Analyze the customers problems and offer them new solutions
Rajesh Nahar Co-Founded Cbazaar along with Ritesh Kataraya. They both were having family businesses and met while doing their MBA but did not want to pursue their family business and wanted to start something new. Rajesh came in from an IT background where he did his engineering in PSG College of Technology and had dabbled with different software packages. By chance, he read about Amazon , PanWaala, Baba Bazaar in one magazine that he picked up during his travel. He took an inspiration from these stories and spoke to Ritesh about this and wanted to check if he would be interested in building an ecommerce portal which will sell the day to day needs of the customers in Chennai as Chennai was itself a big market. Ritesh also got excited and they began building the portal.
Since they wanted to sell everything that the customer wanted on a day to day basis, they named the website as Chennai bazaar. They broke the entire business into pieces – a platform that people could access for their needs , a wide range of products or merchandize which basically were the variety of groceries , cosmetics, diversity of even fruits and vegetables and some specialized beauty products which you would not find in the kirana stores. This was the time when the organized retail was also not that prevelant.
In that times of the market, they launched Chennai bazaar as a Cash on Delivery – one of the first five in India to offer COD way back in Dec 1998. They launched the site, did PR, Advertisements and found people logging in and searching for the products. Rajesh says that his first few customers who transacted on the site were people who were excited about the way to shop rather than the choice of the products because this was a new way to shop – The key driver. People who bought the product from the website also experienced their product neatly packed, delivered on time with a Cash on Delivery model which was new to the market at that point in time went around and began talking about Cbazaar to their known people and the word spread. They also did some cost effective marketing which helped them to spread the awareness.
They averaged 10 to 20 orders a day within a few days, then began streamlining the back office operations , logistics, product mix etc. Even though they were doing revenue everyday, they realized that this was not viable in the long haul because they were losing money on every transaction like time, logistics and margins . Since they understood the power of the Internet and their uniqueness to offer products, they wanted to offer something through internet which is addressing a big pain point of the customer than getting positioned as a commodity and playing the pricing game. They did a research on the pain points their buyer persona was facing and they found that one of the biggest one was in buying reserved railway tickets as people had to stand long hours in the queue, get the ticket printed. This was the time when IRCTC was not existant. They also knew that there were a few good authorized railway ticket agents who can get the tickets for you at any cost but will charge you a premium.
They filled this gap and offered railway ticket booking online – another new to the market. This triggered lot more excitement to people because those people could not even think of doing something like this which solved their problem and they don’t have to wait in the queue and pay only a normal additional cost without travelling to the station. One use case led to the other and they found another gap in the market. They found that many people travel abroad and they had to find train or bus tickets to go back to their home town on their return and hence offered them the option of booing tickets online and that became a great segment of people who will book online and will pick up the tickets from them.
Now this gave an enormous boost that they were in business and they also moved into bus travel. They began taking two seats per transport operator and began selling for many travels. Then came the shocker in Feb 99. Authorities from southern railways visited their office and shut down their entire business that IRCTC is the exclusive one supposed to sell tickets and no one else can sell. They tried explaining that this was only a platform and not a ticketing site but the authorities refused and shut their operations. All this happened when they were studying their MBA and they were also young and did not know how to face the authorities and gave in.
This made them think of something bigger and they had an enquiry from one of the NRI who asked for a flower bouquet to be delivered to his home in Chennai. When they did it, the letter of appreciation expressing his gratitude of letting him stay in touch with his family virtually and that led to them realizing that this is a very big opportunity that they can tap. This was the third innings which led them to sell into the Indian diaspora living outside India. They adopted simple PR in terms of media covering them and that was the best way they got people to know about them. This was very important to them because their product happened to be the first of its kind in the market and they organically acquired customers since the media covered them.
Rajesh’s Advice to startup founders – One needs to absorb and see what is happening around them. The startups should look at consumers who will be consuming your product and figure out how they can make life simple for their customers and how they can solve problems for them. This will give a good idea of how they can come up with their own products and services and hence acquisition of first few customers will be effortless . In this case, the product itself will pull the customers and one does not have to push too hard.
Cbazaar(http://www.cbazaar.in/), is now close to 320 employees and has around 400 vendors across the country. They ship their products to 132 countries and have offices in three locations in India and two in overseas. They have served atleast 200000 customers outside India. They have raised two rounds of capital with a VC and a private equity firm. Rajesh proudly recollects when many of the leading companies shut down in 2001, they were one of the six dotcom companies in India which made profit making even in that period.