E- commerce in India isn’t a new phenomenon but then it is only now that the niche category is grabbing eyeballs. Customers from across India are buying online and their online shopping isn’t just restricted to books, clothes and electronics. Today,their are portals selling gold and diamond jewelry to designer clothing to even furniture! And yes, the audience for them only seems to be growing!
The story of velvetcase.com’s inception is based more on the market gap Runit Shah, co-founder and COO noticed in the way jewellery business in India is conducted and how ideally it should be conducted. Talking about the launch he reveals, “Offline retailers of jewellery are in the business of turning inventory. By definition, they are in business of selling their stock, and not what the consumer desires. Consumer tastes are evolving rapidly and the stock held by retailers is not moving with the trends. Additionally, the cost of carrying inventory in stores as well as real estate costs put huge pressures on the traditional jewelry retail business. Over the last few years we have seen many go out of business.”
Gifting across the world is a big business. And anything that has an ethnic touch and feel to it, proves to be an instant hit. Local gift shops do not really satiate the need for specialized ethnic gifts and perhaps this led to the inception of a niche portal such as artisangilt.com. Rahul Garg, co-founder for this portals shares, “In late 2012, we were invited to a handicrafts exhibition at one of our friends’ place (now one of the co-founders). We were quite surprised to see that the handmade products on display were not only of high quality and great finesse but also attracted several eager buyers. Sensing a potentially large market for these products, we met with several artists, regional suppliers and art connoisseurs in subsequent months and were astonished by the sheer variety of art-forms that Indian handicrafts industry had to offer, a lot of which we didn’t even know existed. To further gauge the commercial viability of these products, we conducted three commercial exhibitions in Mumbai, all of which were very successful. It seemed like we had the right products at the right prices. The decision to scale up seemed only natural at that stage. And that’s how ArtisanGilt.com was born.”
With umpteen fashion websites and fashion clothes being sold by one too many, there was a clear need to have a property that dealt in just niche designer outfits. That is what led Avnish Chhabria to launch Stylista.com. He shares, “Today, the Indian consumer has opened up considerably to the idea of high street fashion. However, we are being forced to wear European fashion at international pricing that does not suit our specific body type. The driving thought behind Stylista.com is to take the burden of manufacturing, distribution and marketing off of our designers and allow them to do what they do best, i.e. design beautiful garments. This allows us to create a brand that is very relevant to today’s global consumer, who is both design and price conscious. We have built Stylista.com to be a collaborative platform for Indian designers to reach a larger customer base, and also give shoppers the opportunity to sample garments from well-known designers at a fraction of the price they’d pay in boutiques. We like to call this a true democratisation of fashion.”
Shopping for books and apparels online was imaginable before someone put it into reality but then shopping for furniture online is something we don’t think many would have even thought of. Today a look at the online space and we have atleast half a dozen players selling furniture online and when we say furniture, we mean hardcore real furniture and not just knick knacks for décor and soft furnishing. PlushPlaza is one of the most coveted online boutique furniture store. Rahul Jagtiani, founder – Plush Plaza shares: “At the time, I decided to self fund the entire venture, and we started off with a very lean team of 2 1/2 people. One of them was part time. It was our own version of two and a half men in the office.”
Inception of majority of the niche e-commerce portals is done so on personal funding. Catching the fancy of investors during the start-up stage does get difficult for budding entrepreneurs specially so if they do not have degrees from the IIMs and IITs.
For Shah, it was a pleasant surprise when a customer ordered a 5+ct solitaire for Rs. 60 lakhs from velvetcase.com and this was achieved within 18 months of their launch. This does go to prove the power of internet in convincing people to spend.
For stylista.com, it took the team over six months to get off the ground, as they built the concept and technology from the ground up to customize the user experience and also share the brand philosophy with shoppers.
Overcoming the Challenges
Challenge that niche e-commerce portal face is that of mushrooming competition and that of retaining the manpower trained by them.
Chhabria shares, “The most important strength of a company is the people within. Having three partners, it was important that we all stayed true to the concept. We focused on the core competency of the business to build the solution piecemeal, with each contributing towards a singular goal. While there are bound to be conflicts and differences in opinion, that singular goal and better communication always solves every issue. Leaving your ego aside and not hesitating to do even the smallest jobs is what builds faith and belief in the people you work with.”
Garg identifies three main areas which pose as a challenge for him – recruitment, logistics and merchant development which in a way encompass the challenge faced by seasoned as well as recent entrants. Elaborating on this, he shares, “There are barely any placement consultants who specialize in start-up hiring and most of the candidates are either not up to the mark or are very expensive. There is also a lot of inertia in the youth of this country to make a relatively risky career choice by joining a startup. For most of the positions, particularly in technology, we had to interview 100s of candidates before we could find even a single good fit. But while it took us a while, we have finally managed to build a very strong team of talented, relentless and resourceful people. As for logistics, for a managed marketplace kind of a business model with pan-India pick-up and delivery all over the world, setting up logistics is only next to a nightmare.”
