Just Dial: First Mover of Indian Local Search Market

About Just Dial

Just Dial has a near monopoly business in local SME search. So, if you want to get in touch with a local doctor, florist, plumber, movers&packers, restaurant, travel agent, etc etc - Just Dial is the place to go to. Just Dial has 15 million SMEs listed on it, and gets about 120 crore search queries in a year. Just Dial earns its revenue from paid listings - a section of the SMEs listed on it pay Just Dial so that more and more of the searches are directed to them. At about 60x PE, it is fairly valued - considering that its current business can reasonably be expected to continue to grow at 35% for the next few years.

Changing landscape

But the current business is under threat from changing customer expectations. Customers are not merely interested to get the contact info of a local SME. They also want to know what price would be charged by the local SME. They also want to transact (purchase/sell) with the local SME online. This threat is not immediate, but will start playing out after 3 years or so…

At the same time local SMEs are also under threat from ecommerce players like Flipkart and Amazon. As more and more purchases get done online, and with increasing penetration of internet on mobile devices - local SMEs are desperately in need to be able to sell online.

New opportunities

In this pot-boiler, Just Dial is entering with its own ecommerce strategy. Just Dial will leverage its existing relationships with SMEs to provide the SMEs with an ecommerce platform. In the process Just Dial will evolve from a search platform to a “search + discover price + purchase” platform.

The launch of ecommerce by Just Dial (including advertising / promotion campaigns) is expected in July 2015. Just Dial is earmarking about 100 crores for the advertising / promotion campaign - which is not a concern as they have about 1000 crore cash reserves. Already pilots have been done in many cities, with highly encouraging results (e.g. average ticket size is 17,000 Rs which is much higher than competitors. E.g. good traction in terms of people booking airline tickets, movies, etc). Just Dial is working on a total revamp of their website and mobile app - the revamped website and the new app will be available soon.

Success in the e-commerce effort will mean geometric growth, due to the super-blazing growth of e-commerce and increasing penetration of internet and mobile devices. It is not difficult to imagine stock prices going up 10x in 2-4 years if the ecommerce foray of Just dial gains traction and becomes successful.

Differentiated strategy / Competitive Advantage

What differentiates Just Dial from Flipkart, Amazon, Snapdeal? Why will they be able to compete?

  • Just Dial’s strategy is capital efficient (requires very little investments) unlike the massively capital hungry business models of Flipkart, Amazon, etc. The massively capital hungry models of Flipkart, Amazon are probably more suited for wealthy countries like US, Europe, and probably too capital hungry to succeed in India.

  • A customer purchasing through Just Dial, will be fulfilled by a local retailer / service provider. So, the delivery will be much faster. They are planning a hyper-local delivery within 2 km radius and these orders will probably be delivered in less than an hour. They are also planning same-day delivery for orders placed before 2 pm.

  • Just Dial has existing relationships with 15 million SMEs across India, which it can leverage. None of the others have such a network

  • For a local retailer to sell on the Just Dial platform - he should have his inventory (and prices) made visible to the Just Dial platform. For this, Just Dial would provide the local retailer a cloud-based mini-ERP software, from which Just Dial will earn subscription income. Once the local retailer adopts this software, he will be hooked up with Just Dial for the foreseeable future (e.g. like shops using Tally for accounting).

  • In the future, Just Dial will charge the retailer a small commission from local retailers for purchases done through its platform. Just Dial will be earning commissions on each sale, unlike the model of Flipkart, Amazon - where they make losses on each sale because of price discounting.

  • Just Dial will also hook up with Flipkart, Amazon, and all other ecommerce players. Thus, a customer transacting on Just Dial will be able to compare prices from local retailers with those of Flipkart, Amazon, Snapdeal, etc. Just Dial will thus be playing the role of an aggregator, while the others are not in a position to play that role.

  • While Flipkart, Amazon have started making noises about hyper-local delivery - Just Dial is way ahead of them as they have already developed the capabilities and finished pilot testing, and are very near to launching these services.

Key risks

  • A key risk is that execution (of an excellent strategy) might be poor. Will especially have to wait for the revamped website, mobile app - as the current website and mobile app are not upto the mark.

