Episode 19: Abhinav Jain- Democratizing Entrepreneurship in Bharat
About Abhinav Jain:
My next guest on The One Percent Project is Abhinav Jain, Founder CEO Shop101 & Dash101. A graduate of IIT Kanpur and IIM Ahmedabad.
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In this conversation, he talks about:
His entrepreneurial journey from Bain & Company to Shop101.
Building for Bharat.
How to create a reseller ecosystem.
How Shop101 has been able to generate a positive contribution margin as the business has grown.
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Transcript:
*The transcripts are not 100% accurate.
Pritish: Welcome, Abhinav to the One Percent Project.
Abhinav: Thanks a lot, it's good to be here.
Pritish: Did you always want to be an entrepreneur?
Abhinav: I've always believed that technology is a force for good. And it can create impact at scale. And I started coding at the age of 10, I was exposed to the magic of technology very early in my life. So, I always wanted to build and solve big problems using technology, it wasn't as much about just, you know, entrepreneurship, but I was very fascinated and excited by the impact that technology could create. And so I knew that I would want to definitely be building products and, and solving problems at scale. So, that's what I always knew, and whether that was going to be through entrepreneurship or to something else that was sort of to be discovered as we as we as I grew. And then as I was looking around and realized, I realized that for entrepreneurs themselves, very little technology was being birthed. And that's when I decided that it was, it was something that I wanted to do. I wanted to democratize entrepreneurship, and hence, this entire thing about leaving my job at Bain, and then starting Shop101
Pritish: While you were building this product, which is enabler for entrepreneurs, how has your leadership evolved?
Abhinav: Yeah, so so it's very interesting, where, as a founder, every six months, your role changes. In fact, it said that if it doesn't change for change every six months, you're doing something very differently. And as you can imagine, the first the initial days, you're doing everything on your own whether it's literally there were in a first office, I would be the first guy to come in, and I would, it had like a, you know, shutter which is there in shops, I would actually open it and close it in the night. So, from there to actually having a team and and today for, there's a function and a department for every single little thing. So, it's been quite a journey, so to say. And that also is reflected in the team that you build around you. The initial team is a team of generalists. These are people who can do everything. And that's what you're looking for. As you keep growing you, you are looking at specialists to come in, people who've done that before, people have run that function before. And over a period of time, your team begins to look much more from a team of generalists to a team of specialists. And as you sort of build this team of specialists around you. It is best that you know, you let the specialists do their job. So, initially, you're doing everything with a team of generalists, you're super involved in each and everything, then over a period of time, as you build this team of specialists around you, you have to keep stepping back and let them let each person function individually and be the enabler for the team that you've built.
Pritish: Shop 101 is a very unique model for India. What is the genesis of Shop 101? And you have also now forayed into new business lines.
Abhinav: Absolutely. So, let me take a step back and sort of talk about what ultimately drives me. The reason why we started Shop 101, the idea was to democratize entrepreneurship, we realized and I personally saw growing up in Kanpur in a small town, that India is fundamentally a country of entrepreneurs. But, look at from when I was to look at it from the lens of technology, and how technology was sweeping everything else we saw and I saw that there was very little which was being done for entrepreneurs. And that got us thinking, hey, how do we democratize entrepreneurship? How do we help people come up in this modern age where things are changing so fast. And that's how with that aim of democratizing entrepreneurship, we started Shop 101. So, at Shop 101 we empower you to be an entrepreneur, and you don't need any investment, we will give you the wide range of products from which you can pick and then share them in your social network and drive sales and earn money. So, effectively, it's a social reselling model where all you need is the willpower to hustle. It really does not matter how much money you have, what you've done in the past, what you have not, as long as you are willing to hustle, we will take care of everything else and you can become an entrepreneur without any investment. Imagine if you are a homemaker fitting in a small town in say, Tamil Nadu, and you want to start your own business, you can just download the Shop 101 app, curate the products and start sharing on social media and in your social network. And that's it and we will take care of rest, we will pick up the product from the supplier, deliver it to the end consumer collect cash, pay you the money, your commission, pay you the supplier their money and take care of the entire infrastructure. So, you can become an entrepreneur without making any investment, without having any existing infrastructure and get started right away. And this is very interesting because this model itself is very unique to India, where our tastes and styles change every few kilometers and the reseller adds the key power of curation and adjust the taste to her consumer base. And what this does is this is a win win for everyone, for the reseller, for the entrepreneur, it's not only a way to make money, but it's also a way to enhance respect and social standing, which she's not been able to do so far. For the end consumer, it's like a personalized collection, which comes to you in the comfort of your home, you can just keep browsing and keep looking at products that are very relevant to you and easily purchase by just chatting with someone. So, leveraging this power of social network and trust, we've built an alternate distribution model, and it builds very well and it ramp up ramps up very well, because fundamentally, we are helping the resellers earn money, and which means that we can actually acquire them at very low cost and build this network out at a very low cost. This is a network which basically feeds on itself and keeps growing very rapidly. That's what we are doing at Shop 101. And you know, beyond just the business of it and how we came about it what's very interesting is that majority of our resellers are actually women. And we are empowering women, and you know, earning livelihood, earning their social standing, and helping the community. In fact, one of the very interesting quotes that I remember is this reseller talking about how she did not want to be known as Mrs Rishab Tiwari. And she said, instead, I want him to be known as the husband of Mrs.Shruti Tiwari. And that, to me was true sort of democratization where every individual gets their own identity, and, and is able to say with pride, hey, here is what I do and here is what I have become. So, that was what we had built at Shop 101 and when we were thinking further, we realized that we had built a very core infrastructure of ecommerce, which was going very deep in the country. And we said, why don't we expose this core infrastructure for other entrepreneurs to use as well, whether they use products from us or whether they have their own existing businesses? Why don't we give them a full stack ecommerce platform? And that became the genesis of Dash 101, which is what we've launched recently. So, Dash 101 is a full stack ecommerce platform, which allows individuals or organizations to either launch or manage an online business. And in under that we will give you a free online shop website, it's plugged in with a full logistics solution. So, you can ship your products anywhere in the country, collect online payments, or collect cash on delivery. And all of this is seamlessly integrated, so you don't need to do anything else. So, today with the if you don't have any viewers starting as a business, you are a budding entrepreneur, you can literally start with Shop 101, and we will manage the entire supply chain plus logistics and delivery. Or if you have an existing business, you can use the Dash 101 platform and set up your own online shopping, we will manage the infrastructure for you. So, that's the so those are the two things that we're doing in the spirit of democratizing entrepreneurship.
