Cryptocurrency Prices by Coinlib
Cryptocurrency Prices by Coinlib

Online retail firms hasten offline push to fend off Flipkart and Amazon

Few players like Firstcry, interior design platform Livspace and furniture retailer Pepperfry are heavily investing in offline stores to give the consumers a

In order to survive the onslaught from Amazon India and Flipkart amid a slowdown in the growth of e-commerce market and a lack of interest among investors towards funding the businesses, specialty online retailers are hastening their offline expansion. In the last one year, Lenskart Solutions Pvt Ltd, Urban Ladder Home Décor Solutions Pvt. Ltd and First cry, among many others have worked on their strategies to protect the turf against Amazon India and Flipkart.

Few players like Firstcry, interior design platform Livspace and furniture retailer Pepperfry are heavily investing in offline stores to give the consumers a “touch and feel” experience. Others like Urban Ladder and Lenskart are opening offline stores as well as trying to establish themselves as brands which are available across channels rather than pure retailers. It is important for vertical players to have a strong moat against the horizontals; otherwise there are chances they could get run over. Hence, it is essential to either build an offline presence which will protect the business against all horizontals or build a brand of products which can be sold across channels on all the platforms including horizontals. If these two strategies are executed efficiently, there is a large opportunity for verticals and enough investor interest.

Peyush Bansal, chief executive of Lenskart mentions that building a brand is critical. If people will not look at Lenskart as a specialized player, then why will they come to the brand? More than marketing, it is the differentiation of the product which is important. Ashish Goel, chief executive officer of Urban Ladder mentions that unlike the large e-commerce platforms, category specific brands have a greater focus on pleasing the customers. With an omni channel presence, they ensure that the brand is where the customer is, which is required especially for a category like furniture where customers want to touch and feel.

Suchi Mukherjee, CEO of Limeroad said that India is a large market to accommodate vertical e-commerce companies. Even in countries like US and China, specialty fashion businesses have thrived despite the presence of Alibaba and Amazon. While specialty online retailers are taking measures to differentiate their business, there are doubts about their viability.

There was a last funding round at Urban Ladder, Livspace and Pepperfry which were done by the existing investors because the companies feared that they would have to lower their valuations in order to attract new investors. The last round for Limeroad happened in March 2015 and it raised $30 million from all the existing investors. The company has gone without fresh funds which show its capital efficiency but it is also because the investors have soured on e-commerce.

Indian e-commerce market was expected to touch between $48-100 billion by 2020 but since the beginning of 2016, there has been a sharp slowdown in the growth. The market grew by less than 15% in 2016 to $14-15 billion and is expected to grow only slightly faster during the year. This slowdown has caused various investors to slash their projections for the market. Along with the expansion plans of Flipkart and Amazon, there are doubts about the ability of the specialist e-commerce companies to survive the market. Majority investors believe that only the companies which are clear leaders in their respective categories can hold their own against Amazon and Flipkart as well as attract fresh capital. Various specialty e-commerce companies which include Urban Ladder, Limeroad, Lenskart and Pepperfry are expected to hit the market with fresh funds in the next few months.  

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