.
Q: For somebody to utilize your platform how much time do they require to spend to get ready?
I haven’t looked into the time required to do these things, I think sellers will be the best people to explain. These are the things we want to solve over a period of time.
Q: What are the keys to your venture’s success? And what is your mantra for getting the right people?
The team. No start-up can function without a great team. Right from the first person to the last person who has joined us, they are the ones who make it happen for us. As for getting the right people, I am always open and transparent. Even in the career page we have listed things that are good in the company and things that are bad. We have taken a survey in the company itself and asked employees what they like and what they don’t and made it public on our website.
Q: What made you become an entrepreneur and second what have been your key learnings?
Starting a t-shirt business was out of conditioning because my family was in business. Overall, solving a problem has led us over here and especially to Zepo.