The Success Story of a Venture Capitalist turned Entrepreneur, who made his E-Commerce Company Profitable
Mr.Manoj Gupta is the Founder/CEO of Craftsvilla.com and was previously Principal at Nexus Venture Partners – an India focused $600 million fund. Mr.Gupta was also a former board member of multiple companies including Yebhi.com and Sohanlal Commodities in India before founding “Craftsvilla”. “Craftsvilla” is a great example for companies to make their business model more sustainable, inclusive and aligned with the societal needs in the post-2015 world, and is an even greater example for young people who are working to start their own business.
The question “Why did Craftsvilla.com become profitable?” may sound naïve, with the most obvious answer being “Of course you should become profitable”. However, many components that contribute to that answer are not always so clear to see. Here is the story of the roller coaster journey of Craftsvilla, and how today Craftsvilla stands tall in e-commerce because their approach to profit focused on looking for long-term success rather than mere survival, without relying on the Venture Capital. Here is the success story of Mr. Gupta’s E-Commerce business start-up.
Today, Craftsvilla is a stand-alone profitable entity without significant funding from VCs. Given Mr. Gupta’s previous VC position, he was already familiar with how quickly a VC and fluctuate between the challenges faced during low periods and the many achievements during a high period.
Sensing the exhaustion of VCs passion for e-commerce, the team started preparing for the worst “no-money” scenario before other companies did, formulating a strategy focusing on three basic action points:
- Reduction of Cost
- Reduction of Complexity
- Expansion of Revenue
Approximately six months ago, the team had 80 people working in five offices across India. Today, there are eight people centralized in one office doing more business than when the team was 10 times that size. One thing I have learned from studying Craftsvilla is that the efficiency drastically boosts when you keep things simple. It is amazing to see how the efficiency increases when you have an optimally-sized team, and how remarkably simplified the work becomes when the employees seated next to each other have specific roles, solving the related issues faster. In addition to a larger staff and multiple offices six months ago, Craftsvilla also had multiple business models with multiple commission structures. Today, Craftsvilla has reduced to one simple business model with one single commission structure. Craftsvilla decided to discontinue their business model called "iManage", through which they managed logistics of their sellers. The program consumed 80% of their resources but contributed to only 20% of the total revenue.
As a result "We need lesser space, we need lesser coordination and we have more time to think what else we can do quantumly different to take us to the next level", says Mr.Gupta. By making such structural and organizational changes, today Craftsvilla is profitable with a steady growth of 15-20% month on month, with Zero discount (a bond bought at a price lower than its face value and the face value paid later on) and COD (cash on delivery) , with double the conversion on traffic and average order value. Their customer acquisition cost is below 250 Rupees and they are recovering the marketing dollars on the customer’s first purchase. All this was done not just to become profitable, but also to make the business capital efficient, scalable and sustainable. Craftsvilla became profitable to mold their business and organization for next level growth, which is going to be largest India has witnessed in the E-Commerce sector so far. Craftsvilla became profitable to be less dependent on fluctuating VC passion, gaining more flexibility and control over the company.
Over the described period of time, Craftsvilla is bringing about a positive change in the livelihoods of base-level customers, artisans and designers. This is aligned with the 8th and 16th goal of United Nations Post-2015 Sustainable Development Goals (SDGs) which focus on promoting sustained and inclusive economic growth, ensuring productive employment and decent work for all and promoting peaceful and inclusive societies for sustainable development. In addition to its successful return, the firm’s business model also stands out in its approach to society and societal needs. While Craftsvilla’s experience proved that it is possible to become profitable in the E-commerce sector, it also showed that becoming “customer-facing, as opposed to “investor-facing” leads to more sustainable and inclusive growth. Craftsvilla uses a marketplace model to capture the regional variations of India. They connect local artisans and designers directly to global customers and thereby increase their livelihoods, remove middlemen, help promote their brand and hence preserve Indian culture, traditions and values.
Craftsvilla’s social engagement also extends to the customers, since the company’s work helps bring goods and services to underserved populations. This journey will help customers match their needs by discovering and buying products they would otherwise not have access to. The company’s strong commitment towards the local communities progressively leads to a greater inclusion and economic empowerment, which will ultimately contribute to the sustainable development of the country’s economy.
Craftsvilla’s experiences while on their path to profitability gave them glimpses of success. They are now more confident than they were six months ago that they will become successful. Furthermore, in doing so, Craftsvilla is contributing to the improvement of society and to the achievement of the Sustainable Development Goals. Mr. Gupta's exemplary profitable E-commerce set-up, may be of great help and a strong inspiration for other entrepreneurs to shape a future billion-dollar society-friendly organization for generations to come.
Learn more about Craftsvilla at Craftsvilla.com
This blog is the fourth in a series of summer blog articles related to the Post-2015 Sustainable Development Goals and are authored by youth working with Child & Youth Finance International. Join the discussion on social media by following @ChildFinance and using the hashtag #cyfiyouth.
About the Author
Ms. Bina Goklaney is 19 years old, and is currently pursuing her BBM-IB (Bachelors in Business Management-International Business) at the Pune University in India, and is a member of the Youth Committee at Child & Youth Finance International.