I recently met Sundeep Malhotra, CEO of Home Shop 18 at an online retailers’ conference in New Delhi. Brilliant speaker and had the audience under a spell throughout his talk. Home Shop 18 has scaled from Rs.35Cr gross sales in year 1 to Rs.200Cr in year 2 and Rs.360Cr in year 3. This puts them at an average of Rs.1Cr of sales per day. Home Shop 18 created the first 24 hour shopping channel in India. In their first year, they tried to replicate the formula that worked in the American living rooms, viz. selling sauna belts, astrological gems and other whacky products that appeal to miserable couch-potatoes and gossiping housewives. Of course, there was the Indian touch of offering ek-mukhi rudraksh malas and yoga paraphernalia, but a good part of the programming consisted of white women speaking studio-translated Hindi matching note by note on the superlatives.

This weekend, I took the time to watch Home Shop 18 for an entire hour on a Saturday evening and took a sneak peak at their 6 hours of original studio programming per day. The first 30-minute segment was fake gold and stone jewelery appealing to the sensibilities of housewives organizing kitty parties positioned as Satyanarayan pooja. The next 30-minute segment was a fake iPhone appealing to the sensibilities of the small town businessmen who travel extensively, use 4 SIM cards at a time and care about the status projected by a multi-touch phone with a fluorescent fish as the background. In both cases, it was not too hard to believe that they fulfill 6,000 transactions a day across 1,000+ towns of India. Mobile phones and jewelery also seem to be a departure from the purely niche and otherwise inaccessible categories.

Similar to the US, television reaches majority Indian households and the mobile phone reaches majority spending consumers. However, the Internet reaches less than 20% of spending consumers in India, compared to over 80% in the US. At the same time, consumer spending in India has increased widely and the penetration of retail malls and distribution network is lagging behind the aspiration to spend in smaller towns. Television creates a desire to buy certain products, yet the distribution network makes those products inaccessible. Along comes Home Shop 18 and fills this gap. Although a moving target, it is a large market considering the consumer base of 350MM+ representing 110M+ households. The phone is obviously an integral part of the eco-system since it gives consumers a way to connect with the business and makes the transaction possible, while the distribution network is integral because it completes the loop where brands and retailers have failed.

Home Shop 18 has now learned that they have unlocked a market for products that fall in the delta of media reach minus distribution reach, and even genuine brands are eligible within their model, if not more so. They are aggressively extending their catalog to include originals instead of fakes. Of course, the challenge is to reach targeted consumers for high value products, instead of mass consumers for high volume products. It is unlikely that a buyer of genuine products would watch the same channel, since she has been cognitively trained to switch the channel as fast as a mother stumbling upon a porn channel in the presence of children. However, it is possible to reach targeted consumers via the large network of private channels that are looking for a revenue stream beyond pay-per-second advertising. There is no dearth of genuine brands looking for reach through the barrage of private channels, if only their ROI risk was better managed. If Home Shop 18 can successfully bridge these two made-for-each-other needs in search for a business model, rest is clockwork and a short runway to the bank.

While entrepreneurs in small towns have figured out Home Shop 18 as a an alternative distribution channel that gives them opportunity to mark up and locally sell products to those who do not watch television, it re-iterates the value Home Shop 18 is creating as a distribution channel.

India spends Rs.10,000Cr a year on television, another Rs.10,000Cr a year is spent on print, and Rs.5,000Cr a year on other media (outdoor, BTL, online, mobile, etc.). The phone is penetrated across all consumers of this media and all consumers who are spending. Are there more “new retail” companies in the making who can address the same delta of media reach minus distribution reach? I would like to believe so.

Think about the last 10 books you read and the reason you picked them up and not any other. In my case, all of them were recommended by friends, or by the author/publisher/editor, or by Amazon.com which knows my reading patterns, or by fellow reviewers of books in the blogosphere and media. Whenever I found myself in a bookstore on impulse, I returned empty handed. Probably picked up a new release by a favorite author every once in a few visits. A book is something we give many hours of our time to and therefore build a fairly strong reason to read it before deciding to purchase a book.

