Smile Interactive To Set Up E-Commerce Kiosks; Expects Operating Break Even In Year One
By Nikhil Pahwa - Wed 05 Dec 2007 11:02 PM PST
Smile Interactive plans to set up around 97,000 e-commerce kiosks in the next three years in India, starting with 900 in the first phase, reports Business Standard. These kiosks, at petrol pumps, malls, grocery stores, will allow consumers to download music, book tickets and buy products online the Net. The company is doing revenue share deals with e-commerce players online. I had some doubts about the viability of a kiosk based business, so I spoke to Harish Bahl, CEO and Founder of Smile Interactive:
What’ll be the cost of each kiosk and the total investment in the project?
We’re working on various models for the kiosks right now. The more basic ones - like a regular PC with a printer are as low as Rs. 30,000 each. There are others with wireless and bluetooth, high end ones which cost above 1 lakh. We’re still exploring which technology and city. For a high conversion retail outlet, we’ll go for a high-end kiosk. Others will be lower. This is an infrastructure investment in access so the investment is quite big.
How will you fund this business - are you looking to raise money?
We’re not looking to raise money at this stage - this is a proof of concept stage. We’re looking first at 900 kiosks, funded through our $10 million incubation fund. Investment is not a problem - we’re on the verge of increasing our internal fund.
Will you subsidise costs and maintenance using a franchise model?
Even if it is a franchise operation, it’ll be run by us. We can’t really leave it on the whims of the franchises. The kiosk will be totally managed by us, and we’ll enter into a fixed fee or revenue share arrangement on a case by case basis.
But how viable is this model - Wouldn’t this be on extremely low margins?
We’ve looked at the best and worst case scenarios. Of course, it is an investment hungry business. At an operating level, the business will break even in year one. Capital investments will come through by the third year. We’ve done some contracting, so we know what to expect in terms of margins. We’re aggregating online services by going the hybrid route. Everyone’s going offline: all the travel and matrimony players are setting up stores.
And is this a business that you’re looking to enter to exit (Ed: the group had sold stake in ad network Tyroo and agency Quasar earlier this year)?
Let us first start it. (laughs)
Posted in: Broadband, Companies, Smile Interactive, E-commerce
