Subscribing to New Business Models

Subscribing to New  Business Models

As the Indian e-commerce industry gains pace and size, several entrepreneurs are experimenting with new business models in a bid to get consumers to buy more products online, reports Economic Times. About half a dozen ventures are offering a range of products, including cosmetics, educational toys and gourmet food on a monthly subscription basis, mimicking a model that is very popular in global markets.

"Subscription-based selling is cost-efficient for a startup like us since we get a better estimate of demand and there is no need to store inventory," said Arunprasad Durairaj, co-founder of recreational toys provider Flinto.

The seven-month old company founded by Durairaj, 32, and Vijaybabu Gandhi, 33, has already signed up 3,000 monthly subscribers for its activity boxes aimed at enhancing a child's motor and social skills, creativity and memory.

Durairaj quit his job with Samsung in Korea and came back to India to start Flinto Box with Gandhi who earlier worked with mobile application platform provider July Systems. "My six-year-old son Aryan waits for his Flinto Box every month, and I am happy to see him play with it since it teaches him something new," said Sandeep Bhatnagar, a software professional, who pays Rs 995 for the service every month.

Apart from a fixed customer base, the subscription model is favoured by young ventures for the recurring monthly sales, predictable inventory pile and a steady cash flow.

With the Indian e-retailing industry estimated to be worth 12,000 crore, such models will only grow, said experts. "Subscribers tend to buy more, spend more and, therefore, margins go up; they are the more profitable customers," said Ankur Bisen, senior vice-president at retail consultancy Technopak.

Investors are already seeing the potential in these models. Chennai-based Flinto received $400,000 in its first round of funding according to Rajesh Sawhney, the founder of early stage investor GSF, which incubated Flinto. The company, which started with an initial investment of 7 lakh, aims to earn revenue of 6 crore in the next ten months.

Other ventures offering a similar service include Canary Crate and Small Brown Box. Subscriptions are also proving to be popular in the food and cosmetic space with ventures such as Gourmet Box, BakeBox and Smart Eats in the food business and Fab Bag in the cosmetic business.

Fab Bag inspired by US-based startup Birchbox, was founded about two years ago by IIM Ahmedabad graduates Kaushik Mukherjee, 31, and Vineet Singh, 30. The company sells high-end branded cosmetic and beauty products to its subscribers as samplers each month.

"I bought my first Fab Bag in July and now I have a year's subscription since I get international brands at very low prices," said Neha Yagnik, 28, a home-maker from Udaipur. has about 35,000 customers, of which about a quarter are from smaller towns and cities, who lack direct access to big-name brands.


Popular posts from this blog

THE HISTORY OF INDIAN ART HISTORY - Free eBook by Debashish Banerji - IdeaIndia.Com

Underused Talent

IoT Police