Lending books makes good business sense

It cost Rs300 and the local library only stocked thrillers, romances and children’s comics. So the four pooled in Rs75 each and bought a copy.

In early 2007, that love of reading led to their own venture: With its website Librarywala.com, Mumbai-based Dharya Information Pvt. Ltd took the local lending library model online and combined it with free home delivery and pick-up of books within 24 hours of request.

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The firm, whose business model is inspired by US-based online DVD rental firm Netflix Inc., today has 5,000 registered users in Mumbai, Bangalore and Pune. It earns revenues through monthly subscriptions. “A lot of people suffer from the no-book syndrome, because local libraries have limited choice and buying books is expensive. We want to give users easy and affordable access to good books," says Hiten Turakhia, managing director, Librarywala.com and the only co-founder working full-time at the company. The others hold day jobs.

The firm stocks books on history, travel, health care, spirituality, children and adult fiction. It often sources books directly from large distributors and publishers, which ensures better discounts and lowers cost of inventory. On average, it buys books worth Rs80,000 every month.

Librarywala.com competes with local libraries, large retail bookstores such as Crossword and Landmark, and other online libraries such as Friendsofbooks.com and Bookmeabook.com.

Librarywala differentiates itself with a number of services such as one where users can keep books for as long as they like with no late fee. The site has multiple payment options both online, through credit and debit accounts, and offline cash or cheque payments that a representative will collect on your doorstep.

A unique feature is its request-a-book service, which allows users to ask for a book not in its inventory. The firm ensures it obtains a copy within seven weeks. It recently bought a hardbacked omnibus of Dilbert comics that cost a few thousand rupees on a customer request.

As with many consumer Internet businesses in India, the company will have to tackle issues of scalability and cost of customer acquisition, say venture capitalists. In addition, it may face challenges more common to retail chains, given its business model.

Currently, most of its operations, such as home delivery and stocking the inventory on the right shelf, are easily managed manually. With scale, “back-end inventory management and logistics are going to be big issues", says a Bangalore-based venture capitalist requesting anonymity.

In the last 16 months since it launched the site, the company has recovered investments made in office space, hiring and logistics. “Breaking even on the cost of books we’ve stocked will take longer," says Turakhia.