E-commerce and fashion are two sides of the same coin. They have many similar features including being dynamic, being fast and—if we may add—furious, with an innate ability to get the customers hooked on to them. They are also easily accessible with the right know how. With such strong similarities, it is only natural that they are famously paired together and hence when one thinks of e-commerce, the first category that comes to mind is fashion and when one talks about fashion, it is the online space that is the first place people think to look for apparel most in vogue.
The Market Overview
To set the context of the story, we hear from one of the early entrants in the field to go online with their collection for women’s wear.
Dr. Lucky Yadav, Founder, Lyla, says, “We started the brand by selling in the online space in 2013; there have been a lot of transformations since then. That time, the online space was just starting to open up and we got an opportunity to scale quickly. However, in the last two years the space has become really crowded and discount driven. It definitely helps to reach more customers especially for brands that are not selling offline. Online has completely changed the way one would do business. Now anyone can sell online, people start business from their homes since no real infrastructure or investment is required.”
Reiterating the same is Vijay Pal Singh Johal, Director, Truffle Collection. “After selling a million pairs in UK, we tapped the growing market of India through e-commerce. E-commerce has helped us reach a lot of Indian households and is vastly shaping up our business,” he says.
Launched in 2018, Raisin is making a mark in the women’s ethnic wear category and according to its Cofounder, Vikash Pacheriwal, e-commerce has hugely impacted the brand’s sales, marketing and positioning as it has been able to reach a vast audience across all corners of the country and overseas.
“We are available on all online e-commerce giants and have our own exclusive portal as well. Collaborations with digital influencers and celebrities have garnered a huge reach across our market audience,” says Pacheriwal.
Not restricted to just start-ups, the online space is helping well-established brands reach every nook and corner of the country and offer their products to aspiring customers.
According to Atul Garg, Chief Marketing Officer, Baggit, thanks to e-commerce, there has been tremendous increase in terms of reach and sales in non metros (Tier II/III cities and beyond). He cites the feedback from these places on products and pricing that have helped them gain confidence in launching their online specific value brand ‘gg’.
Revealing the influence of e-commerce on the brand’s business, Garg says, “E-commerce has been an important revenue contributor by double digit Y-o-Y growth thus contributing to the top line numbers.”
Garg also adds in the challenges that brands like his face when it comes to setting up their presence in the online space, “The challenging side is that technology requires huge investments across the value chain, on regular basis. Currently, we are revamping the frontend and backend of e-commerce and also investing in omni-channel strategies to provide seamless shopping experience to our customers.”
Parul Sharma, E-Commerce
Manager, Numero Uno says, “We can see that e-commerce is creating the biggest revolution in the retail industry, and this trend would continue in the years to come. Apparels are no longer considered durable items and instead, people are now chasing trends and hunting for deals. The business of fashion for 2019 will grow at a steady pace since customers are finding it easier to find fast fashion with exciting deals every now and then.”
To accentuate her point on the growing thrust of fashion and retail in the e-commerce space she talks about how the apparel and lifestyle industry together have contributed to about 30 percent of the online retail sales in 2018 in India. “The figures showcase the potential influence of fashion as a category and going by the way we see so many start-ups entering this field, the space is only getting better,” she adds.
The CEO and Co-Founder of Campus Sutra—which is gaining popularity with its athleisure range of apparels—Dhiraj Agarwal says, “We have seen that whenever a new channel starts, customers gravitate towards it. This happened when brands like Levi’s entered the country a couple of decades ago; this was also obvious when MBOs like Shoppers’ Stop opened in the 90s. E-commerce provided the opportunity for new-age DNVBs (Digital Native Vertical Brands) such as Campus Sutra with opportunities to establish themselves and scale rapidly in step with the Indian consumers expanding aspirations thanks to (consumers’) greater exposure, awareness and increasing prosperity and overall growth of the economy.”
Agarwal credits the e-commerce channel for providing them with a platform to meet consumer expectations for ‘anytime-anywhere’ availability and actually deliver on the promise of fast fashion.
Revealing the advantages that come bundled up with online presence, Tanvi Malik, Co-Founder, FabAlley and Indya states, “Both our brands are present online and offline, and we have seen a lot of emerging synergies between the two channels. Online enables discovery, provides a sense of convenience to our customers with speedy logistics and gives an endless window to showcase the depth of our products. Since women are becoming more tech-savvy, independent and shorter on time due to working hours, our online channels enable them to conveniently shop on our websites.”
In the year that just went by, Malik and her team launched Indya’s website, which caters to 25+ countries. According to her, the brand is seeing a huge demand by NRI customers in the US, UK, Canada, Dubai and other countries.
Where e-commerce exposure is considered a win-win for any brand, Tabby Bhatia, Director, Voganow.com believes that too much of a good thing can act as a spoilt sport. He says, “E-commerce is currently shaping up very differently than it was a year back. Since the taking over of the fashion collaboration of Jabong and Myntra by Walmart, and Amazon pushing its limits against all three including Flipkart, we reckon that currently, it is in to many spots with no sustainable shape in terms of label selling. The marketplace right now is not a great place due to numerous fluctuations. Therefore, it is a safer option to stick to a much more ‘precise’ platform than a giant e-commerce platform that offers everything to anything.”
