Unicommerce heading for IPO, targets sustainable growth with new strategies: CEO

Bengaluru: E-commerce giant Unicommerce, which is planning to list on the stock exchanges, will continue to focus on profitability after the listing, according to its Chief Executive Officer Kapil Makhija.

Makhija said that Unicommerce’s development strategy is based on three pillars: domestic expansion, international expansion and new product introduction.

“Profitability is a key ethos, so we continue to be profitable and that ethos will not go away. We want to continue to drive sustainable growth and we are very confident about that as an organization,” Kapil Makhija, CEO of the company, told Mint.

Unicommerce plans to increase its penetration in India by bringing in more brands and increasing revenue from existing ones. “In terms of international expansion, we are already present in over six countries outside India, largely focusing on Southeast Asia and the Middle East,” he said.

Makhija said the company will continue to launch new products to provide brands with solutions from a single supplier that will handle all after-sales service.

Founded in 2012 and acquired by Snapdeal, Unicommerce is an integrated e-commerce SaaS platform that offers solutions that meet the needs of D2C sellers and brands to streamline business operations. Some of its clients include Lenskart, Fabindia, and Zivame.

According to a document filed with the market regulator, the company on Monday received approval for its initial public offering (IPO) plan from the Securities and Exchange Board of India (SEBI).

It plans to offer up to 2.98 crore equity shares at a face value of ₹1 per share. Unicommerce promoters like AceVector Ltd, formerly known as Snapdeal, have planned an offer for sale of 1.14 crore shares.

Other investors such as B2 Capital Partners and SB Investment Holdings (UK) Limited have scheduled dilution of 22,10,406 i.e. 22.1 lakh ordinary shares and 1,61,70,240 i.e. 1.61 crore ordinary shares, respectively.

Domestic expansion

The national expansion plan is all about getting more brands on the platform. “The idea is to get more brands on the platform and also grow revenue from existing brands because our revenue is transactional,” Makhija said.

The company relies on integrations to do this. The company recently launched a fast commerce integration that allows brands to quickly track commerce orders for their products.

“Quick trade has become a very prominent model over the last 12 months and that’s why we’ve expanded our offering to also provide quick trade integration. Particularly in the health and nutrition categories, as well as in the food and personal care categories, we’re seeing a lot of these channels,” Makhija said.

The company has launched two new products – UniShip (a technology tool that facilitates order tracking, returns and exchanges) and UniReco (a payment reconciliation solution that helps reconcile ordered and returned products, automates billing across markets, etc.) over the past year.

Makhija says that while its primary revenue drivers are “omni-channel order management” and “warehouse management systems,” the company has seen rapid adoption of a newer offering—an “omni-channel retail management solution.”

“We work with over 750 companies, so we’re in regular contact with them to understand their new needs that need to be met. There are parallel experiments going on, but our immediate goal will be to stabilize some of the new introductions,” he said.

The company is also pushing to capture the market in Tier-2 and Tier-3 cities. “It’s not that we can give up on metropolitan cities because a lot of brands are still being launched in metropolitan cities. But at the same time, I think that, say, five years ago, maybe we didn’t make a very concerted effort to reach out to Tier-2, Tier-3 cities. Now we’ve started doing that.”

International expansion

Makhija said the company is currently focused on delving deeper into existing geographies such as Southeast Asia and West Asia, but there is also a parallel process of thinking about what the next set of geographies will be.

Speaking about the company’s solution, he said: “It could be relevant to the geography of Africa, it could be relevant to the geography of Latin America, and it could also be relevant to the geography of Europe.”

In the quarter ended September 2023, the company had 46 international clients, which accounted for over 3.23% of the company’s revenue. In fiscal 2023, the figure was 2.74%.

Sustainable growth

“The whole B2C dropshipping wave is very recent, only three to four years old. That’s where we’ve seen our revenue grow,” Makhija said.

Automation has also been a key lever in maintaining profitability, he said. “We require a lot of automation internally to make sure that we’re able to keep our costs under control. We have a lot of optimizations that are working to make sure that we’re able to keep not only our fixed costs, our overhead costs, but also our direct costs that go into servicing these businesses under control.”

On the IPO, Makhija said, “From a readiness perspective, as an organization, we felt we were ready for this… It will allow not only existing shareholders but also future shareholders to participate and enable a public market for equity shares.”

Unicommerce’s operating revenues increased by 52.5% to ₹90 crore in fiscal 2023 as compared to ₹59 crore in fiscal 2022. Profit increased from ₹5.98 crore to ₹6.64 crore during the same period.

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