How ecommerce companies are experimenting with different models..

There has been a lot of buzz around ecommerce space which lead to the funding of large number of companies in the similar space. Several companies not being able to sustain the growth path have left the scene and several have tweaked their business model. Companies are  adding additional channels to show growth in the highly competitive market.

Koovs changed its business model several time in the last 2 years since its inception. It started off as a deal site then turned to horizontal e-tailing having presence in large number of categories including electronic products etc. It has again tweaked its model to now branding itself as ‘online fashion store for women’. After trying several models, it has now modeled itself more on the lines of myntra but restricting itself to women and also launching its own branded products.

Firstcry started as an online store for ‘Baby and Kids products’. Later, it launched another online store Goodlife, selling beauty products. Firstcry has now added one more channel for selling products. It has started opening stores in several cities and has been giving franchise for the same.

Clearly, several companies are foraying into unrelated verticals and adding new channels. Is it to increase growth rate by tweaking model and adding new channels or desperate attempt to remain afloat?

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I guess there are 2 ways to look at this. One is that these companies were not very clear about their reason of starting their website or they suddenly realized that the market they are serving is too small and they will not be able to sustain. Also, a third reason could be that they did not make a proper cost estimation of running an online store and providing excellent customer service. WRT to Koovs, I would say they are quite confused and do not know which market segment to target. WRT to FirstCry, opening offline stores is a good move as touch & feel is the next best thing after giving an online experience. It makes sense to leverage online brand credibility by starting an offline store. However, in my opinion, the franchise model is risky in these initial stages. A couple of company owned stores are necessary for a brand to first learn the offline retail lessons and then start franchising gradually. Quick expansion through the franchise model generally dilutes the brand and the company loses focus.

 I guess for any industry a learning curve is involved where some trial and error cannot be avoided. Hope they find their final calling soon.

I feel that those who have already ventured in online selling realise 4 things

1. That there is very little initial investment required to really start off

2. if you already have some kind of start or traction in sales in one category, that name or push can actually take you some distance if you start selling just about anything. the minimal incremental cost vis-a-vis the sales push you get makes for an excellent Benefit to cost ratio.

3. Thirdly, you want to cash on. Look at SRK even he sells underwears and beauty creams for men. why fault Firstcry trying to sell "Goodlife" to have a "goodlife". in fact it makes excellent business sense. free publicity on Firstcry which has already made a name for themselves in Baby care segment. 

4. Fourth and most important, remember that "Bigger Fool theory of the stock markets" (if you have been fool enough to buy a dud stock, dont worry, just wait for a bigger fool to buy it from you at still higher price, unless ofcourse you prove yourself to be on top of the table ;)) . Same applies here. there is no shortage of Bigger fools (err VCs, who would start to salivate on seeing anything to do with E-commerce)

Though i m not complaining. Happy for the indian start ups, make money as long as the party lasts. then scoot with your money. eventually "Bigger Fools" will be left holding the "Hot potatoes"

Same goes with

Originally as clone of 99labels or fashion&you but for males only. Once funded by Seedfund, ventured into women and not everything including plastic jars. 

Piyush Jain


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