Demonetisation may have made people get accustomed to online and card payments, but cash is still the King! Majority of the brands in the online space talk about how Cash on Delivery (COD) still rules the game. Mobile wallets too have gained a lot of popularity and if we have to rate the modes of payments, it would be COD followed by mobile wallets, cards and then online bank transfer.
According to Yadav, more than the convenience it is the trust factor that makes people opt for COD. She reveals, “COD sales have always been the preferred choice for customers and apply to 70 percent of our sales. The customer still hesitates to pay upfront especially on brand websites and newer portals. However after demonetisation mobile wallets have become the next big thing since everyone uses it as single mode of payment for all expenses.”
Garg shares, “As per various industry statistics, COD is the largely preferred mode of payment (specially in Tier II and III cities) and contributes to the real growth of online business, followed by cards and mobile wallets. There has been a substantial increase in the number of customers preferring mobile wallets as the mode of payment.”
Agarwal highlights the option of pay by card on delivery as helping ease payment woes as well – both for customers and the retailers.
Elaborating on the same, he shares, “The drive towards digital undertaken by the government has certainly worked in favour of the fashion industry. The ability of consumers to make payment via their cards after the goods arrive has been a real gamechanger. Indian consumers are coming around to swiping their cards rather than always wanting to pay cash.” He further talks about how the cash-backs and other incentives from mobile wallets have provided additional incentives to customers thus eventually let them get accustomed to various modes of payments other than cash!
On the mobile wallet payments gaining popularity, Malik reveals the trend being witnessed at FabAlley and Indya.“Wallets, especially PayTM, have seen an exponential rise on our websites. Now, with Google, Amazon, Phonepe and other large players entering the wallets’ space, it’s much easier for a consumer to confidently transact online. Cashbacks and rebates provided by these wallets also help in converting the customer to prepaid payment modes. 2019 will see amazon and google scale up their wallets business rapidly, due to the sheer scale and captive consumer base the two already possess,” she states.
Keeping the COD preference in mind, Sharma is planning to introduce this option in their mode of payment soon, “As we have recently started online sales, we haven’t introduced the COD option on the website yet, but to make it more convenient for the consumers we will introduce it soon as it is the most preferred payment option with about 45 percent of buyers opting for it in India. For us most of the transactions are done using a mix of net banking and debit and credit card payments.”
She further adds on the future of digital payments in India, saying, “Digital payments adoption will be higher than cash on delivery mainly because of the cashback offers. Analysts, on average, estimated that digital payments comprised 55 to 60 percent of all e-commerce transactions during the festive sales. However, payments by cash on delivery account for about 60 percent of all e-commerce purchases on regular days.”
While talking about the various government policies that are affecting the growth of the e-commerce space, Agarwal says, “The GST norms that were introduced are positive for the industry as a whole (in terms of a consistent tax rate across the country), though the GST refund mechanism is not yet in place and is taking time. Also, the updation of TCS, which was introduced for importers in October last year, seems to be taking time. The e-commerce policy that has being enforced from February 1, 2019 has placed restrictions on the growth of e-commerce players by capping ‘exclusive’ sales on their platform, sales from owned subsidiaries etc. This will obviously affect the growth of e-commerce in the immediate term, but growth should stabilise once players adapt to the new rules and regulations.”
Sharma observes that with the new policies in place, while the local vendors are getting protected, this will be a blow for customers as well since they were able to enjoy discounts which will no longer be there.
Garg adds that with the new framework of policies in place, the government, market places and brands will have to walk together not only to understand the implications but also to provide seamless experience to customers though from the business side, he adds, “Few areas where Government has announced regulations and will affect the ecosystem are bulk purchases from a single entity, providing direct discounts on products, product exclusivity on platforms etc.”
The Road Ahead
Malik point out that 2019 will see online fashion retail becoming more focused on experiences, rather than value and discounting. With the recent policy changes instituted by DIPP, growth on the back of heavy discounting will be curtailed largely and online brands and marketplaces will shift their focus to providing superior experiences to customers.
“Driving engagement with content marketing and influencer led marketing are on the cards for us, as we feel that differentiated and authentic fashion imagery featuring real women and relatable experiences are more impactful than leading with products and fashion trends,” she says.
On the trends and dynamism of the online space, she concludes stating, “The other trend to watch out for in 2019 will be hyper-personalisation. Online shopping provides rich data on customer shopping patterns and behavior, which makes it easier for retailers to target more relevantly.
Online retail is beginning to struggle with the problem of the plenty with the entry of multiple Indian and international brands in the space and solving for it requires a better understanding of unique customer tastes and preferences. AI-based software that de-codes these patterns will be incorporated into online fashion retail so that the right products and brands meet the right customers.”