Just Dial: First Mover of Indian Local Search Market


I read Muthoot Finance thread. And @varadharajanr was perhaps too quick to form an opinion and make a blunder, which may happen with anyone. But I believe at VP, we do not resort to personal name calling and stuff.

Also, I understand you have really strong positive views about JD, which is fine as long as they are kept to yourself. No need to force them on anyone else. It is not a good habit to use strong language to prove yourself correct. This is an open platform to share ideas/views, not force them. Please respect everyone’s opinion even if you do not agree with them.

1 Like


Amazon, FK, eBay, SnapDeal all have platforms where SMEs can register themselves and pay a fee per transaction. A lot of people I know in the local Hyderabad market are listed there. Amazon’s third party sales are 40% of its total sales volume wise:

I have ordered multiple cheap books from third parties on Amazon.

Take the example of airline tickets (a category that can be most easily sold online) - still online is less than 25%, rest being local SMEs.

Take ecommerce in USA - online is less than 10% of retail industry, even after 25 years of Amazon. Rest is offline by SMEs and large players like Walmart.

For local SMEs - ability to sell online, ability to increase sales/profits
For customers - more choice online, faster delivery, better prices

Customer expectations changing. Customers are not happy only knowing the addresses/contact info of the restaurants nearby. They also want to know the menu, prices and even want to be able to order online (and often expect home delivery).

If a person writes totally unrelated stuff and this is pointed out to the person - the person is expected to make some amends… Don’t you think? Has he? Isn’t the burden of making amends even higher if the unrelated stuff you have written is also highly negative, and toxic?

Did I do any personal name calling? I only referred to a certain type of behavior - which is unhealthy.

I looked at it at the time of IP on basis of its PE and decided it was expensive. Should have known better to evaluate it as a FCF stock.

However, even as a FCF stock, I think one can’t ignore that JD operates in a industry where its competitors have $B war chests. Unlikely that any of that FCF will get paid out to investors through dividends.

SMEs can be expected to be distrustful of listing themselves on Amazon/FK - because Amazon/FK will always be suspected to try to push business to their own (like Amazon fulfilled - where the inventory of third party sellers is stored in Amazon warehouses, and delivery is by Amazon)

SMEs want to sell online to protect themselves from the threat posed by Amazon/FK. Why do you think they will hasten the threat by partnering with Amazon/FK?

Of course, there are online retailers, who use the Amazon/FK platform. We are not talking about those - but about SMEs who already have a thriving/existing retail consumer business.

JD is merely an aggregator - so SMEs can trust their neutrality better.

What do you mean “force my views on anyone else”?
How exactly am I applying this force? Please clarify.

The reason some stuff is offline is because it is better that ways and they cannot move online. You cannot go buy a clutch cable or a thermostat online. The other aspect is touch and feel that you are deprived off shopping online.

Coming to your specific example of online ticket booking:

What will make a current offline ticket booking customer go online with the JD platform? An insight from ticket booking agency: Offline ticket booking happen in India for two reasons:

a) Corporate bookings where the agent extends some kind of credit period.
b) For a lot of businessman it is because you can pay in cash.

I will discuss rest of your responses later.

So, in US 90% of retail is offline, because 90% of sales cannot be moved online? How justified is that assumption?

Walmart (mostly offline): $486 billion
Amazon (online): $89 billion

And Walmart is only one of the many offline retail chains in US/Europe.

This is one example where you have expressed total disregard for @Anant’s views. If you cool off and re-read the entire thread, you’ll find more of such instances.

From my side, no more discussion will happen unless we can have an unbiased discussion about the future prospects of the said company.

Thank you.

1 Like

So, using software technology - the SME travel agent will be able to showcase his inventory of tickets and prices on the JD platform.

Why wouldn’t he want to sell more tickets / get better pricing for his tickets by selling on the JD platform, in addition to selling to his existing corporate/retail customers?

And even if the greed of selling more tickets doesn’t appeal to him - will not the fear of losing his existing sales to online web-sites motivate him to have an online presence?

