Hyderabad: Linq, Hyderabad-based aggregator of various e-commerce services, has plans to set up over 400 Linq Stores this year to add to its current 75 stores. As the stores will franchise, they will look to create an employment of at least 400 people.
Each store will need an investment of Rs 2 lakh, making it Rs 8 crore. This will come from the franchises. Linq will provide the software support. The franchises will get a revenue share on the sales happening, said its co-founders Siddarth Yerram.
“There are specific advantages for shopping online. The variety is more and the cost is relatively lower. However, this is mostly a Tier I city phenomenon. Tier II and III cities are still evolving as far as online trade is concerned,” said Siddarth adding that most online players try to tap the same 100 million online shoppers. The next segment, which is bigger in size and has paying capacity, is not tapped.
“We follow a zero inventory model and supply the goods based on demand. We have a digital catalogue of the products being sold by various e-commerce portals across segment including retail, travel, healthcare, insurance, pharmacy, money transfer and others. For instance, it has tied up with Amazon for retail, Netmeds for pharmacy and Rubique for financial products and so on,” said Anirudh Rayaprol, also co-founder. Another member, Sree Ram Juluri, is also part of the core team.
The company in the last six months has set up 75 stores in Telangana and Andhra Pradesh. Its gross merchandise value is about Rs 6 crore and gets a revenue share for the sales that happen through the Linq store. Linq in turn shares the revenues with the franchises; he said adding that there is a possibility of upselling and cross selling.
These stores bring the e-commerce stores into offline space offering the same conveniences like wider choice and better pricing as online players. “Cash on delivery by key players is available in about 400 locations. We can open where there is no such facility,” said Rayaprolu adding that Linq now operates on a cash on delivery model only. The stores take the bookings and the e-commerce players deliver them at the stores. They will be collected by the customers. If there is a need for returns, they will do it at the store.
“Though people are using smart phones and browsing, only a few are doing online transactions. Many have apprehensions about products. This is resulting in buyer numbers getting stagnated and the online players are not able to see the next level of growth. We are providing a newer and cheaper sales channel, tell Yerram.
“Big retail chain stores at the best can open up in about 2,000 places. We are a micro retail store. We have the potential to operate in 50,000 locations in India, in towns and districts,’ said Yerram.
“We are targeting those who do not shop online. Of course, there will be some customers who also buy online. They come due to cash on delivery option,” he said adding that the company is in talks with more e-commerce players.
“Linq is profitable. If we get funds, we will be able to scale up faster. Revenue model is tried and tested. Almost all stores have achieved the breakeven. The data captured can be used for targeted marketing to improve customer experience. Store owners are able to make a net of more than Rs 40,000 a month,” said Rayaprolu.