India's niche e-tailers gain foothold

24 October 2014

NEW DELHI: Niche e-tailers in India are using main media advertising to establish both credibility with consumers and a presence in a market dominated by three big ecommerce players.

"The larger sites just act like a shopping mall which sells top brands," said Sanjay Sethi, founder and CEO, Shopclues.com, an online marketplace, in reference to Flipkart, Amazon and Snapdeal.

"The three players do not account for the entire industry, nor do they sell everything," he told the Financial Express.

Sharp entrepreneurs are therefore seeking out gaps in the marketplace, from home furnishings to eyewear.

"Consumers go to large sites when they want to buy something as basic as an office chair, but when it comes to decorating her house in her own style then a customer comes to our website as we have a huge collection," said Vikram Chopra, co-founder and CEO, FabFurnish.com.

Lenskart.com, meanwhile, claims to have cornered the market in bespoke spectacles. "One of the reasons why Lenskart has been able to attract consumers on its website is that there is no other e-commerce player, large or small, which is into custom-made eyewear," stated CEO and founder Peyush Bansal.

There is, however, little advantage in being the sole player in a market if no-one knows about you, hence the importance of advertising for these start-up sites. But advertising is about more than simply generating awareness.

"In India, it helps in gaining the trust of consumers as they still believe that brands that advertise on television and newspapers are more credible," said Chopra.

Financial Express also noted that advertising was helping to boost the valuations of these businesses and so attract funding from investors, an essential component for an inventory-led approach (unlike the three majors which follow a marketplace model).

Ashvin Vellody, partner, management consulting at advisory firm KPMG India, observed that some of the smaller players had tackled the inventory issue by opening bricks-and-mortar stores, either owned or franchised.

Data sourced from Financial Express; additional content by Warc staff