One of the books recommended by a friend two years ago was Cosmicomics by Italo Calvino. Since then, I have been trying to get my hands on the book in Mumbai. Small bookstores like Granth and Danai in my area did not have it and couldn’t get it for me all this while. Large bookstores like Landmark and Crosswords did not have it and could not find it in stock at any of their outlets across Mumbai. Online stores like Indiaplaza and Indiatimes had no clue who Italo Calvino is. I finally found my copy on Flipkart.com. Found it the first time I looked, ordered it for Rs.561 and am halfway through the book in the following week.

Books are the killer category (arguably) that brought e-commerce to the world. After a decade of failed attempts in India to create an online business for books, along comes Flipkart.com and makes it happen. At the time of writing this, I estimate that they do 40,000 transactions a month at an average selling price of Rs.500. Why did this work now and not in the last 10 years? More Internet penetration - No. More book enthusiasts - No. Past entrepreneurs were stupid - No. Better recommendations & reviews - No.

When you Google a book, you will find it on Flipkart.com. When you land up on Flipkart.com, you will get a certain comfort about the site, about the offer price and about the delivery time-frame. Once you give it a shot and have a good experience, you will go back to it once again when looking for a book. After successive positive experiences, you will tell your fellow readers about it. Millions of such chains are being fanned out. Flipkart.com simply created a comprehensive catalog, made it easily accessible online, gave you all information you needed about the book and nothing you didn’t, did enough to win your trial at the risk of losing a few hundred rupees, then delighted you with the experience to create a habit of coming back.

Indiaplaza, Rediff, Indiatimes and all other past online book stores tried to replicate the in-store format of taking the highest moving books, giving it prime real estate, deeply discounting them, and then grabbing a small part of the funnel for temporarily high moving titles. As a regular reader, you could not find what you were looking for. As an impulse reader, you would decide to read what the store wanted you to read every once in a while. The limitations that made book retailers unprofitable, became precisely the reasons why online retailers did not scale.

It’s heartening to see that simple things done right still result in scaled businesses, even in India. Flipkart addresses an interesting niche. As it expands, it will hopefully not get carried away, be mindful of its customer base and try to sell more things that that customer segment needs. It should also be deliberate about maintaining the same levels of service in other categories it enters where timely deliveries are easier said than done. At Chaupaati, many of us are fans of Flipkart as customers as well as entrepreneurs. We look forward to learning more from this cool company and these phenomenal entrepreneurs.

At Chaupaati, we have always wondered how the pervasiveness of the mobile phone can be used to provide market access to consumers at large. In the early 90’s, AOL made the Internet pervasive in American households and Netscape changed the way these consumers accessed information over this new medium. In the late 90’s, several American companies disrupted traditional brick-and-mortar consumption models by providing direct market access to these consumers in this brave new world. In the late 00’s, the mobile phone has penetrated Indian households and we are in times where businesses are figuring out how this impacts the way people access and buy consumer goods and services. Here are some initial learnings.

Phone is not Internet

A phone is meant to access people. The Internet is meant to access information. One may be used as a proxy to the other, but it is important to understand the difference in consumer expectation to enable that proxy. While the phone can be a medium to interact with a digital platform that is always accessible wherever you are, it is different from the Internet. Using the Awareness-Intent-Desire-Action model of consumer behavior leading to a purchase decision, let us contrast how the two media compare. Both phone and Internet are interactive media and best used for Awareness creation on pull rather than by push. The Internet is great for high-involvement information browsing and okay at visualizing, making it a good medium to convert Awareness to Intent to Desire. The phone is pathetic for this purpose. The phone is great at providing comfort from human interaction and clarifying nagging doubts at the moment of truth, making it a good medium to convert Desire to Action. The Internet falls short here.

