After establishing a presence online, lingerie brands like Clovia and Zivame are now looking to strengthen their offline reach. Clovia has adopted an omnichannel model and doubled its retail footprint this year, focussing on marketing to establish the brand. Currently, it has 13 brand outlets and 150 retail touchpoints, including retail chains like Central and Brand Factory.
Zivame, which claims to have more than 55% market share in the online lingerie market and follows an inventory-led marketplace model, is doing the same. Around 20% of its business comes from offline retail, of which a majority is contributed by its 35 exclusive brand outlets. It plans to have 60 stores by FY20, and is present in 800 multi-brand outlets such as Shoppers Stop.
Since the category demands ‘touch and feel’, the offline push has helped these e-commerce players build a brand, albeit at a price due to inventory and distribution costs. According to Ankur Pahwa, partner and national leader – e-commerce and consumer internet, EY India, this is a complex product category, and there are challenges in replicating the manufacturing and supply chain capabilities, making the entry barriers quite high.
After receiving the latest round of funding this year, investing in technology and omnichannel to understand customer preferences and solve fit issues — which continues to be the biggest pain point — has been a priority for these brands. For the record, Clovia has raised `71 crore in a Series B funding, and Zivame raised `60 crore as part of a Series C extension this year.
Online lingerie players Zivame, Clovia and Pretty Secrets are exploring omnichannel alternatives such as exclusive brand offering stores and multi-brand outlets. “Omnichannel has a multiplier effect on online and it also gives brand recognition,” says Ujjwal Chaudhry, associate director, consumer internet, RedSeer Consulting.
Zivame has been working on cutting down inventory and building efficiency to become profitable in a year-and-a-half. Around 65% of its business comes from tier I cities. “While the average order value is `1,200-1,400 online, it is double of this offline. But the frequency of purchase is higher online,” says Amisha Jain, CEO, Zivame.com. According to RoC data, the company’s revenue grew by almost 63% to `86.6 crore in FY18. Its net loss declined by 44% to `32.1 crore in the same period.
Clovia, meanwhile, is focussing on tier II and III cities, by upgrading consumers who buy local and regional brands. In fact, 40% of the lingerie market is unorganised or semi-unorganised. “Around 55% of the business is coming from tier II and III cities. Our average order value is highest in tier III cities,” says Pankaj Vermani, founder and CEO, Clovia.
Keeping a tight control on inventory is key to the business. “If the inventory holding is equal to revenue, you cannot scale,” Vermani adds. As per RoC filings, the company had posted revenues of `51.8 crore in 2017-18, and reported losses of `8.6 crore during the same period.
At a time when players like M&S are strengthening their lingerie business, and established brands like Jockey and Enamor enjoy top-of-mind recall, it’s not going to be easy for online lingerie brands to fight for the consumer’s wallet share. But these players have crafted a niche by bringing in freshness in design and styles. “Online lingerie players have adopted a fast fashion kind of a model where the time taken from design to shelf is lower. There is huge potential for these online brands to offer premium products and penetrate deeper into markets,” says Chaudhry of RedSeer.
According to analysts, the marketplace model is not well suited for the category; the best way forward is to create a private label or a brand. Chaudhry says that while margins of branded products are lower, for platforms having private labels or their own brand —such as Clovia — there is a decent margin of 25-30%. Also, margins are lower in the marketplace model, making profitability a slower process compared to online brands.
Clovia and Zivame are now eyeing categories like athleisure, loungewear, sleepwear, shapewear, etc, and have launched products beyond the core innerwear category. Zivame has gone a step further and is looking at the personal care and hygiene segments.