Elaborating on the logistical challenges that the industry faces, he adds, “Most of the shipping companies are regional in nature, have unprofessional attitude and a very primitive style of account management. They work in a vendor-customer style rather than as partners with e-commerce players. The use of technology is also limited leading to inefficient system integration & immeasurable human errors. The good ones are very big, expensive and often unwilling to work with smaller players and even they sometimes do not have a state of the art technology custom made for India. And in terms of merchant development, the retail supply chain in India is filled with unorganized and fragmented players. Now this is both good and bad for the ecommerce companies. Good because it presents you with an opportunity to consolidate the supply chain and create value for your customers. Bad because the suppliers are after all unorganized – they don’t understand technology, have a rigid style of doing business and are fairly relaxed with a ‘chalta hai’ attitude towards fulfillment. And therefore it becomes extremely challenging to build a state-of-the-art fulfillment process – it required us picking up the right suppliers, developing easy to follow processes, choosing the right logistics partners and developing technology for suppliers themselves.”
Manning the Manpower
For any niche e-commerce portal and specially when it is a in its start-ups phase, each employee is expected to wear multiple hats and this applies to the founders as well. All the portals we spoke with affirmed to the fact that they had a lean team in place. Where artisinalsguilt.com just has about 17 people including the 5 founders, the other portals too have limited manpower at their disposal. Chhabria shares, “We are a very lean team that believes in multitasking, and each employee wears several hats. As a company, we have built a very collaborative work environment and do not believe in traditional hierarchical structures. We have split each vertical function (content, merchandising, production, marketing, logistics, accounts, etc) with team leaders who take charge to drive their team’s deliverables and also maintain accountability. This helps us track team performance and leadership skills to create a better appraisal system. We understand responsibility and do not micro manage teams to get results. We have a flexible and fun work environment, where we support and mentor employees’ personal business ideas in a quest to develop an entrepreneurial spirit within all of them.”
Shah brings out a picture of a typical office set-up of a eCommerce company when he shares what his team at velvetcase.com looks like, “We are a frugal team that works long hours in a lively fun atmosphere. Our HR philosophy is to find like-minded individuals who look at the long term and believe in the business model. At the same time those that have exceeded both academically and professionally in their past experiences.”
Apart from home delivery and sometimes free home delivery, customer service is what makes shopping online enticing and luring. Unlike the West, in India we do not have a return policy guiding the retail stores but then this is not the case when it comes to shopping online. Almost all the portals offer free exchange / return. Talking about velvetcase.com, Shah says, “We have an internal escalation matrix which rapidly proceeds to the founders of the company. We take utmost pride in 100 per cent satisfaction for our customers. So far we have had only two returns due to dissatisfaction on design, and in those cases have not only returned the payment but also compensated the customer with a free gift for trying us out – with the intention that the customer will come back the next time.”
With social networking allowing a shopper to share his/ her experience, customer relationship forms a key when it comes to online shopping. Shares Garg on behalf of artisinalgilt.com. “We have a dedicated customer care department. We focus a lot on quick turnaround time for all customer grievances and we voluntarily compensate (by giving something extra) all our customers who have faced any issue with our products. However, as I mentioned earlier our grievance rate is very low vs. industry average, so we are usually not swarmed with angry customers. In fact we have a very big presence on facebook, however you will not find a single bad comment on our page regarding our service – that speaks about our dedication to customers.”
The advantage that niche e-commerce portals have is that because of the reach of media and internet to the remotest of towns and villages, there is a vast audience before them and for the vendors too, the online platform gives them a good reach. Chhabria shares, “All major metros and Tier II cities are targeted, where our designers are celebrities but lack the distribution to make their products available. With the online medium, we can reach every household in the country and give them an opportunity to sample their favourite designers at a fraction of the price they’d pay in boutiques.”
Logistics and Infrastructure
The mushrooming of various eCommerce portals has created a huge demand for third party logistic companies. The big names like FlipKart, Jabong, Snapdeal etc. have their own logistics but the recent entrants and specially the niche players rely on third party logistic and warehousing facilities.
Indiaplaza.com began its journey with selling music online and this was well appreciated by the Indian audience. Books followed and then the rest is history. The Indian e-commerce story started off with a niche segment and this is proof enough that the Indian market is more than open to accepting anything different that an entrepreneur can think of. Where we have portals like localbanya.com selling groceries online, we also have portals like thatspersonal.com selling things like condoms and sex toys. The market for niche e-commerce portals is waiting with open arms to welcome entrepreneurs to dive in but the condition being – have deep pockets for marketing and an understanding of inventory management and logistics.