Experts take on if e-commerce will prove to be a viable model for niche products in the long run
The pandemic provided an excellent opportunity to capture the imagination of the digitally savvy consumer
Several non-traditional categories such as liquor, bottled water, gourmet foods and art supplies have moved to online channels in recent months. Devika Singh asks experts if e-commerce will prove to be a viable model for these niche products in the long run.
‘Businesses that provide value but lacked access will benefit’
The pandemic provided an excellent opportunity to capture the imagination of the digitally savvy consumer. Away from normal distractions and deprived of regular sources of fun, people were willing to buy from sources that they were not used to. They were conducting trials on a new channel of online buying outside the big players. Will they continue to buy from the digital cottage industry once everything returns to ‘normal’? Yes and no.
The trials gave producers a rare opportunity to build new sales channels in a short span of time.
Producers of unique clothing will probably get a huge and lasting benefit. Consumers who tried an online purchase would have realised lower prices of direct purchase from producers. Both consumers and producers would have formed networks that didn’t exist earlier. Those businesses that provided distinctive value, but lacked access because of poor trials, will continue to benefit from this Covid shopping period. This could be distinctive design, crafting or pricing. On the other hand, any passing amusement to get over the lockdown boredom will die out. Just like tourists who buy gimcrack novelties on holidays, only to wonder what to do with that stuff later.
Ankur Pahwa, e-commerce & consumer internet leader, EY India
‘Mix of niche, standard products a must for scale’
The emergence of online niche categories including environment-friendly products, organic beauty products, pet products, ayurvedic products, superfoods and bespoke beverages and high-end gadgets is a recent trend. Prior to entering niche categories, companies will need to address two key questions. One, if it is a fad or a trend; a short-term or a long-term bet. Two, if the product resonates with the consumer sentiment (product zeitgeist fit). Many niche product categories gain importance for a very short period or are too early an entrant in a nascent product category and are unable to build a sustainable model.
While there are distinct advantages to being part of a niche product segment, to reach scale, companies in this space may need to explore ancillary product categories that have broader appeal, while continuing to grow their niche product category. Finding a mix of niche hero products and standard growth products is essential. That apart, building an extremely loyal customer base, enabling greater reach with lower acquisition costs, and being able to command premium pricing are critical. While d2c has helped niche products find their zeitgeist moment, to find reach and scale requires deeper thinking on adjacencies for growth.
Partho Chakrabarti, MD, Faber-Castell India
‘Art supplies, liquor will see increased sales online’
The pandemic has accelerated the pace of digital adoption and several new and non-traditional categories have emerged on e-commerce. While it’s reasonable to expect that consumers will return to physical retail after restrictions ease, it’s safe to assume that in-store visits will reduce significantly, perhaps even next year. And hence omnichannel is the way forward. For experience-led categories such as fine-dining and gourmet food, consumers will return to restaurants, but are less likely to return to the old habit of standing in queues and shopping. So, categories that do not require much browsing are likely to remain online.
Liquor delivery, with regulatory easing in some states, will now see significant sales online. Art supplies have seen increased sales on online channels as consumers are spending more time pursuing their hobbies. E-commerce’s contribution to the overall stationery segment was in low-single digits before, but has now grown fivefold. However, challenges await niche markets on e-commerce channels — absence of online identity, delivering an omnichannel experience, maintaining customer loyalty, the problem of data security, and the struggle of competing on price. Also, companies need to be careful about falling back to their old ways once normalcy returns.