Many important issues have been raised and discussed. My views are as follows;
Addressable Market:
The electronics component market is huge in India. There are many such small market clusters all over India- Nehru Place or Bhagirath Palace in Delhi, S P Road in Banglore, Budhwar Peth in Pune, Lamington Road in Mumbai, Richie Street in Chennai etc. All these places have 1000-2000 small shops. On all India basis, number of such small shops is not less than 25000. As these shops are surviving, their sale ought to be at least 8-10 lakhs monthly; or a crore annually. Thus, addressable market is not less than 25000 crores.
On a Macro basis, Invest India says-
India is the second largest importer of electronics items. Electronics manufacturing in India is actively promoted by the Government of India through electronics policy, PLI scheme, and 100% FDI.
Thus opportunity size is not a limiting factor for Macfos.
Electronic Component Market:
We need to understand the market of electronic components- particularly small-value items. Macfos is certainly not going to sell popular items in bulk to anybody; bulk buyers can easily import and buy directly from manufacturers. Macfos is addressing the market where a customer cannot buy directly from the manufacturer- and that is a big market. A market which is being served by numerous shops in the offline electronics market, all over India.
Another aspect is number of products. Robu has 12K products on offer. There can be millions of products. Digikey has more than 1 million products on their website, lately are read somewhere- 2.7 million. Thus opportunity size is huge in this aspect too- if you increase the number of products, say from 12K to 25K- the topline is likely to go up in proportion. At the same time you are likely to have more visitors to your e-com site, if you offer a higher number of products.
Clusters of shops develop in certain categories of goods- electronic parts, even auto parts precisely for the same reason. One shop cannot have all the items a customer need, but a cluster can supply huge numbers of items. However, an e-commerce operator can have all the items. Thus, irrespective of Robu’s future success or otherwise, I am of the view that it is an extremely good area for any E-commerce operator. It is a winner takes it all market.
Management:
Howsoever good a business opportunity is, no business can succeed without able management. Here is a business started by young persons, without any capital or backing. Even in the IPO, the company didn’t dilute any shares. These young people are learning from trial and error, reached such a height, and made themselves the largest e-com operator in a niche area. The electronics component market is big in India, and there were many players with a lot of cash who could have created a Robu-like company by didn’t. From my own experience, I can say that starting a company is the most difficult thing, getting a sale of the first crore or first ten crores is the most difficult- increasing it to a hundred or thousand crores is far easier. That is why I like this management.
Every business will face changes. They import many goods from China, it is a fact. Whole India imports. Tomorrow the Government may ban it, it is okay. Tomorrow new products will come. Inventory can become obsolete. Of course, these things can happen. Unfortunately, I don’t know any business where these things will not happen. It is part of every business journey. First-generation entrepreneurs [my bias] have a better ability to face these challenges, and that is why genuine wealth is created by first-generation entrepreneurs only.
[Disclosure- Invested and Biased]
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