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E-commerce sites turn to apparel

Shivani Shinde & Raghavendra Kamath  |  Mumbai 

Move aimed at offsetting burden of high costs, declining margins

Burdened with high costs and declining margins on account of offering goodies such as free shipping, e-commerce entities are increasingly betting on high-margin apparel segment to bail them out.

Flipkart, the country’s largest e-commerce company, is expected to announce its foray into apparel this festive season. Others like Zovi, and are coming out with differentiated offerings.

“We entered the lifestyle segment recently with perfumes and accessories. While apparel is an integral part of this category and is under consideration, we do not have any concrete time lines to share at this point,” said Ravi Vora, vice-president, marketing,

Margins of over 20 per cent and 50-60 per cent in private labels are drawing the attention of e-commerce entities to apparel . “The other fact is, since India has been a manufacturing hub for several brands, sourcing is much easier, said Amit Gugnani, senior VP, textiles, Technopal. Adding: “While you will continue to see some more coming into this segment, in the long run, these players will have to find their own niche or consolidate.”

Company Differentiation
com Sells only private labels,
offers features like ‘try before you buy’
com Variety in products and fast deliveries
com Exclusive tie-ups with Fabindia and 
New Balance Sells only Indian ethnic wear,
Customisation of products

Launched in 2011, com is building its business model on private labels, as compared to others which mostly sell known brands. The site has developed its own courier services and supply chain in cities where it has good traction. “We know it is a challenging task to make a brand well known. But if you create a good brand online, you set a high entry barrier for newcomers,” says Kavindra Mishra, founder-member and VP, sales. “Our design team has senior people with a successful track record and great understanding of consumers.”

Besides 30-day return and free shipping, has introduced ‘try before you buy’, allowing customers to try clothes before a purchase. “You reach out to people and become closer to them before making good sales,” he explains. says its brands have had fairly good traction in the year since it started and the site is expecting Rs 80 crore of business. It saw over 15,000 transactions in July, growing in double digits over the earlier month.

Gurgaon-based com is differentiating itself by offering a large assortment of products and fast deliveries. The site sells 50,000 products, a mix of full-price and discounted goods. It delivers within 48 hours in the top 10 cities and a maximum of five days in most others. “If you order before noon in the NCR (national capital region), the chances of getting it within 24 hours are more than 95 per cent,” says Praveen Sinha, co-founder and managing director. He says same-day delivery is not a practice in the industry and scores here over others.

In the case of Myntra, Ganesh Subramanian, chief merchandising officer, says they sell looks and not products. “We have style blogs which tells customers about key looks, various ensembles and international looks, take customers to catalogues and help them pick up the products,” he says. is also looking at exclusive tie-ups. Fabindia and shoe brand New Balance sell exclusively on It does close to 8,000 transactions and ships 11,000-12,000 products everyday, one of the highest,” says Ashutosh Lawania, co-founder and head, sales & marketing. Its margins are 35-40 per cent.

With its coming launch of private labels, is expecting higher margins. The site is looking for a tenth of revenue to come from private labels in the next year.

Though most sites have depended on features like free shipping, cash on delivery, return within 30 days, etc, to woo customers, it is creating stress on their margins and profits. Ishita Swarup, co-founder and head of 99Labels, says free shipping is only for her loyal customers (part of the ‘99label club’). In the case of Fashion and You, free shipping is for those pre-paying.

Sinha of agrees it is a necessary hazard. “If the market starts charging for shipping where that does not justify the economics, we will follow market trends. You cannot play a lone game here.”

This has also meant that early players such as 99Labels or Fashion and You, that focus only on the apparel and the accessories segment, have had to see some pressure. “Too many players entering this space has meant we taking a hit on the conversion rate. It has certainly gone down. Clearly, everyone is trying to get their skin in this game, due to the high margins. Electronic goods give you margins in low single digits, but if you can do private labels in the apparel segment, the margin can be upward of 60 per cent,” said Swarup. She, however, maintains that newer players are stretching themselves too thin.

“We always started as a discount portal. We never offered fresh merchandise. We work with small fashion houses and large brands. But some of the players are not only giving heavy discounts on fresh merchandise but also giving out vouchers. I don’t know how long this will be sustainable,” she added. The portal gets 40,000-50,000 visitors per day.

Aasheesh Mediratta, sales director, Fashion and You, agrees conversion rates are getting impacted. “We have not seen a dip in conversion rates but it has been static. For us, the conversion rate is healthy but we just need to get more traffic to our website,” he added.

For Fashion and You, the differentiating factor has been its sales. The portal has a sale on every day. “The others do discounts or sales once a month or two. Besides, since we have already shown results to retailers in terms of delivering volumes, we do better than some of the newer players,” adds Mediratta.

Mishra of com says the entry of so many sites has not impacted their business, as “are the new eco-system and more numbers of players will only grow it”., is yet another player that is targeting online buyers in India. “Our focus is to create an online experience for shoppers, better than the offline segment, as we are not a discount website. We opened our online portal for the domestic market 12 months back, and so far, we were focused on the international market. That contributes to 95 per cent of our revenue. Compared to other portals, our biggest differentiator is a large and fresh variety and customisation, and we focus only on Indian ethnic wear. We feel that none of the players in the e-commerce segment can provide the customistion that we can. What gives us leverage is that we do not work on MRP based sourcing, hence we have better room to work,” said Pradeep Katyal, CEO, Utsavfashion.

First Published: Tue, August 07 2012. 01:05 IST