  • Another risk is that JD ecommerce platform fails to get traction among customers - especially because of the hyper-competition in the ecommerce space.

  • Another risk is on how JD manages to achieve customer satisfaction. Since, purchases on JD will be fulfilled by local retailers, it is important that JD is able to differentiate between the local retailers who provide the best satisfaction to customers (JD has planned various review, rating mechanisms, JD Guaranteed type of sheme, etc. for this).

  • Another risk is the entry of aggregators like Google (Google is planning to implement the “Buy” button along with its search results)


Just Dial has an excellent and proven management - I haven’t heard any concerns about the management so far. Will be glad to know if there are any concerns.

Disc. Invested at lower levels.


Hi @PP1:

Some questions, as we have a similar discussion of a much smaller company in another thread in this forum:

  1. Why would a customer choose Justdial vis-a-vis Flipkart/Snapdeal? - Is Justdial offering a product which is not available in the other retailer(e.g. Motorola products in Flipkart) or is it offering a better price point which the customer may not get from others?

  2. Though this looks like a e-Commerce portal on the face of it, actually if you look at the business model Justdial is offering the software platform(ERP) to these SMEs. So is the play here on the quality of the platform offered or is it really eCommerce? This leads to another question:

2.a Who are Justdial’s actual end customers? - SMEs/retail buyers like you and me: The way I see it, unless retail buyers make this one of their key portals through which they transact, SMEs may quickly opt-out. Their marketing strategy on targeting the customers will be a key thing to watch out for.

Having said this, I must admit, Justdial has certain unique products which you will not find in other platforms. I was once looking for an SME who could offer me a customised POS machine and JD was very helpful.

It looks like a software start-up which sells ERP platform (product) to SMEs and not an E-Tailer.

Please feel free to correct me.

Ravi S

Firstly, JD doesn’t only compete with Flipkart/Amazon
It also competes with Uber/Ola/Bookmyshow/Makemytrip/etc/etc

It doesn’t only sell goods like FK/Amz
It also sells services like Uber/Ola/Bookmyshow/Makemytrip/Zomato/etc/etc

Secondly, it is not necessarily ONLY competing with FK/Amz… It is complementing them too… So, JD will be hooked up with Flipkart/Amazon - and a JD customer will be able to compare prices of Flipkart/Amazon/Snapdeal/Uber/Zomato/others/local retailers/local providers. So, it is an aggregator model…

Multiple reasons why customers will go to JD

(1) Instead of having dozens of apps for different purchases (Uber/Ola/BookmyShow/Makemytrip/Cleartrip/Flipkart/Amazon/Snapdeal/etc) wouldn’t you like to have one app which provides all these services?
(2) Wouldn’t you like faster delivery? E.g. hyper-local delivery within 1 hour / same day delivery?
(3) Wouldn’t you like an aggregator which makes it possible to compare prices across all online/local retailers/service providers?
(4) JD already has a very large user base, who can be expected to migrate to the ecommerce services (e.g. already 6.3 million downloads of JD mobile app).

Also, don’t assume that JD will kill Flipkart/Amazon/Snapdeal or vice-versa… Ecommerce space can potentially accomodate multiple players… However, if you think about it carefully - JD has a model that is far easier to make it work that the extremely capital intensive model of Flipkart/Amazon.

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Your confusion is because, you are assuming that there is only one revenue stream - either from the SMEs, or from the retail buyers… That is an unnecessary assumption… You can make revenue from both…

From what I understand from the latest earnings call transcript - they will indeed be earning subscription income from the mini-ERP cloud-based software.

They will also be charging the local SMEs / Flipkart / Amazon / Uber / Zomato a comission for transactions done through the JD platform. (Now, this debatable whether it is the retail buyer who is being charged OR is it the local SME who is being charged - finally it will come from the pocket of the retail buyer)

All this is in addition to the existing revenue streams (paid listings by SMEs, advertising campaigns by SMEs, etc.)

SMEs have no option but to get on the ecommerce bandwagon.

They don’t have a better option than to get on the JD bandwagon. IF they instead sign on with Flipkart/Amazon, then they have the risk of Flipkart/Amazon cannibalizing their sales…

As to the whether SMEs will continue paying subscription fees for the mini-ERP software even if they are not getting any transactions - the management’s understanding is that the subscription cost of the mini-ERP software will work out cheaper than the existing primitive methods being employed by the local SMEs.

