Mathew Kordolia, the CEO of Heavy Hands Entertainment is a serial entrepreneur based out of Pune city in Western India. He has been running profitably Heavy Hands Entertainment, a 360 degree entertainment company that creates, produces and delivers content for clients. Heavy Hands has pan Indian presence. It is an established business. It is not a startup.
As a smart business man, Mathew keeps a look out for new ideas. He has a nose for a great business opportunity. His vision is to tap into the huge consumer market of India. But he is not the only one eyeing this opportunity.
The E commerce space targeting the Indian consumer is getting crowded. Established players like Amazon and Alibaba have their foot in the door. Amazon is directly present while Alibaba has invested into Snapdeal, another e – marketplace.
There are a host of other e commerce startups selling and servicing a range of goods that include food, fashion, industrial and consumer goods, agricultural products, etc. Others are using the electronic marketplace to collect garbage, electronic waste for reuse or disposal, sell and buy property, cars, making matches, managing events etc.
The traditional brick and mortar retailers – single and multi brand all there in this market too. The multi brand players growth though is restricted by regulatory and policy constraints. Everyone is waiting ready to expand when the multi-brand regulatory constraints are eased.
According to www.ibef.org data the retail market in India was estimated at $600 billion in 2015 with a CAGR growth of 13 percent. The India market from large economies standpoint is still not huge. However it is the growth rate and its potential that is attracting the world to its shores.
Mathew Kordolia launched his new venture www.injectedegc.com a few months back. The venture is focused on providing cheap and convenient shopping through neighborhood stores. As a successful entrepreneur he understood the value of study, data based analysis before finalizing on a new business idea and operating model.
The local consumer behavior was studied. What he purchases, the frequency of purchase, product and price preferences and volumes. Local merchant were visited continuously to understand neighborhood merchant business style, merchant consumer relationships and advertisement techniques adopted by neighborhood stores. This study was spread over three years.
The study and his previous experience with Heavy Hands taught him that every micro market is different. Merchants set up shop in localities based on consumer need and preference. They stock products of brands that are in demand. The merchants keep overheads low and build one to one relationship with the customer.
Mathew Kordolia’s decision making process, I observed , appeared different from other startup entrepreneurs. It is innovation, ideas and energy that drives startup entrepreneurs. In Mathew’s case it was strategy, data, analysis and marketing that were the key drivers.
His emphasis on due diligence before taking a business decision had parallels to practices adopted by large corporations. Both rely on intensive due diligence. It is only once the business case has been established that the decision to launch a new line of business or add a product to an existing portfolio is taken. Business risk is evaluated comprehensively and carefully before arriving at a decision.
With the market analysis and due diligence complete, Mathew launched injectedegc.com. The company is into selling shopping cards. Neighborhood merchants register themselves with the company. At the time of registration, they agree to offer customers with injected cards discounts on products purchased. The discounts, Mathew claimed, vary from 3 percent to 80 percent.
Merchants willingly offer discounts to injected card carrying customers because this is leading to increased sales. Research worldwide has shown that loyalty, discount, cash back schemes or savings cards encourage people to shop more. Merchants know this out of experience.
Injected business concept is turning out to be quite popular with merchants. Over 7500 merchants have already registered with the company. The business is growing rapidly. In just six months since launch, the service has been expanded to six small and large cities of Maharashtra State. Injected cards pricing is based on the period of validity.
While the ecommerce market is expanding exponentially in the Indian market, the battle for market share and revenues between brick and mortar retail and e commerce retail is on. Mathew business model is agnostic of the two camps. Any merchant online or brick and mortar can theoretically register with his company and agree to offer discounts to injected card holders. Majority of the registered establishments are neighborhood brick and mortar establishments.
Card holders do not require to navigate elaborate technology to receive discounts on purchases. This is particularly relevant to the majority of the day to day purchase Indian customers. Most have little or no exposure to technology. He, though, has tied with a private payment gateway that enables payments to be made online.
His business concept and execution design is low tech, has low risk, low costs gives continuous gratification in form of discounts to card holders. This model shows profitability very early on in the business cycle. It is a lesson in getting quick returns with low levels of investments and low dependency on investors. Based on the initial progress seen by the company it appears that the injected card experiment is already cash flow positive.
However, will the company be a future unicorn. I am not inclined to give my vote to injected. Concepts of home delivery, discounts are quite common in the retail business worldwide. As logistics, internet access and tech literacy improves neighborhood shopping concept will become slowly and surely redundant. This is seen all over the developed world where it is large format and online stores that have survived. Till such time this trend catches up in India, injected cards will continue to be regarded by customers with favor.