Will Branded E-Commerce Thrive In India?

by Sohini Bagchi    Jun 24, 2015

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If you think e-commerce is only about ‘cheap brands’ and ‘deep discounts’ you are highly mistaken. Today’s consumers are increasingly becoming ‘brand conscious’ and ‘digitally connected,’ a section of them looking at high-end products offering discerning experiences. This segment of population is driving the growth of online branded market. Likewise, e-commerce firms are forging partnerships with some of the major global corporations as well as Indian premium stores to sell their products online.

Partnering with e-commerce

Take for example Microsoft, a premium software brand which recently partnered with Snapdeal to come up with an exclusive Microsoft branded store on their platform.

Microsoft has been steadily increasing its market share in India, and their partnership with Snapdeal is yet another step to make Microsoft devices more accessible to Indian masses online.

While Microsoft does sell their devices online through Amazon India, it is on piecemeal basis. The branded store on Snapdeal promises to offer users with exclusive deals and offers. all at one place. The store is not only for mobile devices, but also other products as well as software. Along with mobiles, they have tablets, laptops and software listed too.

Another example, Tata Housing, one of the top real estate companies in India has recently sold a villa worth Rs 5.5 crore through its ecommerce portal. The transaction is easily the biggest retail ecommerce sale in India.

“The company has managed to sell more than 30 units with a price tag of over Rs1 crore, after introducing the concept in India,” the company announced, as it pioneered this alternate sales channel more than a year ago in partnership with Snapdeal.

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Similarly, in March this year, Dorothy Perkins, a UK-based premium fashion brand and also fashion label Miss Selfridges announced their debut in India – not by opening large retail stores – but only via online fashion retailer Jabong.com.

Escalating real estate costs and complex regulations often delay the entry of foreign brands into India. This is prompting several premium brands are testing the market by partnering with specialist online retailers like Myntra and Jabong.

Sites such as Amazon have also made even the most exclusive of brands ubiquitous, such as Louis Vuitton and Chanel, bringing them to the mass market.

Growth drivers

According to a recent study by Assocham, Indians are likely to spend $35 billion on online branded stores by 2016, compared to $8 billion in 2012 growing at a CAGR of 25 percent. And the sectors driving this segment will be apparel, accessories, watches, and high-end electronics.

The major key growth drivers are rising income level which leads to a change in spending patterns and creating good business opportunities in India, reveals the study.

“Brand conscious shoppers are well-connected digitally and it becomes easier for brands to showcase themselves online, said DS Rawat, secretary general Assocham adding that with deals/discounts, cash-on-delivery, EMI schemes and easy return policies, online shopping has offered reputed brands a new platform to engage and entice customers.

With more than 140 million internet users, India is the third largest internet market in the world. With premium brands tying up with e-commerce firms, experts opine that not only youngsters who experiment who are now hooked to buying stuff from internet, but the mature customer is also getting accustomed to e-commerce.

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E-commerce is expanding the branded market, as online access and competitive pricing bring hither to unattainable brands and products within the reach of consumers in the country’s second-tier cities as well, said Rawat.

According to study, the premium designer clothing market in India grew 35 per cent to Rs 13,230 crore in 2012 and likely to touch Rs 32,000 crore by the end of 2015. The online market for branded electronic gadgets is growing at 38.5 per cent, and the luxury jewellery market at 42 per cent.

Third parties unreliable?

Some global premium brands such as La Martina, Lacoste and Swarovski among others are hpwever looking to retain premium image. For example, luxury brand Lacoste wanted to sell its sports and leisure apparel through e-commerce, but said it could not locate a suitable website that would fit its brand image in India. Now it has decided to launch its own global e-commerce site (lacoste.com) in India.

Similarly, a BusinessLine report notes Crystal brand Swarovski is also planning to bring its global e- commerce site by 2016 as it does not believe in selling through a third party in any market. “None of the luxury sites in India are authorized to sell our brand and we plan to launch an e-commerce site which will be owned by the company in India,” Sukanya Dutta Roy, Managing Director, Consumer Goods Business, Swarovski India told the news site.

High-end domestic brands such as Shoppers Stop and Trendin have also strengthened their own e-tailing platforms this year to beat the competition.

According to a joint study by consultancy firm PwC and industry body Assocham, Indian e-commerce industry will spend $950-1,900 million in the next 3-4 years on the infrastructure to ensure better speed, efficiency and growth. Of this, branded e-commerce will continues to play an extremely important role for global players and e-commerce firms. Needless to say, the players who pay attention to speed, price and availability will have an edge in this vibrant market.