In this excellent conversation with Future Startup’s Ruhul Kader, Pickaboo CEO Morin Talukder, shares about the latest developments at the leading omnichannel commerce company and its recent strategic changes.
We cover Pickaboo’s omnichannel strategy, retail expansion, evolving operation and business model, expansion, strategic ambition, and growth plans and priorities for 2021.
Future Startup: You launched your offline retail in 2020 and have expanded to 11 outlets as we speak. Could you give us a brief overview of Pickaboo today?
Morin Talukder: We decided to get into offline retail because we saw a big opportunity offline and have come to see an excellent strategic synergy between our ecommerce and offline operation.
Outdoor recreational options are limited for urban people in Bangladesh. When people have some time to spend, they either go shopping or to restaurants. Shopping is on the top of the list. If you take that into account, the offline market in Bangladesh is huge and is likely to continue to dominate.
Retail remains offline driven across markets. Many international online businesses are expanding offline or partnering with offline businesses. We believe getting into offline retail will give us complete coverage allowing us to build an omnichannel operation. The goal is to build an omnichannel operation.
We had to change our offline retail expansion plans several times due to the coronavirus pandemic. While we originally started with a higher ambition — 100 outlets by 2021, we have recalibrated and now plan to open 50 retail outlets by the end of this year.
With currently 11 outlets, we are the second-largest offline retail chain after Gadget & Gear, which has 16 retail stores. We hope to be the largest in terms of the number of outlets by June this year.
Offline market has a number of advantages: the market is ready and is not discount driven.
Ecommerce has become a hyper-competitive market over the past few years. The aggressive discounts offered by several e-commerce players and the lopsided nature of the strategy make it difficult to design an effective response. When you are offering 100% cashback, 20-30% discounts are nothing.
We don’t want to get into the discount race. Our priority is to build a sustainable long-term business. While we do offer price benefits to customers, we don’t think offering 100% cashback is a strategy. Omnichannel is one of our responses to this changing reality.
We have been able to build a loyal customer base. The business continues to experience healthy growth. If we had a more sensible competitive landscape, we would have even stronger growth.
The coronavirus pandemic has given an excellent boost to ecommerce in 2020. We have seen excellent growth. We don’t expect the same growth rate of the online market in 2021, we hope the growth will continue to some extent.
That being said, our growth remains steady — we are happy with the current growth rate which is 25-30% MoM. We certainly want to grow faster but we don’t want to do it at the cost of sustainability.
We have introduced several new features. We are working on a few other new innovations. For example, we have introduced a faster delivery service called “Pickaboo FastPick Express Delivery” where we deliver products within 3 hours. We now deliver mobile phones in less time than it takes to go to the mobile showroom.
Future Startup: What about the integration of your online and offline operation?
Morin Talukder: We have made some progress. It remains, however, a complex operational challenge.
In some parts of the country, where we now have physical retail, such as Chittagong, we are working on improving delivery time such as the same-day delivery using our physical retail presence. We will eventually introduce this integration across our operation.
Future Startup: What are some priorities for your ecommerce business?
Morin Talukder: The market has been going through an upheaval of late. There are too much noise and unhealthy practices at this point in time.
We have taken a different strategic path. Instead of investing in aggressive discounts, we are focusing on improving the service quality for our customers. We do offer price benefits but that is never outlandish.
Our priority for ecommerce is to build a sustainable business that will run for a long time. Having said that, we are building an omnichannel operation.
With our service obsession and innovation, we aim to become a reliable online destination for our customers. The coronavirus pandemic has made it clear to a large number of people that ecommerce could become a viable alternative for shopping. People want quality service as much as they seek price benefits. In the long run, we believe service will work. Our ambition is to become a reliable shopping destination for our customers both offline and online.
We are focusing on value-added services such as fast delivery, authentic product, excellent after-sales service, temporary phone replacement where applicable, and so on.
We are working relentlessly on service innovation. We are launching a new service this April where we will offer a one-year warranty on the smartphone display, if your display breaks in a year's time, we will replace it for a nominal fee i.e. tk. 300 for a 20,000 smartphone.
Future Startup: You launched a new web version last year. Any update product-wise?
Morin Talukder: We launched a new version of our app and web mid-last year. We are now working on a new version of the app and our website which will be launched in the next two months. With the new update, our users will now be able to access a light version of our website and app when they are on slow internet. When you are using the app via 3G or low-speed internet, the lite version will be activated automatically. The lite version will do the basic tasks without slowing you down or hampering your experience.
We are also working on greater integration between our online and offline operations where our customers will be able to pick products from our offline stores.
On the offline retail side, we are working hard to improve the experience of our customers. We are constantly making changes in our outlet and how we deliver services to improve the experience. For example, when a customer buys a mobile phone from our store he gets a text informing the number of days left of the warranty. We provide the buyers a portal to see the warranty period. These are some of the small improvements we have made.
Future Startup: How big is your team now?
Morin Talukder: We started off with our omnichannel strategy at the beginning of 2019 with about 32 people. Today, we are a team of more than 100 people and growing. We are hoping to be a team of roughly around 220 by the end of this year.
We have been working with the same team for the last few years. The members of our core team have been working with Pickaboo for the last 3-4 years. For most of them, Pickaboo is the first company they joined and they are still working with us. In that sense, we can tell you that our retention rate is pretty high.
Future Startup: You were working on launching an in-house brand, how is that plan coming along?
Morin Talukder: We are planning to launch our own brand called Flex, a premium electronic accessories brand made in Bangladesh. The accessories will include cables, adapter, headphones, etc. We are manufacturing our products from the same factory as Harman Kardon. We will sell the same quality Bluetooth speaker as Harman Kardon at a lower price. We are going to offer world-class quality at an unmatched price.
We roughly sell 20,000 electronic accessories of different brands monthly. We want to sell products of our own brand. We will sell the best quality products. The cost will be higher than the other local brands. We will provide 12 months no-question-asked warranty similar to Apple. We are also planning to come up with an OTA device.
One of the priorities for us is to diversify our business. If you look at major ecommerce players such as Amazon, they have their own brands. Amazon Basics is huge now. We see we have a direct relationship with our customers and we can offer high-quality products to them without directly competing with our partners.
Future Startup: How are you doing in retail?
Morin Talukder: Each of our retail stores sells products worth 30-35 lakhs BDT monthly.
We have learned a lot from our retail business model which is different from other retail businesses.
In the retail business, the biggest challenge is everyone is loyal to only money. In traditional retail stores, they only think about making a profit. No one before has tried to make these people understand the value of loyalty in partnership business.
Building loyalty among the retail stores we are working with was a challenge for us. We give the responsibility of a certain area to a retail store and make sure that we will not partner up with another retail store in the same area.
We have changed how retail relationships are managed. No one has made these people understand the importance of KPI or making a business plan for a year. We are doing all these things. The result has been phenomenal for us so far.
Future Startup: Are your retail stores independently profitable?
Morin Talukder: Yes. All of our retail stores are independently profitable. Our retail business is doing very well. If we own 100 retail stores we will own a certain percentage of the total smartphone market. Considering our online and offline market share we are at an excellent place now.
Future Startup: What are your priorities for 2021?
Morin Talukder: Our main priority is to build an integrated omnichannel operation at the intersection of online and offline.
We are focusing on building a sustainable business over the next few years. We believe a loyal customer base, an integrated omnichannel operation along our own brand will help us to get there.