Pritish: COVID definitely has helped ecommerce and social commerce platforms grow and bring in a strong revenue in 2020. But, how has the profitability been impacted?
Abhinav: That's a great question, PritishI think the way we've built the business, we've always been very focused on economics. And we fundamentally believe that you need to build a business the right way with the right unit economics. And we've always been focused with that. Having said that, COVID actually has helped us do even better on that front. And a couple of things that that have helped us significantly on that. One was just the fact that business was at a pause during the initial stages of the lockdown, that just gave us time to reflect, recollect and fix certain things that you never get to fix while you're running at a very high pace. So, that was one very unique opportunity, which may, which we made the most of. And I think the other thing that we've done on our core focus, we have over a period of time built deep capabilities in terms of just the technology framework in the ability to identify and predict which order is going to be returned, who are the consumers who are effectively placing a fake order, and also models around what shipping partner to use for which PIN code pair. So, today we have the ability to predict that for this PIN code destination and for this PIN code origin, which shipping company to use, whether to use a faster service or whether to use the Surface service. So, we have all of that capability built in and which ultimately means that we are able to deliver a great experience to our consumers while also keeping our economics and costs under check. And we are actually one of the very few and maybe one of the only companies which actually generates a positive contribution margin after including all marketing, all sales, all discounts, all costs and all of course logistics, warehousing, whatever costs. So, we are one of the only company maybe the only company in India, in the commerce space which is actually generating a positive contribution margin after accounting for all economics and all fulfillment and logistics and marketing and variable costs.
Pritish: What's the secret sauce, then?
Abhinav: I think the secret sauce if you ask me, I have two words, relentless execution.
Pritish: Building a resellers ecosystem, that has a few aspects to it, one is growth. The other one is building for a country like Bharat And the third one is trust. You're growing at a fast pace, how do you handle growth versus quality?
Abhinav: I wish there were a magic wand to do. But, I think the way I look at growth versus quality is very, very simple. It's, it's not something that you can just do in one day and say, hey, it's done. It's something that you have to breathe day in, day out. And that's the only way to do it. As an example, we've done we track a score called the daily happiness score, which is basically a reseller can go and just rate us on the app itself. That how happy are you feeling with Shop 101 today, a simple score of zero to 10. And we track that every day. And we ensure that are we making a change on a day on day basis? As long as we are doing that, that means we are doing something right, much more than the previous day. So, it's an continuously ongoing thing that you have to keep at to make sure that while you're growing, the quality is maintained. And on the other hand, of course, there are long term strategic choices that you have to make that ensure that while growing, the quality does not get compromised. So, that would mean that your underlying technology platform is built towards serving quality. That would mean that your criteria for onboarding new suppliers is very stringent and you only pick the best suppliers in the market. It also means that you have a very strict data platform and a ratings platform which you keep monitoring on an ongoing basis and weed out the bad actors. It also means that in the case that you actually you are not able to fulfill the expectation of the consumer or the reseller, then you have a fallback mechanism where you are able to pick up returns very quickly and of course correct wherever possible. So, I think it's it's a combination of multitude of things that you have to keep building, and the core underlying fundamentals that you've built early on, that help you deliver quality while growing very rapidly.
Pritish: Now let's talk about Bharat a country with 22 major languages ,720 dialects and it's heterogenous. So, how do you build a product and a company for such a diverse market?
