n this time of recession and lay offs, while most of us are clutching tightly at our purse strings and praying for better times ahead, there are a few who have decided to take advantage of the economic slowdown and launch their own businesses -- one where the costs are low, returns are immediate and there is no fear of being laid off!
Shashank Agarwal, Akhilesh Bali, Ashutosh Dixit and Rachit Mehra are four engineering graduates who decided not to go the conventional route of a 9-to-5 job, but started up an enterprise of their own instead.
These four 22-year-olds came up with a low-cost, innovative idea of setting up a web portal for people to order mithais for their loved ones. MithaiMate.com has tied up with several reputed sweet brands to provide you with fresh mithai at your doorstep, within 24 hours of the order being placed.
rediff.com caught up with Shashank Agarwal, one of the founder members of the business, to learn more about the business, the roadblocks they faced on the way, and their advice to wannabe entrepreneurs.
How did you come up with the idea of launching MithaiMate?
Online gifting is quite a popular concept abroad. Even in India, it's catching on. For example, Ferns 'n' Petals does flower deliveries, and people are using their service. But we thought that Indians would prefer mithais as an ideal gift. Mithais are a very big part of Indian celebrations, and also, it's what we do best. If I were to gift someone an electronic item, buying it from India would cost me more than if I bought it from abroad. But mithais are something that only India does well. And it's a great gift for NRIs to send their Indian relatives and friends too.
We've always been interested in starting something on our own. When we were in college, my friends and I made customised T-shirts for our fellow students. You see, in engineering colleges, there is often an identity crisis between students of different batches -- so we thought customised T-shirts would be a fun way to differentiate between the different batches.
When we graduated, we felt that we wanted to do something on our own, rather than working for someone else. And this business was a good idea for us because it requires very little capital. We didn't have the money to set up a shop, but we had the skills to create a website -- its something we learnt in college. And in some ways, it's better than an actual shop -- it's like a shop that's always accessible; customers don't have to go anywhere to buy.
Which cities is MithaiMate functional in?
As of now, we operate in Delhi, Mumbai and Bangalore. But we are thinking of expanding to Chandigarh, Chennai and Lucknow before Diwali. By then, we expect many of our website visitors to turn into customers.
Are the prices more economical than buying mithai from a store?
No, we have mark-ups, but they are nominal. For example, you can buy a box of motichoor laddoos for Rs 120 from the store, and Rs 160 from our website.
What was your family's reaction when you decided to start your own business?
They thought it was a bit crazy. My father couldn't understand why anyone would want to buy mithai from a website. He is terrified of using his credit card online -- that's a very Indian thing! A lot of Indians don't trust online shopping sites. And I don't blame them; there are many fraudulent sites out there. But this mindset is something we are hoping to change.
Even our friends thought it was a crazy idea. So we didn't share the idea with them until things were up and running. I also feel that this is the best time in our lives for us to do something like this. Even if it doesn't work out, we have plenty of time ahead of us. And with the recession, it's the best time for start-ups as well. So we decided to take the plunge.
Tell us a bit about your company -- when it was started and the progress since.
We started the business three months ago. We developed the website on our own and tried to make it look as beautiful as we could within our budget. It wasn't easy -- we had to be really innovative. The banner is designed by a guy I met at Andheri Station, who was designing menu cards on Corel Draw. He's an illiterate man who's just done a course in Corel Draw. So I went up to him, and told him we'd like him to design a banner for us. That cost us only Rs 300.
Then we came across a Chinese guy online who agreed to develop a Facebook application for us and charged us 42 dollars. So now, people can send virtual mithai to one another on Facebook.
As of now we aren't breaking even, but are getting around 7-8 orders per day.
Was it a struggle to start off? Did people take your idea seriously?
They didn't, but that didn't really bother us, because we didn't need them to. You only need people to take you seriously when you want something from them. But here, we didn't need anything from anyone -- we did everything ourselves. And the brands that we have tied up with may not get the concept, but why would they refuse to sell to us? So that worked out well too.
What kind of challenges have you faced in setting up and running MithaiMate?
Setting up the website was a challenge. And we did it ourselves, which took us almost a month. Nobody seemed to have pictures of mithai for us to use on the website -- I mean, the sweet shops that we have collaborated with couldn't understand why we expected them to have pictures of their products. They were like, "People just come to the shop, see what they want, and we pack it up for them." So we had to go to the shops and take pictures ourselves.
Budgets were also a challenge -- since we are students, we don't have any money. And marketing and advertisements cost a lot. We've advertised with Google, which is giving us very good returns -- its directing 200-300 people to our website everyday. We're targeting NRIs, so we advertise with publications like India Abroad, Des Pardes, on Facebook etc.
Getting delivery boys to deliver the mithai to various places was also a problem, since we couldn't pay them on a regular basis. So we have only one delivery boy in each city, and if we need more help, we hire daily wage earners to work for us. Sometimes, if we are really short-staffed, we deliver orders ourselves.
And since we are a small set-up, we are very flexible. For example, once, a customer was really afraid of using his card on our site, so Akhilesh, the guy who is handling operations in Bangalore, actually went to his house and put in his own card number on the site to reassure him. Another time a girl only wanted to pay by cash, so we asked her to deposit the money in one of our accounts and made the delivery for her.
The customer is the King, as far as we're concerned. We may lose money, but will never compromise on quality. In fact, we even taste the mithai before packing it up to deliver to the customer.
On the plus side, there is no loss of inventory -- we buy only after we sell. The money is coming in but it's also going out in advertisements, high phone bills, maintenance charges for various payment options etc.
What advice do you have for would-be young entrepreneurs?
India is a huge market; don't ignore it. If you price your stuff right, people will buy. These days, people living abroad are also choosing to buy Indian goods over Chinese goods.
But don't be overconfident. Learn from feedback, learn from other people's mistakes and ask for feedback. Listen to your customers and try to get the crowd to advertise for you through tools like Facebook.
High prices are a big mistake. Why would you buy something online that you could get for much cheaper at your neighbourhood store? Ebay works in all countries except India for this very reason.
Our USP is that we are catering to a need that's there today. People are often too busy to buy and deliver mithai and we're cost-effective too. And for NRIs, what is a mere Rs 500 for a box of sweets?
Another mistake is not advertising. Word of mouth only works to a certain extent. To really get people to know about your product, you need to advertise it.
What are your future plans?
An MBA is on the cards for all four of us. We feel that an MBA will teach us stuff about running a business that we don't know yet, and we'll also be able to learn where other people have gone wrong. And of course, we intend to continue running the business for as long as the orders keep rolling in.
Also see: 'Fashion can be a murky business'