There is a Unique Reason

Popular myths: (a) If it sells in the store, it will sell on the phone. (b) If it sells on the Internet, it will sell on the phone. These are both dangerously wrong inferences. Wrong because there are several counter examples. Dangerous because they are half-true. A new medium must offer a unique benefit for people to break away from current habit. This benefit must be compelling enough to drive the change in behavior. Multiple successful behavior changes will eventually drive a habit change. Every order by phone is triggered by one or more of these benefits: not near Internet, special order requests, need clarification, not available at my stores, don’t know where to buy, it’s a secret, want to negotiate, want convenience, have deadline, want home delivery, getting a great deal, etc. It will become a habit only after multiple orders. Before that happens, transactions will not happen just because people want to buy.

Medium - Product - Consumer

Popular myths: (1) Television and print are the best ways to advertise products meant for ordering by phone. (2) Gifts and durables are the killer categories for phone commerce. (3) Businessmen in tier 2 urban areas are most likely to buy over the phone. In each case, the incorrect conclusion is that a medium, or a product, or a consumer is best suited for phone commerce. In reality, it is correct to draw conclusions only on the combination of media, product and consumer. Media bias: Housewives will purchase jewelery as seen on TV, but not as seen in a newspaper. Product bias: Parents will purchase children’s comics they browsed online, but not textbooks. Consumer bias: Nagpur shopkeepers will purchase dual-sim mobiles advertised on hoardings, but Mumbai shopkeepers would not. It is the combination that works or does not work.

It’s a Platform, not a Call Center

Just as an Internet business is not just a website, a phone business is not just a call center. Anyone can set up a call center, just as anyone can set up a website. But outsourcing a call center or website design capability is a different business from offering a platform that enables a new consumer service. What defines an Internet or phone business is the product or service it offers, the experience it provides its customers, and the way it fulfills its promise to the customer. Websites and call centers with a strong catalog, good usability and impeccable fulfillment are more than just websites and call centers. Business success relies on understanding the customer need and building an entire organization, product platform and fulfillment network to fulfill that need.

Chaupaati’s mission is to aggregate the commerce between consumers, unorganized businesses and brands in India, and make it easily accessible. We are doing this by working with leading Indian consumer brands and retailers to build out a direct-to-consumer channel in books & magazines, home appliances, computers, mobiles, education, gifts, automobiles, retail, FMCG, consumer services and other verticals we have not discovered yet. If you know of someone who shares our vision, please let me know at kashyap@chaupaati.in. In the meanwhile, enjoy phone pe deal at 922-222-1947.

August 2009: Laxmikant Vyas, Gaurav Chopra, Mini Paul, Rohit Kumar - students of Indian School of Business 2010 performed a study of Chaupaati Bazaar as part of their final project of the core course in Entrepreneurship. The mandate for the report was to identify an individual who has been involved in starting or growing a venture, identify the challenges or hurdles faced by this individual through his/her journey and the course of action adopted, analyze these actions and their impacts and conclude with any valuable insights gained.

In order to analyze the sustainability of Chaupaati’s business model, they studied a similar venture started by Abhay Singhal, an IIT Kanpur graduate. Abhay was one of the first to realize the potential of phone classifieds and had started his venture in Bombay in 2005 backed by $500,000 in VC funds. They analyzed the reasons why the SMS based phone classified service did not take off as expected and contrasted it with Chaupaati’s business model that overcomes these problems.

The report says that Chaupaati’s key strengths are the business model, affordability by small businessmen, focused top management, and quality of customer experience. The report identifies Chaupaati’s future opportunities in expanding from a phone classifieds to a phone commerce platform, and expanding geographical scope from Mumbai to rest of India; and cites Chaupaati’s agility to adapt to market conditions and change as the biggest factor that makes it eligible to address this opportunity.

Chaupaati was particularly impressed with the “Learning and Reflection” section in which the report draws parallels between Chaupaati’s real world approach and business theories learned in the classroom; in the areas of evaluating and developing the opportunity, securing resources, and growing and sustaining the enterprise.

Thanks Laxmikant and team, for a brilliantly written report and your insightful coverage. And thanks for letting us share it with the world beyond your colleagues and faculty at ISB. Best of luck from the Chaupaati team!

Being a die-hard geek, I never understood business metrics and their impact. Of-late there has been a sub-conscious effort from me to measure productivity in terms of business impact.

