Case Study analysis: GoCoop - Social Marketplace

Contents
Introduction............................................................................................................................................... 1
Handlooms and Handi Crafts in India..................................................................................................... 2
GoCoop....................................................................................................................................................... 2
 Key Partners.................................................................................................................................. 2
 Key Resources................................................................................................................................ 3
 Key Activities................................................................................................................................. 3
 Value Proposition.......................................................................................................................... 4
 Customer Relationships................................................................................................................ 4
 Customer Segments....................................................................................................................... 4
 Channels......................................................................................................................................... 4
 Revenue Streams........................................................................................................................... 4
SWOT......................................................................................................................................................... 5
Conclusion.................................................................................................................................................. 6

Introduction

This case talks from the perspective of Siva Devireddy, the Founder and Managing Director
of GoCoop, which is a startup in the field of handlooms and handicrafts. Siva had started
GoCoop with the vision of becoming a ‘social marketplace’ for artisans who were being
exploited by middlemen in the current industry scenario and to export the products to
domestic and foreign buyers. He had decided to establish his company as an end to end
solution for both buyers and sellers where GoCoop would provide support to the artisans and
handle the supply chain and fulfilment and provide a guarantee to the customers, who could
be B2C as well as B2B.
The main issues he was facing was in deciding which business model to follow and how to
ensure his initial aim of providing a better livelihood to domestic artisans.
Handlooms and Handi Crafts in India
India ranks second in the world after China in terms of export of textiles and clothing, where
textiles accounted for 13% of total exports from India. The textile industries in different
states possess great diversity and are projected to employ around 18 million people by 2022.
These industries are characterized by high fragmented and unorganized operations, high labor
and low capital intensity. Artisans are generally uneducated and and have little or no
exposure to technology, capital, and infrastracture.
Some emerging private players in the country are Craftsvilla, Indian Artisans Online,
Nethaat, My Earth store, Caravan Crafts, Ecokargha, Eco Tasar Silks, and Kashmir box
where some of the established players are FabIndia, Mother Earth, and Goodearth.
The hadicrafts sector employed around 7 million people and were manufactured from a
vareity of materials such as metal, clay, glass, ceramics, wood, marble and other stones, and
textiles. Carpets form a major part to the handicrafts industry. The handicrafts sector is
predominantly rural and unorganized.

GoCoop
GoCoop was started as a directory listing service, where buyers could access sellers’
information. However, Siva soon realized that buyers were interseted in buying from known
entities as well as not confident in buying from artisans or small entities. Upon this
realization, GoCoop changes its business model to become a mediator between the buyer and
the seller and also ensure delivery of quality products to buyers anf timely payment to sellers.
GoCoop evolved into an online Marketplace Model in 2013 to further establish trust between
buyers and sellers.
We use the Business Model Canvas to analyse.

 Key Partners

GoCoop classified clusters as small (<500 artisans), medium (500 to 1000 artisans), large
(5,000 to 15,000 artisans) and mega (>15,000 artisans) based on the number of artisans in
each cluster. GoCoop worked with around 45 clusters by March 2016 and was continuing
to develop its cluster base. Some of the large cooperatives that were present on the
GoCoop platform were Lepakshi, APCO, and Indrayani. By 2016, GoCoop worked with
around 3500 cooperatives.
They also collaborated with government agencies such as National Handloom
Development Corporation (NHDC), Central Silk Board (CSB) as well as garnerd support
from local and state governments. GoCoop engaged designers from the National Institute
of Fashion Technology (NIFT) who would work with the artisans to develop products. It
would also take inputs from retailers and wholesalers for product merchandising.
GoCoop had tied up with a leading state-owned financial institution for availing their
marketing assistance program which was focused on marketing rural products. GoCoop
had also tied up with HEPC and was able to reach out to several buyers and agents in
countries across the world. The company had also partnered with Ministry of Textiles,
Government of India as an e-commerce partner for handlooms. Tie-ups with agents in
foreign countries.

 Key Resources

Local offices present in Hyderabad, Delhi, Bhubaneshwar, and Bangalore helped catalog
the products before making them online. The local offices also helped GoCoop establish
its credibility among the weavers and cooperatives, since they could see GoCoop
executives and signboards, which gave them comfort that GoCoop was an established
player and that they would receive their payments. These offices were also used to
conduct training programs and quality checks along with buyer– seller meets.
At the operational level, GoCoop focused on hiring people with an educational
background in textiles or fashion who could also go to a rural area and work with artisans.
In terms of funding, GoCoop raised funding initially from two sources, Indian Angel
Network (IAN) and Unitus. These investors showed confidence in Siva and made is
possible to sustain activities during intial years. By 2016, the existing investors in
GoCoop were joined by Kris Gopalakrishnan, co-founder of Infosys, the Saha Fund and
others who committed fresh funding of USD 1.50 million (close to INR 100 million) in
Series A round.

