Divide and Rule

It’s tough to get Murugavel Janakiraman talking. The soft-spoken and shy founder of the Rs.13-billion online portal Matrimony, known more for its brand BharatMatrimony, however, has never shied away from experimenting. After attempting to run automobile, property and job portals, he is still constantly searching for newer avenues to make Matrimony a billion-dollar company.

Seventeen years ago, he pioneered the online matchmaking business in India and went on to become the market leader; this time, he has his eyes set on another large slice of the matrimony industry — the wedding services, an industry valued at Rs.4 trillion.

According to a 2016 report by KPMG and Google, online matrimony vertical is expected to grow at a CAGR of 19% till 2020 — standing at around Rs.8 billion today. Among the biggest spends in this are mandap, catering and photography. The Matrimony team launched MatrimonyPhotography, MatrimonyBazaar and MatrimonyMandaps between 2015 and 2017, sensing a considerable opportunity in ancillary services. In FY15, FY16 and FY17, its overall revenue increased from Rs.2.4 billion to Rs.2.5 billion to Rs.2.9 billion. In FY18, the overall revenue was Rs.3.34 billion and PAT stood at Rs.730 million. Its paid subscriptions were 745,000. 

The company hopes to convert most of the 3 million active profiles on its website into customers for its new ancillary wedding services. Currently, about 5% of Matrimony’s business comes from services, but it is a fast-growing segment. In FY18, revenue from it grew 35.8% while the overall revenue grew at 14.5% YoY (see: Good times). 

The experimenter

Born into a small family in Chennai’s Royapuram neighbourhood, which abuts the Bay of Bengal, Janakiraman today has his office in the 10^th floor of Beliciaa Towers in MRC Nagar with an astounding view of the bay. Seems like life had better plans for the boy whose dreams were as simple as becoming a lab technician and moving to a better house from his one-bedroom home, where he lived with his parents and elder brother.

Finishing his MCA, he landed jobs with Polaris and HP, and later moved to the US working with AT&T-Lucent as a consultant. That was when, in 1997, he started making a portal for the Tamils in the US — with a daily calendar of events, festival reminders, chat forums and matrimony classifieds. The matrimony section started gaining eyeballs and even paved for some alliances. From a basic website with a page for brides and grooms each, it grew and went on to become what Matrimony is today. Interestingly, Janakiraman found his life partner through the same portal in 1999.

Things were going hunky dory but, in 2000, he lost his job at AT&T-Lucent in the dotcom bust. But, he knew exactly what to do. In the same year, he launched TamilMatrimony, which a year later got incorporated under the name Consim Info.

In 2004, Janakiraman returned to India and set up a small office for BharatMatrimony in T Nagar. The company soon launched 15 regional domains under BharatMatrimony such as HindiMatrimony, BengaliMatrimony, TeluguMatrimony and more.

In 2006, two years after moving to India, the portal that Janakiraman launched in 1997 spending $10 per month raised $8.65 million from Yahoo! and Canaan Partners. In 2008, it raised another round of $11.75 million led by global venture capital firm Mayfield and existing investors and, in 2012, the company was renamed Matrimony. 

It had raised a little less than Rs.1 billion before it went to the bourses in September 2017, and became the fourth internet company in India to get listed. That year, it had around 3 million active profiles, a revenue of Rs.2.9 billion and a profit of Rs.438 million.

BharatMatrimony today has 300 community sites, about 140 retail outlets, over 700,000 paid subscriptions and 9x the views of its competitors. Jeevansathi and Shaadi are its immediate competitors. While the three together service 99% of the online matchmaking industry, Matrimony has 60% of the market share. 

“We are a classic case study of segmentation. No other company in the world has done segmentation as beautifully as we have done,” says Janakiraman, beaming, while acknowledging that the diverse nature of the country has helped.

Initially, the company tried language-based segmentation and formed 15 regional domains since it believed that people usually looked for alliances with those who spoke the same language. As the business expanded, Janakiraman decided to further exploit the segmentation strategy and launched over 300 Matrimony sites based on religions, sub-communities and special segmentations such as divorcee matrimony and elite matrimony. 

He says that he decided on further segmentation to stay ahead of the curve. “When a category becomes successful, people usually try to create niches out of it and take out some market share in the process. So, we decided to create our own competition,” Janakiraman says. The cannibalisation worked — it saw the highest growth of 40-50% during these years. Subsequently, the company also tried out special segmentations by launching Elite Matrimony in 2006 for the rich and affluent, and Assisted Marriages in 2008 for those who need personalised services. This was followed by divorcee matrimony, any-caste matrimony and defence matrimony. 

“In effect, we created horizontal as well as vertical segmentation. Vertical was based on languages, religion or affluence. Horizontal covered assisted matchmaking,” Janakiraman says.

