Flipkart, Amazon get fashion conscious

Can the fast growing fashion category be as lucrative as mobile phones for e-commerce players?

amazon, flipkart, retail sector, retail industry
Amazon’s imaging studio in Gurugram

The online fashion space is buzzing at the moment. Alongside vertical players such as Jabong and Myntra, horizontal e-tail platforms — the likes of Flipkart and Amazon — are steadily growing their offerings, be it through private labels or brand partnerships. RedSeer’s latest study estimates that horizontal players roughly contribute to 45% of online fashion e-commerce.
Buoyed by the success of its Big Billion Days sale, Flipkart claims to be in the lead. “Our estimates indicate that we have secured close to 50% share of the online fashion market during the sale alone,” says Rishi Vasudev, VP, Flipkart Fashion.

“This year saw higher participation by fashion shoppers,” notes Ujjwal Chaudhry, engagement manager, RedSeer. In fact, fashion and smartphone verticals grew by 78% and 70%, respectively, year on year.

The ‘big F’

There are numbers that indicate that fashion is poised to become a money spinner for horizontal players. “The consumer electronics segment is expected to be overtaken by fashion and lifestyle as the largest e-tail category, generating about 45% of the overall GMV (gross merchandise value) by 2021,” says Ritika Taneja, head, category management, ShopClues.

The online fashion market in India is estimated to touch $15 billion in five years. Flipkart Fashion hopes to control 50% of the pie by 2023. The company has its eyes set on tier II and III markets, with a focus on affordability. “These markets are exploding in terms of e-commerce penetration over the last one year with around 70% y-o-y growth,” Vasudev mentions.

For Amazon India, fashion is the number one category for customer acquisition, with three out of four new customers coming from tier II and III towns. “A third of our fashion business comes from Prime; we expect it to become 50% in the next few years,” says Arun Sirdeshmukh, business head, Amazon India. But offering the attributes of Prime in a category like fashion is not easy. “Between last year and this Diwali, we have worked on strengthening the fashion category — not just on carrying the items in the network, but also mapping them with the projected demand in each of the geographic clusters.”

Amazon India launched a 44,000-sq-ft imaging studio, BLINK, in Gurugram, aimed at delivering high quality fashion content. “We are doubling down investment in fashion,” says Sirdeshmukh.

A stylish approach

In addition to launching The Designer Boutique last Diwali — a store within its site retailing designer wear — Amazon has been working on a private label and exclusive brand partnerships. At present it has three in-house brands and 20 made-for-Amazon brands. It has also entered into a partnership with Shoppers Stop. “The whole selection and inventory of Shoppers Stop is now on Amazon,” says Sirdeshmukh. For the first time, this Diwali, Amazon launched pop-up stores in select Shoppers Stop outlets in Mumbai and Ahmedabad to feature its exclusive brands JustF and Prowl.

Flipkart’s overall strategy around brand selection is built on two key points: growing Indian and international brands through deep partnerships and exclusivity; and providing a high quality and trendy selection at affordable prices through private labels and licences.

Meanwhile, ShopClues, which offers affordable fashion, has launched four private labels: Meia, Code Yellow, 29K and Meia for Girls. “Fashion is a faster means of acquiring new customers,” says Taneja.

Private labels could certainly help e-tailers have higher customer stickiness, better control over production and branding, and increased margins. According to a RedSeer report, vertical online fashion players have better unit economics compared to horizontal ones in the same categories due to a higher share of private labels.

“The younger generation is fashion conscious and may not want to indulge in higher price ranges,” says Harsha Razdan, partner and head, consumer partners, KPMG India. “There is also huge potential for new brands to foray into the e-fashion space.”

So, will fashion be the new mobile phone when it comes to hot selling items in e-commerce? Anil Talreja, partner, Deloitte India, doesn’t think so. “Fashion is still recovering from the setback caused last year due to demonetisation. Also, this is the first normal year after GST.”

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