All things ecommerce with Amazon Pay's 1st PM

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Not many people have worked on everything from payments and checkout to consumer retail, B2B marketplaces, lending, logistics, and supply chain management in the ecommerce landscape across the States, India, and Bangladesh over the past two decades.

The ex-CEO of India’s Voonik (inspired by Stitchfix) and the current CBO of Bangladesh’s ShopUp (a parallel to India’s Udaan), Sujayath, is one of those people.

Amazon’s foray into payments

He was the first product manager for Amazon Pay back in 2005-2008.

Origins: “In 2005, Amazon Payments started as a developer offering as part of AWS. The idea was to create programmable money to facilitate payments between APIs without requiring human intervention,” Sujayath told me. “It would have been more relevant today with the advent of cryptocurrencies, but it was ahead of the market then.” 

They later moved to the ecommerce checkout market. PayPal was the only player at the time, and they redirected users to the PayPal website. 

“My idea was to provide a one-click solution without redirection so that the entire checkout could be completed within the merchant website,’ he said.

“However, we couldn’t get the traction we wanted as the product required customers to use their Amazon accounts which the merchants were skeptical about.”

Fast forward 15 years today, the war for owning checkout on merchant websites has been intense amongst BNPL players, one-click checkout players, first-party platform offerings, and various payment methods. 

“I believe whoever provides the one-stop experience, including fulfillment and post-order operations, will win.” 

Differences in designing checkout for the US versus India: “First, credit cards are insignificant in India. Checkout needs to be optimized for UPI and COD (cash on delivery). Second, India is a mobile-first market, and checkout needs to be mobile-first. Third, two-factor verification is mandatory in India, so the checkout must seamlessly do this verification. Fourth, multi-device buying is increasing in India, and checkout needs to consider QR codes, shared accounts, etc., to span across devices,” he explained.

The first startup in India inspired by StitchFix

In 2013, he started Voonik, a personal styling service back in 2013.

“My original idea was to use AI/ML and create a personal shopping service. However, there were no takers for that.”

Voonik later transitioned into a marketplace. A Myntra for unbranded fashion, as he calls it. Myntra is a fashion and lifestyle marketplace founded in 2007 as a retailer and was bought in 2014 by Flipkart, which Walmart now owns. 

He believes Myntra could provide a great experience for brands because of the available structured data on SKUs. Amazon and Flipkart could not do that for unbranded fashion due to a lack of that data.  

The opportunity in unbranded fashion: “Long tail merchants don’t spend time on data such as patterns, sleeves, collars, etc. There is no standardization. For the same item, one merchant might say, Maroon, the other might say Brown, and another calls it Red,” he said. “This would impact the search, filter, personalization, and a lot more. We already had a best-in-class AI/ML solution to create structured data from image reading. We were able to create the Myntra experience for unbranded items. We did a trial, and it was very successful.”

Voonik’s journey

Transition to operations-heavy business: “We had to develop new capabilities as we moved from being a tech company to an operations company. We had to alter our DNA a bit. We had to create supply chain operations, logistics orchestration, payment reconciliation, returns management, and a lot more. Today there are third-party solutions available, but we had to develop all these in-house.”

Acquisitions spree: “We wanted to move fast. It would have been difficult for us to develop all capabilities in-house quickly. We acquired Zohraa, a marketplace for premium designers and boutiques, to launch the premium segment. We acquired Styl, a salon and spa booking app, for its design capabilities,” he said. “We acquired Picksilk, an online silk store, to strengthen our Silk category. We got Getsty, a shopping site for men, to launch Men's fashion, and TrialKart, a mobile platform for the dressing room experience. We got styling chat app Dekkoh.”

Voonik was a high-flying company in its marketplace phase for a few years until it failed to close a late-stage growth round in 2018 and was forced to change priorities, cut its burn, flip the working capital cycle, and hire different people.

“We were growing very fast, but so was our burn.”

