Indian retail needs to focus more on customer: Aneesh Reddy

Like a snake biting its own tail, the retail industry is responsible for hurting itself, says Aneesh Reddy, co-founder and CEO of Capillary Technologies. Founded in 2008, the company is working towards building the perfect omni channel customer engagement platform for the retail sector.

For Reddy, the inspiration behind the venture is Jeff Bezos and Amazon’s incredible focus on the ‘customer’. Channel World India spoke to Reddy about the growing need for retail to go beyond brick and mortar stores and the challenges they face.

Also read: Retail: This is the year of AI and IoT

Edited Excerpts.

Was it hard to set up Capillary Technologies at a time when startups weren’t the norm or was it easy because the market was up for grabs?

It was probably quite easier as we didn’t have a million dollar idea when we began working. We picked two sectors which were doing well and worked on something in between them. The obvious ones were retail and mobile.

We started our journey just after the collapse of Lehman Brothers in September 2008, in the middle of the recession. When we started talking to investors and companies, we realized that Value Added Service (VAS) for mobiles were going to be a nightmare. As a result, we shifted our focus to retail only. Because of the recession, more retailers were willing to speak about their problems and listen to our proposed solution.

Also, the recession helped us in hiring a lot of talented people who are with Capillary even now. When we went to colleges to hire people, we got a lot of good people without having to face all the ‘fight for talent’ that startups deal with today.

If a company is able to keep a tab on the customer data, analyze it and derive insights, to figure out what’s working and what’s not, they will do really well.

A lot of startups are just emulating existing models and solutions. How will an increase in competition affect your presence in the market?

Capillary Technologies has successfully raised three rounds of funding and with every round, there have been some competitor startup with a similar solution. More than the solution itself, the right approach, the attitude and the right outlook to business matters.

As a startup working with a lot of retail related data, what are some of the unique data points relevant to the industry?

Before ecommerce came in to the picture, the retail industry was simple. Supply stock to the stores, and the rest will follow. Companies never really cared much about the customer and instead focused on keeping the stores stocked. Then came Amazon – a company which is obsessed with the customer – and the story changed.

Also read: Has the Indian startup industry not grown up yet? 

If a company is able to keep a tab on the customer data, analyze it and derive insights, to figure out what’s working and what’s not, they will do really well. Essentially, an omni channel platform takes all these data points in consideration to give the power to the customer.

How does Capillary help retail tackle the competition from ecommerce?

At Capillary, we focus on the intersection between customer needs and data. India is a good five years behind the US market, so retailers here still have time to respond to ecommerce.

With great tools in the market along with good technology, retail companies need to now rein in newer technologies like analytics and artificial intelligence. These technologies were not readily available to retailers when ecommerce disrupted the US market.

I don’t think stores will ever really disappear. Across markets, we have seen that of the total retail sales, ecommerce sales do not count for a lot. For instance, it’s about 11 percent in the UK. There will be an overlap and both physical stores and online stores will co-exist.

What do you think is the biggest challenge for retailers today?

One large reason why retailers suffered the last few years was too much competition. Ecommerce did not hit them as badly as competition from each other. A lot of retailers opened too many stores in the same city, which is often too much, and companies end up cannibalizing themselves. While we can credit a little bit of this to ecommerce, but most of it is related to competition and crazy expansion plans.

Do you work with channel partners?

Almost 95 percent of our revenue is direct, but about 25 percent of our growth comes through our channel community. We’ve been working with channel partners for about one and half years now.

What are your plans for 2017?

I think we’ve been growing very well for a B2B enterprise company, and our focus has helped us a lot. This year, we are aiming to double our revenues and break the USD 50 million software as a service (SaaS) annual recurring revenue (ARR) by March 2018. On the other side, we are also building several new products as there is a very big opportunity to bring an enterprise focused company to the Asian market.