We developers love the idea of generic code, one which taken to any scope should just work. The hard bit is, there are many dependencies. Any phenomenal idea for one market might not necessarily work for another. A good deciding factor is the nature of the consumer. The thought occurred to me while exploring avenues for geographical scaling of Chaupaati into other market.

The underlying needs that Chaupaati serves in its Model

1. People need to buy and sell

2. People don’t have access to “all the” local networks and want a wider reach

3. They want it easy / hassle-free and quick

4. They are willing to pay for a good service.

Aah, they look like the requirements for any market. The Model is generic enough to be taken anywhere was my initial thought, only till I started realizing the nature of the user at places we wanted to take the business to. So, I classified the 2 markets here as “Immigrated” and “Inhabited”.

Bombay is a good case of “Immigrated”, has a large number of people pouring in from probably all parts making it a work city. You walk in the city, like probably I did a little while back, and you need access to the city. The access is available on the information networks or other services which act as peer2peer business. Your nearest solution to any aid is a help-line, a business call-center, or a website operating the need. And the act becomes a habit, and soon becomes a pattern for all the “Buy & Sell”.

The other market is probably where people have been settled for a long time. It’s a local chain of people and information flows well in that chain. It sure doesn’t sound an effective way of information search, the latency of response is much more, but has a tangibility associated with it. I don’t pay for the search, it’s a pro-social chain, not business service. The “relative” trust is more, since the nearest point of search is someone close to you. The tangibility and trust becomes a need and then a habit and then a pattern for all the “Buy & Sell” - the “Inhabited”.

If I was to break the trust equation for both the markets:

Q: I need to buy a car.

TP = Trust probability of it being good.

L = Latency of information.

A - Inhabited: Tell my dad [ TP1 = 90%, L1 = few days], Dad tells a close friend [ TP2 = 90%, L2 = few days], close friend knows a colleague [ TP3 - 90% , L3 = few days]. After L1 + L2 + L3 days and with TP3 of TP2 of TP1 probability of it being good, I can get to see the car and buy it.

B - Immigrant: Call up Chaupaati [ L = Few minutes ], get the seller, and have a look at the car. TP = You can ask for feedback about the seller, deals he has listed on Chaupaati, how many times has he been contacted. You calculate the trust.

The Inhabited have still not got comfortable with technology intervening the chain-link to be a one-point-solution. It takes a little bleeding business, or a little model tuning to reach the different needs of consumers. I wonder if business & market study have Factory Design Pattern.

Also I am beginning to realize, finding the right target audience for your act is as tough as finding the right fit denim.

Shruti and I moved to a new home last week. Given the nature of both our work, neither of us has much income and we need to save every buck on this move to minimize damage. The perfect case for using Chaupaati. Here are my experiences so far.

