E-retail: Players turn to apparels to increase margins

The booming e-commerce space in India saw a flurry of players jump in at the lucrative opportunity. But high costs involved in operating the business and declining margins due to competition is forcing players to offer schemes like heavy discounts,

free shipping, discount coupons and so on. This is pushing them to look at the high-margin apparel segment. While Indian customers give importance to look, feel, fabric and size of the clothing and prefer buying it from brick-n-mortar stores, the scenario is gradually changing. Arvind Singhal, Chairman, Technopak Advisors feels today worldover people are shopping for clothes online and he doesn’t see why Indians should be different. In fact, brands should offer a collection that’s available only online so customer doesn’t have to check offline and online prices.

According to a recent research by First Data Corporation and ICICI Merchant Services, “The domestic e-commerce market has the potential to grow between $125 billion (Rs 6,92,625 crores) and $ 260 billion (Rs 1,440,660 crores) by 2024-25. The report, 'E-commerce: A boon for the current economic downturn' says urban Indian consumers are now confident enough to make online purchases of up to Rs 25,000, from Rs 2,000- 5,000 in the recent past.

And keeping the prospects shown by such research reports in mind, e-shopping portals such as Flipkart, Zovi, Myntra and Jabong are busy working out strategies to offer something different and innovative to increase the number of strikes on their websites. While Flipkart may introduce apparel offerings around the festive season, Zovi.com is banking upon private labels compared to others like 99lables.com and Fashionandyou.com, which mostly sell known brands. Zovi has also developed its own courier services and supply chain in cities where it gets the best response and besides 30-day return and free shipping, it has introduced ‘try before you buy’ option for customers.

On the other hand, Gurgaon-based Jabong.com is maintaining its uniqueness by offering large product categories and options apart from fast deliveries. The site sells 50,000 products, a mix of full-priced and discounted goods. It delivers within 48 hours in the top 10 cities and a maximum of five days in most others. Myntra.com believes in selling looks than products so it focuses on creating style blogs which tell customers about key international looks, latest designs and ensembles and also helps customers to choose products from catalogues. And like Zovi, Myntra expects the launch of private labels would bring them higher margins.

And web-platforms like Fashionandyou.com and 99labels.com, who work on a sale-model offering discounted merchandise of known brands on a daily basis, are also taking initiatives to increase visitor count. Would their efforts pay off and help them seize growth opportunities while building a sustainable growth model remains to be seen.