Interview: LootStreet – Every price is negotiable!

I got a chance to interview Kaushik Mukherjee, one of the 2 co-founders of LootStreet, an Indian startup by 2 IIM graduates – Kaushik and Arun Balakrishnan. The venture is about on-to-one bargain on a assorted list of categories.

Kaushik and Arun at LootStreet

Kaushik is a bargain lover and an avid entrepreneur. Following is an excerpt of an interview with Kaushik,

What is ‘Lootstreet’ all about?

Lootstreet is an endeavour to provide online shoppers with the option of haggling and bargaining over the listed price of any product. The underlying idea is to make online shopping as close as possible to real-life shopping. If you look at the way most of us shop offline, there is a lot of communication that takes place which plays a huge role in determining the final price of the product, the choice of seller, the quantity of purchase. Online shopping provides HUGE opportunities for customizing deals as per a buyer’s characteristics and bargaining appetite – this is exactly what we decided to explore and not a single day passes without LootStreet churning out amazing statistics on bargaining and the manner in which online shoppers prefer to buy online if only they are given an option of having a say in the final price of purchase of a product.

How and when did it all begin?

I think we first stumbled across the idea on an Outlook Money issues (yes, it does pay to read those articles once in a while!). By nature, my co-founder Arun Balakrishnan is a person who is an absolute embarrassment when it comes to public bargaining – partly due to impatience and partly due to ignorance. Needless to say, I spare on opportunity to make a joke of such situation. Yes, I enjoy bargaining – and that’s an understatement. The idea was an instant connect and today the opportunities seem much much wider than we could have imagined at that early stage. We graduated from IIM Ahmedabad in April 2008, LootStreet was at the beginning of June 2008.

Why do we need another ecommerce site? Even if we consider the ‘bargaining’ platform as a differentiated proposition, does it have the potential good enough to be a USP?

Fundamentally, we believe that the first part of the question is irrelevant. “Why another search engine?” is probably was investors asked Google in the days when we had to depend on AltaVista, HotBot, Yahoo! And MSN search. The differentiated bargaining platform is a miniscule portion of the value-added offerings that we can bring to eCommerce. The bigger question which we try to find answers to everyday is – How much can we know about a customer if we know how he has bargained in the past and how he is most likely to bargain the next time he log on to shop online. At the risk of letting out too much information, I would just like to say that we are not looking at Bargaining as the only differentiator – there’s more to come.

What kind of market research did you do before launching?

At the time of launch, LootStreet had partnered with six of the online pure retailers in the Electronics space – getting their insights helped in addition to the basic market research, Internet reports study and focus group discussions that we had conducted across a few cities.

How many employees do you have? Where are your offices located?

We are presently a core team of 5 members with an outsourced technical team. Our offices and located in Hyderabad and Ahmedabad.

Who forms the Lootstreet community? Can you describe the user base in terms of their geographical/demographic makeup?

LootStreet had a strong initial user base of evangelists who had heard about us and had signed up for the beta release to try it out – since then news has mostly spread through word-of-mouth since there is no other website who presently offers a bargaining platform to their customers. The community is almost fully Indian and most metro-centric.

Based on user feedback, what have you found to be the strengths and weaknesses of your website?

I’m not too sure if I would like to answer this question at a public forum since we are still in a transition phase where we are working on a much much bigger idea which grows out of bargaining as a fly-by-night novelty into creating a system that personalizes the shopping experience for each and every online shopper to a point where it’s like an online store “knows” what a visitor might be looking for and when. Cryptic, I know – however, if anybody wishes to discuss this further with us we would love to take it up offline.

How do you authenticate sellers?

LootStreet is the dealer of all new products that are sold on the website. Hence, there is no need to authenticate sellers when we ourselves control the supply and delivery.

Is there a marketing budget?

The monthly marketing budget is limited as the case would be with a self-sustained startup.

How do you plan to get more users to migrate from other sites in the ecommerce space?

We are currently working on a product offering that is based on LootStreet that involved partnering with other eCommerce sites and establishing a network that will greatly help in migrating online shoppers across multiple eCommerce stores.

How was your venture bootstrapped?

During our two-years at business school, my co-founder and I took part in quite a number of business plan contests, case studies and multi-talent assessment events. The cumulative prize money that we totaled at the end of two years was close to 4,00,000 INR. That money was used to start LootStreet. We also undertook a few consulting assignments in the business and web intelligence domain to add to the revenue sources.

What is the scope for ecommerce in India? How do you perceive the present scenario?

I think we are on the verge of a major upswing in the eCommerce industry. If you were to talk about the factors that contribute to this – we could span pages. Credit card penetration, Internet literacy – it has been adding up for a while now. To add to that when government initiatives like the Indian Railways ticket booking become a success, there is substantial proof of concept for the basic eCommerce idea in a place like India for the common man.

How challenging is it to monetize an ecommerce site?

Unlike a lot of other web-concepts, eCommerce throws the monetary aspects fairly straight on the consumer – it’s more of a ‘this is all we have – take it or leave it’. Since, any consumer is programmed to know that a seller makes money through profits. Take social networking sites, music sites – there the money-making stream is not that apparent. It’s a different thing that when consumers are flooded with choice, the only way to retain them is to provide them with something that makes them feel that their spent money is worth it!

What are the sustainability issues?

The challenge of employing adequate resources to provide a compelling shopping experience without the burn-rate exceeding the revenues.

What is your primary revenue model?

Dealer margins on sale.

How do you evaluate the competition?

Medium to Heavy. They key would be differentiation through what we make of the concept of bargaining.

Can you share some new innovations in the pipeline for Lootstreet?

Okay, there is something much much bigger than LootStreet that we are working on right now. I can say that is a product that extends the concept of bargaining beyond what a site like LootStreet can provide. We are in talks with a few investors and mentors w.r.t taking this forward and I will be able to give you a clearer picture once they are done.

I read in a blog that you are planning to introduce a ‘live bargaining’ section. Can you elaborate on this.

‘Live Bargaining’ means real-time bargaining – where there is very little time-delay in getting a response from either end during the bargaining process.

Are you planning to forge tie-ups with retailers?

Yes.

How has been the experience so far? Any words of wisdom you wish to share with fellow or aspiring entrepreneurs?

No words of wisdom from someone who still keeps learning everyday – but I’ll say this much – if you’re aspiring to be an entrepreneur, I hope that you do not see the day when you turn back and say ‘I could have been an entrepreneur’. Please note – ‘taking a plunge’ is quite a fanciful and intimidating way of describing an entrepreneurial experience – this is not irreversible. The sacrifices you make are far outweighed by the feather you carry in that hat of yours – it’s a feather that is different from the other feathers in your hat – this one’s schemed, planned, built and gifted – by none other than you.

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