While private labels are gradually nibbling away at shelf space in retail outlets, they are becoming the mainstay of several online retailers in the country.
Says Mr Vivek Gaur, CEO of e-commerce site Yepme.com, which has just launched a new range of private label fashion-wear for men, “We decided to focus on private labels when we realised that large external brands were handing down last season's or end-of-lifecycle products to us. This is especially true in the apparel business.”
He contends that online retail continues to get a step-sisterly treatment from large brands.
Mr K. Vaitheeswaran, Founder and CEO, Indiaplaza.com, a pioneer in the e-commerce industry, agrees that private labels have become the bread-and-butter products for online retailers. “But this situation has arisen because online retailers created an image of discount retailers,” he says. And brands that did not want to either offer large discounts or create the ‘discount' image decided to offload end-of-lifecycle stocks to online retailers.
One online retailer says his company started offering deep discounts in order to grab eyeballs and quickly garner maximum orders, thus creating a dissonance in the market. “Offline retailers could not offer the same discounts, therefore brands decided to offer old stock or knockoff models to us,” he says.
Mr Purnendu Kumar, Vice-President, Retail and Consumer Goods, at consulting firm Technopak Advisors, says large brands may not offer e-retailers high margins. “Trying to hook consumers with discounts is the current trend and larger brands would not like to have a price difference between online and offline channels.” Also, the volumes sold through these channels are not large enough to give them any bargaining power with the brands, says Mr Mritunjay Kapur, Country Managing Director of consulting firm Protiviti Consulting Pvt Ltd.
The e-tailing segment, which is one per cent of the country's organised retail, is witnessing 40-50 per cent growth year-on-year and poised to touch Rs 20,000 crore by 2015, say analysts.