Written By Athira Nair & Apurva P
As fashion ecommerce attracts more investments and startups, YourStory looks into the space which is evolving every day.
For all the hype about ecommerce, and how it makes shopping convenient, fact remains that no major online shopping platform is profitable as yet. Flipkart, being acquired by US retailer Walmart shows that even though valuations may go into billions, profitability remains elusive. Erstwhile ecommerce unicorn Snapdeal or India’s largest online marketplace ShopClues are not doing any better either.
Be it market conditions, or lack of sustainable business models, it is not just horizontal marketplaces that are struggling. In the retail category, fashion enjoys the highest margins, yet none of the fashion-focused ecommerce players have made it big either. Flipkart-owned Myntra is the indisputable market leader in fashion ecommerce, but is yet to show any profit. While Myntra touched $1 billion GMV and opened hi-tech offline stores, smaller fashion ecommerce players have evolved with the times as well. Many have moved on from the regular retailer or marketplace models to more innovative idea for better customer engagement. YourStory looks into some of the prominent players who have pivoted or grown into newer models. FYND: What happened to Shopsense? When Farooq Adam, Harsh Shah and Sreeraman MG launched Shopsense in 2012, their aim was to bridge the gap between the ease and convenience of click retail, with the touch-and-feel experience of brick retail. Shopsense had a range of products that brands could use to improve customer experience. For instance, a shopper could browse through the entire range on a screen at a shop, and filter inside the store very easily. The startup would charge retail stores a monthly fixed fee of Rs 10,000 to Rs 15,000. (Less the number of stores, more the price, and vice versa, as they were charging for the engagement they created.)
The startup, which offered product-as-a-service, notched up clients like Lee, Satya Paul, Anita Dongre, Flying Machine, and Being Human. But in early 2016, Shopsense became FYND, when the team realised that if it had to scale up the business, they need other avenues. FYND Market Place and FYNDStore were the result of this thought process.
“FYND seemed more accessible, and easy-to-implement from the retailers’ perspective as there was no additional capex required. The omnichannel technology behind this remains the same and hence it seemed logical to pivot Shopsense to FYND,” says Harsh.
FYNDStore helps owners save sales due to unavailability of a product. Harsh claims that they are adding 6-10 percent sales to a brand’s total sales.
“For store associates, additional sales directly result in additional incentives,” he adds. The FYND app has around 10 million downloads and 1.5 lakh visitors on the website every month.
In India, omnichannel is still at a nascent stage. With the growing internet penetration and retail expansion in India, the market looks promising. “Moreover, not many companies provide this service in India and we took the first mover advantage to fill the market gap. In between the vision to explore the unexplored in India and driving the store sales, we came up with omnichannel model,” says Harsh.
There are multiple perks of having an inventory model:
1. No warehousing cost involved
2. No stock transfers within stores which saves the operational hassle for brands
3. Fast delivery (in 2-3 days) as products are picked up from the stock point nearest to the customer
4. Most of the orders are fulfilled from the same state
The Google-backed company works with 330 brands, including Steve Madden, Juicy Couture, DC Shoes, Brooks Brothers, Superdry, GAS, House of Anita Dongre (AND, Global Desi), Cotton World, Being Human etc.
Backend changes for pivoting
For the above mentioned players, transformation of this scale has demanded massive changes in the backend too. For instance, it took four months to make the necessary changes in the backend when ShopSense turned into FYND – with focus on payment, commerce and logistics. Earlier, there were different apps for individual brands; now it is all merged to a single application. (FYND app is for end-consumers, and FYNDstore is for store managers, store associates and store owners.) Harsh says that while evolving, they had to let go of their previous team and add a few members for roles and functions like customer support, logistics, payments, commerce, market-places etc. While hiring, they were looking for problem solvers with experience in commerce, market-places, payments etc. The team has now grown from 32 members to 103 members. In Roposo’s case, Mayank says, it was only about data in the back-end. He elaborates, “Earlier on the platform, there was content from users and the products associated with the content. Now there are only users and their posts. Then and now, everything is broken down into data. The only change was to create a base experience for vernacular users.” Roposo app now provides video creation tools using which anyone can create videos. It also has augmentative reality (AR) on the platform which was launched this year in the first quarter. For Zapyle too, there were back-end changes as it converted from a marketplace model. Earlier, it had only an app where people uploaded their closet by creating a profile. Also, it was only user-generated content at the time. Today, Zapyle generates content and user-generated content accounts for only 20-30 percent of the total. “While moving from tech-oriented to a product-driven platform, we had to hire people in design, sales. Under private label, we hired designers, merchandisers. We plan to raise investment for private label next,” says Rashi. So what is missing? The answer is – much. If one were to look into Myntra, which has always stayed ahead in the game, there are some striking differentiations. According to retail expert Devangshu Dutta, CEO at Third Eyesight management consultancy, from an early stage, Myntra focussed on merchandising from the point of view of the product rather than the point of view of numbers only. “While the online business in India was driven by discounts, it focussed on developing a range and became a destination for the consumer seeking fashion. Myntra maintained this throughout,” he says.
The rapidly growing market demands e-tailers to clearly stand out and be the brand that consumers can connect with using certain attributes like quality, variety etc. Devangshu believes that one should make sure that the bulk of the business is coming from non-discounted sales. “This is one of the biggest problems that online retailers face in the Indian market. The customers are so accustomed to discounted deals with brands that it is virtually impossible to make a profitable business,” he says. One should figure out what suits their business model, product mix, and the customers the best, rather than blindly following buzzwords like omnichannel, he adds. Fashion ecommerce 2.0 The next chapter in the story of fashion ecommerce in India is being written by re-selling platforms like Shopperts and Shop101, and entrepreneurs who solely depend on social media. Online and offline discovery of fashion points have also taken a new step with platforms like Findow, Seenit, and MyBataz. While rental and pre-owned fashion market is growing, consolidation and swivelling have been prominent over the last couple of years. For instance, ecommerce marketplace Limeroad – founded in 2012 and which has $50 million in funding – was focused on women’s fashion from day one, but expanded to include men’s fashion recently. Similarly, Mumbai-based online seller of cosmetics Nykaa now caters to male customers through its new platform Nykaamen, while also selling designer clothes on its main platform. Notably, in India, so far the only ecommerce models that have scaled are the marketplace ones. Although more different models will continue to come up, Devangshu believes that whatever the model, the platform has to take ownership of the consumer. “ For example, a consumer will be approaching a market place as if it is the retailer. So the retailer has to curate and ensure that the product makes the service experience and it has to be differentiated from the others,” he explains. India is yet to see anything remotely close to the China models of convergence of social, entertainment and ecommerce. If anything, we use social networks like FB for that. According to branding expert and angel investor Meeta Malhotra, if convergence is the future, who is best positioned to deliver this new ecommerce model – will it be Facebook adding ecommerce to its social platforms? She believes that the early success of Instagram shopping certainly seems to indicate this. “Then you will have the behemoths like Amazon and Walmart / Flipkart who will use sheer scale to consolidate their positions,” she says. But where does this leave individual ecommerce companies? They will have to answer two questions: 1) Why should the customer buy from them? 2) Do they have a sustainable business model? As Meeta says, time and again, smaller brands arise and disrupt incumbents. But it is the sharply focused value propositions that appeal to customers. Read more at: https://yourstory.com/2018/08/quest-profitability-fashion-ecommerce-platforms-sprout-new-models