Trends that influence online fashion growth: Technavio study

Online fashion retail market in India has been growing rapidly in the last few years. It is expected to grow further as a new report by Technavio, a UK-based market research company reveals. Three key emerging trends will impact the market growth through 2020. The three emerging trends are: increased penetration in Tier II and III cities, demand for private labels and distribution of consumers between mobile application and websites.

Small towns beckon fashion trends

Sales to smaller cities account for nearly half of the total sales of online fashion sites such as Myntra, Jabong and Indiatimes. Already, people in smaller towns are buying fashion products as greater internet penetration exposes them to latest global trends. Also, rising incomes are making products affordable in the smaller towns. In addition, limited penetration of brick-and-mortar stores among non-urban consumers is also increasing the demand for online retailing. In fact, companies like Amazon and Flipkart are in talks with the government to improve postal service so that products can be delivered within 24 hours in any part of the country.

Customer support service improves

Companies are focusing a lot on improving their services. Online tracking, 24/7 customer support and 100 per cent purchase protection are commonly offered by vendors in this space. Further, consumers are updated through messages or emails through the entire purchase and delivery process. Vendors offer easy return policies and online cancellation services to their customers. Players are focusing now on forward and backward integration in the value chain to shorten delivery cycles. For example, Flipkart acquired a 34 per cent stake in MapMyIndia in 2015 to improve its GPS navigation and provide tracking location. On similar lines, Snapdeal acquired a 20 per cent stake in GoJavas, a logistics provider so that products could be delivered within four hours in select cities.

In addition, launch of mobile apps and various other features have made it possible for consumers to access online sites. Such apps offer a more personalized online shopping experience and increase customer engagement. However, many shoppers prefer web shopping, a fact that was proved by the relaunch of online fashion site Myntra which relaunched its website recently. In 2015, it had gone only app but a year later, it relaunched its website.

As Poonam Saini, Technavio’s lead industry analysts for retail goods and services points out, that rural shoppers do not limit themselves to products from Indian entrepreneurs alone. They are also importing products from sellers worldwide and this is encouraging vendors in the market to span out into the rural Indian market. Online fashion retail market in India is expected to grow at a CAGR of 63.45 per cent during the period 2016-2020.