I happened to do a month long internship at Infibeam.com as part of my MBA curriculum. Infibeam too was founded by ex-Amazon, ex-IIT folks. They couldn’t compete with Flipkarts & Snapdeals of the world. They also ventured into an ERP sort of product BuildaBazar, where SMEs can upload images & price data in excels and rest everything will be taken care of by the platform. It was quite user friendly & had a great technology built in, but it too didn’t go very well. The biggest reason in my view, it was a big hassle for SMEs to update prices or add new products.

On the local/hyper local delivery space we already have a lot of VC funded start-ups. To name a few Swiggy/Grofers/Quickli/Housejoy and many more.

This space is extremely competitive & companies like Flipkart, Snapdeal & Amazon have already spoiled end users & SMEs with their technology . I think only time can tell if JD will beat the technology & competition both. I am unable to understand the edge JD has over the VC funded crowd.

I have spent considerable time on studying JustDial mainly as a business (never looked at financial).

Current Scenario:

What Justdial does?
Provides listings for local business and services.

How does it make money?
Those who pay JD are at the the top of search listings and also they get a time advantage to contact the customer over phone.

What kind of listings people generally look for on JustDial?
People do not look for clothes, toys, medicines, electronics(white goods), books. They generally look for more complex products and services. I have interacted with multiple JD customers some of them sell the following:
a) Repair services (Kent, AC, Fridge), taxis etc.
b) Products like security cameras, 2nd hand motor vehicles etc.

I like what they do and currently, my only cause of concern is the viability of this paid model in future. I would like to see how they can move revenues to advertising or else there will always be a threat lurking. Their current business model suppresses competitive pricing.

Coming to their future plans of setting up an SME platform:

a) This will not work with their existing eco-system (which as I mentioned suppresses competitive pricing) and it has to be competitive.
b) Complex products, Extremely difficult. Every store has 1000’s of products with price updates almost necesaary depending upon steel/copper and other base metal prices. Totally agree with Manish above. I spoke to one of the founders of http://www.martjack.com/ and he explained the same.
c) Services: Not really sure if the new model can work.
d) Competing on the newer platform with the like of Amazon: Amazon can burn billions of $ with its deep pockets, it has the best record in terms of customer service (speak to any US shopper). I am not even mentioning Flipkart or Snapdeal in a few years of time they will be distant second and third. Even today the local SMEs have a hard time competing with e-tailers.
e) Who gains with JD entry? I have not been able to figure this out.

My take: JD is trying to mix two very different business and in the newer business there is absolutely no niche. I would have been happier if they had concentrated on the existing biz (is it stagnating?) and move it to a better model (ad based).

Just one question to ask yourself:
If I give you 1000 crores will you compete with Amazon, Flipkart, Justdial etc. with another me too kind of e-commerce portal?

I would rather give it back.

This is purely based on my assessment of how this market can evolve going ahead. I might be totally off as well.

Disclosure: No position and no plans to enter anytime soon.


There are 5+ posts now and … No talks of valuation. :slight_smile: That’s the reason I read into the thread - how does one justify the valuations or even think about it. Turns out, you don’t. :slight_smile:

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Hi Prasanna,

This is kind of VP style. Valuation is the later part. First is we develop an indepth understanding of business. Only then can we comment on valuation.

My thoughts on business model:-

  1. Core Business of providing information:- Undoubtedly the leader, and has a network effect kicking in for them. Challenge on this is expansion of base. Example if there are 10 carpenters in an area and they cater to demand. So even if JD adds another carpenter the incremental revenue which he might get may not be enough. Marginal Utility as mental model.
    The other big challenge could be if google/FB decide to disrupt this space.

  2. e-commerce: i work with an e-com company so can comment on this. From outside business looks like a winner, but from inside its not possible to make money in this space for now. Not just in marketing, but you need to spend massively on Customer Experience, Trust etc etc.
    From the perspective of JD leveraging SME, that has seperate challenges. What is the incentive for SME to get into this? How many local stores actually want to expand business and take hassle of e-commerce? To give a perspective excluding say WS retail and few inhouse sellers, the whole e-com space is run by around 700-1000 sellers. New vendors come, but challenges of e-com more often that not force them to focus on brick and mortar.


