Will the real Indian e-commerce start-up please stand up?

10 Replies

First off let me acknowledge that the title of this post is a bit exaggerated and not really apt but I wanted to use it anyways. Onto the topic now.

I’ve been kinda following(not very regularly though) the Indian startup scene ever since my Slideshare days and things have definitely changed in the last year or two. There are a lot more startups(of all sorts) now ranging from deal a day sites like snapdeal to comics companies like Vimanika. It’s absolutely amazing to see people from non tech background also coming forward and creating products/services in their respective fields. However being from a tech(web) background I am particularly interested in web startups.

The majority of current crop of Indian web startups is (not surprisingly) focused on e-commerce and as with the previous wave of Indian social web startups are religiously following the same path. Somebody whom I met last month mentioned that some 20 e-commerce sites or so are registered with payment gateways every month and a vast majority of them are into selling books. Yes, that’s the “thing” I am talking about. Suddenly everyone wants to do e-commerce and guess what they want to sell? Yes, BOOKS.

While it is not at all difficult to understand why selling books online is one of easiest (especially if you are an ex-amazon) and probably lucrative thing to do what defies me is WHY everyone who sets up an e-commerce store can’t seem to think beyond books? Unless I am missing something obvious here (point me if I am) selling books(particularly to begin with) might not be the best thing these days.

Here are a few reasons why I feel selling books isn’t the best way to start e-commerce

  1. Differentiation: I have told this to at least a couple aspiring entrepreneurs the biggest reason why I feel an e-commerce startup should not start by selling books is differentiation. How on world will you differentiate yourself from half a dozen almost established and established online bookstores out there in the market?
    It becomes particularly difficult when you are late in the book market by at least 2 years and will take at least another 8-12 months to figure out(if at all) how the Indian book market works.
  2. Red Ocean: Loosely related to the first point is the second point of competition. Online book market in India is easily one of the most sought after pie. From independent online retail companies to established bookchains everybody is trying to own as much as they can of this market and unless you have a significant edge in terms of vision/talent, money/resources and distribution/publishing it doesn’t make a lot of sense to join the chaos.
  3. Logistics: Based on my experience of selling books I’ve realized that this is highly logistics oriented business. Since the whole model is based on economics of scale one needs to sell as many books as possible(very low average cost per item). Handling lots of books means lots of procurement, stocking, handling, shipping etc. This can be a huge pain during the initial days of a startup. This problem of high logistics can be avoided by dealing in other items of higher values where despite having lesser % margins one can make good amount of money.

Having said that I think people who want to start an e-commerce business should actively consider other options which have a demand but no one else is focusing on. Though I must say I haven’t deeply thought about the business/feasibility aspect I would actually love to see some Indian e-commerce company sell the following(in a proper way with due diligence)

  • Clothes
  • Watches
  • Grocery
  • Automobile Accessories/Spare parts
  • Furniture
  • Gift Items
  • Food Items/Snacks
  • Fashion Items
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10 thoughts on “Will the real Indian e-commerce start-up please stand up?”

  1. Vikas Bansal

    Mayank, totally agree with you on this one. I myself have dissuaded people to startup an ecommerce venture with books as the first product unless they have considerable resources as their disposal.

    It takes a lot of time to establish yourself in the market and usually the first year or so is the slowest, and very important on how to differentiate amongst so many!! As an aside, someone who wishes to startup with books can contact me if interested in buying out our site, can discuss value proposition more in detail.

    I know of a few websites in clothes, watches, grocery, and fashion items. Furniture would be interesting from a concept implementation POV. What I would really like to have is a great website selling innovative gifting ideas. There is a dearth for good one amongst the clutter out there.

  2. Vikas Bansal

    Mayank, totally agree with you on this one. I myself have dissuaded people to startup an ecommerce venture with books as the first product unless they have considerable resources at their disposal.

    It takes a lot of time to establish yourself in the market and usually the first year or so is the slowest, and very important on how to differentiate amongst so many!! As an aside, someone who wishes to startup with books can contact me if interested in buying out our site, can discuss value proposition more in detail.

    I know of a few websites in clothes, watches, grocery, and fashion items. Furniture would be interesting from a concept implementation POV. What I would really like to have is a great website selling innovative gifting ideas. There is a dearth for good one amongst the clutter out there.

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  4. mayank Post author

    Hi Vikas,

    Glad to know I am not the only one who thinks on these lines. As much as we suggest others I guess we’ll continue to have more book startups at least for a few more months.

    Please point me to any interesting non books e-commerce startups that you know of.

    Also, we should catch up some time over coffee 🙂

  5. Neel

    @ mayank and @Vikas,

    is there any e-commerce venture in India who are into selling medicines directly to customers?

    Is there any restriction in Government rules that prevent one from setting up e-commerce venture in selling medicine and related products?

  6. Om Ramola

    @Mayank,

    Well Mayank,
    First of all I appreciate your gyan over the topic… I agree with you that e-commerce startup with books as first and primary product is a capital & resource intensive bet but we still a have flipkart as successfull startup who started with books probably they seem to be making good use of their experience with amazon and the resources that they have… LetsBuy.com is the non-book startup selling mostly electronic goods… appart from this we have few more like plugsnwires.com
    indiaplaza.in, buzzintown.com and many others selling multi products….e- commerce is catching up in India and I am positive on it atleast for next 5 years.

    I was kind of preparing a paper on E-commerce : books ..can you guide me about the statistics about books being sold online..or any other sources for the same….will be of great help..

    Thanks

  8. abhishek

    Hi all,

    What about selling Indian Art & craft. Does it make sense as the availability of good & standardized craft is not easy. Kindly suggest.

    Thanx.

  9. Kanika

    You your self have invested your time and money in books – dialabooks.in. Why are you discouraging others in opting for books as an eCommerce option?

  10. mayank Post author

    @Abhishek: There might be a couple startups doing that but I don’t think there’s a category winner there yet. You might want to look at the differentiating factor there and be aware the supply chain is a painful problem to solve. Once you figure these two things out, you are good to go. Good Luck !!

    @Kanika: We started dialabook.in in Sep 2009 and I wrote this post in Jan 2011. Also, we started a new category in over the phone commerce which wasn’t there and still isn’t. Till date we don’t accept orders on our website.

    I am by no means discouraging anyone to start an online bookstore and if you want to go for it, please do.

    If you aren’t aware already, you might want to know that almost all eCommerce stores in Books are doing -ve profits . The bigger the brand the more the losses and like I mentioned above, Supply chain is painful problem to solve plus the fact that most ecommerce companies in India have willingly agreed to bleed money on books to lure more customers

    If you start something, do share. Good Luck !!

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