1. Bought a used Washing Machine: Harish Vyas (name anonymized) was upgrading to a bigger washing machine. He found out about Chaupaati from a Gujarati newspaper ad and decided to advertise his washing machine deal by calling 922-222-1947. He was asking for Rs.5,000 for a 6.5KG LG Fabricare washing machine, originally bought at Rs.18,000 one and a half years ago. After Shruti found this deal on Chaupaati, she visited for an inspection and then made an offer of Rs.4,500. The following weekend, I went with the car, completed the transaction, loaded it up at his home and transported it to our home. Before making the payment, I made a cursory inspection, got a promise to return if there were any surprises, and understood all fittings and settings so I could have it up and running the same day back home. Harish lives in Andheri West 2km from our new home, and it sure helped that his engineer dad is hands-on and knows his machines. Sure enough, the washing machine was up and running the next morning with all fittings. No surprises. Except, Harish has not yet paid Chaupaati and does not feel obliged to! As we have discovered the hard way, the individual advertiser does not like to pay after use. If the deal does not happen, they feel no obligation to pay for responses received, no matter how genuine. When the deal happens, they behave just like my mom does in the mall. In a buy-four-get-one-free deal, she always asks the shopkeeper for the free thing, WITHOUT buying the four paid ones. Consumers, after much coaxing, are willing to pay for that one response that translated to a deal, and have something nasty to say about all others and feel no obligation to pay for them. Now Chaupaati collects money in advance, after a FIRST AD FREE trial.
2. Bought a second sale Microwave oven: Rahim Khamisy (name anonymized) is a wholesaler of second-sale LG products and a customer of Chaupaati’s century plan (100 contacts). He has built relationships with LG-corporate and gets bulk stock of LG seconds products, which he supplies to many local entrepreneurs across Mumbai. These products are typically showroom pieces with minor external damages or excess inventory of a discontinued series, and are covered under parts and service warranty (non-replacement) by LG. The asking prices are usually 30-50% off MRP and make it great buys for the value-seeking consumer. Besides supplying to dealers across Mumbai, Rahim does retail sale in his locality. Because of Chaupaati, he has now extended his retail network to rest of Mumbai, as long as customers are willing to visit the little corner of Khar East where his workshop is located in the periphary of a slum. Shruti was looking for a new microwave oven (convection+grill) in her neighbourhood and found Rahim’s deal for a 26 Liter LG. The asking price for a Rs.11,500 MRP microwave was Rs.7,800 in seconds. Shruti brought this down to Rs.7,500 before we made a visit. After inspecting and testing the machine at the workshop, and understanding the warranty process in detail, we haggled a little more and picked up the machine at Rs.7,000 even. We baked papads in it the same evening.
3. Signed up an AMC for two air conditioners: As part of my rental agreement, my landlord required that we sign up an annual maintenance contract for the 2T split AC in the living room and 1.5T window AC in the bedroom. This way he is sure his machine gets serviced (a compulsary activity in polluted Mumbai). I called Chaupaati to find technicians who offer AMC in my neighbourhood and got connected with five technicians. Within the next 10 minutes, I had spoken with each one of them, without making a single outbound call. Each one relentlessly redialled before they could describe their deal to me themselves. Each offered a slightly different rate and service package for the combo deal. The interesting discovery was that there are multiple AMC contracts - service AMC contracts (basic) and parts and spares AMC contracts that cover all replacements (comprehensive). A few hours later, I struck a deal with the landlord by e-mail that we would sign up a comprehensive AMC and he would pay the difference between comprehensive and basic. Everyone wins. The technician visited the same day, inspected the A.C.’s, signed the contract, picked up the cheque and scheduled the first service appointment for next weekend. The interesting part is that technicians on Chaupaati get a chance to specify all their service plans (about half a dozen in case of air conditioner repairs), complete with the pricing and description; something they cannot do in any phone yellow pages where they simply get one business listing for the service offered. They can get creative about their keyword selections so they show up in multiple categories, but nothing differentiates them from each other besides location. What made my day was that one of the technicians introduced himself as a technician calling from Chaupaati Bazaar!

Incidentally, Chaupaati completed a full year of operations (since first employee) last week. One year later, this was all in a weekend’s work…

A lot of us have wondered how print media looks at Internet and phone classifieds in India, and vice versa. Craigslist made a significant dent in the print classifieds business in the US for highly profitable categories such as jobs, real estate, automobiles and personals. However, in India, we increasingly find that online jobs (e.g. Naukri.com), online real estate (e.g. 99acres.com - see ad in Times Property over the weekend), online automobiles (e.g. Zigwheels) and online matrimonials (e.g. Shaadi.com) have long standing deals with major print publications and have advertised on a regular basis.

Are these categories unimportant to print classifieds? Does ToI not understand that 99acres.com can cannibalize the business of Times Property? Is the opportunistic sales team of ToI flying under the radar to make a quick buck from companies that want to suck out relevant customers before head-office finds out? Do publications find new media companies too small or insignificant to be a threat? The answer to all above questions is negative. Let’s unravel the mystery.

For both businesses, reach to buyers/sellers and brokers (”party and broker”) is necessary to build a large enough business. However, it is not sufficient. A sales model to regularly collect payments from these participants is a defining part of the business and ends up consuming a lion’s share of the cost for both businesses.

