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"