After making a significant dent in fashion and lifestyle products, India’s e-commerce companies are trying to crack the nascent premium and bridge-to luxury segment.
Reliance’s Ajio.com, that so far sold its own labels and brands such as Levi’s jeans to Puma shoes, has over the months added a host of premium brands including Steve Madden, DC Shoes, Ed Hardy, Gas, Quiksilver, Roxy, Superdry among other global labels. Flipkart’s Jabong is piloting a ‘Jabong Luxe store’ on its site where buyers must register to gain access.
Tata CLiQ also is ramping up its premium offerings on its site. Darshan Mehta, CEO of Reliance Brands, that sells Steve Madden and a host of brands on Ajio and Tata CLiQ, said the total market for fashion and lifestyle products priced above Rs 6,000 is an estimated 15 million people in India but that market is growing by 20% annually.
However, that market is very minuscule for online retailers where currently the average sales price for fashion apparel for online platforms including Jabong, Myntra, Amazon or Flipkart is anywhere between Rs 600-900, said a top executive of an e-commerce company.
“The average sales price for any of the premium brands is more than Rs 3,000 so it is a big challenge for e-commerce companies to sell. The market is so small that anyone attempting to do Rs 40-50 crore a year is a huge success,” he said.
“You have to be patient and build the business for five years from Rs 10-20 crore to Rs 200 crore. This is not an immediately scalable business but margins are higher due to their higher ticket sizes.” However, Tata CLiQ said the premium brands are already contributing a portion of their sales.
“We are focused on the new money customer who is more amenable to online shopping. We are clocking Yo-Y growth that is over 250% and 8-12% of the business contribution in India for most brands that we work with,” said Vikas Purohit, chief executive of Tata CLiQ. “ Ajio did not respond to a questionnaire seeking comments.