After media reports on lay off of hundreds of employees by the Bengaluru-based furniture retailer Urban Ladder, it looks evident that niche players in the e-commerce segment are feeling the pinch to grow and expand their businesses. Companies such as Urban Ladder may find it difficult to crack the business in a sector which is largely unorganised wherein around 90 per cent of players are unbranded single shop players. There are also issues like the Indian customer's psyche to go for the “touch and feel factor” before making a purchase and also getting personal attention from the shop, that may be hard to crack by online players such as Urban Ladder. Though players like Urban Ladder have physical stores, their scale and network may not be enough to match that of the unorganised players in the country.
Alok Shende of Mumbai-based Ascentius Consulting says the furniture industry is already a well covered segment in India where every city has specific or localised markets known for furniture and decor. “In Mumbai, for instance, one would like to buy high-end furniture from shops in south Mumbai or if someone wants ordinary furniture they will go to Powai or suburbs around. Though players such as Urban Ladder have also set up offline stores, they would not be able to compete with the local furniture shops as they too have become very competitive. Offline furniture shops are now offering much more innovative products and customised products as per the needs of the customer. E-commerce market is good for low complex products. People in India usually order complex furniture as per their requirement from the local shops rather than buying it from players such as Urban Ladder,” remarked Shende.
Experts also feel that small and niche players such as Urban Ladder may find it challenging to manage the logistics to cater the requirements of their customers. “If an unorganised furniture player wants to sell their products they may do so through Amazon and Flipkart, who have the required bandwidth and logistics to provide better service than players such as Urban Ladder, who are small and always require additional funds to sustain their business. These players may not be able to the maintain high inventory due to paucity of fulfilment centres compared to the biggies such as Amazon and Flipkart. These biggies will be able to ship the products faster to their customers as they have the scale and magnitude to do it compared to these niche players. Eventually, all this will lead to consolidation in the e-commerce industry in the country wherein only a few players will be left in the market,” Murthy B.S., CEO of Bengaluru-based firm LeadershipCapital, told THE WEEK.
Murthy also feels that majority of these niche players will not be able to generate additional revenues as they may not be able to scale up when compared to the biggies in the Indian e-commerce market and would either be acquired by large players in the market or may fade out eventually.
