As Indian ecommerce startups get bought up, guess who’s benefitting?

Photo credit: Hypnotica Studios Infinite.

The last few weeks saw a flurry of activities in the Indian startup space, particularly for online  retailers.

India’s software-to-cosmetics behemoth, the Tata Group, bought a majority stake in Tiger- backed online jewellery retailer Caratlane on Wednesday, acting through its lifestyle retail division, Titan Company.  This follows the acquisition of online furniture retailer Fabfurnish by Future Group in March, and various earlier announcements of offline-online tie-ups.

If anything, it looks like an indication that cracking the online market might not be all that easy for pioneers in the brick and mortar space after all. And also that, for many VCs and hedge funds looking for an exit in the retail space, offline may be the way to go.

The acquisitions come after several years of the country’s biggest offline players raising questions on startup sustainability, and pointing fingers at each other’s ability to reach out to consumers.

It’s a classic build or buy situation

This week’s announcements, however, aren’t even the beginning. Acquisitions in the space had begun last year when baby products retailer Babyoye merged with Mahindra Group. Similarly, gourmet products retailer Godrej Nature’s Basket bought online grocery store, ekstop.com, but shut it down soon after.

Initially thought of as one offs, it is becoming overwhelmingly clear that for India’s offline retail chains, ecommerce players represent an easy way into the exciting world of online sales, and increased competence, which brick and mortar players have not been able to garner for themselves, says brand consultant Harish Bijoor.

“When they’re buying the format, they’re trying to say, ‘hey listen, we’ve tried like hell to build our own ecommerce platform, but we have not been successful at all’”, Harish told Tech in Asia.

Department store chain Shoppers Stop has had an online presence for several years, as have several consumer electronic product retailers, but none have really taken off.

Some are experimenting with their own setup, such as Aditya Birla Group with its platform Abof for its own brands, and Calvin Klein seller Arvind Brands, which sells bespoke apparel under its brand Creyate. Other department chains are also slowly getting in the fray.

If you can’t beat them, buy them

Photo credit: The US Army.

Caratlane has been in business since 2008. The company, which competes with the Ratan Tata-backed Bluestone, has stores in around seven cities, offers home trials, and fast shipping services to consumers.

More to come?