Vertical-focused vs multi-category players.
Beginning of most recent online portals with focus on single category the
choice of categories ranges across books, electronics, apparel, baby care
products, perfumes and even prescription lens. Players that arose as category
leaders were those that were able to penetrate their target category deeply to
offer a large range of products by spreading their operations beyond the top
cities. Rebirth of e-Commerce in India 49 Players adding categories or getting developed
by multi- category players Categories such as books and electronics saw early
traction, with market leaders moving toward multi-category models. There has
also been consolidation in the market, with larger players acquiring small
single-category ones to enhance their portfolios.  Need 
to  mark  a 
larger share of customers’ wallets among key drivers of diversification
Online retailers incur great costs in their effort to acquire customers through
forceful marketing and by offering large discounts on products. Their
underlying thought is to recover these investments over multiple purchases made
by the same customer. While this necessarily requires focus on delivering a
superior customer experience to invite future business, a broader product
category is a safer bet to invite customers wanting to buy from their preferred
e-Tailors. A higher volume of transactions could drive down cost per
transaction (economies of scale), and it has a healthy impact on valuations
also. Vertical-focused businesses, however, are here to stay and grow
Vertical-focused businesses bring to the table a deep understanding of their
target customer segments and product categories. Maintaining category focus enables
a portal to design the entire customer experience around the specific needs of
its target segment. This can enable the portal to become a brand that is larger
than the products sold and have strong bargaining power with its supplier
group. We believe that while vertical players may have to compromise on scale
in the short term, profitable ventures (similar to those we see in the off-line
world) are likely to emerge in this space in the longer term.