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E-commerce firms chase private labels

Update On :21 September 2016

E-commerce firms chase private labels

To boost business, E-commerce firms are looking at private labels & mirroring a move that offline retailers such as Shoppers Stop and Big Bazaar made in the past.

“E-commerce companies are realising that they have to enjoy larger margin structures. They are now turning to having their own range of items. This will give them larger margins as well as help them make their brand names stronger,” said brand consultant Harish Bijoor.Myntra is now joined by Amazon, Lenskart and Flipkart, all of whom started off as storefronts. As the sector gains maturity, more firms are looking at profits, pushing them towards opening their own line of branded products.

“India has few brands. As the leading online fashion and lifestyle retailer, we should actually create brands. Myntra Fashion Brands, our core asset, creates brands,” said Ananth Narayanan, CEO of Myntra, in an earlier interview with Business Standard.

Fashion is not the only category where e-commerce firms are experimenting with private labels. Amazon has been working with its largest seller Cloudtail to launch its own line of mobile and PC accessories under the brand name AmazonBasics. Flipkart launched DigiFlip, its in-house electronics accessories brand in 2012, but shut the brand last year.

While private labels might seem like the way forward for sustainable e-commerce in India, not all players are on board, including India’s third largest e-commerce marketplace Snapdeal.The company says it does not have any private label brands and does not plan to introduce any.

Shopclues, another e-commerce firm, says it does not have private labels, but encourages its merchants to start them. This might work for Shopclues, which largely sells unbranded wares to buyers in smaller towns, but the model is not as lucrative for larger players like Amazon, Flipkart and Myntra. â€œWhen I purchase a product on sale, I am always wary of its quality, even if it is from a big brand. The same applies to these e-commerce companies, which have built their brands around offering discounts,” said Kartik Kompella, founder of Purposeful Brands.

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