Publications primarily operate through classifieds depots run by local entrepreneurs who have last-mile reach and motivation to collect small payments. The depots take care of inventory risk, defaults, ad creatives and placements. For the advertiser, the experience involves paying a local guy some money and waiting at the phone to receive calls. The advertiser may not even be a newspaper reader.

Online classifieds operate through a multi-tiered sales force of salesmen collecting money offline. These salesmen might be in-house or agency driven, and work on a commission basis. For the advertiser, the experience involves paying a friendly sales guy some money and waiting at their computers/phones to receive e-mails/phone calls. The advertiser may not have ever been to the classifieds website.

Note: Like all rules, there are exceptions. There are online players that sell through classifieds depots (e.g. Rediff.com) and publications that sell through direct sales (e.g. Mid-day).

The point is: all consumer media businesses at scale (new or old media) rely on a multi-tier commission-based sales model, even if they are able to solve the last-mile and trust problem to drive usage and deliver value. In such a scenario, aggregating a few hundred customers at a time is desirable as a strategy. If a partner can short circuit your cost structure by being proxy for hundreds and thousands of advertisers in one shot, total cost savings for these advertisers more than make up for revenues shared with the partner for those many advertisers. In fact, chances are both businesses inherently have a cost structure that favors aggregation of many advertisers into one source of revenue.

In the future, don’t rule out an online/phone classifieds powering the inventory of print publications and directing people to subscribe to newspapers, just as newspapers would direct consumers to Internet companies. It makes sense for both businesses - short and long term. Benefits of working together for both outweigh potential loss of revenue for either.

Btw, Chaupaati has partnered with multiple print publications in English, Hindi, Marathi and Urdu for a weekly Second Hand Bazaar section. The results have been successful for Chaupaati as well as the print partner, and both sides believe that we are offering more to our mutual consumers and advertisers by working together. These deals are beyond simple branding or banner advertising, and integrate at the inventory and response level. Conflict of interest, did you say?

Mohammad Rafiq is the sole bread winner of a family of five: his wife, 3 kids and him. “I started my little shop in 2008. I am in a limited area in the middle of 1,000-2,000 jhopdas (huts). Before Chaupaati, I sold 2-5 computers in the neighbourhood”. Besides selling assembled computers to slumdwellers and low-income customers, Rafiq also trades computer parts, offers repair services and computer education & training to youngsters in his slum. Before meeting Chaupaati, he did not get customers from outside the slum.

“God had his way and someone from Chaupaati visited me here and told me that he would get me new business through SMS. His words immediately stuck in my head.” Rafiq bought the cheapest available trial plan from Chaupaati and got 20 contacts within a period of a week. Out of these, a couple of youngsters from Virar (30 km north of Andheri) found Rafiq’s deal too good to be true and showed up at his shop. They took home two computers, on which Rafiq made a profit of Rs.500 each. After a week, he sold another at Rs.700 profit. He had now made more than 3x return on his investment in Chaupaati. Then he bought the monthly plan and closed 4 more deals: “Mira Road, Sion, Kandivali East and Kandivali West”. He is now a subscriber for our yearly plan, whose plan value is 50 times the value of his original trial plan; and with this, Rafiq expects to do 100x more business within the year!

“Dial Karo tried to sell me a plan for a much cheaper price than Chaupaati and said they would start my service within 3 days”, says Rafiq, “but now I am familiar with Chaupaati and I like that they always started sending me contacts from the very first day. I am satisfied with Chaupaati and I trust them.” He has no reason to try another service when Chaupaati is exceeding his service capacity faster than he can scale it. Rafiq succintly concludes “For me, it’s all about fresh sms, fresh call, fresh deal“.

Customers like Mohammad Rafiq help us fulfill our dream of empowering the small entrepreneur and give him a level field to compete with bigger businesses on the basis of his merit.

A 2007 report by Toxicslink mentions how Mumbai generates 19,000 Tonnes of e-waste per year, and yet imports furthermore. In the heart of Jari Mari Industrial Area in Mumbai is Saki Naka, the focal point of electronic waste trade in India and the centre of a large low-income slum area. There are approximately 100 shops of computer waste located in Teen Number Khadi (Bay No. 3). Kurla, Kamathipura-Grant Road, Jogeshwari and Malad are other centers for computer waste in Mumbai. Entrepreneurs with the capability to scavenge, salvage and re-engineer products out of e-waste have created a vibrant economy of unorganized retail for computers and consumer durables across Mumbai. Hundreds of such retailers use Chaupaati as a medium to reach tens of thousands of consumers across Mumbai, many of whom are located in slums in the same areas.

