This is a niche in which the consumer seeks a very wide variety of choice, way more than a physical retailer can possibly offer (primarily due to lack of technical expertise) and hence ideal for online ecommerce. But it is not an easy niche to build a supply chain for and that is the primary challenge that Bulbtiger is trying to solve.
Why operate in such a niche vertical when everybody else is taking a horizontal approach? Here is a brief QnA with Bulbtiger team :
1. Why choose such a niche ecommerce vertical? What’s the big opportunity in this space?
As Indian e-commerce market matures and cost of doing business increases, new players would prefer to enter niche categories as there are numerous niche categories which are currently untapped and are difficult to address by typical horizontal or big e-commerce players. The challenges in niche categories are due to supply chain and business fundamentals due to which these categories can only work well in a stand-alone model. With niche category, there is an opportunity to stand out and establish yourself as a category leader. Such niche categories give time to establish your business as big players won’t enter until the category matures.
We have chosen lighting and electrical products as it is approximately US$ 5 b market of which consumer market space is approx. US$ 1 billion which is big enough for a niche player like us. Our target customer is a new home buyer or someone who is looking to refurbish his home. Moreover, as Indian economy grows, more consumers would like to spend on their home décor. Such customers have genuine demand and they are willing to spend serious money on home décor. The purchases for these products are discretionary and very involved. To capture demand for such involved purchases, it is important to have dedicated platform to customer your offerings per customer need.
Currently, generic home furnishing sites like Fab Furnish, Pepper Fry and Zansaar are selling lights but their lighting product range is extremely shallow largely due to supply related issues. Their business model revolves around impulsive sales driven by promotions, incentives and cross selling due to wide mix. Gradually, they will be able to able more depth in their product mix but it will be a slow process.
From our perspective, the big opportunity is to create a lighting retail brand (interestingly, there is no lighting brand in offline retail as well) which can consolidate such demand. From product perspective, big opportunity is in LED lighting products which is likely to become mainstream by 2014-15.
2. What has been the traction so far?
Our traction has been moderate so far but it is better than expected considering that it is extremely niche category and most of sales were driven by organic traffic. However, we are trying out options to improve traction as lower sales have limited our ability to get better terms with our suppliers and other vendors which makes us uncompetitive and our unit cost structure high. To increase traction and sales volume, we are now leveraging market places like eBay, Snapdeal, Shopclues etc and price comparison sites like Junglee to acquire new customers at minimal cost.
3. Are you looking at B2B sales as well? Or is Bulbtiger pure retail focused?
B2B sales is part of our future business plan but current focus is on retail only as commercial market is extremely competitive and well distributed. Low margins and high shipping costs make economics of B2B online sales unviable. We are also constrained by our limited resource bandwidth as B2B sales invariable involve lengthy negotiations. However, it is a big untapped opportunity as this market is largely ignored and currently addressed only by non-transactional sites Indiamart and Justdial.
4. Future plans?
Current focus is on further expanding Bulbtiger product range as we have not even fully covered consumer product range yet. Expansion plans include launching commercial lighting products, a new niche website in related home improvement categories such as bath fittings, home furnishings etc.
–
An interesting concept, but do you think the key lies in selling the home décor concept (instead of simply bulbs)? What’s your take?
