Anna Mittal, a Gurgaon-based consultant, recently moved to India after two decades of working with technology companies like IBM and Cisco in Singapore and Australia. Over the years she has become used to buying clothes and furniture online. That virtual shopping list includes lingerie. In Singapore Mittal preferred shopping at Victoria's Secret webstore and in Australia she routinely picked up Strawberry innerwear online. "Buying from the comfort of your living room offers privacy and the 25% discount compared to buying from retail outlets makes it more attractive," says Mittal.
In India, however, Mittal has had to drive down to malls to buy lingerie at Marks & Spencer outlets. "I find the websites unable to manage expectations very well. Lingerie buying in India has a long way to go," says Mittal. Her expectations include a choice of brands, timely delivery, return policy and she wouldn't mind an occasional consultancy.
A Niche Play
In evolving online marketplaces, lingerie has been pretty much under wraps. There are more than 50 webstores in India but lingerie, according to Sanjeev Aggarwal, managing director of Helion Venture Partners, a venture fund, is "the fifth or sixth category for multi-product webstores. Besides, it's a small, unorganized market. The offline lingerie market is just above $2 billion and online is insignificant." For instance two-year-old fashion retailer Jabong.com started lingerie as a category only six months back. Another portal Yebhi.com, which started as a webstore for shoes and added lingerie later, says innerwear sales account for 2-3% of their business and "it's not a key category for us", says Nikhil Rungta, Yebhi's chief business officer.
Yet, a few sites are betting on lingerie. These include Zivame.com, Prettysecrets.com, Moodsofcloe.com and Laceandme.com. Last fortnight Zivame.com, which claims to be India's largest online retailer of lingerie, raised $6 million in a fresh round of funding from Unilazer Ventures, IDG Ventures and Kalaari Capital. Overall, much like the small size of lingerie market, venture money into the vertical has also been minusculeless than2%of the $500 million venture investment going into internet businesses in 2013. In all, Zivame.com has raised $9 million since it started two years back; and another lingerie-focused portal Prettysecrets.com got $1 million from three angel investors Indian Angel Network, Harvard Business School and Orios Venture Partners.
Ronnie Screwvala, the entertainment czar who's now wearing the investor hat as founder of Unilazer Ventures says, "Lingerie is an under-explored sector due to lack of organized retail. In this category there's a need for anonymity from the core consumer and e-commerce will open up a strong latent demand." Contours of that demand can be gauged from the daily orders that Zivame.com ships. Says Richa Kar, founder-CEO of Zivame.com: "We are averaging 1,200 orders daily. This has jumped 200% in one year." The category spans bra, panty, nightwear, fashion tapes, shape wear and more. "We are selling solutions for innerwear," Kar adds.
Karan Behal, founder-CEO of Prettysecrets.com, and Kar believe the value proposition for online innerwear stores is fourfold. First, the choice online offers to buyers or, in trade parlance, the sheer number of stock keeping units (SKUs) of lingerie is far higher than for any other category. Says Behal: "The number of bra
sizes is eight times the number of men's shirt sizes." Adds Kar: "Retail stores stock only the fast-moving category and sizes and not all the 85 sizes and 35 different styles of bras."
Second, online ensures privacy of purchase. Third, lingerie portals offer unlimited shelf space and, finally, online rises above the problems of physical distribution. Explains Kar: "The top 10 cities account for 70-75% of our sales. A buyer in either Dimapur in Nagaland, Surat in Gujarat or in Bangalore has access to the whole inventory."
Behal has been in the lingerie business for three decades, selling via 250 retailers across India. However, the company wound up the brick-and-mortar retail business to focus entirely on online. Says Behal: "The problems in lingerie are poor supply chains, lack of in-store ambience and the absence of trial rooms. Earlier [in the offline model] there was a distributor, retailer and seller. Now between us and the customer is a computer screen and we can engage with the buyer directly?"
This helps Prettysecrets.com, launched in 2012, to improve margins and offer lower than retail prices. While 70% of the sales of Prettysecrets.com come from its own brand, zivame.com offers buyers a wider choice from local and international brands, including Jockey, Enamor, Loveable, Curvy Kate, Ultimo, Panache and Promise.
