MUMBAI: Smile Group, one of the earliest Indian firms to foray into e-commerce, is restructuring its businesses in a bid to make a comeback in the sector in 2015.
The owners of flash sales site FashionandYou plans to change the business model of its group buying site DealsandYou as part of the restructuring exercise. It has also shuttered its online footwear store BeStylish.
"The unit economics for the group buying model doesn't make sense in this market. We've shrunk that business and will announce a pivot in a month," said Harish Bahl who founded Smile in 1999.
The group's e-commerce revival bid will be largely driven by FashionandYou, with support from its lifestyle brand Freecultr and online fashion jewellery shop Juvalia & You. The three currently account for combined gross merchandise value (GMV) — or total sales value of products sold on the portals — of about $80 million, or approx Rs 510 crore.
Bahl said DealsandYou, launched in August 2010, has returned a sizable chunk of funds it had raised. "The new model is not as capital intensive as the earlier group buying model," he told ET.
DealsandYou had raised a $17 million in late 2011 in its second round of funding led by venture capital investors Mayfield Fund and Norwest Venture Partners.
About the closure of online footwear store BeStylish, Bahl said, "No player has been successful in single category e-commerce. BeStylish is currently parked as an asset under our media business, SVG Media."
BeStylish had reportedly raised more than $20 million over multiple rounds from investors such as ru-Net, Springstar GmbH and Mangrove Capital Partners.
The group's biggest bet is FashionandYou, which is just coming out a two-year setback triggered by its acquisition of online fashion retailer Urban Touch in 2012 for a reported $30 million, which had to be subsequently shut down.
Aasheesh Mediratta, CEO at FashionandYou, said, "We've consolidated the business and are now at a $60 million GMV run rate against $30 million in June. We are on course to hit $100 million by mid next year."
In the past 12 months, the flash sales site — modelled on VIP.com, China's largest discount sales site run by NYSE listed Vipshop — has added three sourcing and distribution centres in Surat, Mumbai and Bangalore to support its Gurgaon centre. This has helped reduce its delivery schedules to 5-7 days from over nine days earlier.
Venture capital investors Sequoia Capital, Norwest Venture Partners, Intel Capital and Nokia Growth Partners have more than $40 million invested in the company.
In June this year, it reportedly raised an additional $10 million in a round led by Vipshop. Bahl did not confirm the amount raised, but said its existing investors participated in the round.
The company is now in the market to raise $40-50 million in fresh round of funding from both financial and strategic investors.
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