An uneasy calm filled the air one morning in July 2013 at ShopClues’ Gurugram office. Employees were just trickling in, but the atmosphere was tense with hushed conversations about what had happened while they were fast asleep. Sandeep Aggarwal, their boss and the e-commerce marketplace’s co-founder had been arrested in the US on insider trading charges. Although unrelated to the ShopClues operations, it raised questions about what the future would hold for the employees. The CEO was taken in for allegedly tipping off a portfolio manager about a pending deal while working at Wall Street. The co-founders — Aggarwal’s wife Radhika who headed marketing and Sanjay Sethi who headed operations — sprung into action. They addressed a nervous workforce over the next few days and presented a strong front.
Everything seemed under control. It had to be. It had just been four months since the two-year-old company had raised $10 million from names such as Helion Venture Partners, Nexus Partners and Netprice as a part of its Series B funding. They had everything going for them — an early headstart in the non-Tier-I marketplace, a strategy that set them apart from the biggies in the game (Amazon and Flipkart) and a focus on bringing unorganised products on to an organised platform. It already had over 200,000 products on offer on its platform, being sold across 7,500 locations. With 2,500 transactions a day and an average ticket value of Rs.1,000, it wasn’t doing too badly in comparison with Flipkart that had an average ticket value of Rs.2,000.
Shopping for slots
This story was playing out when India was waking up to an e-commerce boom — internet user base was hardly 100 million, venture funds were on the prowl for the next big thing, and Flipkart was trying to figure out the market, but was mostly known for being a convenient bookstore. Amazon was not in the picture yet. Plus, names such as Snapdeal, FashionandYou and Yebhi were the only other e-commerce players, besides Flipkart, that were thriving. Aggarwal, who had spent much of his professional career in the US, was intrigued by the India story and the opportunity was irresistible. So, while the big players focused on the large metros, ShopClues decided it would focus on Tier-II and below — it hoped to profit by selling many