Sayed Asad, owner of Best Computer Solutions, is headquartered in a prime location in Saki Naka. He purchases old computers, laptops and printers from leading banks and corporations, then re-furbishes and upgrades them with multimedia and entertainment capabilities, then offers them at unbelievable prices for education, home and office use. He provides replacement warranty for all his products and has broken a price barrier that no one in Mumbai is able to match, especially for entry-level configurations. He has 10 branches across Mumbai and 25 full-time engineers. Sayed says, “Now we are proud we made it easy for all to purchase computers.”

When Sayed first heard about Chaupaati on June 15, 2008 (10 days before Chaupaati launched), he was immediately convinced because of our focus on second-hand products, and he is one of the best in the business for old computers. Sayed Asad was one of the first dealers to advertise his deals on Chaupaati and then went on to be a party to Chaupaati’s first known phone pe deal on July 4, 2008, within 4 days of launch.

Since then, Sayed has acquired over 1,000 customers from Chaupaati and he says “For every 100 inquiries received from Chaupaati, at least 25% get developed into deals”, and says “we have been able to build a brand across Mumbai. Since we joined, Chaupaati has resulted in significant growth in business development for us.” Compared to newspapers, Internet, flyers and other media, he finds mobile as the fastest and best medium for interaction. After a customer is generated, “we get an immediate alert by SMS. This is followed up with a quick conversation, prompt visit, and fast deal.” Chaupaati has sent him inquiries from all corners of Mumbai (Vashi - Eastern corner, Vasai/Virar - Northern corner, Colaba - Southern Corner) and the customer profiles include low-income, middle-class as well as corporate buyers.

It is customers like Sayed Asad that help us fulfill the promise of “best deals in Mumbai” for computers.

From the time Chaupaati started, we have always felt that our eventual success would NOT rely on how much of the market we are able to capture, but what market we are able to create. Mobilizing an existing market is not as attractive for start-ups, as fulfilling a latent need. Solving solved problems is not as interesting as solving an unsolved problem. Though we are miles away from being disruptive innovators (addressing non-consumption), we discovered some early signs of fulfilling a latent need, not entirely by design.

One of our regular customers Rakesh Rane, a computer dealer from Lamington Road said to Kiran Patil, Chaupaati’s head of sales: “Yaar tumhare buyers non-serious hote hain, lekin unke saath deal hoti hai.” (Your buyers are non-serious, but they convert to a sale). Kiran was stumped by the irony. Isn’t conversion the only criteria for lead quality! He pealed the onion, however, and connected the dots for us.

The way Chaupaati works is that we advertise hot deals across categories using a variety of media - print, SMS, flyers, online, etc. Consumers call 922-222-1947 and a representative directs those callers to their favorite deals within their locality, budget and feature preferences. Many of our deals appeal to consumers who have not yet made up their minds about buying a product, are usually first time buyers for those products, are attracted by a too-good-to-be-true deal and call us to learn more.

To Rakesh Rane who has advertised his deals on Chaupaati and also advertised his business in a yellow pages, the lead received from Chaupaati is quite different from the one received from the talking yellow pages companies. In case of Chaupaati, the consumer with a latent need asks stupid questions about the computer and does not know what to ask. This consumer wants to be told and sold. In the other case, the consumer with a specific need asks pointed questions (that she is also asking 7 other similar businesses in the list) and is a savvy comparitive shopper. This consumer wants to ask and task. For this customer, one of five Chaupaati leads converts to a sale, whereas one in thirty five yellow-pages leads converts to a sale.

Of course, we continue to figure out how to address the savvy consumer, and whether the higher conversions are a result of the tender-love-and-affection of a small company or is it a product flow that works. We would love to hear your thoughts.