Homeshop18, the TV and online-shopping network, claims to be close to stitching up investments from private-equity firms. Its Rs 700-crore revenue today comes largely from TV (70 per cent), a business which will break even in three to five quarters, according to the company's founder and CEO, Mr Sundeep Malhotra. He added that the undisclosed investments should be in “in a month's time”.
Speaking to Business Line , Mr Malhotra said, “What we are doing now is a revamp of the business in several ways. We are expanding infrastructure, continuing to invest in IT and expanding the product portfolio. The target is to touch Rs 2,500 to Rs 3,000 crore in two to three years.”
Expansion in infrastructure is underway — the warehousing facility in Delhi is being scaled up, and 14 new warehouses are coming up across the country in major cities, one in each State. Forecasting mechanisms, enterprise resource planning and revamped customer relationship management tools are on the anvil. The intent is also to move from value-for-money offerings to lifestyle and, eventually, add luxury to the product portfolio.
Homeshop18's e-commerce business started operations in January. It will have to wait a bit longer than the TV arm to break even — even if average transaction value per day has gone up from Rs 2 lakh at the time of launch to Rs 70 lakh. It is expected to contribute equally to Homeshop18's revenue in three years.
On several e-commerce players engaging in aggressive mass-media advertising and marketing he said, “If the priority is to get market share (customer recruitment) and valuation, then it is different. Building a long-term, sustainable business cannot be done on brand recall alone.”
On profitability he said, “It is too early in the evolution of the e-commerce industry to focus on profits right now. While break-even with the shopping channel will be faster; e-commerce is seeing a very different kind of competitive activity.”