Fashion brands keep close eye on online sales

Bengaluru: As online retailers continue to give discounts to boost sales, fashion brands such as Puma, Adidas and others are using price-tracking technology to spy on e-commerce sites for unauthorized discounts, entering contracts that ban online retailers from giving price-offs without their approval and launching online-only merchandise as they seek to protect their offline businesses.

Some companies such as Madura Fashion and Lifestyle have also started to aggressively advertise their own sites to ensure they don’t miss the boom in online shopping, and others such as Adidas India Pvt. Ltd and Arvind Ltd are launching their shopping sites as they try to draw customers away from online retailers.

Puma and Adidas are using technology provided by third-party vendors such as DataWeave Software Pvt. Ltd that help them track prices on e-commerce sites.

This technology, called “crawlers” in industry parlance, trawls e-commerce sites and digs out product prices, allowing brands to find out if their products are being discounted or not.

“Puma monitors prices on the online space on a daily basis,“ Puma India managing director Abhishek Ganguly said. “We track metrics such as full-price sales because it is one of the key indicators of a brand’s popularity… if our goals do not align (with online partners), we do not work with those platforms. We have already reduced the number of platforms that we work with as we want to have more control over what is sold online.”

These measures highlight the tensions between brands and online retailers such as Flipkart, Myntra (owned by Flipkart) and Jabong, which have become too popular with customers for brands to ignore but which are also the biggest threats to the offline businesses of the same brands.

Fuelled by venture capital money, online retailers have built large collections of fashion products and are wooing shoppers with persistent advertising, deep discounts and easy, on-demand access in the form of mobile apps. Until last year, apparel stores hadn’t been nearly as badly hit by the e-commerce boom as their electronics counterparts, partly because shirts, trousers and skirts are much more varied than standardized technology products such as laptops and mobile phones.

But online retailers have increased their focus on apparel as it offers fatter margins than books or electronics and their efforts are paying off in a big way. Myntra generated sales of more than ₹ 90 crore in a single-day sales event in early January that was heavily advertised across media, Mint reported on 15 January.

The sustained success of online retailers in apparel over the past year has hit traditional retailers and it has raised the need for brands to have a well-thought out e-commerce strategy. Some large fashion companies such as Arvind and Madura Garments that have a large portfolio of brands are better placed than independent brands to negotiate with online retailers, and these companies have signed legal contracts that give them control over discounts on e-commerce sites.

“E-commerce sites cannot give discounts without our approval,” Van Heusen chief operating officer Vinay Bhopatkar said. Van Heusen is part of Madura Garments, which also owns Louis Philippe, Allen Solly and Peter England.

Madura Garments has been advertising its site Trendin.com over the past month and is looking to prop it up to battle online retailers.

Among Madura brands, Van Heusen has taken the lead in building a so-called omni-channel approach, which refers to part or full integration of physical stores with an e-commerce platform, and offering similar benefits, value and shopping experience across formats.

Apart from designing a product line exclusively for the Google Online Shopping Festival in December, Van Heusen also recently launched a concept called My Fit in over 200 stores. This concept allows customers to choose fabrics in specific sizes—even those that aren’t available otherwise—and other product specifications, through a tablet located in Van Heusen stores. Rival Arvind launched a similar concept and brand called Creyate last year, though at a much smaller scale.

“We are offering the benefits of online shopping—ease, convenience and collection—with My Fit,” Bhopatkar said.

Bhopatkar also expects many brands to launch online-only product lines this year onward that will help them avoid the headache of offering the same prices across mediums.

Not all brands are convinced about the potential of the omni-channel approach. Value fashion brand Max, which is owned by Dubai-based Landmark Group, has no immediate plans of launching its e-commerce site, executive director Vasanth Kumar said.

Max signed up with Flipkart exclusively late last year and Kumar said the exclusivity will help protect the company’s offline business from the rapid expansion of e-commerce.

“We don’t see omni-channel becoming big for the next year or two because of infrastructure and other issues, so we’re currently focusing on building our offline business. The exclusive partnership with Flipkart will help us achieve controlled expansion online and it will also enable us to manage the online business in a much better way,” Kumar said.