Private Labels become stars of Indian etailing

Private labels, catering to fashion conscious Indians, are able to make margins of as much as 60 percent, thereby attracting more and more venture capital funding today
Written by Rajiv Rao, Contributing Writer
etailing women

While a lot of the action in the Indian online landscape is about how much funding India's top retailers such as India's Amazon (Flipkart) has received, a whole new force is beginning to dictate the evolution of Indian retail, and that force is fashion.

As this article in the Economic Times details, a wellspring of new fashion brands geared to sell on the web have emerged, drawing hordes of customers and making lots more money than your run-of-the-mill e-tailing sites. Already, an Indian online retail site such as Myntra, which sells branded apparel, makes a at least 45 percent margins selling its merchandise—35 percent more than those selling electronics like phones and tablets. However, 'private label' fashion sites apparently make an impressive 15 percent more in margins—in other words a healthy 60 percent on the apparel they sell.

These sites—DoneByNone, Koovs, Shopninteen and StyleTag—are catering to a whole new breed of Indian consumers who are both fashion and price conscious. Apparently, these sites that are in charge of the entire chain of activity in this space—namely, conception, design and manufacturing and of their own merchandise and are therefore able to command better margins.

Some of these fashion sites have already seen major success. Yepme, based out of Delhi suburb Gurgaon evidently clocked revenues of Rs 140 crore (US$63 million) in revenues for fiscal 2014 in just a few years which is quite something considering how few brands are able to get this kind of traction in the offline space. Many are now attracting a good amount of venture money as well.DoneByNone.com,  a brand that sells to young women was able to quickly raise Rs 12 core (close to US$2 million) from early stage investor Seedfund.

etailing one

Some have even blazed a trail abroad in other ways: Apparently, Koovs.com, purveyor of stuff women want—shoes, accessories, perfumes and other such things was even able to list themselves on London’s AIM exchange at a 26 percent premium.

In fact, women as consumers are largely responsible for driving the success of these sites. As I wrote here previously, fashion has become the biggest catalyst for e-commerce sales (doubling to US$559 million compared to the previous year). Working women who were also shoppers increased by close to fifty percent.

"Women are emerging as a strong customer base for us, having grown from contributing 20 percent to our overall sales two years back to now clocking 40 percent of sales. The offline fashion and apparel industry has been dominated by offerings for men. We expect women will contribute 50-55 percent sales in the next two years as we increase our private-label presence," Mukesh Bansal, co-founder of Myntra, told Times Of India.

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