Online marketer ShopClues puts off IPO plans
Online marketing has become popular over the past few years. These days you can find just about anything on them. Stores like iTunes and Spotify specialize in the sale of online music, while there are those more diverse ones that you might know of. These include world-renowned online retailer Amazon.com and the more modest Indian ShopClues (Private: CLUES).
Amazon.com caters to what you might call a discerning palate. That’s just one of the upsides (and the downsides) of operating on such a large scale. That means that Amazon can’t really shoulder its way into smaller more diverse markets. That’s where firms like ShopClues come in. These firms deal with the consumer with average purchasing power.
ShopClues was founded in 2011 by a group of Indian marketers based in Silicon Valley. It’s an online platform like Amazon, but it comes with a few unique twists. One of these twists is that ShopClues operates in lower tier cities, which according to their website, are Tier II and Tier III cities. Another is that the company hosts what you might call flea markets-bargaining and all- to its consumers. For a commission that can be anything from 4% to 17% depending on what you are selling, you get to sell your products through the site. ShopClues boasts a 350,000 consumer base if their website is to be believed.
Earlier this year ShopClues had announced that it was considering an issuance. The company was not set on a specific market but indicated a vested interest in operating on the NASDAQ stock exchange. For the first few months of 2017 investors thought that the firm would be trading by the time the second quarter hit.
According to analysts with Seeking Alpha, a ShopClues IPO is possible this year, but it will be held somewhere in the region of September. The reason for this is that the company has been having a few problems of its own pre-IPO.
One of those crises that have led the India-based company to postpone its IPO is the power play that is going on in the company. The CEO of ShopClues has accused a few high-ranking officials of denying him some of his management rights. Before an IPO you’ll notice that companies have unified fronts. A squabble within the company pre-IPO is a negative statement to investors. It’s practically a message for them not to invest in a company.
Another is that the ratings that the company got from analysts indicated that people were not ready to buy their stock. That may have come as a shock to the company. How often do you hear investors passing up the opportunity to dip their toes in a company that has shown a 200% rise in revenue and 400% drop in losses in the last two years? Not too many probably. Two reasons were given for this.
One, the company may have reported significant growth between 2015 and 2016, but that growth rate is on the decline. It moved from 180% in 2015 to 12% in 2016. Other investors stated that they could not invest in the company until it came up with a strategy to compete with major players like Amazon and Flipkart post-IPO. ShopClues will be shelving its IPO as it works on doing that for the next couple of months.