 Key Activities
GoCoop purchased item of handloom from artisan clusters and delivered to
customers, both B2B and B2C. The team at GoCoop worked hard to ensure
that the quality of dyeing and weaving remained largely uniform and of high
quality even in the case of large production orders. They also identified
products from the cluster which could be tailored towards demand and engaged
designers from the National Institute of Fashion Technology (NIFT) who
would work with the artisans to develop products. It would also take inputs
from retailers and wholesalers for product merchandising.
Products were catalogued and listed from regional offices and marketd by
GoCoop. They used both online and offline channels for marketing. Blogs and
videos on art of weaving and artisans were used for online marketing. A blog
was written on every new cluster developed by GoCoop. Offline marketing was
done by reaching out to traders and exporters from databases obtained from
trade agencies and those developed within the organization through incoming
enquiries. Buyer–seller meets were also organized at the clusters, which made
buyers confident of working with GoCoop for the given cluster.
 Value Proposition
GoCoop managed to become a mediator between the buyer and seller and also
ensure delivery of quality products to buyers and timely payment to sellers. T
The main value proposition was - Invest in the creation of supply capabilities,
working with artisans and cooperatives to identify products that would have a
ready demand in the international market, enabling the cooperatives scale their
production capacity and to ensure that they received fair and reasonable terms of
trade that would make it attractive to continue with their craft.

 Customer Relationships
GoCoop catered to both individual and large customers such as retailers and
wholesalers. In India, GoCoop had large customers such as some of the leading
Indian textile and fashion retail chains. GoCoop’s B2B customers were both
domestic and international. Domestic buyers had the advantage of approaching
clusters themselves to reduce their costs. Domestic buyers were price sensitive
and would change their suppliers for small margins. For international buyers,
relationship with the supplier, deep sourcing capabilities, ethical, and transparent
sourcing were important and generally they did not negotiate much on the prices,
since they appreciated the fact that artisans received higher wages. Some of the
international buyers provided 100% advance against orders, while domestic
buyers paid after delivery and often a long time after delivery.

 Customer Segments
GoCoop Served both B2B and B2C segments which meant catering to both
individual and large customers such as retailers and wholesalers. They also
segmentd B2B customers according to geography- Domestic and International.

 Channels
GoCoop had tied up with HEPC and was able to reach out to several buyers and
agents in countries across the world. The company had also partnered with
Ministry of Textiles, Government of India as an e-commerce partner for
handlooms. Tie-ups with agents in foreign countries were essential to accelerate
the process of finding buyers, since agents had local intelligence. Also, physical
presence through agents helped in establishing credibility. However, there were
also instances of a buyer being interested and then not placing the order.
  Revenue Streams
The pricing depended on the size of the co-operative the material was sourced
from. For large cooperatives which were capable of doing transactions
themselves, GoCoop provided the marketplace for a commission of 10% to 15%
and did not do any intermediation. For small cooperatives and in the instance of
exports, GoCoop played the role of an intermediary wherein it procured orders,
negotiated with buyers, worked with the suppliers to obtain high quality
products, delivered them to buyers, obtained payments and paid the suppliers. In
the latter instance, GoCoop played the role of a wholesaler in the market. The
markup earned ranged between 10% and 20%, depending on the product and the
buyer. GoCoop ensured that it had a transparent process for pricing.
In 2015, GoCoop’s gross merchandise value (GMV) was USD 0.62 million (INR
40 million) and this was expected to reach USD 3 Million (INR 200 million) in
2016 and USD 30 million (INR 2000 million) by 2020.

SWOT
 Strengths:
• First mover advantage
• Excellent liaison with government agencies
• Strong textile and handloom industry in India
• Trust among artisans and co-operatives

 Weaknesses:
• Low capital availability
• Lack of qualified leaders other than Siva and problems in recruitment
• Investors not buying into the B2B model

 Opportunities
• Robust business plan already in place along with solutions to
common issues. Siva can focus solely on expansion now
• Addition of new products as well as categories
• Expansion into neighbouring countries

 Threats
• The business of connecting artisans to customers in India and outside
was getting crowded
 • Many new players were entering, who were trying to connect artisans
to the marketplace. Each of them had some unique element in their
strategy
• Interference of investors in Siva’s vision for the company

Conclusion
From the discussion above we can see that GoCoop has come ahead in leaps and bounds
since its inception. The main issues that still plague the company are availability of capital
and unavailability of resources. However, after the latest rounds of funding where the
investors have shown confidence in Siva’s capabilities, there is no reason to think that he
cannot go through with implementing his vision for the company. GoCoop has already
distinguished itself from competition through its combination of a high level of commitment
to the welfare of the artisans, working closely with them to raise their products to
international standards, providing global reach to them by harnessing technology and
assuring the customer of the authenticity of the product by way of full traceability.
His multichannel approach has worked for the company so far and looks to be the best going
forward.