Writing a $30-bn e-tale!

The number of digital buyers in India is expected to reach 41 million by the end of 2016, among which the rank of online buyers of apparels has been growing at a faster rate. An exclusive ITJ Report reveals the many-sided facets of this booming digital revolution.

Much less than a decade back, buying apparels online was unthinkable! But today, online fashion is fuelling the growth of e-commerce, and by 2020, apparel segment is expected to account for about 30 per cent of total retail revenue of $100 billion. The queue for online buying is swelling, thanks to mobile boom that has eased buying modes, discount sales, comfortable paying gateways and a return-if-dissatisfied policy that have proved extremely attractive for online buyers of clothes. These positive aspects have also converted many, who relied on touch-and-feel sentiments earlier, to online buying.

According to a research report, every third shopping search on Google is fashion-related and the queries on fashion are growing at 66 per cent year-on-year. The online population in India is expected to grow to 250 million by 2020 from its present 40 million. By 2018, India is set to witness 500 million internet users whereas 280 million smart phone users could be the key drivers for e-commerce portals, reveals a Forester Consumer Research.

The trading portals have expanded their warehouses and are up-to-date with technology to manage operations from customer-care to inventory and payments. The payment revolution with the new gateways like Paytm and credit card facilities have given the further boost. The ease of ordering from wherever they are for the modern career-oriented generation, who is always on the go further lubricates the wheels of growth in the apparel e-commerce.

According to a report from Associated Chambers of Commerce and Industry of India (Assocham), e-commerce is likely to generate nearly 2.5 lakh jobs in India’s online retail, including temporary employees, supply chain, logistics and ancillary units during 2016. The report states that India’s e-commerce market was worth about Rs 25,692 crore in 2009, it went up to Rs 1,14,940 crore in 2014 and to Rs 1,55,507 crore in 2015 and was expected to touch a whopping Rs 2,56,925 crore by 2016.

Mumbai-based Suditi Industries’ Riot brand has been able to penetrate the youth market of India and abroad. The Riot brand had rights to manufacture and sell fan merchandise during the 2014 FIFA World Cup. The brand is available in stores as well as online. According to R Chinraj, President, Suditi Industries, “E-tail is a booming market and one needs to adapt to such competitiveness of the industry. And we believe that e-commerce would be one of the major drivers for Suditi moving forward. So far we were selling only through our distribution network and retail stores. It is only now that we are getting directly in touch with our customers through e-commerce platforms as well as our own e-com website. This has allowed us to get more efficient due to better feedback from the customers. Also, customers get products at better prices as it is direct from the brand and saves him on his travel too.”

There are other brands of clothing as well that are available only through online channels. One such brand is Bhashan T-Shirts. Says Bhashan T-Shirts’ Founder & Owner Bhavesh Sanghvi, “As of now, it is available only through online portals (Snapdeal, Flipkart, Paytm, Shopclues, etc.).” But from January onwards it will be available in retail stores across Mumbai and a few other cities, he adds.

“E-commerce has been a revolution and it has created entrepreneurship ability in the youth. It has been next best thing to happen to garment industry. And few years down the line, the concept of malls will be just a gone thing,” he adds.

Bhashan T-shirts contributes in many ways, firstly it creates awareness on social issues. Secondly it gives you an alternate medium to express your thoughts on the same through t-shirt. “Also we come up with many campaigns on social issues to support it. And from some percentage profit of Bhashan T-Shirts, I do my bit of helping and serving the needy, by providing education to those who want to study and can’t. Feed the poor who can’t earn. And many other ways”, adds Sanghvi.

Anuj Puri, Chairman & Country Head, JLL India, a professional services and investment management firm, provides some numbers on the Indian retail market. He says, “India’s retail market value was estimated at $520 billion in 2013, and is expected to grow to $950 billion by 2018. With a CAGR currently pegged at 13 per cent, the Indian e-commerce market is expected to grow the fastest within the Asia-Pacific Region – with its market size doubling every 2-2.5 years. This certainly gives us reason for deep introspection. While the global growth rate of online shoppers is estimated at 8-10 per cent, India currently has more than 10 million online shoppers.”

