OPPORTUNITIES E-RETAIL but in different sizes. Some exporters doing this segment have noticed nearly double growth in order size. Earlier, mostly small manufacturers with 50 to 70 stitching machines were working with these platforms but now with the increasing order sizes, mediumlevel exporters are also moving towards these portals.“ Order quantity for such platforms has become double in last three-four years; and as it will definitely grow further, so I am working with these platforms to secure my future,” said Anand Jain, Director, Sarbi Apparel, Delhi. Having factory in Ghaziabad, the company is working with Myntra and Jabong and is especially making sportswear and winterwear for these platforms.
Apart from future growth opportunities, better systems( specially compared to smalland few medium-level overseas buyers), payment safety, more understanding of domestic market …, are the few main reasons that are attracting the exporters to these platforms. Total use of technology, standard operating procedure( SOP), full transparency and automated system from PO to payments – have all made these online players have better options than many overseas buyers. Whatever platforms are there, payment is no issue with them. Even no follow-ups are required for payments. Moreover, payment cycle is around 45 to 90 days. In case, one is selling one’ s own brand, payments are on timely basis as
Anand Jain, Director, Sarbi Apparel
EXPERTS ELABORATE …
Rahul Mehta, President, CMAI, Mumbai
It would not be accurate to state that exporters have started working in a significant way with e-commerce. In fact, they have just about started with offline retailers in the domestic market, primarily to offset their drop of export business. E-commerce is largely characterized by old season merchandise( OSM) which is offered at steep discounts. Secondly, a very large range of styles are on offer and dispatched in small quantities to large number of customers; similarly the return is also equally large by the customer. Exporters would typically not find any of these characteristics convenient. They are used to manufacturing against order, – so concept of OSM is non-existent, except in case of order cancellations or overruns; they are used to supplying to a few customers in large quantities, and significant quantities as per style – exactly opposite of what e-commerce would typically require, and the question of customer returns normally do not arise. Hence, we have not seen too many exporters get onto the online or e-commerce channel. Amazon is doing well in US
Exporters started selling via the e-commerce platforms to find a way to tap into growing domestic demand, as a hedge against declining demand and pricing pressures in their export markets. Some of them found a way to create‘ labels’ using their product development skills and to gain additional margins, even though they were not quite true consumer brands. However, the rhythm of the two businesses are quite different. Exporters working with retailers and importers in Western markets are more accustomed to working on typically larger volumes per style at one go, besides longer lead times, more planning predictability, relatively lower working capital requirements, etc. Selling on e-commerce platforms has meant being willing to make-to-stock, work with smaller quantities and faster deliveries, and committing working capital in inventory of both raw materials and finished products. Exporters who have succeeded in growing e-commerce sales in the past did so because they usually understood and acknowledged the very different nature of their contract manufacturing export business and the new e-commerce business and were able to invest time and effort in creating a base for the new business. Significant cash reserves from funding in the e-commerce companies meant that payment cycles were also quite stable and getting volumes up was also primarily the responsibility of the e-commerce platforms.
but for some reasons has not succeeded as much in India in clothing; besides more fashion-driven sites, such as Jabong and Myntra are faring far better in apparel sales. The Government’ s e-commerce policy is followed more in breach than anything else, especially in the FDA regulations. I therefore think what is more crucial is the implementation of the policy, rather than re-examining the policy itself.
Devangshu Dutta, Chief Executive, Third Eyesight, Gurgaon
However, previously e-commerce growth was pushed by the platforms on aggressive promotions and discounts. With that cooling off somewhat in the last 12-18 months, exporters who have not invested in understanding the nuances of the domestic Indian consumer or are creating their own brand identity, have suffered declining volumes or have even been dropped from the platforms.
On the other hand, some of the larger exporters have become contract manufacturers of private labels to the larger domestic retailers such as Reliance, rather than focusing on e-commerce – the phenomenon is not new( for instance, Sonal Garments was a contract supplier to the Little Kingdom chain almost 30 years ago), but there is far more volume available than earlier that makes this a more viable proposition.
www. apparelresources. com | MAY 16-31, 2018 | Apparel Online India 23