Abhinav: Yeah, so it's a very interesting problem that you know we've grappled with forever and Shop 101 in some ways is is a model which is just built for Bharat. So, part that resellers are at the heart of the ecosystem means that we are able to cater our offering for every single dialect for every single taste for every single region. Because the reseller is selecting what products they would share in their network, what products would they push, they are also selecting what is the appropriate price point for them. Are they looking to go for low volumes but high margins? Or are they trying to make higher sales and keep them margins thin? It is all on them. So, so our model sits very well with the fact that there are different tastes and different styles and different paying powers in the country. The second thing is that because reseller is the one who is interacting with the end consumers, she takes care of all the issues of language understanding, explaining what the product is to the end consumer, answering those questions patiently, making sure that there is no issue of technology penetration, so to say, right? If the consumer is not comfortable in chatting on say WhatsApp, a reseller is very happy to pick up the phone and explain to them. A lot of resellers actually also sell in person. So, the fact that reseller sits at the heart of the entire business means that we are able to cater to every single end consumer in their own unique way and and are able to do that very well. The third thing is the reseller also is able to effectively drive trust, because they're typically they've built these relationships where not only are they curating and pushing the relevant products, but they're also able to answer questions, they're able to also give the comfort that in case anything goes wrong. It's a very easy process to return the product and it will get picked up right from the consumers home. So, I think just the core model itself lends itself very well to how diverse Bharat is. And then of course beyond that we've done multitude of things in the product itself to make the life of the reseller also very easy. We've made it such that the reseller does not have to read as much, the buttons are very bold, Indians and people who are not very comfortable reading leverage a lot of visual cues, colors, highlights, and they understand which icon means what and they just click through that. So, our endeavor is to build an app where language or reading is not the most important thing but it's just highlights and colors and that guides you as to what to do. So, those are the various different things that we have done underlying in the model itself, and then the technology product to make sure that we are catering to Bharat.
Pritish: You touched upon trust, I think that is a key pillar for building a very successful ecosystem. And India is actually a high trust deficit market.
Abhinav: Correct.
Pritish: So, how do you actually build trust with your resellers as resellers with the buyers?
Abhinav: Yeah, see, so as I said, resellers have existing relationships with their end consumers, which drives trust, our job is to make sure that we don't like we live up to the resellers' trust that they are putting on the platform. So, for that, what we've done is we've we've made sure that as we spoke about quality, we've instituted a lot of key things that help the reseller drive trust and shop on their own. So, I spoke about how we are very finicky about getting the right suppliers, how we ensure that we weed out the bad actors and we weed out products that that see high returns. But, along with that, we also provide resellers not only with images of products that have been worn by models, but we actively provide real images. What that means is that we asked resellers to collect actual product images from end consumers and put them back on the platform. So, when the next reseller is pitching that same product, they can see how did this Kurtha look on an end consumer? What was the material like? And it's very clear that they are able to then say, hey, here is a product worth 500 rupees, look, this looks fantastic. This is much more than what you would get for at this price in the market. So, so doing small, small things like this go a long way in ensuring that A, reseller is able to trust us and then B, they are able to communicate with confidence that same trust to their end consumers.
Pritish: Flipkart and Amazon are entering the social commerce space. Do you think that they are booster to the business or you will need to compete against them?
Abhinav: See, I think Amazon and Flipkart the way they are thinking of social commerce is fundamentally very different from the way we look at it. Right? As I said, we are here to democratize entrepreneurship and empower the entrepreneur, the entrepreneur or the reseller is the front and the heart and soul of the entire piece. The consumer buys from them, the consumer is trusting the reseller. So, it's the reseller business who we are empowering. Amazon and Flipkart, on the other side, the way they think about the model is that the consumer is buying from an Amazon, consumer is buying from a Flipkart, which is where that they want the consumer to trust the platform. So, these are two very different models, very different ways of operating. And in fact, serve very different needs. If you think of a product that you want to if you you know, use it realize, hey, I want to buy, say, a particular style of home decor item, you go and search on Amazon, it's a very need based search driven thing. Versus through our model, you are getting products that you potentially will like, it's a browse driven model, right? It's a model in when you colloquially say you tell your friends, hey, let's go shopping. But, and you don't really imply what you're shopping for. It's a different model, you go you browse, you like something and you buy. So, these fundamentally different models and not really competing with each other.
Pritish: The last question, which is that one advice that you got while building Shop 101 that has helped you the most?
Abhinav: Okay, I think the key thing that I always remember is that the only rule of entrepreneurship is that there are no rules. And which basically means that in every situation, you don't think about it from first principles you should ask, you should realize, what are the other examples that you see around. But, ultimately, every situation is unique. And you should respond and react without any constraints to what has been done before or not. It's a blank canvas that you're drawing on. And you should not be constrained or you should not think about anything what's possible or what's been done before. So, the only rule of entrepreneurship is that there are no rules.
Pritish: Rapid fire questions, one word or one statement.
Abhinav: Okay.
Pritish: The hardest thing about your job.
Abhinav: Not knowing what the next day will entail. Every single day is very different.
Pritish: One book or blog that has influenced you the most.
Abhinav: The Hard Thing About Hard Things by Ben Horowitz.
Pritish: Your most favorite superhero?
Abhinav: Iron Man.
Pritish: Abhinav it was great speaking to you. Thank you for your time.
Abhinav: Thanks a lot, Pritish. It's a pleasure being on the show.