• StartUps

They say the best way to deal with a craving is to fulfil it. For B.Com graduate Shubhra Chadda, it meant filling the gap in Indian souvenir market by creating fun, quirky knick-knacks that represent India in its truest, rawest form with Bengaluru-based startup Chumbak, launched in March 2010.
In the midst of her eight-year career span, with various roles from a staff accountant in KPMG, to a volunteer at a Gujarat-based NGO and later a core team member at a data storage firm, Chadda found herself traveling a fair bit. In typical tourist fashion, she came back with a fridge magnet and soon realized, Indian souvenirs were limited to Pashminas, miniature Taj Mahal’s and handicrafts. The seeds of Chumbak were sown as early as 2004 and Chadda thought she was ready to venture out on her own. “I made a big pitch to my country manager citing my reasons for resigning, but he gave me a reality check, so I put my plans on hold,” she quips.
In 2007, she entered a new phase of life with motherhood but it wasn’t long before she had itchy feet. Two years later in 2009, on advice of husband Vivek Prabhakar, she revisited her idea of designing fridge magnets. “When we started working on a pseudo business plan, we figured we’d have to sell loads of magnets to make money,” she recalls. Over four-five months they realized that the design lent itself to much more than just one product—key chains, mobile charms, mugs, T-shirts, postcards, posters, stationary. By the time Chumbak launched, it had merchandise ready for 12 product categories, in width and depth.
“We spent a year researching manufacturers, making product samples, experimenting with materials and narrowing down on the right designer; this time paid us well,” Prabhakar notes. The startup’s strategy was to launch with a consistent look throughout categories and over next two years look at adding new designers.
Funnily enough, once merchandise came in from across its manufacturer base the founders didn’t have any points of sale. Chumbak
till then had no real B-Plan, and operated on pure instinct. “We were bang on with the categories,” he affirms.
Chaddha, however, knew what she had to do. Cold call the list of potential stores. Her first target was duty free outlets at airports springing up back then, followed by hotels, independent lifestyle boutiques and later chain stores. “The biggest thing going for us was the product; our designs stood out and were affordable,” she says. The first 12 required heavy selling, but by the time she contacted the 20th store, buyers were approaching Chumbak directly. In the process, a business model evolved with five broad verticals.
First, internet to include its own website that ships to 50-60 cities across India, other e-commerce sites, and one-off discount portals where Chumbak sells bundles to customers. The second, standalone boutiques, constituting 50 percent of stores in 20-25 cities, and then chain stores which comprise the balance set of retail outlets. Next up, hotels, so far two major 5-star chains sell Chumbak products in 15 of its properties across about 10 cities. Finally, exports to the U.S., the U.K., and recently Japan. “The founder of an online store in Atlanta found us and expressed business interest; we sell directly through Amazon in the U.K.,” he says.
Chadda admits she’s got a soft spot for independent stores, and is quite flexible with the first 12 who became clients. “It’s good working with them, they take decisions fast, appreciate creative designs and are in tune with latest trends,” she states. Unlike chain stores, desire to sell is in equal interest of both parties since sales stand proportionate to proprietor’s earnings. “Sales personnel at chain stores are mere employees, how much they sell doesn’t reflect on their personal income, apart from some sales incentives,” she highlights. Plus, in-house processes delay new product launches by at least a month. “We can’t randomly launch a product and expect a purchase order next day, that’s where standalone stores win. New items reach shelves in a week,” she points. Sneha Raisoni, founder of Mumbai-based Tappu Ki Dukaan has been stocking Chumbak products since April 2010. “Chumbak does well in our store, especially the fridge magnets and tins. Everything is fantastically priced,” she says.
On hindsight, converting airports to clients has been the toughest task, citing their sensitivity to margins as the primary reason. Plus, the contract to operate duty-free shopping at airports is handed over to a centralised operator, we are told. “No matter how unique you are, buyers are only interested in how much money they will make,” she explains. “It was a challenge but we cracked it, as people started noticing us,” she states. The founders were successful first with Goa, followed by Hyderabad, Delhi T3 and Mumbai. Ironically, they’ve not managed to crack Bengaluru yet as authorities kept changing. “A lot depends on the buyer, if it’s run by people without foresight, it’s difficult,” she says.

