Investors find vertical ecommerce portals attractive investments-report

November 18
10:44 PM 2013

Vertical ecommerce portals are online retailers that offer only a single category of healthcare products and they are luring investors in. According to a report in The Economic Times, these portals are quickly gaining traction with investors because they don't need a lot of capital to grow compared to retailers that offer various brands. Vertical ecommerce portals sell high value products that range from nutritional supplements, prescription drugs and baby care. They serve customers who purchase these goods often.

The report said investors have poured INR 664 million so far in India-based vertical ecommerce portals due to their higher margins. Earlier this year, for example, Gurgaon-based online retailer Healthkart was able to raise USD 14 million in financing from Sequioia Capital and Intel Capital. Healthkart Founder Prashant Tandon said "We aim to build a valuable company that meets the investors' strategy of backing sustainable ventures." Healthkart's line of products includes prescription drugs and consumer healthcare goods. The company initially offered management software to doctors before it ventured to direct healthcare retail. It now conducts around 50,000 transactions monthly and posts estimated revenues of INR 10 million a month.

IDG Ventures Vice President Karan Mohla told The Economic Times,  "These companies do not require the same amount of funding as say, a Flipkart, as they use capital more efficiently while providing a variety of high-margin products, for more frequent purchases. This makes them very good value creators." IDG Ventures has also supported Valyoo Technologies, a company in New Delhi that manages the Bagkart and Jewelkart portals.

Valyoo Technologies was established by Peyush Bansal who once worked for Microsoft. It raised USD 10 million for LensKart, a retail website that focuses on eye care, from Unilazer Ventures and IDG Ventures. LensKart now posts monthly revenues of 4.5 million selling 1,000 pairs of eye glasses each day in 1,500 cities.

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