Start-ups in the online commerce space may be facing a crunch in terms of fresh infusion of funds but the fashion and lifestyle segment seems to have bucked the trend.
Tracxn Technologies data show that though a few start-ups in the fashion segment have shut, overall funding in the segment rose 45% year-on-year to $251.1 million during the January-August period.
The interest in this segment could be for two reasons: One, being a high-margin business, odds of a venture turning profitable is higher; and two, projections say that in the next couple of years the share of this segment in the overall pie will rise.
According to a recent RedSeer report, by 2020 the share of fashion in the e-commerce market space is set to rise from the current 20% to 36% as more buyers will flock from tier II and III cities on the back of higher internet penetration.
“Fashion and lifestyle is a high-margin category. So the chances of a fashion and lifestyle e-tailer turning profitable is higher compared to other categories,” said Gaurav Singh Kushwaha, founder and CEO, Bluestone, an online jewellery firm.