Now big brands ride the e-commerce wave

Established brick and mortar retailers of consumer brands, especially apparel and accessory brands, such as Puma, Nike and Wrangler are witnessing a big jump in revenues earned through online sales. Interestingly, the rise

in purchases was seen mostly in smaller towns and cities with consumers paying the full price for products. This puts at rest the common belief that online sales are driven by discount model.

Puma’s sales from online retail currently stands at 15 percent, compared to 1 percent three years ago. Denim brand Wrangler, which currently clocks 3.5 percent of sales from online sites, expects this channel to be significant contributor to overall revenue in five years. Meanwhile e-commerce companies selling the brands are seeing a boost in growth. For instance, multi-brand retail accounts for 90 percent of the business at fashion e-tailer Myntra, which expects to double revenues to Rs 800 crores in FY14.

A recent report by First Data Corporation and ICICI Merchant Services reveals, the Indian e-commerce market has the potential to grow between 125 billion dollars (over Rs 6,00,000 crores) and 260 billion dollars (Rs 13,96,723 crores) by 2024-25. The report ‘E-Commerce: A boon for the current economic downturn’, says that 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.

Realising the huge potential Aditya Birla group's Madura, which owns brands such as Louis Philippe and Allen Solly, has just gone live with an e-commerce project trendin.com while DLF Brands is planning the launch of portal aveneu.com later this year. Reliance Brands recently kick-started a portal to sell American footwear and accessories brand Steve Madden, which will be followed by separate e-commerce sites for Quiksilver and Superdry from its brand portfolio. And retail baron Kishore Biyani of the Future Group is eyeing an e-commerce play along with launching new labels, with an aim of making his Future Lifestyle & Fashion a one billion dollars (over 5,000 crores) unit by revenue within two years.

While a recent analysis showed that 122 of the top 500 ecommerce companies in the world are from the apparel space, analysts opine that it obviously doesn’t mean a large number of players will be able to co-exist profitably. Apart from the leading players, venture funding has almost dried up for most others, with many ventures either getting acquired by bigger players or shutting shop. It seems while most e-tailing ventures are struggling to make headway, e-commerce is turning out to be a profitable venture for well established brands.