With the growing population of shoppers over the internet, Indian online retail landscape has seen many players venturing out to tap the diverse niche market segments such as shoes, home decor, healthcare including school and stationary supplies and several others. Amongst all the niche segments in the space, school, educational & stationery supplies seem to have attracted fair amount of eyeballs from entrepreneurs. Over the past one year, the industry has seen debuts of players such as koolskool.com, allschoolstuff.com and skoolshop.com into this niche market along with several multi categories focused etailers such as Flipkart selling school, stationary and office supplies.
So the question sparks – what opportunities drove these entrepreneurs & mass scale etailers to bet on niche category such as school & educational supplies? According to reports, currently the market size of school & stationery supplies base estimated to be a USD 10-15 billion range in India but is largely unorganized and purchases primarily happen through mom-and-pop stores located in markets and nearby localities.
Most of the players whom we have interviewed are of the view that unorganized market actually provides them an edge and opens up the huge opportunity. Pointing out the opportunities into this category, Manoj Chandra, founder & CEO, Allschoolstuff said “it’s a very large market estimated around $ 10 billion with about 30% of private spending on education going into this”.
Meanwhile, every parent knows that education is the passport to a better life. But quality of education is not uniform across schools, hence parents seek products and services to give their children an edge. But not all these products are available across the length and breadth of the country. Speaking about the opportunity clubbed with ease for parents looking for educational needs of their children, Satya Raghavan, CEO, Skoolshop.com mentions “on Skoolshop.com every parent can now find products, be the better textbooks or e-learning packages, that can give their child an edge, whether they are in a village or town or city”.
Most of the players operating in this niche highlight handsome growth, with approximate 50% (purchase) split between metro and tier 2 & 3 cities. Unavailability along with fair pricing and discounts on quality school and learning products seem to be driving the purchases in tier 2 & 3 cities by parents. According to Suhas Dutta, founder, Koolskool.com, “Koolskool started focusing on its ecommerce business from January this year and since then, we are close to a 1000 orders a month now and it’s about 2x growths in terms of transactions including traffic jump by 400 percent”.
On the other hand, Allschoolstuff.com, one of the early entrants into school & learning supplies (claims to be a leader in this category) is dealing with triple digits orders on everyday basis. Commenting on growth pattern of Allschoolstuff, Chandra said “we have been growing at about 100% MOM and expect this trend to continue in the future”. Apart from growth of these niche players into this space, Flipkart has also grown 2x in terms of sale. Sharing insight on Flipkart growth in stationery & school supplies, Ankit Nagori, VP (Retail) said “we believe we have put together a competitive and well-rounded range in our stationery/school category. While we cannot share specific growth data like orders per day, revenue or traffic owing to competitive reasons, we can share the fact that we have more than doubled our sales in this category in last 7 months”.
When it comes to gross margin in this unique category, etailers usually make 10-15 percent on stationery supplies including many of the bulkier items such as fitness related equipment (for schools), and 15 percent in toys, lifestyle stationery to 50 percent odd in some sports related equipment. However, it differs widely depending on factors such as whether the company stocks the products or not, volume of pickup and point of sale (corporate or consumer).
In terms of consumer demand, the school supplies segment behaves differently from other niche categories. Demand pattern in school supplies is observed to be cyclical with intermittent periods of high demand in new session for schools during March-June followed by steady demand from consumers through the rest of the year. Unlike B2C consumers into this space, B2B consumers such as corporate, big schools demand flow keeps coming across the year (additionally B2B customers prefer local etailers as their requirements are meant to be met in short deadlines).
Shedding light on consumer behavior in B2C segment, Chandra added “this is an unique space with very high engagement levels with consumers, as the products are not just having functional purpose, but also a strong emotional connect with the parent”.
As far as challenges in this niche is concerned, there are enough bumps to surmount, apart from typical ecommerce challenges such as logistics, payment procurement and last mile delivery. Players operating in educational & stationery supplies space struggle over stock availability confusion as many vendors are unable to provide an accurate update in terms of availability and margin, thus causing stock out situations (except books category).
And of course, this vertical faces same issues of overly discounted pricing (for acquiring customers) – “The flip side of this is that many etailers in this space are offering discounts beyond the discount that they are getting from suppliers, and also incurring other expenses including shipping” said Dutta of Skoolkool.