How Chinese firm Club Factory is challenging Amazon, Flipkart in India

The ecommerce platform is seeing a surge in growth from Indian users, and is unique in that it doesn't charge its sellers a commission

By Rajiv Singh Forbes India Staff

Published: Mar 23, 2020 06:44:45 PM IST

Updated: Mar 23, 2020 06:48:28 PM IST

Full Bio

Vincent Lou, founder of Club Factory

Last month, when a report by analytics research firm TechArc named Chinese ecommerce platform Club Factory as the top challenger to Flipkart and Amazon in India, it took everybody by surprise.

The Hangzhou-headquartered startup, which raised $100 million last October in its Series D funding round, counts Bertelsmann and IDG Capital among its backers.

“We recently surpassed 100 million monthly active users (MAUs) in India,” says Vincent Lou, founder of Club Factory, in an email interview with Forbes India. Club Factory, Lou claims, citing data from analytics platform App Annie, surpassed Snapdeal to become the third largest shopping app (in terms of MAUs) in India since June 2019. How did they get there? Edited excerpts from an interview with Lou:

Q. What sort of growth have you seen in India?

We are doing extremely well in India. We recently surpassed 100 million MAUs in India following a strong surge in user adoption. We have also achieved more than 10 times growth in the past six months for our Indian SME business. In 2019, we clocked in 4x growth in orders received on the platform as compared to the previous year. We aim to become the leading marketplace in India and to enable the ecosystem to thrive.

Club Factory is strengthening its India leadership team and will appoint local leaders for key functions in the coming quarters. Club Factory has been the most downloaded shopping app on the Android platform globally over the last quarter, according to Sensor Tower’s Store Intelligence platform.

We are the only e-commerce player in India that does not charge any commission fee from sellers, so sellers can achieve 20-30% cost saving when selling on our platform. They can transfer this cost benefit for users.

Q. How big is India in Club Factory’s global scheme of things?

India remains the most important market for Club Factory; our current registered local seller base stands close to 30,000 (December 2019). We have set a target to on-board 100,000 local sellers in 2020.

Q. What challenges do you face in an evolving online market like India?

The infrastructure of e-commerce is currently our biggest challenge. In order to provide a seamless user experience to both users and sellers, we need to facilitate digitisation in many of the traditional processes. That’s why we continued to invest in warehousing, delivery, technology and have worked with multiple partners to achieve this.

We are now looking forward to an era of FAC (Flipkart, Amazon, Club Factory) in Indian e-commerce market. Our goal is to facilitate a fair marketplace where both sellers and buyers are benefitted.

Q. What percentage of your sales comes from m-commerce?

M-Commerce makes up over 95 percent of our total sales. In a mobile-first economy like India, an m-commerce strategy is critical for companies. It is also proven in the other global markets that app-focused shopping provides a better user experience.

Q. Do you see COVID 19 impacting India operations?

All our sellers are registered Indian sellers. The current situation might see a surge in the price of products like gadget accessories that are not manufactured in India but imported by the sellers. We haven’t yet seen any slowdown so far but continue to evaluate potential risks.

Q. What are your plans for 2020? How do you intend to scale up?

In the next few years, what we need is increased participation from local manufacturers in order to further strengthen the e-commerce industry in India. By empowering local manufacturers, we can open up more categories for users.

Very soon, we plan to open two new offices—in Bengaluru and Mumbai. We will also be hiring more local employees as local talent is key to our success in India. We are looking to make significant investments in warehousing, delivery, technology, and marketing to further connect with masses across the country.

The Indian government is looking to protect the rights of sellers and buyers and build a healthy e-commerce ecosystem via the new policy. We are completely aligned with this policy and believe in facilitating a robust ecology that benefits all and creates a level playing field. Our 0% commission policy and direct messenger functions between sellers and consumers are some key highlights of our effort and philosophy for India.

To further accelerate growth, we are also looking at providing better experiences by having more warehouses and customer care agencies. We plan to add more product categories soon and will also continue to expand existing categories.