Private label offerings are on the rise not only among brick-and-mortar players but also online retailers. The strategy will help e-tailers differentiate themselves from others and also boost their profit margins.
While fashion retailer Myntra.com plans to launch 3-4 private label brands by mid-October this year, several other firms such as Hoopos.com, Yepme.com and Inkfruit already have their own apparel and product lines. These retailers are targeting 20-30 per cent sales from these brands. Even Flipkart has launched its private label brand Digiflip to sell laptop bags, laptop skins, camera bags and camera pouches.
Currently, most e-tailers offer several national and international brands at heavily discounted prices.
“Most of the online players are competing with each other by offering the same brands thus losing out on exclusivity. Private labels will not only offer comparable quality at significantly lower cost, but will be a strategic imperative for e-tailers,” said Vijay Jumani, Founder,
The Bangalore-based online firm has three private labels such as Aomi, Oyakoz and Ollie. The brands generate around eight per cent of total sales, Jumani said and added that he expects the sales to grow up to 20 per cent in the next two years.
Even Myntra.com is betting big on the private clothing business. “We expect 10 per cent of the business from private labels in the first year of launch. This, we expect, will go up to 30-40 per cent in the next 2-3 years. We will be launching our own casual and denim wear. This will definitely help us differentiate and boost our bottom line,” said Ashutosh Lawania, co-founder of Myntra.
Lawania further said that one has to identify the gaps in the market, quality and pricing points before launching private labels. The margins are as high as 50 per cent, for retailers directly source the merchandise from the manufacturer.
Arvind Singhal of advisory firm Technopak Advisory said that the need for private labels is more than that offered by offline players. He added that people tend to get confused with several sites offering the same brand and eventually, lowest price or discounts are the differentiator. He said this would not only impact their business going forward on the margin front but also would create complications for other start-ups.
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