India eCommerce future: The “XYZ of the month” Club or Subscription eCommece companies

There are now according to my own count (not comprehensive) about 141 subscription eCommerce companies in the US that send you a package of “stuff” every month – from food to cosmetics, and toys for kids to cigars.

Subscription eCommerce is the fastest growing category of eCommerce according to Internet Retailer magazine.

So will this come to India soon?

There are a couple here already, but none that can solve the logistics problems with any amount of significance.

Which sub categories are ripe for subscription commerce in India?

I think subscription commerce in apparel, books and electronics are fairly niche markets. Whereas food and snacks, daily personal needs and music might be more suited for it.

Who are the likely players? New ones or the existing players?

Given the problems of managing subscription payments monthly (some may take the entire money of the 12 month subscription upfront) I suspect most existing vendors will start to offer this as a service to their partners. Which means new providers in these categories will work with Infibeam, Flipkart, Snapdeal to fulfill their customer’s request. I think there’s room for 1 or 2 good new providers, but the markets they will target will be fairly niche.

How will the new providers manage logistics?

I think there will be a smart local+central logistics player in eCommerce who will start to work this model well and deliver the goods from a local vendor.

What do you think? Any good subscription eCommerce companies in India that you are using? Are they delivering? Are they good? Am I missing any categories?

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8 thoughts on “India eCommerce future: The “XYZ of the month” Club or Subscription eCommece companies”

  1. Hi,

    The trend is slowly catching on in India. A year ago, I worked with a start-up, which had a subscription model in the cosmetics space (I just cant seem to find their website!). Apart from the retailing, their aim was to act as consumer preference aggregator and intended to sell the data back to these cosmetic companies. Did this happen in USA too ?

    Would love to discuss this in detail.

    Cheers,

    Raghuveer

  2. hey mukund,
    Am not sure how well it will work in India considering the ” $10 ” price point does not have a similar counterpart in India.

    However, we are trying to experiment with something similar at Sampler. (http://sampler.in/)
    Will be great if you could check it out and and share some thoughts.

    cheers
    abhik

  3. Hello Mukund,

    We have had 5 or more enquiries from founders who are setting up subscription box type of businesses to manage billing.

    The basic premise is that when people signup for this service, it is always sent till they “opt out”. But to effectively do this you need ability to collect money upfront (some of our customers even charge 5 days in advance before shipping, use it to buy products & then ship it to conserve cash). With all the regulation challenges in India, this is still a pain.

    It is not impossible, but just a bit of pain to make it work. What are your thoughts?

  4. There is a big issue in India for subscription based services – there are no subscription payment gateways available. The only way to go about is to either use a service like PayPal and bear huge fees in the form of monthly costs, currency conversion fee’s, transaction fees, etc. or to actually incorporate a company in the US/Singapore and get an international merchant account (again quite expensive and lots of legal formalities).

    I think its time India sees some innovation is the payment gateways fields. Though its still very hard due to the numerous RBI regulations.

  5. Hi Mukund,

    The current payments regulation does not permit subscription type of payments in India. This hurdle needs to be crossed before this becomes truly online ( though CoD remains an option albeit expensive and IMO retrograde ). Setting up ECS kind of mechanism is again full of friction and not truly online. For example, I do pay my utility bills via bill junction automatically but I had to fill an ECS form, sign it and send it across.

    Representations are being made to RBI Payments and Settlements Department but it will take some time,

    This issue is also a challenge for product companies delivering software as a service on a right to use basis with monthly payments ( until opted out ).

    Other than this, I do see a use case for say online groceries but alongside smart algorithms to analyze the buying pattern of a customer and basis that suggest auto-reorder. Over time, consumers will be begin to see value in this as people become more and more time impoverished and look at convenience as a big factor to simplify their lives.

    Cheers,
    Rajnish

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