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Hitting it big in the small towns
Soumik Sen |
June 05, 2004
Vishal Anand jokes that his ambition in life was to make millions as a forex trader by his mid-thirties, survive two heart attacks and retire -- presumably with a few coronary bypasses -- with his pot of gold.
It hasn't quite worked out that way for the founder of Mahamaza.com -- but he could be on his way to several millions at least. Anand, 33, has combined high technology with a low-level understanding of Indian rural realities. The result: he's turning small town mouse clicks into wads of money.
"I am more interested in the guy sitting in Unnao, 30 km from Kanpur, who has been neglected both by the Internet sites, and by the dealership networks of many multinationals, because of logistics," says Vishal.
Why has Mahamaza clicked when so many other Internet ventures have fallen by the dusty wayside? The answer is because it has found ways to get an extraordinary range of products from motorcycles to Atlas cycles and Nokia cellphones to rural or small town customers. Equally importantly, he has worked out failsafe ways of collecting cash from them.
How does the Mahamaza system work? Quite simply, anyone who wants to be a dealer signs up with Mahamaza by making a one-time payment (around Rs 5,000). Then, the new dealer gets orders from his town or villages and places orders with Mahamaza. The company then gets discounts from the companies because it's buying in bulk and some of this is passed to the dealer as his commission.
Amazingly, Mahamaza has stretched its tentacles to remote corners of the country -- and that's bringing much greater volumes than anyone could have expected. Take Nokia for instance. Mahamaza sold Rs 1.5 crore (Rs 15 million) worth of Nokia phones in the first month after striking a deal with the company.
It was a similar story with Atlas Cycles. Mahamaza had just tied up with a leading two-wheeler company to sell motorcycles when feedback from Uttar Pradesh suggested that cycles would sell equally well because of bad roads in some regions. In three months Mahamaza delivered 3,000 Atlas cycles to buyers' doorsteps.
Today, the company is sitting pretty. It sells 28 brands across 15 industries. What's more, it's selling to districts that the companies had never gone near before.
Says Anand: "People from areas like Medak in Andhra Pradesh and Abhohar in Punjab, are buying Nokia cellphones and inquiring about Plasma TVs, and they also provide us valuable feedback."
Also, Mahamaza has built up a gigantic network of virtual dealers scattered around the country. In the first year after it started operations it had around 66,000 dealers who are taking orders for it in different parts of the country. Today it has an amazing 275,000.
Of course, there were hiccups along the way before Anand discovered the right business model. After studying at BITS, Pilani, he started out with the aim of making big bucks as a forex trader and worked with Thomas Cook for five years.
But he found that the work revolved more around money changing than forex trading. "I could not get myself an entry into the dealing room, and as a result decided to get back to my forte, infotech."
He then moved to Dubai with a company named Aqili Information Systems but decided to chuck it up and return to India to start his own business.
In 1997 Mahamaza was born. "As a VC-less entrepreneur, all I had was Rs 600,000 as start up investment, and had to do everything because it was a question of survival," says Anand.
The portal began as a simple discount coupon distributor -- people could print out coupons by visiting the site, and use them to claim discounts at shops that Mahamaza had tied up. Bigger discounts were given for online transactions.
However, it was an idea that didn't take off well even in Delhi, where Anand was headquartered. Meanwhile, the Internet bubble burst and sceptical shopkeepers started refusing Mahamaza coupons.
And within a year, it was clear that Mahamaza had to reorganise itself. Also, it became obvious that the bigger dotcoms like indiatimes and Rediff were targeting the moneyed credit card owners of the metros. However, the B and C category towns were largely being neglected.
The first company to sign up with Mahamaza was Kenstar, which didn't pay any money for its Mahamaza listing. But as sale inquiries started pouring in, and the site took off in 2001, other brands joined the bandwagon.
Payment was through pay orders or demand drafts and goods were delivered in a week. Credit cards haven't made much of an impact in most of the areas where Mahamaza sells.
Today Mahamaza does around Rs 90 crore (Rs 900 million) worth of business on its website. And, Anand insists that this puts him just behind the Indian Railways, which sells tickets worth Rs 96 crore (Rs 960 million) on the net.
"This year we will clock Rs 120 crore (Rs 1.2 billion)," he says confidently, "and become the undisputed number one e-commerce site in India." He's also talking about a Rs 500 crore (Rs 5 billion) turnover in two years.
The company also believes that SMS will soon replace e-mail as the preferred mode of connection, Mahamaza has recently added a messaging service for its webstore owners. Once a webstore owner finds out that someone wants to buy a TV, he can SMS the details along with an eight digit Mahamaza number so that he can make his sales pitch.
Nevertheless, Anand has firmly decided to stay clear of the big cities and even mini metros. "Dealers in big cities cut margins so much that the option of earning through a margin minimises, and besides, the idea is to deliver goods that are ordinarily unreachable to the small town guy," he elaborates.
However, he is all set to launch a 'brick' version of his 'click' model, by setting up five Mahamaza stores in Lucknow and Dehradun and then move to even smaller towns.
Anand modestly insists that the Mahamaza system isn't unique. "I aped the referral program of Amazon.com and translated it to my concept of the webstore, and combined it with the direct selling model of Amway to provide buyers an opportunity to become entrepreneurs," he says.
Also, he's working hard at building up the dealer network. Anand himself does a lot of roadshows and conducts workshops on community building and direct selling.
"For a cybercafe visitor in a place like Basti (it's between Ayodhya and Gorakhpur) spending Rs 20 an hour in a cyber cafe can help him earn Rs 500 (between 3 per cent and 25 per cent of the product price) as side income," he says.
What will happen in the future? Will Mahamaza continue to prosper as the larger companies expand their sales networks and penetrate further into small town and rural India?Anand is confident about the future and believes he has nothing to fear. He says that Mahamaza is far ahead and he intends to keep it that way.