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June 16, 2012

Do single product e-tailers have an edge?

The debate that Amazon.com must have had about 15 years ago - whether it should stick to selling books or move into other categories - is now happening at niche Indian e-tailers. From a Business Today article.
Niche players have two kinds of clientele. "In the cities, they provide convenience and value, while in the small towns they provide availability," says Raghav Gupta, Principal at investment firm Booz and Co. Increasingly, a substantial part of these websites' patrons come from Tier-II and Tier-III cities, where many now have the purchasing power to afford the best, but often cannot find shops in their area selling premium products and brands. "We see a lot of high value electronic items being bought from smaller cities," says Arindam Bose, MD and Chief Customer Officer, timtara. Amin of bestylish says half his orders come from the smaller cities. As for items like lingerie, many small town folk prefer buying online rather than at a store. "The social discomfort associated with buying lingerie magnifies as you go to smaller towns," says Richa Kar, co-founder and CEO of Zivame. "Our growth in the smaller towns has been phenomenal."

...In their bid to achieve scale, niche websites are moving in two different directions. "Firstcry was so successful that we have launched another specialised website - Goodlife.com for personal care products," says Amitava Saha, its co-founder. On the other hand, timtara has followed the flipkart path, moving from one item to several: it now also sells lifestyle and personal care items. "Initially, we focused only on electronics, but after market research and customer feedback we introduced other categories too," says Bose, its MD.

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