According to a Boston Consulting Group report, the consumer market in India is projected to grow to $3.6 trillion by the year 2020, from an estimated $1 trillion in 2010. Within the market, increased Internet penetration is also spurring the growth of e-commerce. But as I have said, there are few sectors within consumer retail that are seeing strong growth in the market. Within retail, though, there are several others besides Flipkart that are making it big.
HomeShop18 is India’s version of the Home Shopping Network. The channel was launched in 2008 by India’s media and entertainment group, Network 18. The group was able to make significant inroads into the Indian consumer market due to its on-air presence. In 2011, the company turned to the Internet to not only sell products advertised on its network, but also to act as an online retailer for several other products.
Today, HomeShop18 stocks more than 12 million SKUs from 500 brands and processes 3.7 million transactions annually. Products span categories ranging from apparel and accessories to household appliances and consumer electronics. The company delivers products to more than 3,000 cities and towns in India. It claims to be the only online shopping portal in the country to offer free shipping on all products. As with other online players, HomeShop18 offers payment options besides credit card payments, such as cash on delivery and easy EMIs.
According to a comScore report, as of December 2012, HomeShop18 saw traffic grow 185% to 7.7 million unique visitors. More than 75 million page views were recorded for the website in the month.
In its recently reported financials, HomeShop18 saw net revenues grow 89% over the year to Rs. 225.4 crore (~$35.6 million) for the year ended March 2013. The gross revenues for the company stood at more than Rs. 1,000 crore (~$158.1 million) for the year. But HomeShop18 has yet to turn a profit. Losses for the year increased 12% to Rs. 120 crore (~$19.0 million). The company does not split its revenues between its TV and Internet businesses.
HomeShop18 is a subsidiary of Network18, with an investment of $130 million received so far from Network18, G S Home Shopping, SAIF Partners, and OCP Asia. The latest round of funding held in April this year helped it raise $30 million from OCP Asia and Network18 at a valuation of $330 million.
According to market speculation, at the end of 2012, HomeShop18 filed for an IPO on the Nasdaq to raise $100 million to expand technology, warehousing, and market reach. The company has neither denied nor accepted such claims.
For now, HomeShop18 is working on growing its market reach and recently launched a Virtual Shopping Wall at the New Delhi airport. Named “Scan n Shop,” the wall lets consumers make instant purchases of a product displayed on the wall. Smartphone users can download a QR scanner and use that to scan the code of the product displayed and process the purchase transaction over the smartphones. Consumers can also purchase the product by contacting the e-tailer’s contact center.
Earlier this year, it also began retailing grocery products on its website. The company plans to begin operations by selling pre-packaged products that have a longer shelf life as it irons out logistics and consumer demand to ascertain the need for moving into supply of perishables. It has worked out logistics to ensure that consumers living in a metro area can get products delivered within the same day. All other customers will get the products shipped within two to three days of placing an order. HomeShop18 plans to leverage the business to build more of a repeat consumer base.
I think the company knows very well that the Indian e-commerce market is plagued with slow growth rates. Given that there are only an estimated 52 million Internet users in the country with a population of more than 1.2 billion and that only 40% of these Internet users actually shop online, the market has huge potential. But India’s restrictive government policies and weak infrastructure and logistics have made it a challenging market. HomeShop18 is rightly cautious about its expansion plans into categories that may not see the growth it aspires to.