At my work, till about 3 years ago - I used to depend on the Travel-desk to book my flight tickets - the Travel-desk would then book it through a local SME travel agent. But since the last 3 years - I just book my business travel online on makemytrip/cleartrip/airline website. I found that faster and more efficient than depending on the Travel-desk.

1 Like

1.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.

  • Is it okay to say fairly valued for a company growing @ 35% quoting a p/e of 60.
  1. Customers are not merely interested to get the contact info of a local SME.
  • You a right. As a customer, I would like to compare prices quoted by different SME’s. This will help the customer but not the SME who pays to get listed. This is applicable to products but not services. Services are determined by trust built over a period of time.
  1. At the same time local SMEs are also under threat from ecommerce players like Flipkart and Amazon
  • Our SME’s are smart. It is one more sales channel for them . They can do both online and offline. See the increase in number of retailers registered with amazon, flipkart,etc. This can make SME move to e-commerce portal where he sells more. Just Dial can fail in retaining SME. This is the most pertinent threat to just dial and it can fail because of this. Its e-commerce cannot stand against the intense competition developing and with better players.
  1. 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.
  • Only a inventory led model requires massive amount of capital. But bulk of the portals is market place models. Capital is burnt now to lure the customers and market penetration.
  1. 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).
  • SME will not have any affinity to anybody. He will move to portal where can sell more. See the point already mentioned above in bold letters.
    6.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.
  • No commission model will work here as it is also price driven. Sellers and e-com portals have to agree on the price and what accrues them before selling to end customer. Discounts and commissions are separate things. Dicounts now is a market penetration strategy and commission is altogether different. Lets not confuse between both.
  1. 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.
  • The strategy is not clear here. Lets be clear who are the competitors and the market and its size. Why should Amazon has to go thru Just dial. As per my understanding , the model/future model of Just Dial is just a search engine ( Google, many own portals,etc) and e-commerce ( Amazon, flipkart,etc)
  • Aggregator is not required as a customer can compare prices himself by just opening the other sites in TAB.
  1. 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?
  • Customer would like to go directly to cut costs as direct dealing is always better. The days of intermediation gone.
    (2) Wouldn’t you like faster delivery? E.g. hyper-local delivery within 1 hour / same day delivery?
  • This is not a major differentiation factor as everybody will strive to achieve this.
    (3) Wouldn’t you like an aggregator which makes it possible to compare prices across all online/local retailers/service providers?
  • The days of intermediation gone.
    (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).
  • This is not a major differentiation factor

Just Dial had a first mover advantage as a Search Engine. This is the age of disintermediation. It is already happening in the offline mode in areas like real estate,etc. Hence, it is clear that a paid model of a Search Engine cannot survive for long. Can advertising compensate revenue by lisitings – debatable/uncertainty.
Again, there is competition in the form of Google or in the form of companies promoting their own web site (like fasoo’s,etc). A retailer will no more go to Just Dial for selling its products . He will go to a market place or inventory model. A service provider will start his own website either internet or smartphone based.
Next , e-commerce venture which Just dial calls Search plus. A retailer has too many options now. What is the advantage of Just Dial over others? In fact, here Just Dial has to agree whatever price quoted by the retailer/SME.
I would rate Just Dial as more of an online broker. With this disintermediation is already happening in Offline , I dont think Just Dial can grow as per the market expectations reflected in the p/e. Growth for past years is 28% in the sales which will come down in the coming years. Margins will also take a beating.

Now financial analysis :

  1. when yu analyse profits , remove the investment income and see. Why they have to sell investment every year and shows the profit which is substantial.
  2. Just dial never discloses paid listings. If we calculate, revenue earned per listing is stagnant @ Rs 390 for the years 2014 and 2013 . Yet to see 2015.
  3. Unearned revenue as a % of sales is coming down.
  4. It is all right to claim there is phenomenal growth in searches but what really matters is whether it actually turns into revenue. What is penetration of paid listings into the total searches? We don’t know.
  5. Co announced buy back on 5th June @ Rs 1550/- Why share price has not reacted to this news?

