At a time when e-commerce start-ups are struggling to hit profitability, Shopsity, a shopping app that connects offline lifestyle retailers to customers in their vicinity, became profitable within three months of going live in the Delhi/NCR region.

Encouraged with the response received by 500 lifestyle retailers who are using Shopsity to generate an average transaction value of ₹12,000 a month, the app has just been launched in Lucknow and will be launched in Chandigarh and Jaipur next month.

Danish Ahmed, CEO of Shopsity who exited Yebhi.com last year, a company he had co-founded, to start Shopsity Tech Pvt Ltd in April 2015, told BusinessLine that the company has become profitable and is now looking to raise capital of $3 million from VCs to expand to different locations pan India. From a one-man show in April, Shopsity has grown to a team size of 45. The start-up has raised ₹2 crore from angel investors,Viren Rana, Sandeep Aggarwal and Teruhide Sato, founders of Renovite, ShopClues and Netprice, respectively.

Business model

“We incur a minus ₹38 cost to acquire a customer; a negative cost because retailers pay us ₹8,000 to ₹30,000 in subscription fees per quarter, for various marketing tools using which they acquire customers through SMS or Hyperlocal mobile ad campaigns,” said Ahmed. This is unlike the business model followed by most e-commerce start-ups where they spend crores on marketing and discounts, while sellers are charged a commission for each transaction.

“Our business model is very similar to Taobao, where our revenues are not from the transaction, but from activities supporting that transaction,” said Ahmed, whose company is witnessing a 200 per cent month-on-month growth in subscriptions from new retailers. Subscription renewals stand at 85 per cent.

Search online buy offline

Stating that Shopsity combines the convenience of online shopping with the experience of shopping at a store, Ahmed said, “Instead of spending hours running around from store to store trying to find clothes, shoes, jewellery, accessories or furniture of your choice, you can download the Shopsity app and quickly see what’s selling in local stores by browsing through the catalogue which has pictures, offers, prices and sizes; search by market, brand or category; call the shop or check its location on a map. To buy the item, you can visit the local shop, try the item and buy it. This gives users the convenience of online search, and the comfort of offline shopping.”

In the next 12 months, Ahmed is targeting 10,000 stores across 10 cities, giving retailers upwards of one lakh orders a month.

Related Topics