COVID-19 has affected global businesses severely but in India it has made a bad situation worse. The Indian economy was reeling under a slowdown even before COVID-19 arrived. While many businesses, especially smaller players, have taken it on the chin, there are many who could just turn out to be beneficiaries once things crawl back to normal. Just that, there is no clarity yet on what that ‘normal’ will be, given our policy mishandling of the pandemic.
Offline businesses have been hurt the most and those with a multichannel presence seem better off. Interestingly, online players adopted an offline strategy only to grow faster and capture the online footfalls that did not translate into sales. Even though they are relatively unscathed, it is not as if e-commerce players escaped scot-free. The policy flip-flop during the lockdown, on what comprised ‘essentials’ and ‘non-essentials’, messed up their business model. Everyone from Amazon to Flipkart to Bigbasket struggled to meet increased demand and could not cope given the disruption in the supply chain.
As the dust settles, the best placed to survive the storm are companies that have stuck to one vertical, be it babycare, eyewear, beauty, fashion or furniture. They have not only entrenched themselves in their chosen niche, they are also profitable unlike most players in e-commerce. The bigger players have also struggled to compete with them as their execution efficiency is scattered over many SKUs.
Along with their niche focus, their business model and capital reserves could well put these vertical-focused players in an unassailable position. Going forward, their sustainable growth will not only evince further investor interest but the e-commerce giants could line up to acquire them as well. For now, like the rest, they are doing their best to counter the collateral damage caused by COVID-19.