Bengaluru: Amazon India has launched the first of at least six fashion private labels it proposes to introduce this year, as it looks to boost sales and margins in the second largest product category in e-commerce.
The first brand, Symbol, was launched by Cloudtail India Pvt. Ltd, Amazon’s largest seller, earlier this month. Amazon (Amazon Seller Services Pvt. Ltd) wanted to start selling Symbol ahead of the upcoming festive season sales to attract shoppers in the initial months of the launch, according to two people aware of the company’s plans.
Cloudtail is a joint venture between Amazon Asia and Infosys Ltd founder N.R. Narayana Murthy’s Catamaran Ventures. Cloudtail will launch other fashion brands by the end of the year, the people cited above said on condition of anonymity. Amazon currently also offers headphones, charging cables, bags and a few other accessories under the AmazonBasics brand through Cloudtail.
On 25 August, Mint reported Amazon’s plans to create its own private brands in fashion. The company has hired former Myntra executive Gautam Kotamraju to spearhead its push into private fashion labels. Under Kotamraju, Myntra enjoyed unprecedented success with private labels such as Roadster and Mast & Harbour, which now account for 25% of its overall sales.
Amazon India head Amit Agarwal said in an interview last week that the company would launch private brands to fill gaps in its product portfolio. “If there are selection gaps on your platform, then there are spaces that absolutely need to be filled. But you want to do it in an area where there clearly is need and customers would shop for that,” Agarwal said.
Expanding its fashion business is important for Amazon in its e-commerce battle with Flipkart, which owns Myntra and Jabong, two of the largest specialty online fashion retailers in India.
Fashion is expected to be the single largest product category in online retail by 2020 and also offers much higher margins than books and electronics, according to a May report by Google Inc. and A.T. Kearney.
Amazon launched fashion in a full-fledged way only towards the end of 2014 but it has quickly caught up with Flipkart by spending hundreds of crore on marketing, forging alliances with fashion labels, offering deep discounts through the year and delivering products fast.
In fashion, private brands offer fatter margins to marketplaces compared with third-party brands and enable them to lock in customers.
In May, Flipkart chief executive Binny Bansal proposed building a large private-label business by September, and put Mausam Bhatt, a product and marketing expert, in charge of this push. It has delayed its plan by a few months but it still wants to launch private-label products before the end of the year.
“India is a very different e-commerce market compared with the US—in the US, e-commerce players often get an edge over competition by launching exclusive products with exclusive brands. In the Indian market, even if you do end up coming up with a unique product, the market is not as homogenized as the US. While launching private labels will help companies, these labels are still competing with the major brands,” said Harminder Sahni, managing director at consulting firm Wazir Advisors.