KIT: Apparel etailing

Strategic tools for the practising manager

With changing demographics and an increase in the quality of life of urban people, the Indian retail sector is poised for a boom. Currently estimated at $500 billion, it is forecast to reach $1 trillion by 2020. However, with 0.1 per cent penetration, the online market presently constitutes only $500 million of the total retail market, but is expected to grow 140 times and reach $70 billion by 2020, thanks to the demand from the so-called Generation Z.

E-commerce has brought about a revolution in the shopping model of India. With over 10 million Indian consumers shopping online for commodities other than electronics, this sector is growing at a great pace. Opportunities for web-exclusive brands are coming up in apparel, accessories, shoes etc. and also gathering momentum across all market segments with each passing day.

In the last two years, the $130 million apparel e-retailing space has attracted investments worth $70 million that is 40 per cent of the total funding Indian e-retailers bagged during the period. In fact, the recent inflow of private equity investment into many garment start-ups is an indication that the apparel e-tailing platform is reaching a tipping point fast. Many PE and VC firms have invested between $5 million and $52 million in portals like Letsbuy.com, Flipkart.com, Yebhi.com, Snapdeal.com and FashionAndYou.com.

Apparel e-tailing has experienced significant growth across the country due to increasing time-poverty, changing lifestyles, convenience and flexibility of shopping from home and option of free home delivery. Dramatic increase in penetration of IT devices and communication solutions and emergence of new ‘virtual reality’ technologies are contributing to the expansion of apparel e-tailing.