Competition is a way of life, and there is no way one can avoid competition. Yes, the company must be prepared to face competition.
Here competition can come in three-way and let us analyze that:
- There are some websites outside India in similar line of business- Digikey.com
Supply by these sites in India will not be able to compete against Robu.in as supplies will incur higher shipping cost, time lag, and custom clearance. - Large platform businesses like Amazon.
Of course they have the financial muscle, but there business model cannot affect Robu as generally suppliers list their products on amazon. Thus, it is possible that manufacturers/suppliers may list their product there but one particular manufacturer or supplier list 5-10 products there. If a customer needs say, 30 products, he will need to order such items to different suppliers and supplies may not fit/ be compatible with each other. Thus, I dont see platform businesses as a great threat. Further, the niche is not big like groceries, where you expect Amazon to start a “fresh” type of platform. - Real competition may come from similar type of web offereings in India. Robocraze, bbotics, robodo etc. Here the competition is real and competition will be decided based on the execution capability of the players.
In this space Robu.in has a first mover advantage. Further, they are doing branding in certain products, have a robust offline channel and developing certain products; the company look geared to face competition. From the reports, their inventory management and cash from operation looks inpressive. Their capital allocation/management looks good. Even in the IPO, there had been no dilution in equity.
Thus, in my view, competition is there and the company has to face it. Let us see how they do.
[Disclosure- Invested and biased]
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