Take a look at this checkout page on pepperfry.com:

So, technically, I am just 1 click away from BUYING a Rs 95 priced GARNIER MEN HAIR COLOR PRODUCT FOR Rs 15!!!!

This includes FREE SHIPPING AT HOME.

Now, I found out that pepperfry.com has got 5 million US$ in funding.

That's Rs 25 CRORES.

Assume that they have 24 Crores in the bank (1 crore spent already), it means that IF AN ORDER COMES, then they can BUY 25 lacs PACKS OF THIS PRODUCT = 24 CRORES in SPENDS (actually  they will get it even less than Rs 90 if they buy 25 lacs from Garnier).

Now, I have to spend Rs 15* 25 lacs = 4. 25 CRORES on pepperfry.com!

I get the product delivered to a warehouse.

And then SELL 25 lacs GARNIER PACKS BACK in the market at Rs 80 = Rs 20 CRORES

I WILL MAKE 15 CRORES from this deal!!!!

Pepperfry will SHOW in its books:

Sales of 4.25 CRORES + all the accounting jugglery to show the FREE discounts as SALE to PROVE that the sale was 25 CRORES!!

WOW!!!

They have a SALE OF 25 CRORES IN ONE DAY

They will get 250 MILLION DOLLARS FUNDING AND I WILL AGAIN BUY ALL THEIR GOODS!!!

I just figured - PEPPER IS THE BEST SPICE I EVER LIKED, WILL LIKE!!!

LONG LIVE PEPPER, LONG LIVE E-COMMERCE IN INDIA!!

*****

UPDATE - 1955 PM!

The Garnier Item has been removed from the site>>>???????

The 'Pepper Points' are no longer visible???

Oh my God, WHO MOVED MY PEPPER???

***

UPDATE 2014 PM!

BOUGHT THE PRODUCT!!

YIPPEE PAID RS 15!

To further prove how bankupt this model is (of BRIBING PEOPLE TO SIGN UP), check this:

So, THEY ARE PAYING YOU RS 200 to SIGN UP! 

Tags: pepperfry.com

Views: 16035

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I haven't yet figured out what the investors are smoking or for that matter the market itself is!

After all the stuff on Groupon it still manages to go and do an amazing IPO(little consolation that the stock has been falling ever since).

Best time to be the top dog actually:When was business only about spending money?

If its my capacity to take in the maximum losses where is business acumen in that ?

Raise a million ,Burn a million get a 10 million valuation(its as friggin simple as that) !and yes, come back , take another million!

Only profit is real , rest is insanity.Its a mad mad world and lets party till the music stops.

Sidd.

Is it a fact that are Indians buying stuff over the internet in such huge quantities.

Is Flipkart generating enough revenue per month so as to pay the bills of 4661 employees and its warehouses and offices around India.

Recently heard that fetise.com gets around 60,000 visitors per day. Is it possible?? And why should i buy garments from internet, don't people need to go for a trial(touch and feel of the clothes) and is shopping a bare necessity that needs to be filled in any possible way or a luxury( i mean like walking on streets, having fun, getting into shops, these all things make a human feel better). 

And what are VC's seeing in the e-commerce thing, why so much of easy money out for all the same prototype business.

A mystery !!!! 

Alok,

Would like to make few points here and know your perspective on the same:

1. In a situation of a planned sabotage on the business model by a mafia gang, can the Company not renege on its promise to supply of the materials, if it is able to decipher this mischief? Assuming that the Company has a tool in place to analyse patterns in its order flow to identify such occurrences and also make a provision in the terms of use/terms and conditions of its website, a legally tenable right to cancel its decision to fulfill a order, it might save itself from such a situation of a planned attack. It can reserve such a right to cancel its decision to supply/sell by putting a rider in some corner of their website - terms of use section/registration form etc (which most people choose to ignore).

However I do see a possibility that the disgruntled mafia gang (which could be a competitor) might then hold this against the Company and tarnish/bad-mouth the Company's services as poor and unreliable. Am not sure how can this be addressed or how would the Company salvage the situation then!

2. On a cursory look at the site and it's products (after I saw your post), I saw that they have a large variety of stuff typically of two-three brands (in each category). I am guessing that they could have struck a very strong deal in terms of the margins/discounts from these brands and managed to keep their prices abnormally low apart from all other reasons typically attributable to an ecommerce business model (low overheads etc) and by compromising on their return expectations till they are sizeable in terms of their order flow. The reward points are not encashable in any way and hence assure repeat business in order to get utilised by the customers. Reward points on registration and this garnier type of product/deal could be initial strategies for customer acquisition which is probably planned to be phased out after a set target of business volumes/customer base.

3. Would like to make one last point on the accounting jugglery. Am sure you know that per the accounting guidelines the Company will be able to book sale only at the actual price at which it made the sale and neither the list price/nor it's own purchase price. The most creative accounting trick that the Company adopt is book sales at the list price or the MRP and book the discount as an intangible asset (customer acquisition costs), thereby over-state it's top-line and assets size. Now this is explicitly not permitted by the accounting standards in India as well as globally (customer acquisition cost capitalisation is subject to very strngent rquirements). It would be hard to be believe that the VCs would not be able to figure out such a jugglery perpetrated by the investee even with a little common sense (though I have often come across investors who have a decent accounting knowledge). Appointing a good dd guy pre-transaction stage and an auditor thereafter should give some comfort investor but an investor who cannot understand on his own this, deserve to lose his money, may be!

Surprise they still don't have it. 

I recently saw upto 90% off on Flipkart, I think they would start the sale from tomorrow. Imagine if they sell only 1 product at 90% off, what does that mean, are they making losses, if so why don't they sell it for FREE.

Similar example as your's, If i buy all their stock and sell it in market, I can at least make 50% profit.

So what are we trying to do? 

Excellent post. Would be very interesting to see how ecommerce business heads in India in days to come.

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