Why international brands chose online itinerary to enter into Indian market?

Over the last 2 years, Indian eCommerce majors such as Myntra, Snapdeal, Amazon etc have joined forces with more than 100 international brands.
Luxury Fashion

At a time when Indian government is constantly slacking its foreign direct investment (FDI) policy and opening gates for various international brands to trade in the country as a single-brand entity through brick-and-mortar stores, some eCommerce giants like Myntra, Snapdeal, Amazon etc., are aggressively focusing on roping international brands and bringing them to India taking the eCommerce route.

One of country’s online fashion retailers Myntra recently said that the international brands will account for 15 percent of its total revenue in the coming 12-18 months. Myntra has been constantly adding global fashion brands to its portfolio. The etailer has created a strong consumer pull by partnering with a bunch of international brands such as Stanley Kane, New Balance, 883 Police, JanSport, Time Force, Desigual, Scotch and Soda, Adidas, Arrow, Mango, DKNY, Diesel, Harley Davidson, Ferrari and many others.

Commenting on the same, Gunjan Soni, Chief Marketing Officer, International Brands, Myntra said, “Bringing some of the leading premium international brands to India such as DKNY has helped us strengthen our offering across categories and allow our consumers to experience the latest in fashion globally, in India.”

Though, the Government of India has now allowed 100 percent FDI in single-brand retail, but still these international labels prefer testing the water in the preliminary stage leveraging India’s booming eCommerce horizon. As per Nasscom, Indian eCommerce is will surpass $ 100 bn mark by 2020 and the dearth in traditional retail (brick-and-mortar) is likely to face the same challenges it did last year. Several international labels have either changed their business models or have shutdown their offline stores due to the increasing online upheaval.

British luxury menswear brand, Alfred Dunhill shut its stores in 2012, Italian fashion label Versace too made a comeback with a new pricing strategy and American fashion brand, 7 for all mankind, which opened its store back in 2010 now largely operate online. With such drift towards the online section, India will soon become one of the largest hubs for international brand (for both online and offline).

Increasing brand awareness and growing economy has made Indian customers more magnetised towards international luxury brands. India will spend around a massive $35 bn on online luxury brand by the end of 2016. However, some industry pundits still dissent this model of testing products online via partnership. As per Nakul Bajaj, CEO, Darveys (a luxury fashion marketplace), “A global brand has to have an online presence to let their potential customers know what unique are they offering. It is only when a consumer understands the brand's offering that they become a loyal customer.”

The trend of entering to a market taking the eCommerce route started in China, where many international players chose to foray online looking at the massive retail evolution happening around. Understanding the market need thereafter helped them to root a strong offline presence in the later stage. Over the last 2 years, Indian eCommerce majors such as Myntra, Snapdeal, Amazon etc have joined forces with more than 100 international brands.

As per a recent report by Euromonitor, Indian was the fastest emerging market for luxury goods across the globe. The country’s luxury market is all set to scale by 86 percent in constant value terms between 2013 and 2018 leaving behind countries like Malaysia (62 percent), Indonesia (59 percent) and even China (74 percent).

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