Director and Chief Marketing Officer (CMO) Eshopbox
Apparel e-tailers have done nothing to stop industry from being discount-driven
The apparel and fashion e-tailing industry is growing at an unimaginable rate in India. But the e-commerce firms have yet to see profitability. In an interview with Fibre2Fashion.com, Neeraj Choudhary, Director and Chief Marketing Officer (CMO) of Eshopbox, an online technology service provider to fashion and apparel e-tailers, discusses the pros and cons of the industry in detail.
What is the size of the e-commerce industry in India? What is the percentage pie claimed by apparel and fashion e-tailing?
Currently, the Indian e-commerce industry is worth about $24 billion, which is a meteoric rise in 7 years from $3.8 billion in 2009.
India has an internet user-base of about 375 million (30 per cent of population) as of Q1 FY16. Despite being the second largest user-base in the world - only behind China (650 million, 48 per cent of the population) - the penetration of e-commerce is low as compared to markets like the US or France. But it is growing at an unprecedented rate, adding around 6 million new entrants every month. With this increasing internet user-base, India's e-commerce market is likely to touch $38 billion mark in 2016, a massive jump over $23 billion in 2015. On the other hand, m-commerce is growing rapidly as a stable and secure supplement to e-commerce industry.
What strategies can help fashion and apparel e-commerce firms attain profitability?
Being in this industry for long, I have seen that one of the biggest factors lowering profitability of e-commerce firms is that they have done nothing to stop this industry from becoming discount-driven, which actually hurts sellers and firms. They should work on making it a product-driven industry rather than being discount-driven. They can take many steps since they are the ones dealing with the end-customer like giving them future trend analysis, curation of products, analysis to sellers based on their products and its performance, etc. Such kind of close monitoring will not only help in increasing volumes, but will also help in lowering return percentages, which is also a factor hurting the pockets of such firms.
There are many marketplaces operating only on fashion categories such as Jabong, Myntra, Limeroad, etc. According to studies, every third search on Google is related to fashion. So, there is no doubt that this is one of the fastest growing sectors in the Indian online market. Even marketplaces which sell products from various categories (fashion apparel being one of them) have their advertisements majorly focused on fashion. Online market in India is driven by discounts, offers and heavy promotions. From sellers' point of view, it becomes important that they take full advantage of these promotions and remain updated. So that when an end consumer reaches these platforms, they are present there at the right time with the right kind of products.
How can Indian apparel and fashion e-tailers obtain funding for growth? Please share relevant information about the possible sources.
Online apparel is one of the popular verticals, which along with computers and consumer electronics make up 42 per cent of the total retail e-commerce sales. Some established brands like Arvind are now creating clothing lines just for e-commerce. Foreseeing growth in this sector, investor circle is very positive on putting their investments in this category. Apart from big venture capital firms, there are many small Non-Banking Financial Companies (NBFCs) and investment firms like Pinnacle Group, Capital Float, etc who assist small apparel e-retailers with funds based on their product performance. Their customised financing services suit e-commerce environment, and help merchants and e-retailers in achieving desired volumes. Such kind of easy loans help e-retailers grow their business. They can get funds on hand in almost no time to invest for growth (eg expand production capacity or to pay for raw materials on time).
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