Tier-II e-commerce sites in the verge of getting shut soon
Another wave of consolidation has hit the Indian e-commerce industry as the smaller etailers struggle to stay afloat. After collectively racking up around $400 million in investor capital, in the past few months, a clutch of smaller online marketplaces such as Shop-Clues, Craftsvilla, Voonik, Wooplr, and Elanic are shutting shop, pivoting their business model or opting for outright sale.
Most of these web retailers were targeting non-metro shoppers and selling wares from smaller merchants. But with the growth of the Indian e-commerce market slowing and Amazon and Walmart-owned Flipkart dominating the industry, the second tier of etailers is now faced with an existential crisis.
Financial backers of these companies have either written off their investments or aren’t ready to plow more capital into businesses that won’t be able to fight bigger rivals.
Investors and executives ET spoke to indicated that these businesses have struggled as they sold inferior products and had a weak supply chain and inventory, leading to high returns and close to zero customer repeats, making them unviable.
Estimates by logistics companies and industry sources say returns from most of these marketplaces and social commerce platforms stood at 35-40% for the apparel category while for Flipkart’s Myntra or Amazon Fashion, the number is close to 20%. Logistics companies said returns to origin — when a customer does not accept a package — were as high as 10-15% for these businesses.