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Monday, June 18, 2001

Fabmart happy to be e-shop
Anshuman Daga

INTERNET retailing may be going bust worldwide, but India's 19-month-old Fabmart.com thinks it has what it takes to buck the trend.

Fabmart, which sells goods ranging from groceries to jewels, is banking on long-haul plans and heavyweight backers to give it more staying power than a typical shaky startup.

But despite its deep pockets, Fabmart is also lean and mean.

Employing less than 40 persons but delivering to 850 locations across India, it out sources the bulk of its work, including delivery of goods.

Capitalising on the absence of large, organised retail outlets in small Indian towns and cities, Fabmart expects the bulk of its business to come there.


"Right from the beginning we were very clear that we don't compete with online stores. We compete with physical stores," K. Vaitheeswaran, co-founder and marketing head at Fabmart, told Reuters.

India's overarching Reliance group and an aggressive venture capital firm together have a majority stake in the business. Analysts say Fabmart could gain from the Reliance network.

Fabmart is even rejecting advertisements and foregoing revenue in the form of loss leaders and instead says it is happy to be a "shop on the Net."

"Even from our early days, we felt that going forward, the only sustainable business is one where the consumer pays for transacting for products or services," Vaitheeswaran said.

"You don't build businesses by giving it away free."

Fabmart gets about between 550 to 600 orders per day with an average value order of 400 Indian rupees ($8).

With core backing from six technology specialists, Fabmart began with music, books and jewellery and last October went into groceries, which are fast topping its revenue streams.

"We have seen that a lot of customers try it out with very, very small items but over a time have graduated to buying their entire monthly groceries online," Vaitheeswaran said.

"And this number is growing by leaps and bounds."

Fabmart is handling 100 to 120 orders per day for groceries in two southern cities, Bangalore and Madras, where it has its distribution. It plans to hit four more cities by next March.

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