IPay plans to expand presence in six states, raise fresh funds
E-commerce firm looks to raise $10-15 million, establish a presence in Tamil Nadu, Karnataka, Kerala, Odisha, Gujarat and Maharashtra
New Delhi: As the Indian e-commerce story unfolds beyond the metros, companies like IPay Tech India Pvt. Ltd are seeing a business opportunity in creating shopping avenues for the rural population.
Hyderabad-based IPay is looking to expand its presence to six more states over the next eight quarters and is looking to raise $10-15 million (around ₹ 62-94 crore) in fresh capital, according to Krishna Lakamsani, founder and chief executive of IPay.
Founded in 2013, IPay via its brand Dukanline offers a so-called assisted e-commerce platform, where a consumer can place an order at IPay kiosks placed at local grocery stores. The company now has a presence across Andhra Pradesh and Telangana, and will soon be seen in Tamil Nadu, Karnataka, Kerala, Odisha, Gujarat and Maharashtra.
“The share of e-commerce in India is currently only 2% of the entire retail. The large chunk of the retail market is (made up of) those who do not have access to Internet or even know how to read," said Lakamsani, a serial entrepreneur and an angel investor with the Hyderabad Angels and Harvard Business Angels group. “We have created a platform where consumers can go to their neighbourhood grocery store, browse for items on a tablet or place an order through our call centre."
IPay currently lists over 6,000 products across 19 categories, which include goods such as mobile accessories, apparel, footwear and fashion accessories as well as train and bus tickets. It also sells insurance policies via its platform.
The company has tied up with 2,700 retailers who offer these services to consumers. These retailers act as cash collection points for IPay. Customers can place an order on the tablet or with the help of the IPay call centre. The goods are later delivered at the grocery store or to the customer directly. Orders placed on the platform are prepaid and take five-seven days to be delivered to the customer.
“We are banking on the trust and relationship that the consumer shares with their nearby kirana store to penetrate through a segment of consumers who have no understanding of online," added Lakamsani, a Harvard Business School alumnus.
The company, in 11 months of going live, has shipped close to 100,000 orders via Dukanline.
“We are acquiring one new customer every 5 seconds," claimed Lakamsani. “We have been surprised with the traction we are getting. People are even buying washing machines via our platform."
Retailers pay a one-time fee of ₹ 8,800 to place an IPay kiosk in their store and get a commission for every order. The company did not disclose the commission it pays to the retailer. “These retailers are registering 22% growth in their business because of the kiosks," said Lakamsani.
There are currently more than 30 sellers retailing on IPay’s platform. These sellers are largely from Andhra Pradesh.
According to Lakamsani, the company would prefer to follow a so-called hyper-local model, where sellers from within the state will ship the goods ordered to save time and cost.
“There is a huge potential in the assisted e-commerce business because most online websites are not multilingual. However, execution is a big challenge here. Getting a retail network in place, making sure that the person manning the store can manage the terminal and ensuring a timely delivery in those areas," said Sunil Goyal, founder and CEO at YourNest Angel Fund.
“Whether the business is scalable or not will depend on how the company manages margins as they will have high investments for call centre and other infrastructure once they scale beyond one state," he added.
Lakamsani founded his first company, Hello Communications, in the US in 2001. In 2004, he sold it to New York-based telecom firm Champion Reef Infotech. In 2006, he started another tech company by the name of Infovision Technologies, which was in 2012 acquired by Major Infrastructure Management Services company, GSS Infotech, an entity listed on the Bombay Stock Exchange and the National Stock Exchange.
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