Fashionista Priya Sachdev, founder and chief executive of online luxury products site, is planning to expand her e-commerce business by introducing children’s luxury brands on her portal next month. Also on the cards is the launch of luxury home décor items. CEO Amit Maheshwari is equally busy expanding the website that was acquired by online marketplace Snapdeal in February 2015. He feels that Exclusively’s back-end integration with Snapdeal will be the springboard to scaling up the luxury fashion business.

Post-acquisition, Snapdeal has been adding to the luxury site’s product portfolio every month. In the last one year, Exclusively has grown 400%, claims Maheshwari, and plans to strengthen its beauty and personal care products range, besides designer wear, which is currently its core.

Vijay K.G., CEO and founder of four-month-old luxury site, too, is planning to add the beauty category on its website. It already sells accessories and apparel., meanwhile, is in talks with several international luxury brands to partner them in their India debut. Some of them do not want to enter India by setting up a physical retail store. Instead they are keen to launch through their online marketplace, says Maheshwari, without naming the brands his company is in talks with.

To be sure, in the last couple of years, several premium and luxury fashion e-tailers have cropped up (besides those mentioned above, there is Elitify and Darveys, among others), hawking for men and women a plethora of Western labels such as LVMH, Dior, Gucci, Emporio Armani, Hermès, Chanel, Salvatore Ferragamo, Bvlgari and many more.

Sachdev’s RockNShop, which started with 12 brands in 2014, currently showcases 65. With the launch of the children’s range, this number will swell to 100, she claims. On sale are designer wear and jewellery labels—both international and Indian—besides bags, watches, shoes, scarves and miscellaneous other products.

Considering the online luxury products marketplaces have big expansion plans, they must be confident about their business potential. Some of this confidence stems from the fact that for every dollar spent in India on luxury goods, Indians spend $9 overseas. So there is a good runway available for growth in this market.

Interestingly, founders of these e-commerce sites believe that the online luxury business will grow remarkably well in small towns. The potential, they say, resides, surprisingly, in India’s tier I and tier II cities. Already a fat chunk of orders is coming from the non-metros, with consumers in smaller cities logging onto these sites. The small-town consumers have exposure and aspirations and the luxury portals provide access and affordability.

There are two types of consumers of luxury. The indulgent customer, who is well travelled and will pay, and the aspirational consumer, who prefers to pay by cash on delivery and also avails the EMI (equated monthly instalment) option that sites like RockNShop offer. “This is the segment that will grow," says Sachdev.

When it was acquired by Snapdeal, Exclusively was a New York-based company selling in 150 countries. It is now focusing on India and finds that 60% of its traffic comes from the metros. However, the remaining sizeable 40% is from other towns. For the e-tailer, Ahmedabad and Pune are rapidly growing markets.

Forty per cent of Luxepolis consumers are also logging in from smaller cities such as Dehradun, Indore, Nagpur, Amritsar, Kochi, Visakhapatnam and Gangtok. “There is money in these markets, but there is no access to luxury brands. As Indians acquire global tastes thanks to affordable foreign vacations, influence of Hollywood and Bollywood, and the Indian diaspora, they are looking to own foreign luxury brands," says Vijay.

Surprisingly, in a market like India where luxury in bricks-and-mortar retail has been facing challenges and struggling to expand, the online model is full of possibilities. For starters, online brings a discipline to demand and supply in the sector. You can find the entire range of a particular brand at one place instead of it being distributed across the various physical outlets where consumers often find a specific size, colour or pattern missing.

“In online, you can cover 3,000km north and south from the same platform," says Maheshwari of Exclusively.

To be sure, luxury brands have limited distribution in India. Except for a couple of luxury malls and a few luxury stores, much of the country is not serviced by luxury retail. Online availability of premium and luxury fashion brands then appears to be a viable option. It is also advantageous for customers who feel intimidated by luxury malls and stores. Even for those who do not want to be seen spending so much money, online is a safe haven.

Interestingly, for Luxepolis, the demand from small towns is driven by the “pre-owned" luxury goods that it sells online. Basically these are second-hand goods that are in excellent condition and certified by the company. On “pre-owned" luxury goods, it offers a discount of between 40% and 70%.

With fast-fashion becoming a widely accepted trend, there is a higher churn in luxury products as they get outdated faster. Consumers are constantly looking to change their bags and accessories, and flaunt their new acquisitions.

Launched in November 2015, Luxepolis sold 70% new products in the first month, while 30% of the products were in the resale category. However, by the second month, second-hand goods constituted 51% of its total sales.

Currently, does not deal in “pre-owned" luxury products. But Maheshwari admits that it is an interesting market.

According to estimates, the current luxury customer base in India is 50 million. This is set to touch 100 million by 2020. With 20 million Indians following luxury content on Facebook, part of the expanding consumer base may move online to shop for luxury.

Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.

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