Web-only brands use marketplaces for visibility, woo customers to own sites with unique offers
Large retailers struggling to ensure that online sellers don't cannibalise their traditional sales channels could learn a thing or two from young web-only brands, which offer products on their own websites and in marketplaces.
Depending on how you look at it, it's either a tightrope act or the best of both worlds. Online retailers of clothing and accessories such as American Swan, FabAlley , Vox Pop Clothing, Zovi and Yepme sell products on websites including Flipkart, Snapdeal, Amazon, Myntra and Jabong. These young fashion brands also have separate clothing lines and made-to-order products to drive traffic to their own sites.
"When you are new, you need visibility , which only aggregators can provide," said Anurag Rajpal, founder and CEO of the American Swan Lifestyle Company , set up two years ago. "But the aggregators are chasing toplines aggressively and the heavy discounts ensure that our products are cheaper on their sites than on ours." Aggregators account for half of the sales of the American Swan brand of apparel and accessories and the company expects to double sales to . 80 crore in this financial year.
"We get to reach over a million people a day only because of being on marketplaces,“ said Shivani Poddar, co-founder of two-year-old FabAlley, which sells on Flipkart, Myntra and Jabong, apart from its own portal. "But customers have told us they buy our products on other sites due to higher discounts."
Marketplaces are good to gain reach, according to Rohan Dighe, founder of ViralMint, a technology provider that helps sites such as Lenskart, IndianRoots and FabAlley to maximise onsite revenue."But as a brand owner, the brand will want to own the channel of distribution and highlight the brand, which will happen only on its own site," said Dighe.
Brands have to differentiate on product ranges and assortment to protect their core channel, Technopak's Singh said. “The rules of the game are getting established and brands -large or small -need to get used to the new reality of online marketplaces," she said.
Gurgaon-based American Swan is doing just that. It is set to launch a range of clothing for 18-to-24-year-olds that will be sold only on its portal for about Rs900.The company's core product range of western apparel and accessories is focused on 25-to-35-year-olds and is sold at an average price of Rs1,500.
New Delhi-based FabAlley, with a gross revenue of about Rs1.8 crore a month, introduces about 400 new products every month on its site. Only onefourth of them make it to other portals.Its new products are available on marketplaces 2-3 weeks after they are launched on FabAlley.
At $2.3 billion, e-tailing accounts for 0.4% of overall retail in India and is projected to grow rapidly to about 3% of the total domestic market, with a size of $32 billion by 2020, according to Technopak Advisors, a consultancy firm. There is growing demand for online channels that have a wider reach and deliver even in smaller cities and towns, Technopak said in a paper on its website. "It is still early days of e-commerce and that is why we are seeing this tussle between brands and online platforms," said Pragya Singh, an associate vice president at retail advisory firm Technopak.
The predicament is tougher for companies that get a significant portion of their sales from online marketplaces. For instance, over 70% of FabAlley's sales come from other portals.
Slightly older online-only brands such as Yepme and Zovi get less than 20% of their sales from third-party sites. Both , companies only sell a portion of their range on marketplaces and launch prod ucts first on their own site before releas ing to other portals. "If you want the full range, you have to come to our site," said Vevek Gaur, who co-founded Yepme in 2011.
Some brands offer unique services to attract buyers to their sites. Year-and. a-half old merchandising brand Vox l Pop Clothing allows brands and even in dividuals to upload designs and customise T-shirts that are produced and sold on its platform. The company, which is targeting sales of Rs1 crore a month by December, is set to start retailing some of its products on Flipkart and Amazon.
American Swan and FabAlley also conl duct flash sales on their sites and have set aside certain days of the month to offer discounts. "We need to continue to do business with the giants and sharks," said Rajpal of American Swan. "But we l need to maintain a balance so that our . brand is protected and there is no canni balisation of sales from our own site."