Home / Companies / What next for enterprise software start-up Capillary?

Bengaluru: Capillary Technologies Pvt Ltd, a start-up that sells loyalty and customer-relationship-management solutions to retailers, is looking to tap the omnichannel market to drive growth, on the back on multiple acquisitions it has made in the last 15 months.

The convergence of offline and online retail—called omnichannel—is a big market opportunity for Capillary.

Online retailers benefit from knowing what their customers buy in the offline world. For offline retailers, it is important to gain the loyalty of customers who have the option to shop across multiple devices as well as in physical stores.

Capillary’s first big push into omni-channel came with the acquisition of Martjack, which made e-commerce software for retailers and counted Walmart India among its customers, and Ruaha Labs, a machine-learning start-up, in September 2015.

Since then it has also added Sellerworx, which makes technology for e-commerce to its portfolio, apart from making strategic investments in Cloudcherry, a customer engagement start-up, and business analytics start-up Webengage.

Of the 19 products that it offers (both its own, and from partners like Webengage), about six were launched or piloted in 2016 as a part of its effort to become a one-stop-solution provider for retailers.

However, Indian retailers have been somewhat slow in adopting these strategies.

“According to our research web influenced retail sale (where customer researched online and bought in offline store) is more than double the online retail sales in 2016 and this ratio is going to increase going forward. Existing offline retailers are trying half-heartedly in adopting an omni-channel strategy but there’s no real plan behind it," said Satish Meena, forecast analyst at Forrester Research.

The firm is eyeing the opportunities in China, which has a relatively mature e-commerce space, and where consumers are used to shopping on their smartphones. Alibaba, for example, has invested $4.6 billion in Suning, a major traditional retailer in China, to help tie together e-commerce, logistics, and omnichannel initiatives.

“We are investing in China and looking at that market for hyper growth. We opened an office there last year. We have 15 employees and already we have five customers. It’s a good start," said Abhijeet Vijayvergiya, vice-president and business head, Asia-Pacific, at Capillary.

Capillary, which is one of the largest enterprise software start-ups in India, is among the few to target Asia as a core market whereas most others like Freshdesk, look to the US and Europe to boost sales.

Capillary, which is registered in Singapore, is also ramping up its sales team from 15 to 50, to tap into the markets it serves—mainly India, Southeast Asia, the Middle East and China.

Even as it makes investments in new markets such as China, Capillary’s losses for its India entity narrowed from Rs60.37 crore in the financial year ended March 2015 to Rs26.63 crore for the financial year ended March 2016, according to documents filed with the Registrar of Companies.

Revenue during the same period increased to Rs73.32 crore from Rs51 crore, while expenses surged to Rs99.95 crore from Rs57 crore. Employee costs increased to Rs51.82 crore in FY16 from Rs33.74 crore in FY15.

“Our focus has always been on unit economics. In the next six months we can be Ebitda positive. We are looking to cross $50 million in run rate over next 12-18 months," said Vijayvergiya.

Ebitda stands for earnings before interest, tax, depreciation and amortisation, an indicator of operating profitability.

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