PARDES
technology
&
Business
Flipkart Considering
Fashion
I
Portals
Such As YepMe and Zovi
n its quest for high margin products, Flipkart has launched its own fashion brand and
is also planning to acquire another apparel company. It is considering YepMe and
Zovi since both have a desirable rate of sale.
If this plan comes to fruition, this will be Flipkart’s second in the last two years, the
first being the acquisition Letsbuy, an electronic portal, in 2012. In 2013, Flipkart generated a whopping amount of capital that can easily be used for making the desired acquisitions this year. The company is expected to achieve a record sale of $1 billion or Rs.
6,200 crore by the year 2015. Once this milestone is achieved, Flipkart will look forward
to welcoming more private labels and sellers.
The margins for private-label fashion can be upwards of almost 60% and, for branded clothing, by almost 45%, thus making it a feasible category for online stores that
are looking to cut losses. The margin for electronic items is around 10% or less. A new
range of menswear and footwear, Flippd, is soon to be extended to other categories,
such as women’s apparel, watches and sunglasses by the first quarter of 2014.
Flipkart has also recently bought a jewelry retailing brand, which is the second
brand that the company launched. In 2012, a tech-brand called DigiFlip was launched
by Flipkart. It sells mobile cases, speakers, chargers, etc.
Pushing private labels seems to have become the new strategy for online businesses to increase their profit margins. This is due to the fact that online businesses have
been seeing a tough time in India. Snapdeal, an online marketplace, aims to increase
its profit margin in the next 2 years. Myntra, an online fashion brand, aims to achieve
the same by the end of 2014. According to the documents submitted to the Ministry
of Corporate Affairs, in fiscal 2013 Flipkart Indian Pvt. Ltd., the wholesale cash-and-carry
business of the online retail company, earned a total income of Rs. 1, 180 crore and suffered a loss of Rs. 281.7 crore before extraordinary tax and items.
Experts believe that it is better for Flipkart to go for an acquisition rather than create
its own brands. However, the online retailer will have access to online-only brands,
which will considerably restrict its options. Bankers have opined that this restriction of
options can drive up the valuation of the companies, making it expensive for Flipkart to
buy them.
Zovi, a seller of clothes, footwear and accessories, intends to earn around $250
million or Rs.1550 crore in the next 3 or 4 years. YepMe, which has its own clothing and
footwear brand, aims to generate a ROI of Rs. 300 crore by next year. A spokesperson at
YepMe has said that the brand is ready to collaborate with any portal that offers them
brand value.
Zovi collaborated with online retailer Inkfruit in 2013. Myntra, in 2012, acquired a
private label brand called “Sher Singh” and its sister concern, “Exclusively,” which is solely
sold in India.
60
To wrap it up, it can be said that having private labels is the new way to go for running a successful e-commerce business. Competition is stiff, so companies need to
PARDES MAGAZINE I FEBRUARY compete on the basis of the uniqueness of their products.
2014
PARDESMAGAZINE.COM