Rocket Internet-backed OfficeYes targeting SMBs; Can it crack the unorganised market?

Hank Retail Pvt Ltd, the company that owns and operates officeyes.com, a B2B website for office supplies and stationery, claims to be doing high double-digit transactions on a daily basis, adding that this number will hit the triple digit by the end of this month. While this number is not so great in comparison with a general e-com firm, it is still more than what companies in the same space are doing.

The Gurgaon-based startup was founded by the duo of Siddharth Nambiar (MD) and Arvind Sivdas in Q1, 2012. The site went live in May this year and around the same time, the company also raised undisclosed funding from Rocket Internet and an unnamed US-based VC fund. Nambiar, an MBA in Business Administration from Oxford and a London School of Economics alumnus, has earlier worked in Evalueserve and Man Investments. Sivdas is an IIT (Madras) and IIM (Kolkata) alumni and has worked with McKinsey & Company, National Intelligence Grid, Zanding Associates and Deloitte, prior to OfficeYes.

The site

The site aims to be a one-stop online shop for all office requirements of a business. The products available on the site range from basic stationary, furniture and office electronics (printers, fax machines, etc.), to pantry as well as items for corporate gifting. As of now, the site has around 3,000 products. It has also recently added a few product categories to the site that include software products (operating systems and anti virus, etc.) and furniture.

According to Nambiar, the company's market opportunity is in the low double digit billion (dollars). This is considering the fact there are 30-40 million small and medium size businesses (SMB) in India, out of which around five million businesses transact online. Vineet Neeraj, co-founder, Kobster.com, a competitor of OfficeYes, estimates this market at $14.02 billion and growing at approximately 15-20 per cent per year.

But unlike Kobster.com, which is both a B2B and a B2C company, OfficeYes follows a different model. It aggregates demand, negotiates prices from suppliers (since it buys in bulk) and passes on those savings (along with its operating costs) to the end customers. And since the site only caters to organisations and businesses, the customers have to undergo a one-time verification process by providing a scanned copy of a few documents at the time of placing their first order.

But why not be active in both B2B and B2C space, considering it will only increase the customer base? "We don't want to be a Flipkart, in the sense we don't want millions of customers. Rather, we want to develop long-term relationships with our customers who provide us with business on a regular basis," says Nambiar.

As of now, the company has a single warehouse in Gurgaon where it stocks fast-moving products. The cheapest product we could find on the site was a pen refill for Rs 4, while the costliest one was a recliner sofa for Rs 57,000. The company has over 100 brands that include Cross, Ergonomy, Geeken, Citizen, Canon, Casio, Kores, Reynolds, Moser Baer, etc.

For logistics, the company follows a mixed model where some of it is done in-house and the rest is outsourced to partners including Bluedart, Aramex and First Flight. Marketing is also a combination of both online and offline. And while Nambiar mentions that most of the company's customers have been acquired online, for large orders, businesses still want a telephone call or a face-to-face visit, since they are still not very comfortable transacting online.

Competition

The company faces competition from a number of players (mostly startups) that include 1Click1Call, Yesgrid and iThinkStore. The market also has a number of large established players like Staples and Office Depot, but Nambiar doesn't see them as their competition.

"The large players (like Staples) serve massive (in terms of size) companies, but that is not our target. Instead, we focus on the largely unorganised market of small and medium organisations that have to work with a number of vendors to fulfill their office supplies needs," said Nambiar.

According to him, the USP of the company is the fact that it can provide businesses with a single destination (its site) for satisfying all their office needs, negating the need for working with one vendor for furniture and another for pantry, and so on. In addition, the company also provides negotiated discounts since it buys the products in bulk.

The way ahead

For expansion, the company is looking at three new cities in the next six months including Bangalore, Chennai and Mumbai. It is also planning to increase the number of products on the site to 4,000 by the end of this year.

Going forward, it will also look at providing school and hospitals supplies.

(Edited by Prem Udayabhanu)