ShopClues bets on fashion segment to drive growth
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New Delhi: ShopClues.com, run by Clues Network Inc., is scaling up the fashion segment on its portal with a focus on non-branded apparel and accessories, as it looks to capture the opportunity in the fast-growing category at a time when its nearest rival Snapdeal (Jasper Infotech Pvt. Ltd) is struggling.
The company has launched a dedicated television marketing campaign for the category and aims to double sales from fashion over 10 months, co-founder and chief business officer Radhika Aggarwal said. It will spend Rs5-6 crore on the campaign that hit television screens on Friday.
As a category, fashion—which includes clothing, footwear and accessories—has seen a surge in demand over the last few years due to heavy discounting by Myntra and Jabong, now owned by Flipkart, and the emergence of fashion-only portals like Voonik, Limeroad and Koovs. The segment is believed to have higher margins than other product categories.
“Currently, India’s apparel and lifestyle market is a $92-billion industry. However, according to recent reports, only 2% of that is currently online. This is the fastest-growing category and reaches 24% of online consumers in India,” Aggarwal said.
ShopClues is banking on low-cost unbranded merchandise, especially women’s ethnic wear, to boost sales. “We have exponentially scaled up our offerings in this category including clothing, jewellery, fashion accessories and footwear,” Aggarwal said, adding that the focus is to grow tier-III and IV markets.
About 50% of its orders come from these markets, which include cities like Tiruvallur, Vellore, Chittoor, Ernakulam, Tiruchirapalli and Madurai in South India and Bardhaman, Aizawl and Agartala in the east.
While on the demand side ShopClues services tier-III and tier-IV cities, on the supply side it also on-boards smaller merchants selling un-branded clothes and accessories in these areas. About 80% of its sellers are small-and-medium enterprises.
Aggarwal said the company was shipping about 1.2 million fashion products on a monthly basis, and the category has already grown to account for 50% of the company’s overall annualized gross merchandise value, and about 65% of net revenue. Gross merchandise value or GMV represents the total value of goods sold through the platform, and excludes discounts and returns.
The company is able to derive 20-30% margins from the fashion segment while the rate of returns is also around 20-30%. According to Aggarwal, on a standalone basis, the apparel category from the larger fashion segment is profitable for ShopClues.
ShopClues claims it will touch a GMV of $3 billion by fiscal 2018 on an annualized basis. It currently services 30,000 pin codes across the country.
The move may help ShopClues tap the seller base of Snapdeal, the other large horizontal marketplace to focus on non-branded fashion, that has witnessed a significant drop in orders.