I think the company is not transparent in disclosing the growth in paid listings and average revenue earned per paid listing. I need to derive in a round about way. They have also not disclosed the revenue earned from Search Plus model however small it might be.

This can be the sole ground for rejecting investment in Just Dial. Further, the trend of disintermediation will affect the Company in the coming years.


Flipkart has 20,000 employees.

It has invested massively in its logistics business (Ekart?) - with probably thousands of employees, and millions of sft of warehouse space.

In theory it may be a market-place, but then its Capex is huge, because it provides warehousing, inventory management, logistics, etc etc.

It is indeed a capital intensive model. Same goes for Amazon/Snapdeal/etc.

It is indeed true that they also burned whole lots of capital on giving discounts - but that is another matter.

Thanks to the opaqueness in this industry - we don’t how much capital has been invested / burnt by Flipkart/Amazon/Snapdeal - but it is in the billions of US dollars.

On the contrary JD will be investing less than 150 crores (Indian Rs), out of which 100 crores would be for advertising/promotion.

In tech, the landscape changes very fast - so important to keep yourselves updated.

Google is getting into ecommerce (with a “Buy” button implementation along with search results)

Flipkart, Amazon are moving into Google territory, by selling ad-space (like ad-words of Google)

May be true, when using desktops.
But, more and more ecommerce happening through apps on mobile. Opening 10 apps and checking prices in these apps is nearly physically painfully impossible.

JD strategy is to be aggregator in ecommerce. So, it is very much an intermediation strategy.

Can be quite powerful, when people move to ecommerce using mobile devices.

To the statement you make that “this is the age of disintermediation - all intermediaries will go” — Flipkart and Walmart are also intermediaries. So will they go too? Facebook is an intermediary - will it go too? Google is an intermediary - will it go too? National Stock Exchange and BSE are intermediaries - will they go too? Banks are intermediaries - will they go too?

1 Like


There can be arguments and counter arguments over tangibles and intangibles and we can argue till the cows go home . But key factor - you show that they have increased their average revenue per paid listing . Volume increase - growth, Price Increase - existence or absence of pricing power.

There is no point in arguing with you as you have not grasped what I am saying by Disintermediation and how it applies to JD. There is a difference between selling a Product ( Amazon, Flipkart,etc) and a Service (makemytrip,etc). You also understand how pricing plays a key part in the channel. JD does not have any incremental advantage in the channel either product or service which means they will derive less from listing and there will be de-growth in listings.

JD has an capital-efficient ecommerce strategy.

It is also a financially conservative management.

Recently, its board approved share buyback for 170 crores (out of its cash reserves of 1000 crores - 170 crores is the max allowed for share buyback by Companies Act)

Their existing listing business will die down over the next 10 year timeframe -unless their ecommerce strategy works out.

This is not because of any disintermediation. It is because customer expectations are changing - and other vertical intermediaries (like Flipkart/Zomato/Makemytrip/etc) are better suited to meet these expectations.

So, it is not disintermediation - it is merely a better suited intermediary coming up to meet ever increasing customer expectations.

The ecommerce strategy of aggregation is how JD hopes to be relevant in the future - it is able to keep its horizontal strengths + meet customer expectations at the same time.


Zomato > JD local search


JD local search + transact > Zomato > JD local search

Hope you don’t have difficulty to interpret the mathematical representation :wink:


One more key point : The growth of total listing is 30% in 2014 as compared to 2013. Please view this against the CAGR of 46% in the prior five years. I do not know what happened in 2015 as AR is not out.

This is happening in a company where growth is blared thru AR’s. They talk about growth in searches but do not talk about how their revenue is growing.


One interesting fact about JD, I think is they might be able to tap the local services market, which currently is not being serviced well. For example, if I need a plumber or a carpenter or a caterer or someone like that then JD can provide the info along with tentative price rates etc. I don’t really think they have any competitive advantage in the traditional ecommerce space or booking travel tickets also for that matter. in fact I would argue that they have a disadvantage over the already established players. Valuations are a major put off. Difficult to make a bull case purely based on the valuations.

1 Like