Macfos Limited- A niche E-commerce Company

My 2 cents.

1. First, let’s see the business from it’s customer’s perspective. Customer is typcially a student/tinkerer/DIY kind of person, maybe doing his doing his engineering degree and as part of it, he is supposed/passionate to try out few hardware projects. Where does he go to buy the components ? If he/she is in a small city, then he is lucky to have 1-2 store dealing with such HW. But then timely availability of so many sku’s at such low volumes is a big deal for the physical store. Hence the necessity of online stores. If one is lucky to live in a big city like Bangalore with S.P,Road then things become easier, but the hassle of physically going there and fishing out the right product, price, return policy remains still remains a tough job. Hence the need for this category of online stores.
2. Second category is, the Defense R&D PSU, Startups – The first category out of the 2 need transparent pricing (cheaper local store not providing formal bill won’t make the cut). Startups also need them quickly delivered. Price may not be that big a deal for first prototyping stage.
3. Business of Vaibhav Global is not comparable with Macfos IMHO. From whatever little i know about them , it’s more dependent on luring customers to buy some knick-knacks, the product themselves may not have much real value for their customers. Easily replaceable. No one will bat an eyelid, if they shut shop. BUT, If one is working on a prototype of some product, having the components available, reliability, timely delivery, scalability of units, quality each of components, all these aspects are very important.
4. Chinese parts : That’s an unfortunate reality of the industry, we are way too behind the Chinese in this industry at the moment. I won’t that against Macfos. It’s not their doing. and it’s not like they are deliberately promoting Chinese while Indian equivalents are available.
   All said and done, if they grow below 40-50% then it may not be worth the risk, being a SME. The play here is for growth, hopefully matching the last 3 year rates. If that does happen, then we can see some good wealth creation. I think the risk to business model is not that serious. The risk from competitors will be there. No serious moat for Macfos either. Execution is the name of the game here.