Besides a well-executed segmentation plan, Janakiraman’s prowess in technology was another significant differentiator. With strong data sets in hand, Matrimony had developed an intelligent matchmaking-algorithm called MIMA, based on the millions of interactions between its members, which gave smart suggestions to users. MIMA resulted in around 31% increase in engagement metrics and 50% increase in success rate.

Janakiraman also took a risk that helped build trust in the matchmaking medium and set an industry standard. Few years back, anyone could create a profile on the matrimonial sites and mischief makers were abusing the platform, and damaging its credibility. To tackle this, in 2012, BharatMatrimony decided to make mobile-number submission mandatory. “That was a big step for us. People were not comfortable disclosing the number and we were at the risk of losing 20-30% of our customers. But, we took that step anyway,” says Janakiraman. The trust built over many years and innovative interventions such as MIMA, apart from the segmentation strategy, have placed Matrimony above other players.

The next leap

Janakiraman is now working on diversifying his business and, therefore, his plunge into wedding services three years back. “After starting our journey 18 years ago, we have today organised the large unorganised matchmaking industry. Similarly, the wedding-services industry, too, is large and highly unorganised. A marketplace for these services would appeal to people short of time and looking for convenience,” he says. 

Janakiraman launched MatrimonyPhotography in 2015 offering — as the name suggests — wedding photography and video services; MatrimonyBazaar that lists services ranging from wedding clothes to catering in 2016; and, in 2017, MatrimonyMandaps that lists wedding venues. Bazaar with 4,000 vendors largely services Tamil Nadu but Mandaps with 3,000 vendors facilitates venue booking across south India. Both, however, get their revenues from commissions or as a share of sales made by the vendors. While Mandaps and Bazaar are aggregators, Photography is a full-service provider.

Janakiraman seems to have spotted the gap in the online market for wedding services quite aptly and local businesses are happy to join in. RK Raghavendran, who runs Vivahaa Catering Services in Chennai, a partner with MatrimonyBazaar, says, “There have been many times when we’d lose out and compromise in terms of service, quality and pricing just because we didn’t have a trusted partner. Now, MatrimonyBazaar sends us high-end customers at the right budget at the right time.” R Yogesh, proprietor at MPK Mahal, Chennai, says, “MatrimonyMandaps has been getting us customers not just for high-demand muhurtham dates, but also for non-muhurtham dates (by finding them customers who do not care about alignment of stars).” 

It seems a happy union but an earlier attempt by Janakiraman at diversification did not end well. In 2006, Matrimony launched portals for automobiles, jobs, loans and real estate, and spread itself too thin. After the Lehman crisis in 2008, there was a cash crunch and the board of Matrimony decided to shut down most of its non-matrimony ventures in 2009. 

There were times when even new verticals related to the core couldn’t take off. A previous attempt in 2012 at the wedding-services market, Tambulya — a returns gift portal — had to be shut down. Tambulya was a hybrid model with both retail and online business and was not profitable. 

Second time lucky

But these failures at diversification have not deterred Janakiraman. He strongly believes that his new ventures are on the right track. 

Photography services, which Matrimony offers in four southern states, seems to have taken off — they are booked for nearly 1,000 weddings per quarter. Its charges start from Rs.45,000 and can go up to Rs.100,000. Janakiraman explains why he didn’t choose the facilitator route for it, unlike Mandaps and Bazaar: “When we analysed the category, we found that it had not gone through any major technological innovation for a very long period.” He saw an opportunity to redefine this category — an attempt that was not possible through a “connector” role.

With Matrimony’s services, customers can co-create their wedding albums with the team. Using the app, they can get involved at various stages including photo selection, album design and editing. Apart from the physical album, an e-album would be available on the cloud, accessible to the user through the app at any time.

Being an altogether new business, Janakiraman had to contend with some key challenges. “After paying only a small percentage as advance, many people didn’t come back to us post the wedding to collect the album. So we changed the model and, from the past six months, we have started collecting 70% of the money upfront,” says Janakiraman, who believes that with such changes, he has got the business model right by-and-large now.

Initially conceived as a fully in-house team, MatrimonyPhotography later tweaked the model and now works with a 300-member team of photographers and videographers who are a mix of full-time employees, retainers and freelancers. “For retainers, it’s a very attractive proposition — working for six days on an average in a month can earn a photographer Rs.20,000 to Rs.25,000. Photography is largely seasonal but, with us, there is regular income,” says Janakiraman.

While the entrepreneur is optimistic about his new verticals, Amarjeet Maurya, analyst at Angel Broking has a different view. He feels the ancillary business is very vast, highly unorganised and, therefore, difficult to crack. “I doubt if one can aggregate all of that across India under a single brand and make money out of it. These services are fragmented, niche and highly localised,” he says. 

