How fashion e-commerce sites are innovating to build customer loyalty in a $3 billion marketChaitanya Ramalingegowda & Sakshi Khare
The Indian e-commerce market was worth $13 billion in 2013 with online travel business contributing 70-75% of it. With increased Internet penetration & easy-to-use payment mechanisms the online retail e-commerce industry totaled $3 billion in the same year. Further, the overall e-commerce market is expected to increase to $50 billion by 2020.
In e-commerce, the category that is seeing a lot of traction from consumers and sellers is fashion. Sales in this category have doubled to reach $559 million from last year when compared with top categories like electronics and books, with an estimated growth rate of 20 percent per year. The fashion segment is projected to reach $2.9 billion by 2016. E-commerce companies are investing heavily in this category because the margins (20 percent) are higher as compared to other categories for fashion products, which can go higher in the case of private labels (50-60 percent). Further, in the case of private labels, the control on the supply chain and inventory is higher. These higher margins are a blessing for e-commerce companies because they can offset the hits taken due to free shipping, same day delivery and wafer-thin margins on standard goods such as books and electronics (low single digit margin). This definitely would have played a part in Flipkart’s acquisition of Myntra. This growth is further supported by the fact that India has been used as a sourcing hub by the global fashion brands because of the textile clusters present in Coimbatore, Madurai, Bangalore and others.
Given the high impact on the bottom line by this category, top Indian online retailers are now vying to increase and retain their customers, in addition to the traditional loyalty programs. Apart from the standard loyalty programs, excellent customer service, special discounts, targeted marketing & newsletters, free delivery, scheduled delivery and subscription based services, these portals are pulling out all stops to create very innovative marketing strategies to engage with customers at a non-transactional level – to get them to spend more and spend often.
Some of the innovative marketing strategies are:
- Flipkart-Myntra recently launched a fashion incubator for young budding entrepreneurs in the fashion field. The first batch of 20 entrepreneurs will start in July with 3-4 online brands amongst them getting incubated and retailed through their own online e-commerce store. Currently, Flipkart-Myntra together account for nearly half the fashion market share. Myntra is expecting nearly a tenth of the revenue with its forthcoming launch of private labels along with the associated higher margins
- Huge billboards of the Myntra’s “Live for Likes” campaign in most major cities have been created to target the digital generation – those that spend a significant amount of time online in a day. It encouraged users to be their stylish best and put up their selfies. This online fashion trend game had Lisa Haydon as the brand ambassador, and also had a targeted microsite for users
- There is an increased number of partnerships between Indian fashion e-commerce sites and international fashion brands over the past few months. Jabong has inked a deal with London based high street brand River Island. Its rival Myntra has signed a contract with a Dutch youth fashion brand named Scotch & Soda and also plans to introduce Harvard University Ivy League Clothing in the next few weeks. For higher customer satisfaction, services like altering & fitting of clothes and customized tailoring will soon be incorporated
- Jabong has recently started hosting fashion events for displaying their collection. For example, there was a Jabong stage at the Lakme Fashion Week this year. They are soon going to launch India’s first online Fashion Week by July-end and have also recently associated with Bollywood movies ‘Main Tera Hero’ and ‘Humpty Sharma ki Dulhaniya’ for showcasing their apparel collection
- Zovi, a well-known private label brand has developed its own courier services and supply chain in cities where it has good traction. Besides 30-day return and free shipping, Zovi has introduced ‘try before you buy’, allowing customers to try clothes before making the purchase
- Myntra has made a name from selling ‘looks’ and not just products. They have their own style blog (Look Good Blog) which educates customers about the latest trendy looks through its catalogues. Fashion and Bollywood are two inseparable entities. Fashion specific e-commerce companies have also started adding star power to their brands through endorsements. Myntra started a "Star and Style Campaign" starring Abhay Deol in its recent June edition. Last month Chitrangada Singh was the star featured on this blog sharing her style secrets and tips with her fashion lovers. Earlier this year it has also roped in Ranveer Singh as the brand ambassador of its in-house private label "Roadster" along with signing up Kangna Ranaut as their brand ambassador
- Limeroad's "Create and Earn" initiative is an innovative way in which users (women only) can design and display her style and fashion in a scrapbook and earn a certain percentage of the sale amount of all items sold through their scrapbook looks. Limeroad also celebrates real women by pinning their images on their official Pinterest page
- Football fever is on and Jabong is selling football merchandise online on its Football Shop. The availability of the apparel is in sync with the performances of the star players of the world cup tournament with Ronaldo, Messi and Neymar appearing almost ubiquitously
One very unique innovative marketing strategy in the pipeline is the introduction of e-commerce websites in local languages. Further, some of these e-commerce stores are planning an offline interface, either as small stores or in the shop-in-shop format in order to take their brand visibility to the next level by reaching consumers who are not so tech-savvy
The innovative marketing strategies to lure the customers are in resonance with the type and taste of the audience that these sites are serving. Experienced e-commerce giants like Flipkart-Myntra and Jabong are battling it out for mindshare of the upper-middle class section while Snapdeal and Limeroad target a tasteful niche audience. With Amazon shaking things up and also scaling up their fashion offerings, it will be an interesting space to watch out for.
Have you come across any innovative marketing strategies by fashion e-commerce sites? Tell us in the comments below!