Kar believes that online buying has brought in new lingerie buyers and even men are comfortably buying off the webstores. She says: "80% of the buyers are eves. The men tend to buy more on occasions like Valentine's Day." Adds Pragya Singh, assistant vice-president, retail and consumer products, Technopak Advisors: "Men buy lingerie as a gift frequently and they won't feel awkward about buying online. Webstores allow buyers men or women - to discover options."
For the Younger Eves
However, not all women are rushing to buy their next pair of stockings online. Says Kiran Ray Chaudhury, managing director, Aether Marketing, "I haven't bought online as I'm concerned about the fit. In the past six months I have selected and then abandoned my lingerie shopping cart at least three times." She is, though, hopeful of concluding a transaction soon "as online is 25-30% cheaper".
Ahmedabad-based Madhuri, who works out of home, adds: "There's a certain romance associated with lingerie buying online. The range is better, but I won't buy online unless there's a good return policy. Online lingerie buying is for younger buyers between 20 and 35 years. I continue to buy from my neighborhood store as I know what I want.
In fact the target market for Prettysecrets.com is 20-35-year-olds; as Behal explains, this age group not only wants a variety of fashion wear and online is all about a wide choice it is also more comfortable shopping online. "As awareness increases women will flock online to buy innerwear," he says. Kar believes the choice offered online is driving women to purchase lingerie six to eight times a year, compared to four times a year offline.
Lingerie retailers hope the trajectory of buying online will be similar to that in the West, where both online and offline are far more evolved. For instance, in the US alone there are more than 50 webstores selling lingerie, with Victoria's Secret being
the largest. About 30% of its $6-billion sales come from online shoppers. Others include Bare Necessities, HerRoom, Freshpair, FigLeaves and La Mew.
Says Mittal: "I believe online can tackle many of the problems of lingerie shopping. Typically you have untrained sales people selling lingerie in shops and most often there are men behind the counters. Neither are there consultants to advise women on new styles andbrands, like in the overseas markets. In India online has the opportunity to bridge the gap."
A key reason for the glacial speed in innovation in the lingerie market is its small size. At close to $2.5 billion, the market is dominated by mom-and-pop type retailers and hence the opportunity is not deep enough for new experiments for the online entrepreneurs. Says Arun Chandarmohan, co-founder of Jabong.com: "Lingerie is intimate wear with limited availability. The biggermarketsgot the initial attention so you had electronics and fashion accessories getting more attention online rather than lingerie. Now, with online shopping on the rise, we see room for this category to scale."
Can it Scale?
For Jabong.com lingerie is one of its 10 verticals; however, it's the lingerie-only sites that could face a bigger challenge to scale the game. Says Alok Mittal, managing director of venture capitalfirm Canaan Partners: "Unless it becomes $100-200 million business online, lingerie will be too niche. It's a tough business to sustain as a standalone vertical. Customer differentiation experience can make a webstore attractive, but a good model can be copied easily. The better way will be a hybrid model both online and offline options."
Aggarwal of Helion believes it can be expensive to acquire customers in this business. He explains: "Cost of customer acquisition is amortized over the same category ofproduct. That makes it expensive and a big challenge for lingerie-only sites. There's always ariskfrom a horizontal like Jabong.com, as for the latter it's marginal cost. A buyer at a multiproduct portal like Jabong.com can come again quickly to buy a shirt, a belt, a shoe and lingerie and hence get more stickiness." He does add, however, that if this niche can be scaled into say a $100-million business, it then becomes less about scale and more about margins. Adds Singh of Technopak: "Every vertical won't become a Jabong or a Flipkart. Although a good niche player can be an attractive buy for a multiproduct portal wanting to expand in that niche."
Aditya Rath, associate director, consulting, Pricewaterhouse-Coopers, says the lingerie market is growing at 10% a year, though it's very local at present, where women go to the neighborhood store to buy. "It [the online component] is like the screensaver and wallpaper download kind of business. It won't be very big," says Rath.
Despite the challenges Kar feels more women will buy lingerie online. She says, "Every urban woman is a potential customer."
This article was originally published in the online version of the Economic Times dated on 5th January 2014.