For a while now, Indonesian e-commerce has seemed to follow a ‘bigger is better’ philosophy. The ambition of online stores and marketplaces has been to carry as many different products as possible.

The results are sprawling marketplaces such as Kaskus or Tokobagus, and online stores that sell everything!

Take Bhinneka as an example. Famous for selling online electronics well, Bhinneka was one of the highest ranking sites in Indonesia based on its performance in that product range alone. Yet, now it is looking to sell an even broader range of categories – from office products and toys to fashion.

Or consider Bhinneka’s more recent rival, Lazada, which sells just about every product category – from luggage, electronics to hair gel. Lazada recently expanded its range by launching specially branded stores for fashion and beauty categories, a move that puts it in direct competition with its Rocket-funded stable mate Zalora.

What have been missing in Indonesian e-commerce so far are targeted specialist retailers – online stores that focus on niche categories. While specialist retailers often don’t achieve the sheer market size of multi-category retailers like Amazon, they often can achieve higher margins and profits by building brand loyalty and becoming authorities in categories perceived as unique.

To cite an example, when Amazon bought specialist retailer Zappos in 2009 and Diapers in 2010, it did not re-brand the sites, recognising that customers looking for fashion and baby products (respectively) preferred to use a tailored site than buy from a multi-category retailer.

Specialist e-commerce retailers with a deep range in a limited number of categories are an online version of what has traditionally been called the ‘category killer’, a business model that is just as successful online as offline. An office supplies specialist, Staples, is USA’s second largest e-commerce retailer, coming next only to Amazon.  Other popular ‘category killers’ include DicksSportingGoodsToysRUs and the aforementioned Zappos.

For an interesting twist on the specialist retailer, look again to Diapers, which after three years in the Amazon stable has maintained distinctive site design and branding, while remaining linked to categories as varied as pets (Wag) and homeware (Casa), all under one umbrella site.

It seems that Indonesian startups are beginning to catch on to the category killer craze. While in 2013, big was better, there are early signs that 2014 will be the year of the specialists. The baby category seems to be a favourite, with the recent launch of  Tororo adding to the competition between Bilna (which recently received further funding) and Birds n Bees. Not to forget, Indonesian retail heavyweight MAP quietly launching PlanetSports earlier this year, selling sports wear, shoes and equipment.

Odds are these specialised e-commerce players will soon be followed by more. Globally, niche online retailers dominate in categories as diverse as pet, homeware, and eyewear, and even succeed with more specialist businesses such as cycling or hiking supplies. Yet none of these product categories currently have a strong and specialised Indonesian offer.

The views are of the author and e27 may not necessarily subscribe to them.

The author is an e-commerce and retail expert based in Indonesia, specialising in digital marketing and merchandising.

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