Does Flipkart's fashion gambit run the risk of falling between two stools?

The online retailer wants to straddle the top end of the market with fast fashion and the mass end with products for the value conscious

India’s apparel market will be worth $59.3 billion in 2022, making it the sixth largest in the world, comparable to the United Kingdom’s ($65 billion) and Germany’s ($63.1 billion), according to data from McKinsey’s FashionScope. It is little surprise that more than 300 international fashion brands are looking to open stores in India over the next couple of years. But India remains a complex market that presents challenges as well as opportunities. For one, fashion has always been a hotbed for innovation and today, technology is transforming fashion at a pace faster than ever before. Plus now a whole new segment of fast fashion has opened up, forcing retailers to offer “solutions” for consumers with personalisation and speed.

Flipkart has moved fast in this business. It has signaled adoption of a two-pronged strategy for fashion. The etailer aims to consolidate its leadership position among the core offline fashion buyers by offering retailer Lifestyle’s private labels and reach out to the value conscious consumer by adding fashion and accessories to 2GUD, its refurbished mobile and electronics platform.

The strategic partnership with Lifestyle and the rejig sends the message that Flipkart wants to serve all price points by taking on the online and offline players in the mass premium to premium segment through Flipkart, Myntra and Jabong. It will leverage 2GUD to take on players such as Snapdeal and others who have made some inroads in the Tier II and Tier III cities in recent times.

But is Flipkart spreading itself too thin? In trying to straddle both the top and the mass ends of the mass market, does it run the risk of falling between two stools?
 

N Chandramouli, CEO, TRA disagrees. “It's a way to extend fashion which does not mean premium alone. Even among those who go for the bigger brands, there are some looking for discounts and timing purchases accordingly. So by reaching out to the mass market, they are enhancing the usability of the platform and the move certainly isn’t the antithesis of what they are doing.”

“Whether it is the tie up with Lifestyle or strengthening its holdings like Myntra, Jabong, these are not ad hoc initiatives. These are all in a bid to create superior value for every kind of consumer and to keep competitors on their toes,” says Siddharth Shekhar Singh, associate professor of marketing at the Indian School of Business, Hyderabad and Mohali.

Commenting on Lifestyle move, Harminder Sahni, founder, Wazir Advisors, says while the offline partner's entry into the Flipkart platform was not an expected move, what is significant is how it will change the fortunes of its private labels — which it has quite a few. As regards 2GUD, Sahni said, “One difficulty with refurbished products in India is that customers can get the same used products at much cheaper prices from elsewhere. So sustaining such a platform becomes difficult.” He also doesn’t see the perceived competitors have achieved something to the extent that it could have made Flipkart worried.

Flipkart is undeterred. There are good reasons for its excitement. 

While announcing the Lifestyle tie-up last week, Rishi Vasudev, senior vice-president and group head of fashion at Flipkart, Myntra, and Jabong had said that Lifestyle’s range of brands across fashion categories (11 private label brands from bags to clothing) would complement its platforms and enable growth for both players on the one hand and enable more consumers to come online, on the other.

Vasanth Kumar, managing director, Lifestyle International, says that it was looking to enter newer geographies through the Flipkart Group with its 160 million consumer base. Industry sources quote Flipkart as holding a 70 per cent market share in the online fashion retail market.

The company feels that 2GUD will help it move step by step in all three directions of premium, mass and value conscious and tap a segment beyond the first 160 million. These are customers who have aspirations and are now well connected. With 2GUD, which was started last year as a separate app selling only refurbished mobiles, the company observed that the platform also had a lot of customers who were buying fashion accessories more frequently within a certain budget.

“This opportunity of unbranded online retail ranges anywhere between $60 billion to $100 billion. But this is a fragmented market and (we are) organising it,” Chanakya Gupta, head of 2GUD, had said earlier. While 2GUD is expected to maintain its refurbished category, it will go big on fashion, accessories and beauty offering distinct products from the mostly branded and some unbranded offerings from Flipkart, Myntra and Jabong.

“Similarly, if the customer is willing to trade-off the brand and is more likely to buy an unbranded product because it is good and affordable, that is the segment on which we will concentrate,” Gupta had said. Present across more than 40 categories previously, the platform will now expand to over 150 categories and over 2,000 verticals, beyond the ongoing refurbished space and with the aim of making latest fashion affordable and at the fingertips of aspirational Indian.

With this, the company will find itself competing with the likes of Snapdeal, Paytm Mall and some Chinese online apparel players. While for the company, it is an opportunity to reach newer geographies, for sellers, the Flipkart umbrella brings a certain brand value and trust among consumers, says Sachin Taparia, founder and chairman, LocalCircles.