What is the Good News for Start-ups Selling Niche Products Online-Only?

Several Fast Moving Consumer Goods giants are investing in start-ups who are selling products online.

As the markets across the globes are going online, several entrepreneurs are unaware of what and how to sell online. Launching a business online becomes a herculean task if it is not planned out well. With competition becoming more and more fierce and product markets saturated with ideas and innovations, it is difficult to come up with something new that satisfies consumers and provides convenience. With changing lifestyles, easy access to products and the gradual shift to the digital platforms for shopping, FMCG giants are investing in start-ups who sell niche products online. 

Niche Products on Online Platforms 

There are two types of products you can sell- niche and commoditized items.  What you will sell will develop all other business decisions you make including Brand name, Website design, Marketing, Loyalty Programs, and Shipping and fulfilment.

Commoditized products are essential products in high demand that can be physical or digital products. While on the other hand, Niche products are goods or services that serve a specific customer base and product category. They are often unique, one-of-a-kind, or handmade products, which makes them gain traction. They are usually made in small batch runs or on-demand. Many store owners sell a combination of commoditized products and niche products to increase their profit margin. To become successful, offering only commoditized items will make it difficult to make it big or stand out. 

What is FMCG?

FMCG stands for Fast-Moving Consumer Goods which are products that are sold quickly and are generally non-durable. They are also known as Consumer Packaged Goods (CPG) and include a wide spectrum of goods ranging from soft drinks, processed foods, cosmetics, toilet paper, face towel, shower cap, toilet soaps, over-the-counter drugs, etc. These goods tend to have a short life and generally get replaced within a few days, weeks or months. The success of FMCG products depends on several factors like brand equity, marketing, distribution network and understanding of consumer behaviour.

Being the fourth largest sector in the Indian economy, the FMCG sector was estimated to grow from US$ 30 billion in 2011 to US$ 75 billion in 2018. 

What is the Good News for Start-ups selling Niche Products?

The start-up space selling niche products has become a prime investment area in the Fast-Moving Consumer Goods (FMCG) sector. To accelerate growth, one needs to focus on delivering industry-leading performance and venture into newer categories and sub-segments. 

FMCG majors like Unilever and Marico are investing in emerging companies. Oral care giant Colgate Palmolive Asia Pacific recently invested in men’s grooming products maker Bombay Shaving Company while Parachute hair oil maker Marico acquired a stake in Beardo in 2017.  Britannia is also planning to set-up a separate entity to invest in startups and emerging companies across niche categories and platforms. 

The main aim of this move is to drive technology and innovation and create disruptions in the market. Thus start-ups are attracting investor attention and securing heavy funding. Other examples include Emami which invested in BrillareScience, an Ahmedabad-based startup manufacturing hair and skincare products which they sell to professional salons. Funding for FMCG startups stood at US $0.03 billion in 2017 with the increase in online shopping and incomes, states Analytics and technology firm Tracxn. The market for niche-products is gradually evolving and gaining more traction in terms of investments and expansions. 

Smruthi Krishnan
Smruthi Krishnan
Smruthi interviews and writes on inspiring entrepreneurs and the success stories of start-ups. She is currently pursuing Economics major from Delhi University.

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