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online fashion

Online BPC companies saw steady growth in private label business in 2018 and in 2019 are poised to expand private labels rapidly 

Published on: Aug 2019

  • Online BPC (beauty and personal care) space saw the rise of private labels in 2018, with their share reaching double digits as initiatives from Nykaa and Purple bore fruit
  • We expect private labels (which generate a 30% gross margin) to account for more than 15% of online beauty GMV in 2019.

Online BPC (beauty and personal care) market poised to grow 100+% y-o-y in 2019, with improving unit economics

Published on: Jun 2019

The online beauty landscape is heating up, with the rapid growth of both horizontals and verticals. While horizontals drive growth by bringing onboard many first-time online beauty shoppers and focus on the personal care category, verticals are playing a key role in educating and premiumizing the beauty consumption, with a higher share of make-up and skin care categories.

A lot of the growth is organic, driven by content/blogs. Which means that the category is likely to avoid the discount-driven growth models that other categories struggled to move away from. Given this trend, we expect the online beauty category to grow by triple digits in 2019, as even as its overall contribution margin remains stable or slightly improves y-o-y.

Online fashion category records 66% annual growth by effectively tapping into Tier 2+ city opportunity

Published on: Jun 2019

Online fashion players, both horizontals and verticals, have been successful at reinventing themselves to cater to the needs of the Tier 2+ city consumers.

This success is reflected in the strong 66% annual growth recorded in Q1 2019, which sets the industry on course to have a USD 10 Bn exit GMV run rate at the end of the year 2019. This would be a landmark indeed, putting the online fashion market within touching distance of a 10% share of overall fashion, a feat achieved by few categories in India’s online retail landscape.

The vertical online fashion players have better unit economics compared to the same categories for the horizontals


Published on: Oct 2018

The horizontals are still running good discount schemes for customer acquisition in the fashion category thus resulting in negative contribution margins. The verticals have a higher focus on private labels which attract higher margins which are driving the positive contribution margins in their favor.

 

Both horizontals and verticals witnessed an increase in consumer  satisfaction from OND-17 to JFM-18

Published on: Jun 2018

The online fashion market witnessed an increase in consumer satisfaction with both horizontal and verticals players in JFM-18. Multiple sale events like Republic day sale and end of reason sale led to the increase in consumer satisfaction as the offer and discounts provided attracted the consumers. And since the volume of these sale events was less than the festive sales the fashion e-tailers were able to have a better control on delivery experience.
online fashion

The market is largely dominated by horizontals and large verticals

Published on: Jun 2018

The online fashion market is largely dominated by horizontals and large verticals but the small verticals are growing at a fast pace. The small verticals have been able to create a niche by offering good assortment and pushing private labels. Going forward we expect the industry to remain fragmented as various players have been able to provide good consumer experience.
online fashion market

Brand and Price are the top consumer decision making criteria while buying online fashion

Published on: May 2018

The online fashion consumers give highest importance to brand while buying. This is largely because the trust required while buying fashion online is the high and consumer generally go for the brands they trust. Price is the second most important criteria. The online fashion verticals which are pushing their private labels are thus trying to become a brand by focusing on providing a good quality, reasonably priced product to attract the consumers.
Redseer Consultant

Online fashion has stronger penetration in Metros, however contribution from smaller cities is also significant

Published on: Jan 2018

All the leading horizontal players receive more than 25% of their sales from tier-2+ cities leading to higher share of online fashion from tier-2+ as compared to overall online retail.

 
                                              Online Fashion – Tier wise split, USD Billion
online fashion market
 

Verticals have been narrowing the gap with horizontals in online fashion

Published on: Jan 2018

While the Flipkart’s and Amazons of the world continue to a have an edge in the online fashion market during festive sale quarters, the market split nearly 50-50 for the other quarters as verticals are increasingly asserting themselves.Growing number of fashion-conscious consumers are attracted to verticals by their superior consumer experience and their collection of high quality and affordable private labels.

 
fashion-conscious consumers

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  • Rohan Agarwal has been a part of the Redseer Strategy Consultants journey for over six years. He is an expert in digital strategy for traditional corporates and start-ups.

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