“Though 70 per cent of India’s e-commerce market is related to travel, electronics and apparels are by far the most important categories in terms of sales,” adds Puri. He further says, “The key driver Indian e-commerce is the rapid increase of broadband internet penetration, which is growing at a whopping 20 per cent every year. The rising standards of the mushrooming middle-class with high disposable incomes, coupled with the urban influence on rural aspirations, have led to an exponential growth of the internet culture in India. This is very pertinent to the Indian retail sector. The internet has given Indian consumers access to a wide spectrum of products and services, even in places where brick-and-mortar shopping complexes have not reached. Also, the availability of a much wider range of products when compared to physical retail stores, coupled with relatively lower prices, is driving demand for online retail. With the evolution of the online marketplace, sites like Flipkart, Snapdeal, OLX and Jabong are thriving and more and more Indians are buying goods online.”

Corporates join the bandwagon

When Jabong, Myntra, Flipkart and Amazon.com started making a success of e-commerce in apparels, the corporates were not far behind. Encouraged by the sales boom of these trading portals, textile companies like Arvind Ltd, TT Ltd and Creative Lifestyles, began exploring the online market through their own e-commerce platforms.

The companies gameplan is to replicate the company owned exclusive brick-and-mortar store experience on the Internet. For instance, while Arvind Ltd has begun its own e-commerce initiative through its start-up Arvind Internet Ltd (AIL), TT and Creative Lifestyles too have been selling their products through their own websites.

“It is the same logic of being present at franchisee-run exclusive branded outlets (EBOs), multi branded outlets (MBOs) as well as having your own company-owned exclusive stores. So while textile companies are selling their products through other platforms like Jabong and Myntra, gradually they have begun selling on their own websites too,” says Rahul Mehta, President, Clothing Manufacturers’ Association of India (CMAI) and Managing Director of Creative Lifestyles, which markets its brand—109°F—through other e-commerce platforms as well as its own website.

Arvind is very bullish about its initiative and according to Kulin Lalbhai, Executive Director at Arvind Ltd, the company see e-commerce “as a key growth driver for the group and we aim to be Rs 1,000 crore plus business in three years”. Raymond Limited, the leading manufacturer, marketer and retailer of worsted suiting fabrics, launched its official online store, ‘RaymondNext.com’, in the middle of 2014. RaymondNext.com integrates all Raymond products, brands and services under a common e-commerce platform.

The launch of RaymondNext.com, is a step forward for the company to ensure increased visibility and availability of its products, as consumers can now see and purchase from a wide range of products from the house of Raymond across Textile, Apparel brands, Home Furnishing and Accessories.

In a first-of-its-kind in the industry, Raymond has launched five individual e-commerce enabled brand websites of Raymond, ColorPlus, Park Avenue and Parx with a common shopping cart. All these websites are optimised to be viewed on smart phones and tablets.

Commenting on the launch of RaymondNext.com, Vijay Basrur, Head – Ecommerce, Raymond, said, “We are thrilled to offer our customers an exciting new avenue for shopping with the launch of RaymondNext.com. E tailing at present is a small contributor to retail and is fast emerging as an alternate commercial channel across multiple product categories among a rapidly evolving netizen base in the country. According to industry estimates, e-tailing market is set to reach $32 billion by 2020 and hence makes perfect business sense for Raymond to capture this growing demand.”

Coming up of online retailers has made ‘fashion’ more accessible than ever to customers. “E-commerce is able to bridge the gap and bring fashion closer to consumers in smaller markets. Online stores also give consumers the convenience of accessing a broad selection of brands and styles across all price-points, all at one place and at the click of a button,” says Mayank Shivam, Category Leader, Amazon Fashion, India.

Arvind Internet Ltd (AIL), a start-up by the Arvind Group, is ready to revolutionise fashion & retail across India this year with its online custom clothing brand – Creyate. Kulin Lalbhai is driving the e-commerce initiative at the company, which will be a major growth driver for Arvind moving forward.

Spykar, one of India’s leading denim brands –synonymous with youth and fashion, launched its website Spykar.com recently in a new e-com avatar. This news comes as a delight for all Spykar fans spread across the length and breadth of the country. To leverage the launch, Spykar has announced a unique ‘Spykar Pe Buykar’ offer. The platform consists of the latest Autumn-Winter 15 collection that includes a variety of shirts, t-shirts, denims, trousers, jogger pants, jackets; and accessories like wallets, bags and belts, socks. Moving further, the platform would continue to showcase an array of apparel styles along with accessories each season.