The market changed overnight: “We were not prepared for black swan events. Demonetisation happened when we were out in the market for our Series C funding during the second half of 2016. It was a triple whammy with huge shipping losses (a returned item costs 2X as forward shipping), negative cash flow, and inability to close funding,” Sujayath said, reflecting on the rough phase of Voonik. “When a company grows, you can easily be cash flow positive as your revenue is higher than the bills due from previous months.”

When growth stalls, the reverse happens, and you get into a death spiral, he told me. They did become profitable eventually. “Profitability at the right scale is needed,” he said to make it worthwhile for him and his investors.

Many companies today are going through what they did a few years ago. I asked him where he disagreed with conventional wisdom.

“Conventional wisdom is we should align with the market funding climate. Today it will be cutting burn and moving to profitability. Tomorrow it will be market share at any cost. Investors can afford to change their strategy per the market cycle as they have multiple bets. But founders have a single bet. We either create a dent or die as a failure. The funding climate should not matter to us. In fact, it's better if we choose to be aggressive during winter and lean during summer.” 

Merger with Bangladesh-based ShopUp, a parallel of India’s Udaan

He had just spent years building a consumer brand before merging in early 2020 and was now taking on parts of the value chain that were multiple steps distanced from the consumer.

ShopUp is a B2B commerce platform servicing small businesses. 

I was curious about what that transition was like.

“‘Being Nice’ was a core value at Voonik. We wanted to work with fundamentally nice people. ShopUp had similar DNA, and that made the merger smooth.”

Merging cultures and hiring: “Bringing together teams from different countries was always going to be a challenge. Tech and product culture had better evolved in India, and we wanted to take it to Bangladesh. Hiring was challenging initially,” he explained. “We wanted to hire leaders from companies such as Flipkart, Udaan, and Amazon. It was difficult to convince them, but we could use our Voonik credentials to get them onboard. Today, we have a solid leadership layer from Indian blue-chip startups, which is turning out to be a deep moat for ShopUp.” 

Local context: “The way of working in Bangladesh is starkly different from that of India. Bangladesh's infrastructure is a few years behind India's. On-ground operations had to follow the Bangladesh model. A few Indian startups expanded to Bangladesh but failed miserably as they didn’t adapt to the local context. We made our leaders from India travel often, visit the markets, connect with customers and tailor our approach to the local context. For example, SMBs in Bangladesh are not very tech-savvy, and a mobile app self-service model will not work. We had to combine feet-on-the-ground and telecalling to address that.”

Operations: “B2C and B2B ecommerce are very similar. The tenets for order generation, post-order management, customer experience, etc., are the same. We were able to deploy the Voonik ecommerce platform for ShopUp and evolve it from there. Salesforce management, account management, and catalog management required new approaches for B2B, and we were able to do it,” Sujayath said.

ShopUp’s product breakdown and learnings

ShopUp helps retailers source inventory from suppliers, deliver goods locally and finance the working capital to scale up. 

I asked him to talk through the progress, learnings, and challenges.

RedX, the logistics offering: “This was our first launch after the merger. We were evangelizing the BHAG framework across the org and wanted to use the RedX launch as the pilot. We launched it in 6 weeks, survived the pandemic, and became the number 1 player in another 6 weeks. We started with necessities exempted from lockdown. We were able to onboard all the top merchants within days organically, which would have taken months or years if not for the pandemic. As the lockdown eased, all these merchants continued to give us parcels as our performance was better than all incumbents. We deliver most of the same-city parcels within 24 hours and anywhere in Bangladesh within 72 hours.”

When asked about differences between India and Bangladesh, he said they don’t charge for returned items for high-volume merchants in RedX while Indian logistics players charge 2X for returns. “Redx has Return OTP to avoid returns by delivery personnel without consumer consent, while Indian players don’t. RedX does daily payments for orders delivered the previous day and provides advance payments based on COD volume trends. Indian players don’t do that.”

