Online retail sale in India is picking up like never before. One section of online retail which we have closely followed over the years is the fashion segment. Myntra and Jabong can probably be called the icons of Indian online fashion industry. With both of them registering significant growth over the last few years and poised for an even brighter future, is it too early to say that online fashion retail in India is finally coming of age?
Given the ease of shopping, fabulous discounts which one can avail and the sheer convenience of online shopping, the two spearheads of fashion industry in India along with smaller sites like LimeTree, The Closet Label and others are now deciding how the internet using Indian population will dress up in future.
Phenomenal Growth Rate over the Last Three Years
Founded in 2012 by three enterprising young men, Jabong offers apparel, shoes, shoes, accessories, home décor and furniture over their website. They offer more than 90,000 products made by over a 1,000 manufacturers in one place.
They did not really get off to what would be called ‘a rocking start’ with sales worth only Rs 4.6 crore in 2011-12 while incurring a loss of Rs 67 lakh.
Though the company did not release their sales figures for 2012-13, they did announce cut down on their losses hugely- bringing the down to only Rs16 lakh, by sticking to core fashion for online retail.
In March 2013, they were said to be handling 6000-7,000 orders a day which, according to LiveMint, had grown to 14,000 orders a day by September 2013. Their sales over CY 2013-14 were to the tune of Rs 527 crore- a growth of more than 11,000% over a three-year period.
The now seven-year-old Myntra was founded by three IITians from Bangalore in 2007 as a seller of personalized gift items. With time, they shifted their focus to online retail of branded apparel. A company which sold 15 gift items, like mugs, watches, calendars, glasses, etc till 2010 now features more than 500 brands and 60,000 products.
Their sales have swollen up from a humble Rs 67.1 crore ($11 million) in 2011-12 to a jaw-dropping Rs 441 crore ($73.5 million) in 2013-14. A phenomenal growth of 558% over a three-year period. (Blame it on Jabong if they stole the thunder from right under the latter’s nose by making this awesome growth rate look pale in comparison).
Myntra which was acquired by Flipkart is growing much faster than its foster parent at the moment expects to be able to come out of the red in the coming 18 months by cutting costs and pushing up the profit margins.
During his recent visit to India, the Amazon founder- CEO Jeff Bezos had admitted to being bowled over completely by the online fashion retail scene in India.
Reasons behind Huge Success of Fashion Etail
With the revenues of these two poster boys of online fashion retail shooting skywards year after year, we see the fashion e-tailing in India reaching a tipping point. With more and more people getting connected to the internet and more buyers from Tier II and Tier III towns beginning to splurge online, the future of this section in online retail is shining brightly.
While the prospect of being able to shop from the cosy comfort of a blanket on a winter evening or while rocking in one’s favorite chair as it rains heavily outside is of course a driving factor, the Cash on Delivery (CoD) facility, the fabulous discounts offered by some sites and the ease with which ill-fitting clothes/ shoes can be returned are also major contributing factors.
Add to it the fact that both these leading fashion e-tailers are multi-brand and multi-product stores. Which means that now we can buy a Mango dress, a Fossil watch, a FCUK t-shirt, Nike shoes, Bombay Dyeing bedcover, Calvin Klein jeans and a Dorothy Perkins bag- all at one place! It makes it easy for a buyer like me to compare features and prices of the product he/ she plans to buy and, if one is lucky, get a discount as well.
Praveen Sinha, co-founder of Jabong. com, observes:
“Online retail has passed the inflection point as customers have stopped questioning its viability and authenticity. Apart from the acceptance of ecommerce at a macro-level, we have, over time, built our reputation through customer experience. This will now translate into higher sales as we laid a strong foundation.”
The huge success achieved by these two brands is largely depends on their tie-ups with many international brands which allows the fashion conscious urbane youngsters to keep updated with the latest fashions, while at the same time adding economy range for most products too. A person looking forward to buy a wrist watch, for example, can see watches priced as low as Rs 225 ($3.5) to Rs 16,000 ($280) across Jabong only! Who would want to visit a dozen watch stores in different corners of the city after being caught up in traffic and hassling with the auto-rickshaw driver?
RNCOS, a leading research and consultancy firm, has predicted the Indian online retail market to touch $14.5 billion in 2018 (Rs 88,000 crore) as compared to only $3.5 billion (Rs 21,000 crore) at present. fashion e-tail, which forms only 4% of the total sales of apparel in India is also expected to become the top category leaving the smartphone market (whose online sales are nearly 15% of the total sales) behind.
Role Played by Rapid Smartphone Penetration
The rapid smartphone penetration will have a major role to play in the rapidly expanding fashion industry as with overall online sales. According to ET, there are 100 million users in India who access the internet from their computers while a much larger 120 million of them do so over their smartphones.
As the number of smartphone users in the country is all set to cross the 2 billion user mark within two years, online retail will get a further fillip.
Amit Agarwal, Amazon India Vice President and Country Manager, has this to say:
“In India, the mobile internet traffic now outweighs personal computer traffic. With increasing penetration of smartphones, India is all set to be a massive market for m-commerce. The marketing strategies for e-commerce companies will increasingly be tailored to suit the rising adoption of smartphones, social media and improving customer experience across touch points and platforms.”
Mobile traffic to online retailing sites, which is estimated to be 40% of the total traffic at present, will go upto 70% soon, he says.
70% of Myntra’s sales over this year is expected to come from mobiles, says Shamik Sharma, Chief Product and Technology Officer at Myntra.
“Currently, close to 50 per cent of our business is driven by m-commerce and with the launch of our Mobile App across all platforms ( Android, iOS and Windows), we expect this figure to grow to 70 per cent by end of this fiscal.”
This is keeping in tandem with the manner in which the entire e-commerce scene in India is evolving at the moment and becoming more mobile-centered. Though there is no doubt that the entire online retail is on fire (much to the chagrin of brick and mortar store owners), mobile commerce is skyrocketing!
Biggies Beginning to Cut Down on Discounts
With rapid and impressive growth behind them, the stalwarts of fashion etail in India are already beginning to assert themselves, marking the end of a golden period for consumers when they would see hundreds of new products up for grabs every morning. Having turned the corner, the sellers are now focusing on profitability by cutting down on discounts and offers.
“Overall, I would say discounts have to stabilise, but I would say that there will be always some discounts there for e-commerce companies as we have the advantage of scale and we don’t have the real-estate and overhead costs associated with that of offline retailers,” said Praveen Sinha, co-founder of fashion portal Jabong.
The rapid growth charted by these two leading fashion e-tailers and the manner in which they have evolved over the last few years to experienced biggies dominating the scenes herald the beginning of a new period for online fashion sales in India.