Wedding services apart, the online matrimony business is becoming hyper-competitive. The players in the industry have had to hike their ad-spends and discounts, which has affected their bottomlines. “Existing players are spending almost 15% of their revenue on advertisements. Matrimony’s topline was around Rs.3.35 billion last year and it spent around Rs.500 million for ads. Plus, BharatMatrimony, Jeevansathi and Shaadi are fighting hard for subscriptions by offering hefty discounts,” says Maurya. This is because, having achieved fairly high urban penetration, online matchmaking seems to be slipping into slow growth. 

Maurya notes that on the ancillary services side, Matrimony made about Rs.160 million in FY18, but it is ridden with losses. “In the ancillary services, most of the revenue comes from photography and videography, but it has not been able to achieve break even in that,” he says. According to him, a better strategy would have been to sell leads to photographers instead of hiring them. 

Kuldeep Koul, analyst at ICICI Securities, begs to differ. He feels the opportunity is big and it would take quite a few hits and errors to get the model right. “Since no one else has perfected the model, and Matrimony is trying to build a scale business around photography for the first time in India, there is bound to be initial hiccups,” he says. According to Koul, given the scale of opportunity, it perfectly makes sense to bear the losses and keep investing. 

Janakiraman says that the challenge is more in terms of getting the demand-supply right. In the case of Mandaps, moving the not-so-tech-savvy owners online and making them share the necessary information on the site has not been easy. When it comes to Bazaar, the problem flips — convincing vendors to sign on is not a big problem, but winning over customers is.

Koul says, “Murugavel’s aspiration is to grow at 50-100% every year. You will see signs of that growth starting from Q3FY19.”

Tough nut

Aggregation of wedding services is not an easy business to crack. Several start-ups such as My Wedding Planning, Weddingplz, PlanningWale, WedMeGood and Weddingz, who have tried their hands at the same, have not been able to scale up their businesses. Most of them have not been able to attract funding beyond the seed round. For Matrimony, the challenge is to get the unit economics right. Scaling up will be relatively easy.

Indians, on an average, splurge Rs.750,000 on a wedding. Matchmaking services get only a minuscule share of this despite having access to the right target audience. That’s why it makes sense for these companies to diversify. “If they can win over the customers’ trust, it is a fantastic opportunity. The market of wedding services is huge and customers also benefit significantly if the unorganised wedding services are brought on one platform. Since these companies have the tech capability too, all they have to do is focus on adoption,” says Sreedhar Prasad, partner and head – consumer markets and internet business, advisory, KPMG India.

As for Matrimony, it can depend on its brand value and the massive database. For one, when a person is deleting his or her profile from the site after the wedding is fixed, he or she has to enter their wedding date. This information helps the company pitch vendor services to them. 

Another challenge that Matrimony needs to overcome is that the wedding business is seasonal and a pan-India brand needs to understand the nuances of regional markets. For example, in Tamil Nadu, people won’t get married during the month of Margazhi, which falls in December. Whereas, in Delhi, most weddings take place in December. However, Janakiraman believes analysing its data pool can help the company get past this hurdle too. 

It’s a date!

The website maybe winning over vendors, but its customer base is changing. Even in a traditional market such as India, arranged marriages and even marriage itself is losing ground. Dating apps are making inroads too. In fact, Janakiraman himself had launched a dating app named Matchify in 2014, which was discontinued in a year because there were few takers for it.

He is convinced that dating apps, which are more of an urban phenomenon, are not going to be a threat to matrimony websites in India any time soon. His website gets over 40% of its users from tier-3 towns, the remaining 60% is from tier-1 and 2 towns. Going forward, Matrimony sees its growth driven by demand from smaller towns. It is soon launching the services in regional languages to capture more users from these small towns. 

Janakiraman says the Matrimony venture empowers young individuals. “Today more than 60% of the profiles are created by the individuals. Earlier the parents were in the driving seat, today it is a more collaborative effort,” he says.

Besides, out of 60 million looking for a match, only 10% is online, according to Janakiraman. This is only set to grow in the coming days with the penetration of mobile and internet connectivity. Therefore, there is room for growth in the core business itself, and the company is working on expanding its market share. Janakiraman believes that wedding services is only a natural extension. The two businesses could benefit from each other. 

“We would be looking at new markets,” says Janakiraman, without divulging the names of potential markets. Apart from India, Matrimony currently has offices in the US and the Middle East. This year, Matrimony made its first acquisition with SecondShaadi.

In the spirit of brave exploration, will there be a revival of services such as the automobile and jobs portals? “For now I’m wedded to Matrimony,” says Janakiraman.