Raise Funds, Grow 10x In the Next 12 Months: That's the Plan Of This Consumer Electronics E-Commerce Firm
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Arzooo.com, a start-up that is bridging the gap between consumers and small retailers selling consumer electronics, aims to achieve a growth of more than 10-fold in gross merchandise volume (GMV) in the next 12 months and could potentially raise new funds by the end of this year.
GMV is the total value of transactions on an e-commerce platform.
In the last 10 years, e-commerce giants such as Amazon and Flipkart as well as the likes of Reliance Retail have disrupted the retail space in terms of selection and pricing, according to Arzooo’s co-founder and chief executive officer Khushnud Khan.
“Arzooo is about empowering electronics retailers,” Khan said in an interview with Entrepreneur India.
The Bengaluru-based start-up is solving the problem of selection for these small retailers by connecting them directly with major suppliers and manufacturers, ensuring a virtual inventory that encompasses 90 per cent of all available stock keeping units, much larger than the 15-20 per cent that they can afford on average with physical inventory, and beating the 50-60 per cent that e-commerce giants provide, Khan explained.
Arzooo aggregates the demand that it receives from customers at the physical stores and goes back to suppliers for price negotiations.
“We have created a better sourcing mechanism where consumers in Arzooo-powered stores, apart from having access to larger selection, get better pricing than Flipkart or Amazon,” Khan added.
Launched in 2016, Arzooo currently serves about 1,300 physical retailers. It plans to take that number up to 5,000 across 30 large cities in the country in the next one year. If that happens, the annual GMV numbers would multiply from INR 300 crore currently to over INR 3,500 crore, according to Khan.
“Given the way we have planned and gone about things in the last one year and the way it's going now, we see that happening,” he said.
Arzooo earns by adding a small amount to the final price of the supplier before selling it to retail stores.
On profitability, Khan said while Arzooo was profitable on a unit operational basis, he expects earnings before interest, tax, depreciation and amortization to turn positive by 2021.
The company’s economics are helped by the fact that it does not store inventory, said Khan.
Although details have not yet been finalized, Khan said Arzooo is in the process of raising new funds. Earlier this year, the company raised $1 million in a pre-series A round led by Jabbar Internet Group apart from investors from India and the UK.
According to Khan, the biggest challenge that the company faced was convincing retail store partners on how this technology could help them.
But as e-commerce companies continue to push for a larger chunk of the retail pie, they are slowly beginning to understand the need to adopt something like Arzooo.
In every new city that Arzooo ventures into, it takes at least two-three meetings to get a retailer on board, said Khan. “Because this is unheard of in this industry, it has never happened.”
Arzooo’s newest offering would allow consumers going to a physical store powered by Arzooo to directly choose from the entire virtual inventory available.
“On our consumer interface screen, you will be able to see what is the price of this product right now on Amazon and Flipkart, and how the price at the store,” Khan said.
The stores have the option to choose whether they want to deliver the products to their customers themselves or choose Arzooo to deliver directly.
Apart from the consumer interface offering, Arzooo is also developing a third product that will give them access to suppliers’ inventory in real time, Khan said. “We are creating a platform wherein suppliers can plug in and upload their inventory and we have real-time visibility...that would be a game-changer for our business.”