Alok Chawla, CEO, Gizmobaba |

He chuckles, perhaps reminiscing, when asked why he chose the name Gizmobaba for his entrepreneurial venture. “Gizmo is used as a slang for gadgets. We wanted to merge something Indian with it. Baba was apt as we wanted to be the gurus, the authority on gizmos in India!” avers Alok Chawla, the guru behind Gizmobaba.com, in a candid interaction with The Dollar Business

Interview by Neha Dewan | The Dollar Business 

TDB: How did the idea of Gizmobaba gain ground in your mind?

Alok Chawla (AC): I have always been a gadget freak. Whenever I travel, I always try to take a stop at all gadget stores overseas. And it was always in my mind to make such things available in India. So, during one of my trips to China – I was there on some other business and had some free time – I walked into one of these electronic surveillance stores and was quite amazed by the number of gadgets that were available there. That’s when I decided to get something started here.

I thought we need to have such products in India and I am just going to do it, even if as just a hobby. So, we started off with a very small product range and I also tried to reach out to some importers in India. Gizmobaba, in its current avatar, was launched in September 2012, although we, actually, had a soft start in June 2012. At that time, not much capital was deployed as this was just a hobby. I sourced four or five products directly and also reached out to importers and distributors of gadgets in India, asking them if we can list their products on our website. But, it dint work well for a number of reasons. Firstly, they could never give us a real-time stock update once we had an order. Sometimes, they would be stocked out. Then there were quality issues because these people were importing all low quality stuff and by the time the gadgets reached the customers, half of them used to fail, for which we were responsible for replacements. That’s when we took a step back and decided that this isn’t going to work. We wanted to build a reputation and goodwill. The quality of products had to be good, for which we needed to own the channel, end-to-end.

So, we pulled back and re-launched in September 2012. However, even at that time we only had five of our own products, which were not enough to run a website. So, we had to make some serious financial commitment. If we had to do 25-30 products, tie up with manufacturers and give them deposits, we had to put money on the table. But by then, I had the conviction that the concept works as the products were moving off the shelf. People were buying. We knew as a business, it was sustainable.

Also, because we already had another business, it was easier to get a bank limit for working capital. Two years since our re-launch, today, we hold more than 150 products. In fact, we keep adding new products on a regular basis.

TDB: Since you are sourcing all products from China, was it difficult to break the popular notion that products procured from there will face quality issues?

AC: At that beginning, we did not have the money to do consumer surveys and research or advertise and tell people that we are ensuring good quality. So, we had to have some initial adopters and risk takers, who would take this up and spread the good word. Our strategy, even today, is that 90% of our products are priced below Rs.1,000. When we started, the price points were even lower. We almost had 50% of our products below Rs.500. The basic idea was that the Indian youth is willing to risk that much as it’s not such a big amount. This made people come forward and try.

 

TDB: How difficult was/is it for you to source quality products from China?

AC: Initially, it was very difficult. In China, you have these tiered supply models. The top tier involves buying directly from manufacturers. The next tier involves the middleman who can help you source from multiple factories. This ensures decent quality, but there can still be rejections. There’s another tier, where you buy from local shops. The worst tier is where all this rejected material, actually, comes from streets. So, for the same stuff, prices can vary significantly. The guy on the street is selling things by the kilo, as they are all rejected material and the American and European buyers are not going to buy them. Typically, all sourcing people from developing countries buy things at this tier as it’s very cheap. In India, you can always say that goods sold cannot be returned. Such material has ruined the reputation of Chinese products, since the top tier products are not even coming to our country.

Today, all high-end products – be it Apple iPhones or Sony televisions – are manufactured in China. So, we cannot generalise that something is bad because it is made in China. It’s just that the bad stuff is being imported into our country and we, at Gizmobaba, are trying to change that. We deal directly with manufacturers and get only the good stuff. Initially, it was a challenge as our volumes were very low and they did not want to speak to us. We then started paying them price premiums. So, for instance, if they were selling products to an American company at $5, we offered them $6.50. That is how we started to get them interested. Typically, they will not speak to someone importing less than 10,000 units. But for us, even if we were importing just 500 units, they agreed, provided we paid them the premium. When we started, we were, at times, paying even up to 30% premiums, as they were just not willing to talk to us.

TDB: When did things really start changing at Gizmobaba? When did you start scaling up?

AC: As time went by, we were in a position to negotiate with the suppliers better. From May-June 2013, we started seeing an increase in month-on-month sales. Everything used to get sold off and get out of stock pretty soon. At that time, as it was still early days for us, even we were in a learning phase. But now, we understand consumer needs far better and, hence, source and stock accordingly. In fact, we are virtually running a monopoly in the kind of products we offer. Our products range from home utility gadgets, which are always in demand among young working couples, to funky gadgets that are readily taken up by the youth. Many of these products are universal, in the sense that they cut across age groups. For instance, the wireless mouse in the shape of a sports car, priced at Rs.799, appeals to people of all age groups.

TDB: You have products like caps with solar powered fans, ear vacuum cleaners, teeth whitening gadgets and the likes. Is there really a demand & acceptability for such out-of-the-box offerings in India?

AC: We have virtually created a category for such unique gadgets in India. Our subscriber base is growing, with more than 30% sales coming from existing customers. We have found there is a latent need for the kind of products we offer. There is also the word-of-mouth effect. People hear from others and want gadgets for themselves. So, all our products get lots of buyers within three months of being introduced.

TDB: What are Gizmobaba’s future plans and targets?

AC: We hope to have 400 products in the next 12-18 months from the current 150. We also aim to have Rs.1 crore monthly sales over the next 18 months. Hopefully, this will be realised in a shorter duration. We have plans of raising capital and will be talking to investors at some point of time in the near future.

Our target is to scale up Gizmobaba to a Rs.100-crore turnover business over the next three-four years.