players have a clear value proposition, top-of-the-mind recall and a focused positioning. “Business economics and margins work better for vertical players and they need a smaller scale to get to profitability. Also, solutions can be specifically designed from product to digital experience to marketing for the specific target audience,” says Srivatsa, who is well funded for the next two years.
The furniture website, which was launched mid last year, at present, is seeing a 10-15% month on month growth in transaction.
Pune-based TastyKhana, which started in October 2007 and clocked sales of R2.5 crore in 2012, is aiming to cross a turnover of R10 crore by the end of this year. “Niche players always have their own standing in the market. Once you distinguish yourself on services and quality standards people would always want to transact from an 'expert' than a have it all player,” says Shachin Bharadwaj, CEO & Founder, TastyKhana.com.
Even though most online retailers have not managed to be profitable as they are struggling to grow, it hasn’t stopped investors from cherrypicking opportunities and parking their funds in single product and services companies lured by higher margins and faster growth rate to breakeven. It is also a fact that there are not many attractive sectors where investors find good returns.
“The niche companies usually have higher margins. While the initial customer acquisition is as costly as a multi-product company, the niche companies tend to achieve break-even at a customer level is faster as the brand effect and product differentiation gives them a stickiness effect. Their products also cannot be compared with other sites and thus do not get commoditised and lower price is not a factor,” says Prashanth Prakash, partner, Accel Partners India, the venture capital firm which has backed Facebook and Groupon, and invested about $5 million in online jewellery store BlueStone.com last year.
“Niche e-commerce must be categories that allow you to go deep. Such a category will not be a great success for big players as it will be just another icon or tab for them and is not their