Aditya Birla Group launches online fashion store Abof.com3 min read . Updated: 16 Oct 2015, 07:12 PM IST
The portal will sell all brands including those from the Aditya Birla Group and other external brands
Mumbai: The Aditya Birla Group on Friday launched a new online fashion store, joining the growing trend of so-called brick-and-mortar companies seeking to tap a boom in e-commerce.
The portal www.abof.com will offer shoppers brands from both the Aditya Birla Group and other companies.
“We believe that fashion is a vertical that worked well for us for two reasons. One is that the vertical itself is fast growing," Kumar Mangalam Birla, chairman of the Birla group, told reporters.
“The other is the fact that we have substantial experience in the offline fashion space. So both of these factors put together make fashion a very obvious choice for us and what we are launching today is an e-commerce portal for fashion," Birla said.
Some analysts, such as financial services firm UBS, have said e-commerce sales can touch $60 billion by 2020 from less than $6 billion last year, driven by the manifold growth in smartphone users to more than 500 million.
By the end of the calendar year, fashionwear, including apparel and footwear, is expected to be the largest retail category online, with sales of $3.9 billion, bigger than sales of electronics and consumer durables online at $3.5 billion, according to an April report by UBS Securities India Pvt. Ltd.
Birla said estimates show that five years from now fashion will be a vertical with potential demand of $15 billion a year.
On 9 October, Mint reported that Aditya Birla Group is set to launch its online fashion store Abof.com that will compete with the likes of Myntra, a Flipkart unit, and Rocket Internet-backed Jabong.
In May, the Aditya Birla Group said it will consolidate its garments business into a single entity by carving out premium apparel maker Madura Garments Lifestyle Retail Co. Ltd from Aditya Birla Nuvo Ltd and merging it with Pantaloons Fashion and Retail India Ltd.
The merged entity will be India’s largest branded clothing company with annual sales of ₹ 5,290 crore.
The consolidation will unlock shareholder value and give investors an opportunity to invest in the fast-growing fashion space through Aditya Birla Fashion and Retail Ltd, Birla had said.
To be sure, Abof.com will be privately held by Birla in his personal capacity.
The new portal will be targeted at the young and have a curated collection focusing on quality and not give discounts, executives of the company said.
“To get an analogy from the cellphone world, we would like to be the Apple of the industry," said Prashant Gupta, president and chief executive officer of Abof.com.
Birla said the company will be closely held and did not disclose the investments that are going into it or the profit targets. He said it would be open to financial investors. While e-commerce is unlikely to contribute substantial revenue to the metals-to-telecom conglomerate, its valuation would be sizable.
“There are no targets...we have some internal estimation but nothing that we can share," Birla said. “This is not a business in which one can give specific targets. It is like a step into the unknown world."
Last year, Future Group, Shoppers Stop Ltd, DLF Brands Ltd and Arvind Ltd announced investments to strengthen their presence across shopping channels. Future Group is investing ₹ 100 crore in its so-called omni-channel strategy and Shoppers Stop has announced a ₹ 60 crore investment for this.
“The launch of Abof.com does not come as surprise as all large corporate houses are entering the online fray," said Ashish Jhalani, founder of eTailing India, an e-commerce knowledge platform.
“Aditya Birla group will have a large play in the fashion category with all brands under one roof but they would face an uphill battle with likes of Myntra that has been concentrated in this category for years. But as the industry is still in an astronomical upward growth, they will be able to gain scale quickly," Jhalani said.
Birla, described Abof (all about fashion) as a one-stop fashion portal for apparel, footwear and accessories for men and women.
“The e-commerce sector is a sunrise sector from an investment point of view. While a lot has happened in the last couple of years, a lot more is yet to happen in this space," Birla said.
He said the Aditya Birla Group is already India’s largest fashion company through Madura Fashion and Pantaloons.
“Therefore, it made sense for us to enter into fashion e-commerce to further strengthen our pole position in the business of fashion in India. We see the potential to build another billion dollar business of the group in this space," Birla said.