India's e-commerce wars to be reshaped by private label

With nearly 500 million Indians using the internet in 2018 and many just dipping their toes into online shopping, private labels will woo price-sensitive customers and create loyalty and higher margins, say retail analysts. — Reuters

MUMBAI: For Lalit Bisht, buying Roadster jeans and T-shirts off Myntra, Flipkart's fashion operation, is a no-brainer. It may take a week to deliver clothes to Bisht's small hometown in Uttarakhand, but the wait is worth it.

“The fit is perfect and price is just about right. It's a value-for-money brand, “said 32-year-old Bisht, a government worker who lives in Haldwani, which had a population of just over 360,000 at the time of the last census in 2011. It is a place where options for good quality, affordable apparel are mostly lacking.

Bisht's purchases of at least 20 Roadster items from Myntra are symptomatic of the appeal of private labels to smartphones. These are the people who can not afford to splash on the big global brandnames.

And with Walmart now taking on Amazon Inc in India with its US $ 16bil (RM63.84bil) purchase of the homegrown online retailer Flipkart, India's e-commerce wars are likely to pivot more towards private label brands.

Up until now, the battle has more often been fought through flash 19659002] Both Flipkart and Amazon have been burning through cash to those discounts, say analysts.

With nearly 500 million Indians using the Internet in 2018 and many just dipping their toes into online shopping, private labels will woo the price-sensitive customers and create loyalty and higher margins, say retail analysts.

For example, Roadster jeans for women on myntra that started at 389 rupees (RM23), could lure many more buyers than the cheapest Billion brand

Last year, Flipkart launched its private brand Billion which sells everything from T-shirts to air conditioners. Marc and furniture label Perfect Homes. Myntra's private brand portfolio, which includes 13 labels, is profitable.

Amazon has been slowly moving into private labels in India. Its portfolio includes its global AmazonBasics brand that sells everything from headphones to stationery; Solimo for dry fruits and bed sheets, women's ethnic-wear brand Myx, men's clothing brand Symbol, and a low-cost smartphone brand 10.or.

“The role of private brands. are not being serviced, “Amazon India head Amit Agarwal told Reuters in an interview last month. “We'll keep looking for these opportunities.”

And although the Amazon says money in India is years away, Arun Sirdeshmukh, the head of its fashion business in India told embitter on ” a general long-term profitability journey. “

One supplier, who asked not to be named, said retailers to the price competitively and still make a profit.

Others see opportunities for Flipkart and Amazon to take some of these private label brands overseas.

The following deal, Flipkart's co-founder Binny Bansal said a lot of the private it has created in the countries where Walmart operates. “That's something we'll be looking at,” he said.

Sources familiar with Walmart's plans say private labels will be a key focus for the Bentonville, Arkansas-based retailer in India, an e-commerce market forecast by Morgan Stanley to grow to an annual US $ 200bil (RM798bil) in a decade.

Walmart's fashion brands, with clothes priced from US $ 5 (RM20) to US $ 30 (RM119) an item, could also be a hit with Indian shoppers, including labels like women's apparel brands Time and Tru, men's clothing brand Wonder Nation, say analysts.

“The US private label for Walmart has always been an entry price, it tends to be at the lower end of the pricing spectrum,” said Neil Saunders, managing director of consultancy GlobalData Retail.

Road to profit

Bengaluru-based Flipkart, founded in 2007 by two formerly Amazon employees, has grown to become India's top e-commerce firm, thanks, in part, to the exclusive launches of electronics with deep discounts.

Flash sales of smartphones or TVs, typically exclusive to one online retailer, create hype around a brand and help move inventory, but hit profitability – making them a bad long-term bet, analysts warn.

Flipkart reported a net loss of 87.71bil Indian rupees (RM5.18bil) in the year to March 2017. Amazon's international operating loss grew 29% to US $ 622 million in the first quarter, pledged a US $ 5bil (RM19.95bil) in vestment.

Sources say Walmart could expedite Flipkart's push into private brands and help develop new brands to differentiate and counter Amazon, Which Prime is a loyalty program in India in any other part of the world. – Reuters

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