Exploring new markets includes online... Don’t miss the bus!
Don’t miss the bus!
Surpassing many predictions, Amazon is poised to uproot Walmart as the No. 1 retailer in the US, creating a buzz among exporters supplying to the US.
This e-commerce giant is already top spot among other apparel retailers, like Target, Kohl’s and TJ Maxx. Following the lead, many brands are looking to leverage the online/digital advantage. After reporting a massive 57 per cent increase in its online sales at 1.5 billion Euros in 2017, Germanybased sportswear company Adidas is considering to sell more products through e-stores. The story is the same for many brands. Selling platforms may be different, but the medium is the same. India is also picking up the trend quickly.
A recent study by Facebook and Boston Consulting Group (BCG) claims that Indian online fashion market which is currently around US $ 4 billion, will be worth around US $ 12-14 billion by 2020. In the US alone, retail e-commerce revenues from apparel and accessories sales amounted to US $ 72.13 billion in 2016 and are projected to increase to US $ 116.3 billion by 2021. This represents a huge opportunity for players in the segment, including garment exporters, both in the national and international market. So, are the Indian exporters ready to encash this massively growing opportunity? Apparel Online explored how the exporters are doing in this segment and what they need to do to ensure that they do not miss this bus. A rising number of garment manufacturers, be it mediumlevel Indian exporters or manufacturers doing domestic as well as exports, are doing reasonable amount of online business and most have started focusing more on this segment in last 3-4 years. For most, the response so far has been satisfactory. Reasons for entry into online business vary from company to company, as there is not much growth in exports.
Online is definitely a growing segment, and many exporters are already doing business in domestic market (offline). These are among the most common reasons for getting into e-retail. Exporters are working in both ways with online platforms with their own brand/label or doing labels of these platforms as a contract manufacturer. Some have also created their own web sites to sell their own labels.
All the options have their own benefits and negative aspects. Experts believe that having proper balance in all segments is the best growth strategy.
Working for an established platform’s label is comparatively easy and more prevalent with the exporters as this system is more or less near to their existing system of exports. In this system, for exporters, there is no ‘headache’ of ‘returns’ as in fashion product, average return is nearly 30 per cent. Only issue is the very small order size which is nearly 200 pieces per colour or little more,
“The Global Selling Program opened a floodgate of opportunities for Indian manufacturers and SMEs to design and manufacture products for global marketplaces and get access to millions of Amazon customers, and thus build global brands. On the textile side, we have great diversity – apparel from Tirupur, printed bedsheets made in Sanganer... We believe Amazon Global Selling will transform Indian products’ exports as it enables more and more exporters to venture into international markets with ease and convenience to unravel the opportunity that lies ahead.”
– Amit Agarwal Senior VP and Country Head, Amazon India
some platforms pay monthly. Issue of payment in the case of individual brands is little complicated to manage as ‘returns’ come in even after a month and despite having systems in place, it is a little challenging.
Some of the manufacturers are of the opinion that selling own brands through these portals is not difficult if someone is having strong control over PD, proper quality, reasonable price and knowhow of social media and digital marketing. With good design, perfect quality and proper delivery, chances of return remain less. If the product is of good quality, and has proper fitting, and yet despite all this it is returned, then there are enough chances that it will be bought by another customer. “Return is not a big issue as we take care of all aspects before dispatch. Whatever returns are there, are being reduced, now,” says Satish Bansal, MD, Sriyansh Knitters, Ludhiana, having his brand ‘TSAVO’. But Satish has a different issue, as he mainly offers winterwear, so visibility is less.
“We are doing business through Flipkart, Amazon and Snapdeal from last 2-3 years but still order quantities have not picked up. Overall process is very timeconsuming. We are trying to grow but so far this segment is negligible for us,” he added. But few exporters doing their own brand/label are of the view that it is very challenging, as apart from courier charges, cost of finishing the returned garment is another issue. Sometimes, the returned garment is damaged also.
Despite all challenges, some good examples are also there, like women clothing brand ‘Eves Pret A Porter’. Ankit Aggarwal, Director, Eves Fashion, Delhi who joined his family business of garment exports is now successfully running his own initiative Eves Pret A Porter, available on all leading platforms and doing reasonably well. It can be a good example of an exporter selling his brand online. “Without much promotion, we are selling 300
pieces every day. As this business is all about long-term planning and there is enough scope, we are sure to grow further,” said a confident Ankit. He further added that one has to have a different and dedicated team for this segment and needs to be patient due to the nature of this business. “Your stock may be clear in one month or it may take one year also; so having a long-term vision is a must,” he added.
Ankit is also of the view that if someone is having average sale of 1,000 pieces daily, in that case it is worth to do the business with different infrastructure and with full resources, otherwise functioning with the existing infrastructure is the best option. Also, having a balance within online business, be it own brand, or doing for other labels is also a good option to be in touch with the market. Working with Amazon in the global sphere, Espresso International, Tirupur fulfilled its dream of building a global brand. Till 2012, the company was doing exports and business was fine. However, in 2012 the dyeing issue related to pollution, resulted in many factories shutting down in Tirupur, and which proved to be a turning point for the company. “The break of one year forced me to rethink my business strategy and that’s when I thought of establishing my own T-shirts brand and go online. I had already done business offline and knew the challenges. The online world however, was very different. There was ease of doing business and one could start immediately. That’s how my brand called Espresso was born and I signed up with Amazon.com in 2015,” shared V G Sivaraj, Espresso International. Now that the US business is well established, Sivaraj is motivated to expand business to UK clients as well. “In 2017, we have reached the point of around 100 pieces a day, with almost a turnover of around US $ 800-1,000 a day.
That’s huge for me,” he added.
When the wave of globalization swept India in 2005, Sathesh Nallathambi Callista, Namakkal invested a lot in spinning and weaving, as a result both productivity and quality increased and all good exporters were sourcing from them. But Sathesh wanted to convert the fabric into readymade products and ship these articles for exports, however the situation of physical stores was bad, so he took the online plunge in 2017. “I was aware that in the last five years in Europe, UK and US, many of the physical stores were closed down, suffering from losses. So I joined Amazon in 2017 with our brand, Callista, in USA, and started with our first shipment that landed in January 2017. From bedsheets to other readymade products, we are exporting now globally.
When we began, we set an annual target of US $ 1 million and have already passed more than 50% of the target. We are very confident that we will surpass this target within this financial year. This has also given us motivation to grow more with Amazon in various geographical locations like UK, Europe,
Australia, and Japan,” concluded an upbeat Sathesh.
“Currently the domestic business is 30 per cent of our total, whereas the online business is on experimental mode. Since Indian market is changing and is quite dynamic too, the buying pattern and our strategy accordingly are also changing… Hopefully we will grow in online segment also.”
– Niraj Kumar Pugalia, Silver Apparels, Noida
Ankit Aggarwal (R), Director, Eves Fashion, Delhi and Founder, Eves Pret A Porter, with his father Sushil Kumar Aggarwal