Taking on Flipkart, Amazon in their strength areas is not a good idea. The strength of Flipkart, Amazon is huge warehouse/huge inventory driven model + price discounting as is done by large ecommerce players in wealthy western countries.

Infibeam, Paytm, Snapdeal etc. etc. are all trying to fight Flipkart, Amazon with a copy-cat business model. That obviously won’t work.

JD is not really into ecommerce. It is neither an inventory based ecommerce model, nor a market place ecommerce model.

It is an aggregator model. Let me try to explain to you…

Suppose you want to book a flight ticket - you have two main options… You go to makemytrip.com and book it online. Or you go to a local travel agent and book it. Now, less than 25% of airline tickets are booked online, the others are booked through offline travel agents.

What JD does is aggregate both - so, on the JD platform, both makemytrip and the local travel agents will be hooked into, and a customer can compare prices of all the providers and finally book the ticket (either from makemytrip or from local travel agents - all from the convenience of a single app in his mobile phone).

Did Infibeam have such a differentiated strategy - I am afraid not.

So, unlike a Flipkart/Amazon which is forced to give discounts to increase sales - JD is under no pressure to give any discounts. It is merely an aggregator.

Difficulty in making money is for the ecommerce players - who have to resort to discounting. The aggregator is merely making a commission on each transaction (just like a share broker who makes money whether or not his clients make money in trading).

Get this ecommerce boogey out of the system. JD is not competing with Flipkart/Amazon. JD is an aggregator, that forces Flipkart/Amazon to compete with local SMEs. Till now local SMEs couldn’t sell online. With the JD platform, now they too will sell online.

Competing with Flipkart/Amazon would be the stupidest thing to do on earth. Not only because Flipkart/Amazon are already very large - but also because they are willing to lose any amount of money to win market share :smiley:

Hey, I think you are not familiar with what Just Dial is actually planning to do.

Suggest you at least read their latest earnings conf call transcript.

Hi PP,

Good point of thinking outside the e-comm system.

The second question still remains, what is the incentive for SME’s to sell online. in e-comm also we assumed that why wont sellers sell online …after all its expansion of business.They start enthusiastically but then serving these clients thru e-comm becomes a headache and they drop off.
Even in an aggregator model if things dont get delivered model will not work.

Also, another thing which they would need to win on is their search. an aggregator with such diverse SME’s will need to have brilliant search algos

I am yet to meet a local SME who isn’t worried to death about how ecommerce can kill/hurt their business.

At least 10 local SMEs have asked me if I know anybody who can help them with building an online sales platform. I have told them that they can build an online selling website - but nobody would visit their website to purchase.

Almost every large consumer oriented company now has an online selling platform.

This is because customer behaviour is changing. Thanks to Flipkart/Amazon/Snapdeal who have blown billions of dollars to achieve this change in customer behaviour.

In terms of how delivery would be done - I can only mention what is told by the management in the earnings conf call.

For same day delivery - the delivery would be done by the local SME itself. The local SME has an incentive to deliver on time / in quality - because future sales through JD platform would be influenced by the quality of service they give to customer.

For hyper-local delivery (within 2 km radius), it would at first be launched only in select cities - and Flipkart would partner with providers of delivery service, who would do the delivery. These partners would charge the local SME for the delivery charges.

I think the biggest problem for Justdial is the widespread internet use and google.
There was a time when I used to call up justdial for information. Now it has been years… I no longer need that info. Everything is available through direct websites or other online listings.

Would like to invite your thoughts on valuation.

The ecommerce strategy of JD is expected to be launched next month (July). We have to look at the execution, and customer traction - and that is only possible in 6 months to 12 months from now.

Until that we are merely discussing chances of success of this strategy, based on what we think of the strategy as the management has outlined.

All tech businesses have the quality of being highly scalable without incurring much extra capex/opex. Which means that if these businesses are successful, then their valuations can go through the roof. If these businesses are failures, then they are good for nothing. So, tech investing is typically a win-big or lose-big game.

