The future of rollup e-commerce business in India: What trends we can foresee in 2022? – The Times of India Blog

The future of rollup e-commerce business in India: What trends we can foresee in 2022? – The Times of India Blog

<!–Uday Deb

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Inevitable as it was, the e-commerce roll-up wave finally hit Indian shores in 2021 with multiple roll-up startups getting founded, funded and acquiring brands all across the categories.  While the amount of activity going on may come across as almost a frenzy of sorts, the core thesis behind the business model is fairly simple and strongly tied to long-term value creation. The practice of consolidating similar businesses, leveraging synergies and growing them together is nothing new – roll-ups are just a unique application of the same principle applied to the particular context of E-commerce brands. And this relation to E-commerce is what makes roll-ups so interesting – because they both share the same DNA of hypergrowth.

Never in history has there been such a fast-paced consolidation and integration of businesses across different categories – Fashion, Sports, Beauty and Health to name a few. As a case in point, some of the early US roll-ups are now operating 100+ brands across categories, scales and in some cases, geographies. Globally, roll-ups have raised over 13 billion USD in funding to acquire and grow E-commerce brands. What’s interesting is the model hasn’t remained confined to the usual startup hubs of US and Europe with multiple roll-ups getting founded in Latin America, China, Japan and now, India. 

The Indian roll-up story, like most of our stories, will of course have a uniquely desi flavour to it. Not just because of the usual factors – diversity, scale and the resultant complexity of almost everything, but also because of the unique point where we are in our E-commerce journey. E-commerce has grown exponentially in the past decade but has an even longer way ahead – as of FY20 online sales accounted for only 4.3% of overall retail which is significantly less than the double-digit figures of most evolved markets. What this ultimately means is that Indian roll-ups, while sharing a lot of similarities with their global counterparts will have their own set of unique challenges to solve for and responsibilities to share. 

Consider for example the number of ‘acquirable’ private label brands on Amazon India. Amazon, in its annual report of 2020 published that there are about 4152 sellers that crossed that 1 Crore annual revenue benchmark. A vast majority of these are resellers and distributors. Further excluding established brands run by major FMCG conglomerates, it’s likely that this number could be anywhere around 1000-1500 for Amazon.in. Compare that to Amazon.com where, in 2019 itself, there were 18,000 sellers doing at least a million dollars in sales. This number is estimated to be significantly higher now, 2 years after Covid as more and more people become E-commerce savvy.

As a result, the number of relevant brands that satisfy the criteria of scale, category and margin for roll-ups is fairly limited. Add to that the fact that we Indians are an emotional lot, and selling away a brand you’ve worked hard and built from scratch is a fairly tough decision. Indian roll-ups will therefore need to foster deeper relationships with the seller community and be an active contributor …….

Source: https://timesofindia.indiatimes.com/blogs/voices/the-future-of-rollup-e-commerce-business-in-india-what-trends-we-can-foresee-in-2022/

E-commerce