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Wednesday, 5 November 2014

Amazon preparing for big push into fashion retail.....

Bengaluru: After establishing its presence as a major e-commerce brand in India, Amazon.com Inc. is planning to make an aggressive push into fashion and lifestyle products to take on Flipkart-Myntra, which dominate online sales of apparel, footwear and accessories. 

 Till now, Amazon’s advertisements have largely focused on increasing awareness about the platform and promoting its fast and reliable delivery services.

 Now, Amazon India, which began selling apparel six months ago, is preparing its next marketing campaign exclusively around fashion, three people familiar with the matter said, speaking on condition of anonymity

. Amazon India declined to comment on the firm’s upcoming marketing campaign.

 Amazon, Flipkart and Snapdeal are all trying to increase sales of fashion products, which typically offer higher margins than electronics and books.

 Amazon needs to make a big push into fashion now, as rival Flipkart has built a dominant position in online fashion sales after acquiring Myntra in May. Mukesh Bansal, the head of fashion at Myntra and Flipkart, said in an interview in September that Myntra’s sales growth accelerated after the takeover.

 The other large online fashion retailer, Jabong, too, continues to spend heavily to draw shoppers, though its sales growth in the first half of the year fell from year-ago levels, documents filed by parent Rocket Internet AG ahead of its overseas listing show. Indians bought fashion products worth $559 million online in 2013; this number may increase to $2.8 billion by 2016, according to an April report by venture capital firm Accel Partners, which is an investor in Flipkart.

 As part of its push into fashion, Amazon is lining up many exclusive partnerships with clothing brands and is ramping up its product assortment, two of the three people cited above said. Last month, Amazon announced it will sell Future Group’s fashion brands such as Indigo Nation and John Miller on its site.

 Amazon India reported a five-fold jump in sales of ethnic wear and an eight-fold jump in sales of kidswear last month, when it held its festive season promotion, a company spokeswoman said. “Several sellers and brands are increasingly appreciative of the value that the Amazon India marketplace offers to them and are keenly exploring various ways of working with us closely to reach their customers across the country,” she said. “We have created special brand stores for several fashion brands including HiDesign, Viari, Waterlily LA. Tommy Hilfiger luggage and many more are in the pipeline. We will continue to add new product categories and increase the depth of selection in the existing categories.” 

Amazon wants to launch its campaign before the end of the year partly because it wants to promote its fashion offerings ahead of the end-of-the-season sale that typically starts in January, two of the people cited above said

In this end-of-the-season fashion sale, online retailers such as Flipkart and Amazon are likely to be much more aggressive in competing with offline apparel retailers such as Shopper’s Stop and Lifestyle compared with previous years, several industry executives say. But clothing stores have fared much better against the onslaught from e-tailers such as Flipkart and Amazon compared with their electronics and books retailing counterparts. Fashion is a difficult category to crack for online marketplaces, whose biggest appeal is lower prices. Many shoppers prefer buying fashion products at a specialty retailer, whether online or offline, analysts say. Even in the US, Amazon was forced to buy online shoe seller Zappos in 2009 after it struggled to build a large shoe retail business of its own. Flipkart, which set out to build the largest online fashion business in 2013, couldn’t overtake Myntra despite pumping in hundreds of crores of rupees; it bought Myntra for more than $330 million for the latter’s expertise in fashion and to increase its lead over Amazon India.

 “I’m sceptical if Amazon or even Flipkart and Snapdeal can succeed in building sizeable fashion businesses,” said Harminder Sahni, managing director at Wazir Advisors, a consumer goods consultancy. “Who buys fashion at a Big Bazaar or a Walmart or a Tesco? Horizontals are just not made for buying fashion. Fashion is a category that needs deep expertise and involvement, both on the consumer-facing side as well as internally.”