K Vaitheeswaran

When Fabmart started out in the year 1999, it knew it was taking on a tough job i.e. changing habits of users who were not used to shopping on the Net. The only way this could be achieved was through concentrating only on the core activity, rather than shopping and not spreading themselves trying to be the jack of all trades. The belief was that if Fabmart could offer the Indian customer a better choice between a brick and mortar store or an online counterpart, there was a strong likelihood that customer preference, in spite of low Internet penetration, would shift to Fabmart.

The relentless focus on shopping has meant that Fabmart is today counted as one of the few rare success stories in the Indian space. While most shopping sites have concentrated on making their sites resourceful and well categorised, the prime factor that is missing is good customer support. Looking at some other competitor sites, many of whom were big names in business, Fabmart could clearly see the main stumbling block for e-commerce was lack of customer support and prompt delivery of goods. It is no surprise therefore, that most customers buying goods from Fabmart are repeat customers.

A success of a e-commerce site is measured not by how many people visit the site but by the number of orders or transactions that it executes. Fabmart can surely claim to be an e-commerce success as it currently executes over 1,200 transactions every day. Revenues have also been growing at a fast clip. Fabmart closed fiscal year 2002 with revenues of Rs 9.4 crore, up from Rs 3.2 crore last year. For financial year 2002-03, Fabmart is expecting to close with revenues at Rs 20 crore.

One more key element in Fabmart’s success is that the site has got a completely automated solution that ensures that Fabmart works on a virtual inventory model and does not hold any physical inventory itself. The company has also taken a conscious decision to outsource most of its functions. For example, networking is handled by Wipro, the payment gateway by Citibank and hosting by Bharti Telecom. The responsibility of the logistics part has been given to Blue Dart, which delivers the goods to the customer, leaving Fabmart to concentrate on its core business.

Though online revenues have been increasing at a fast clip, experience shows that customers prefer to look up at a particular thing on the site, but prefer to buy it offline. Looking at this particular trend, Fabmart decided to launch its offline model, which would give a physical face to the customer. Currently, this model is confined to Bangalore. Looking at the excellent response, the company plans to open up similar stores in Chennai, Hyderabad, Pune and Mumbai shortly.

Adds K Vaitheeswaran, vice president-marketing, Fabmart, “Our future plans include setting up a physical retail chain across various cities.” With a focused approach, Fabmart is confident of making the e-commerce revolution happen in India in a big way, and on the way break even by 2004. And unlike other sites, who have splurged hard earned cash belonging to VCs Fabmart is keeping a tight tab on its spending. For instance, the company has cut down 50 percent of its communication costs by the use of instant messaging solutions. When we asked Vaitheeswaran for an telephonic interview (it would have entailed a STD call from Mumbai to Bangalore), he suggested chat instead! Like mothers who are proud of their sons who know the value of money, Fabmart’s VCs surely would be proud of their choice.