In the case of JD, the win-big part is very much there depending on how well the ecommerce foray does after launch. The lose-big chances are mitigated due to an existing highly successful business, which is on a fast growth path for the next 3-5 years timeframe.

Not always prudent to extrapolate one’s own experience to a consumer market of 120-130 crores (population of India).

If you want to find out if the existing local search business of JD has any relevance - then go through the last few years annual reports to see if they are getting increasing number of search queries.

Also, try to talk to local SMEs, if they are getting leads for new business from JD. Also, see if JD is getting more paid listings than previous years.

Then you can come to the right conclusions - which is not clouded by personal experiences.

Anyways, the discussion we are having now is not about the existing search business - but the planned new search+transact business.

that is the exact point i am saying…the inflow is good…most SME’s get onboarded but after that they realize the challenge of serving far higher customers…few, very few survive…that is the beauty and problem of an open aggregator/marketplace.

the ripple effect is that JD will need to ensure that SME’s whom are onboarded are able to continue…in a way they need to break the 80:20 rule :slight_smile:

I think the aggregator of local SMEs model is better placed in this respect vis-a-vis a market-place model.

The reason is that local SMEs have a geographical location advantage / disadvantage. So, a local SME in Dadar is always better placed to serve a customer in Dadar, than a local SME based in Thane. This means that even if the local SME in Thane is superior in terms of previous customer service record - it may not be able to beat the location advantage of the SME based in Dadar.

Such dynamics don’t work out in the market-place model of Flipkart/Amazon.

I can also imagine that the JD platform gives the local SME the option of not bidding for purchases from places beyond a certain distance. So, in that sense - the Dadar SME should be able to tell the JD platform that it wants to only serve customers in Dadar.

I looked at JD in detail a while back and here are a few trends/concerns that made me pass

  1. increasing verticalization/hyper localization of commerce : JD was the telephone equivalent of a directory services. Unfortunately, now there are so many verticals, that there are specific vertical foussed websites for each - eg., zomato for restaurants, changemytyre for changing tyres. Given this context, what was a "two step process’ in the consumer’s mind has now become a “one-step process”.

For eg., think of how everyone now uses uber or a food ordering app directly instead of going through JD, finding out the closest vendor in that vertical and then ordering the service

  1. most of these focussed service providers have an understanding of knowledge, customer’s needs, local geographic nuances that no “one size fits al” guy can manage. For eg., a trip advisor tells you nuances like “child/elder friendly, risk of prostitution/nacotics” in hotels through reviews and intelligent analytics. You will never be able to get such stuff from a mouthsut equivalent.

  2. Issues of intermediation exists within SMEs and small retailers - they do not want to be intermediated when it comes to local delivery given reasons of margin etc. if they are going to do fulfilment themselves, why would they want to share their revenues - most of them are content paying for leads/listings. Plus, there are concerns of customer service etc. when it comes to local delivery/fulfilment.

Look at how this model has evolved in the west in a place like USA - you have an increasingly vertical or increasingly local segmentation (for eg., commerce in san francisco). unfortunately, JD falls in no man’s land - it can never give me the number of tea shop near my house nor can it provide me nuances of a premium restaurant either.

These are just my views - look at growth, it is increasingly slowing - so PE multiples might de-rated. it otherwise is a fantastic FCF generator - but I would not buy at this price.

At 30-35 x, this makes a lot of sense.

counter views ?



Instead of making personal remarks against @varadharajanr and me, I think you should pay more attention to the questions raised. I did go through their conf. call after you probed me to do so I have gone through their other conf calls regularly) and I have done certain amount of scuttlebutt too. Off-course my research is not complete. I still have the same questions:

a) Given a 1000 crores will you compete with Amazon, Flipkart, Snapdeal?
b) Do you think that the local SME’s are competitive enough with the above e-tailers in segments whee e-tailers operate?
c) What does this new proposition from JD bring to the eco-system which makes it more competitive?
d) There current business is giving excellent returns with good growth. What is the need to diversify?

My questions remain same. I hope you can respond to them instead of making personal remarks.

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JD is not competing with Amazon, FK

It is making Amazon, FK compete with local SMEs. Till now Amazon, FK were online, and local SMEs were offline.

With JD, they will both be online.

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