Wednesday, February 8

India’s e-commerce wars to be reshaped by private label brands

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MUMBAI: For Lalit Bisht, buying Roadster jeans and T-shirts off Myntra, Flipkart’s fashion operation, is a no brainer. It may take a week to deliver clothes to Bisht’s small hometown in India’s hilly northern Uttarakhand state, but the wait is worth it.

“The fit is perfect and price is just about right. It’s a value-for-money brand,” said 32-year-old Bisht, a government worker who lives in Haldwani, which had a population of just over 360,000 at the time of the last census in 2011. It is a place where options for good quality, affordable apparel are mostly lacking.

Bisht’s purchases of at least 20 Roadster items from Myntra are symptomatic of the appeal of private label brands for tens of millions of aspirational Indian shoppers looking for low-cost alternatives for everything from clothes to smartphones. These are people who may want to look hip and cool but can rarely afford to splurge on the big global brandnames.

And with Walmart now taking on Amazon Inc in India with its US$16 billion purchase of the homegrown online retailer Flipkart, India’s e-commerce wars are likely to pivot more toward private label brands.

Up until now, the battle has more often been fought through flash sales of discounted electronics but the losses in that game are unsustainably large.

Both Flipkart and Amazon have been burning through cash to offer those discounts and a bigger push into private labels could help them make money as they control the pricing, marketing and supply chain of these brands, say analysts.

With nearly 500 million Indians using the internet in 2018 and many just dipping their toes into online shopping, private labels will woo price-sensitive customers and create loyalty and higher margins, say retail analysts.

For example, Roadster jeans for women on Myntra that start at 389 rupees (US$5.73), could lure many more buyers than the cheapest Levi’s for women that begin at about 1,999 rupees (US$29.47) on the denim brand’s Indian website.

Last year, Flipkart launched its private brand Billion which sells everything from T-shirts to air conditioners. It also owns electronics brand MarQ and furniture label Perfect Homes. Myntra’s private brand portfolio, which comprises 13 labels, is profitable. — Reuters