Online firms look at value creation to seize markets As vast segments of the taxi, home services and furniture markets remain unorganised, differentiated offerings at scale remains the biggest hurdle

New, online companies in India — be it aggregators in the taxi industry or leading brands in furniture and home services — may be seen as riding a wave of disruption in traditionally fragmented markets, but bringing vast urorganised segments into the organised fold remains a tall ask. This demands creating a value proposition with products that cut across geographies and consumer preferences.

Sample this: The taxi market in India is estimated at about $15 billion, and the online segment is worth nearly $2 billion, according to RedSeer Consulting. The offline market is growing at about five per cent as against 60 per cent projected this year for the online market. Besides offering cheaper rides than offline taxis, one of the disruptive trends has been the carpooling feature launched by aggregators that has cut average fares and simultaneously improved driver earnings.

For Uber, when it entered in 2013, even as it saw a potential in connecting riders with the nearest cab with the help of its technology, limitations such as data speeds and low smartphone penetration added a layer of difficulty. While things have changed considerably since then, says a spokesperson, Uber focuses on ensuring its app works well not only on high-end smartphones but on all models including in areas with poor connectivity. “We invested in making driving for Uber an attractive opportunity for our driver partners, providing them relevant training and access to technology, all of which helped us to a large extent open up the market for our services.”

The online home and furniture segment is valued at around ~20,000 crore, while nearly 88-90 per cent of the overall market is unorganised, points out Ashish Shah, founder and chief operating officer, Pepperfry. Pepperfry has invested considerably towards consolidating the fragmented supply in the industry, and built an ecosystem of small manufacturers, skilled craftsmen, artisans, small and medium enterprises (SMEs) etc. across origin centres in the country to establish a strong supply network. “The home and furniture business is about variety. Our managed marketplace model is a platform for 1,000-plus SMEs and 900-plus leading brands in the segment,” says Shah.

Having set up its own distribution network to cover more than 500 cities and a carpenter network of about 250 personnel that help assemble the item once delivered, Pepperfry is aiming to expand its offline presence and set up the largest omni-channel business in home and furniture. “We are investing heavily in augmented reality and virtual reality to offer superior customer experiences in the coming months. We have set out a target of a ~5,000crore turnover by 2020,” adds Shah.

In case of hyperlocal home services, pegged at $40-50 million gross transaction value, UrbanClap enjoys over three-fourths market share, as per RedSeer data. The organised sector constitutes less than one per cent of the overall home services market.

Suhail Vadgaokar, vice-president, customer experience, brand and PR, UrbanClap, says: “One of the biggest challenges we face is the training of professionals in terms of attitude, skills and availability of tools. UrbanClap invests highly in this to deliver customer