That is a great question. Do they have any moat?
We are primarily looking at a platform business. We need to check whether they have any network effect?
the term network effect refers to any situation in which the value of a product, service, or platform depends on the number of buyers, sellers, or users who leverage it. Typically, the greater the number of buyers, sellers, or users, the greater the network effect—and the greater the value created by the offering. In other words, the willingness to pay, for a buyer, increases as the number of buyers or sellers for the business grows.
Every platform has some amount of network effect. Say, to buy groceries we wish to use big basket, because they have more options. To buy books, we prefer Amazon beacuse they have greatest collection of books.
In the case of electronics/drone/robot parts, the network effect is higher because the customer needs many types of part supplies, and all parts ought to be compatible to each other. Further, the chances of parts malfunctioning is greater and a customer will typically prefer a reputed supplier with good after sale care. We can see that Robu.in has started well, and probably can grow well too.
The opportunity size is very high. Robu has 12000 odd SKUs, whereas Digikey has 1.6 million SKUs. Digikey revenue has crossed 5 billion USD with more than 1 billion net profit. Found somewhere that Digikey is operating on EBIDTA of higher than 40%! Thus, in my view, the company has the opportunity to grow. Whether they grow or not, we can only guess.
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