Extended family member and mentor Ashwin Patel is positive on the scalability of the model. “Since inception, the business has grown from two critical perspectives—market and product range,” he highlights. In context to focus areas for Chumbak he advises, “They need to build operational and organizational
framework to meet future needs based on the expansion and strategic plan.” This process is already in place.
Since inception, the firm has been dealing with a solid manufacturer base, seven-eight in total, each producing a specific product. Sourcing them was a challenge too, and the entrepreneurs depended on the internet for starters. “Facebook and Google are life-changing for entrepreneurs,” laughs Chadda. Chumbak’s strategy has been to approach the best in each category. While paper products are printed in Bengaluru, tins are manufactured in Puducherry, apparels in Tirupur, fridge magnets and key chains in China. “Money talks with manufacturers. Only once you pay they start work,” says Chadda. “In India people don’t know how to say no and we had to deal with all types,” she adds. Lauding this decision Patel says, “Outsourcing production is a sound strategy, it is flexible and building long term relationships with each one is a good approach.”
Identifying the right supplier for magnets and key chains in India was becoming a cumbersome task, and apprehensive as she was, Chadda had to look outside. Interestingly, she found someone in China [cleared by professional auditors] and after testing a few
samples she placed orders, never to look back. “I used to wake up in a sweat, thinking I’d get
back stones in my package,” she quips.
For whatever myth of working with Chinese, Chadda vouches for their professionalism—execution or quality. “Our magnets now have a 3D design and they have executed it successfully,” she says.

Most important learning here was dealing with custom clearance and refusing bribes even if it meant delays. “A lot of our stuff comes by
sea and now we have started outsourcing to courier companies,” mentions Prabhakar.
Challenges notwithstanding, Chumbak owes a large part of its success at building a brand to social media, a cost-friendly option for sure. “Everybody has some sort of a social media strategy. How serious or effective has to be questioned,” he says.
Its first strategy was to get early adopters on students and youngsters as they are excited by design. This was done
by spreading the word through friends.
“These early adopters, in turn, become influencers by recommending to others. It cultivates curiosity,” he notes. Organising contests was another option to engage with potential buyers. Ironically, these were not related with products sold but with people’s “India” experiences.
In one such instance, responses to a contest converted to a new poster on memorable cricket watching experiences. Social media also helped spread the word among suppliers, thereby piquing the interest of retailers. “Every product of ours goes with our Chumbak/Facebook ID on it,” he says. They’ve also been conscious of what not to do on social media and have stayed away from advertising.
“Majority of people who like fan pages aren’t going to be your customers,” he points. Founders have focused on using Facebook as an interactive forum to engage with the customer base, treating it like a community of friends. “Our response times are good, that’s been appreciated,” he claims. “Sometimes I impulsively announce discounts, there’s nothing planned,” he adds.  On Twitter in particular, a lot of recommendations take place and Chumbak’s customers can subscribe to its e-newsletters.
The firm forayed into corporate gifting, too, as a result of social media. “Every single corporate order we’ve done has been because someone approached us,” cites Prabhakar. “Today the brand is bigger than the design,” he adds. Ruchika Sethi, HR Head at a leading MNC has placed two corporate orders since May 2010 on a budget of about Rs.350 per employee and for about 300-500 pieces each time.
“Their products appeal to the new generation as designs are creative and ethnic, but not ethnic as we know it,” says Sethi. Happy with their delivery time and quality of service she adds, “Unlike other vendors who buy products from the market and package it attractively, Chumbak’s items are original.”
Moving forth the duo plan to be a bit more business savvy and for starters have come up with a design calendar, before releasing new products. In due course, they plan to experiment with company-owned stores, starting with a kiosk-model at malls in 2012. Also, Chumbak is slated to move up the value chain by launching premium-priced products as well.

Tags:
Bengaluru, Chumbak, Shubhra Chadda, startup, Vivek Prabhakar