Abof implementing no discounting strategy to steer growth

Moving away from discounts, the Aditya Birla Group launched its online fashion portal – Abof one year ago. With this portal, they aimed to sell limited and fashionable range of merchandise. Today after almost a year, about 70 per cent of the products on the portal are on discount and they promise this will change in the near future. As Prashant Gupta, CEO, Abof explaines the pitch to their partners is to have a set of core merchandise that should never be discounted. The company intends to sell at least half its merchandise on full price, aiming to rake in profits in a market where bigger and discount-led rivals Flipkart and Amazon control nearly three-fourths of the online fashion market. Talking about managing an independent brand in such a highly competitive space, he says obstacle were many and they had to overcome them during the launch phase, but now most of the brands are open-minded about it.

Sticking to ‘No Discounting’ to rake in profits

If you look at the buying trend, about 30 per cent of the market is buying for convenience and 70 per cent is buying for discounts. A good retailer always has this number to be more like 50 per cent but it is a journey every company has to traverse and Abof believes over time they will get there. The company has added a new feature — Never on Discount — that means the customer will not wait. That was the insight when Aditya Birla Group launched SKULT by Shahid Kapoor back in October and have not put any discount on the merchandise. It has become a bestseller.

Highlighting why there hasn’t been thorough promotional activities done lately. Gupta says until you are very clear what you are able to deliver, marketing should not try and sell a bad product and bad experience. So, now that people are convinced that it’s an outstanding product and experience, now is the good time to go out to town and do all the song and dance.

The company’s pitch to sellers has always been to be a differentiator. ABOF believes in giving customers prominence and position them the way they want to be positioned. The company’s target consumer is not the guy looking for a deal, but somebody who is looking for the best fashion in the most convenient manner of shopping. It has a one-step exchange where their person collects the old product and delivers the new one just once. There is also free at-home alteration. One of the biggest pain points in this industry is refunds and the company has a refund model of 24 hours after the pickup. Nobody else does it.

Strategy to earn profits

Indeed sales are picking up in the country, it’s the discounting model which is to be blamed for companies not earning profits. At good discounts, anything sells in India. The company started with only about 60 brands and then it expanded slowly to 125-130. About their future plans, Gupta says they will not expand beyond what they have currently. Abof is not a marketplace. It’s a completely buy and sell business, which means they buy all the merchandise, and keep it in their warehouse. They want to be differentiated in customer experience and marketplace customer experience is pathetic.