Boost to logistics

The rise in e-tailing has a spin-off on the logistics sector, the business of which has grown phenomenally servicing the online portal for their warehousing and transport needs. Said Chandar Agarwal, Joint MD, TCI-XPS, a division of Transport Corporation of India: “The e-commerce retail market is one of India’s fastest growing markets. It is expected to be worth $36.7 billion by 2020, from $3 billion in 2014, growing at a CAGR of approximately 52 per cent. The growing prominence of e-commerce with rising internet penetration and consumer confidence in online shopping has come as a big boon for the logistics service providers. This is due to the fact that despite commerce moving online there is still the need to address the issues like warehousing, packing, shipping and tracking. The logistics sector specific to e-commerce retailing in India was valued at $0.2 billion in 2014 and is projected to witness a CAGR of 48 per cent in the upcoming five years to reach $2 billion by 2020. Logistics in e-commerce retail is evolving with growing business requirements, and is acting as an important lever for business growth.”

“TCI XPS is fully geared to cater to the logistics requirement of e-commerce sector and can provide to the specific warehousing requirements of sector due to its ability to deliver products to customers in a safe, secure and cost effective manner across the country. For its B2B customers, it offers Forward Movement Service portfolio management, which includes last mile delivery from warehouse and inter-warehouse transfer. Further, it also handles Reverse Movement Service Portfolio, which includes movement from vendor to warehouse, vendor to fulfillment centre and packaging from vendor locations. For its B2C customers, it offers warehouse to customer, vendor to customer and bulk and break services through its unique hub-and-spoke model for delivery. It also handles reverse logistics for its B2C category, which includes customer to warehouse and customer to vendor movement. With the new focus, TCI XPS is now capable of handling 10,000-12,000 shipments per day without much of fuss,” he adds.

Agarwal says: “E-commerce is the fastest growing business for TCI XPS and we are expecting it to even further expand at a tremendous pace. TCI XPS is doing exceedingly well in the large business category. The company is also providing PNP services (pick & pack services) in the large business category. For the coming year, TCI XPS will focus more on small packages starting 500 gm. The launch of ‘Make in India’ initiative has acted like a catalyst in the growth of logistics sector. With factors like GDP revival, ramp up in transport infrastructure, e-commerce penetration and impending GST implementation; India’s logistics sector is poised for accelerated growth.”

Up for the challenge

In order to boost its seller base, online retailer Flipkart is keen to reach out to the handicraft sector. The online retailer has tied up with the National Institute of Fashion Technology (NIFT). According to the agreement, students and the Flipkart team will work to integrate the local weavers and artisans for end consumers. The first pilot of the project will begin at Uttar Pradesh’s Varanasi, Prime Minister Narendra Modi’s constituency. Out of NIFT’s 15 centres across the country, five—Hyderabad, Mumbai, Gandhinagar, Chennai and Delhi—have shown interest to be part of the project. Flipkart staff will be deployed in various cities to coordinate with the local artisans, who can also take support from fashion-designing students at NIFT about market trends and consumer interests. While Banarasi saris will be the focus, products like leather purses, bags and laptop and ipad covers will also find place in the list of shopping items.

According to estimates, Varanasi has about 40,000 weavers, while Barabanki, another city in Uttar Pradesh, has 10,000 engaged in various forms of handicraft. Flipkart plans to target about 15,000 weavers in Sultanpur, too.

Earlier, the e-retailer had signed a memorandum of understanding with the labour ministry for skill development of its employees, and the Textiles Ministry to reach small and medium manufacturers. A few months ago, it also signed a deal with Federation of Indian Micro and Small & Medium Enterprises to reach its target of 50,000 sellers by the end of this financial year. While Snapdeal, Flipkart’s domestic rival, is already way ahead in the race with 30,000 sellers, American giant Amazon has been on an expansion spree with about 6,500 sellers. Flipkart stands at about 3,000 and it is eyeing an ambitious target of 50,000 by the end of this year.

Consumer perspective

Very apprehensive to buy clothes online at first, Vrushali Kulkarni, an event management executive with a reputed Mumbai-based publication firm, now has been buying clothes online almost regularly. She says that buying clothes online has become so much easier now due to various factors like easy return policy and easier availability, and everything available in just a click of a button. Almost all the brands are available at one single place and she does not have to search for it in the stores. Another reason why she buys clothes online is because of the range of products available and the discounts offered on online stuff.

Even Priya Shetty, Manager with Ominicom Group echoed the same points put by Kulkarni.