Mokam, the sourcing offering: “It surpassed USD 1B in sales within the first year. However, the margins were thin, and it didn’t become our moat. I had to unlearn my Voonik instincts and focus on margin than sales. We decided to deal directly with the suppliers and skip intermediaries. We ensured that only verified suppliers and retailers worked with us. We had to earn every basis point. Earlier, our focus was on execution with little time for planning. We changed our approach and spent a lot more time on detailed planning. We were able to create a sustainable business with a process-first approach.” 

Baki, the financing offering: “Baki provides embedded financing to SMBs within the ShopUp ecosystem. Since it’s lending without collateral, we had to be very cautious. Teams were interested in scaling the lending part but not much on due collection. To address this, we had to make the due collection the top priority for the entire company. Every business unit is different, so we had to create credit policies tailored to the business need of each unit. We had to identify leaky buckets and minimize credits there. We had to ensure all lending approvals go through the system and tie them up with payments and collections.”

Financing was the steepest learning curve for the Voonik team.

Building B2B versus B2C marketplaces in ecommerce

He walked me through liquidity dynamics, margin profiles, and focus areas.

B2C: “The challenge is to generate enough demand with positive unit economics. Most time and focus goes into figuring out the GTM and customer acquisition. As long as customer demand is there, supply will come. You will start with razor-thin margins; over time, you will try to squeeze enough margins to sponsor the customer acquisition efforts. There will be only 1 or 2 winners, and it’s mostly a last-man-standing game. The success rate is low, but the rewards are high.”

B2B: “Demand is easier to generate. There can be multiple winners. You can have a good margin from the start. The challenge is to create a superior supply for the existing demand. You win or lose based on your supply chain management. There is a danger of becoming a small company with good economics. The successful players create a flywheel between sourcing, logistics, and financing to deepen value proposition and create a large-enough scale.” 

Digital penetration in ecommerce in Bangladesh and India

He believes digital has not penetrated the manufacturing sector in both countries yet.

B2B: “The first wave of B2B was sourcing ready-made products, and companies like Udaan captured that market. A much bigger opportunity is in made-to-order. In India, startups such as Zetwerk, Moglix, and OfBusiness are already targeting this,” he explained. “There are no such players in Bangladesh, and ShopUp might get into this.”  

B2C: “We are yet to see standalone D2C unicorns. Most of the D2C players rely on Amazon. This will change for a few reasons: First, D2C players are gaining more customer insight, data, and confidence. Second, the D2C brands are getting known, and brand loyalty will kick in. Third, startups such as ShipRocket and Razorpay are now mature enough to enable companies to provide Amazon-level customer experience to their customers.” 

Embracing change and speed 

Sujayath told me, “Startups are moving at light speed. You have to sense opportunities on the fly and quickly steer the company toward them. Sometimes you just don't have time to gradually change a process, business model, or strategy. An instant change could be required to stop bleeding, retain a key client, react to competition, or sustain a dominant position. A small mistake can kill the entire momentum.”

He said that once a change decision is made and announced, the team needs to instantly become the new version as they walk out of the announcement meeting. 

“You don't wait for the process, people, or tech to change but instantly transform into your newer self.”

He admits the changes will take time for the team to grasp and suggests creating new tenets and values for the team to use to make decisions in the new model.

“This approach has helped me to remain opportunistic but at the same time minimize mistakes.”

Influence and mentorship

“Whatever I know, and whoever I am today, I owe it to Amazon. Almost everyone from my initial team at Amazon is now a well-known entrepreneur or celebrated professional. I am grateful to Jeff Bezos for creating a wonderful breeding ground, a nursery, if I might say. I am grateful to my mentors there, who are shaping the future of ecommerce. I am grateful to Sachin & Binny [Cofounders of Flipkart], who kickstarted the Indian startup scene – without them, the ecosystem would at least be behind by a decade,” he told me in the end.

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