At the launch of Abof.com, Kumar Mangalam Birla, Chairman, Aditya Birla Group spoke to the Retailer Media on various things, including the reason behind launching a fashion forward online apparel brand for millenials Abof.com, the one of its kind virtual 3D trial room feature among other things. Few excerpts:
Don’t you think you are late in launching Abof and it would be better if you launched it 3 years back?
There is no right timing and I don’t think that we have lost any time yet, what matters is the quality of the offering. I don't think we have reached the stage of polarisation.
Why did you opt to go for the closely held company when you already have an in-house fashion wear company?
This is something that we have been debating since the last few months. The reason behind this is to have a specific fashion-oriented brand for youths. For Abof, our consumer set segment is different and so is the medium. What the millennial is looking from the merchandisers, if you see, is very different from our current offerings of Louis Philippe, Allen Solly, Van Heusen and even Pantaloons. There is no connect or overlap between the product offerings of Abof and our other brands which is why we can have Abof.
What kind of investments have you done to ensure a smooth functioning of the brand?
We have set up our brand new warehouse in Bengaluru and the second one is in the works, which is likely to come up in NCR. For the last mile delivery and logistics, we will partner with people. After thorough evaluations we have chosen a group of people who do last mile in the fashion space and we have partnered with them in our own way to make sure consumer experience is delightful. We have partnered with outsource delivery providers on last mile logistics delivery which also gives us lots of flexibility and scalability. We do not want to talk about the extent of investment that has gone into it so far. There is enough fire power this initiative will have to make it successful.
What about profitability?
We couldn’t make any estimate of profitability. This is a business where it is very difficult to give any estimates. Obviously, the idea is that in the possible future it starts giving profit.
Will it be a platform offering Abof products exclusively?
We will be offering in-house as well as external brands through Abof. From the external brands that we have selected, many will have merchandise exclusively with us. It’s just that if you take any brand on other portals they may have all their 500 or 1000 options available, but we are going to be more selective and we will handpick products that have a higher fashion quotient, superior products, in trend, and much less of regular plain vanilla merchandise and we will be a lot more curative. In selective cases, depending on the expectation of the brand, we will have some exclusive products available on Abof but that would not be the norm, we will have a mix of both.
How many pin codes you have covered?
As of now our courier partners have covered close to 5000 pin codes in more than 400 cities in the country. Most of the country landscape is covered. The only other incremental coverage can happen if we were to tie-up with India Post. Consumer pay through Master card, Visa card, American express, net banking and cash on delivery options.
How accurate is your 3D trial room feature and how will it attract your consumers?
Our analysis is that it is 95 per cent accurate. It will estimate hip and waist size but it also gives the flexibility of one inch higher (or lesser) measure and that’s the information we store with us, which allows the customer to pick the right size for every brand. Fitting and sizing are the most important problems to solve in fashion as a space and we believe this is an important step forward. I hope we will solve it completely. This is still step one and we have some distance to cover.
Is there an eventual aim of what eCommerce as a percentage will contribute to the overall group’s turnover?
No, I don’t think it will be anything sizeable in terms of turnover. In terms of valuation it could be sizeable. I don’t think I can give you a number in terms of comparison with our overall group numbers.
What are the marketing and promotional strategies for Abof?
It’s a multi promotional strategy; a mix of digital marketing through platforms like Google or the Facebook, some offline marketing through print media marketing, TV advertisement or advertising through YouTube. Digital tech segment actually consumes a lot of media than print or television so we have worked that out and you will see lot of that is happening within six months.
Why you are not targetting the kids section through Abof?
We are very sharply targeted at the youth of today, who are 18 to 25 year old. We have chosen very consciously to be that sharp. We will see how this business will grow. We will see the consumer behaviour and what they are buying. And we have to come to a situation where there is a lot of consumer feedback saying we would like you guys to go for kids as well. We may evaluate that in the future. In the beginning, though, our primary target will be millennials, because they are the largest shoppers.
Can we expect more of such initiatives from the brand?
We are looking at other spaces as well. But this is something that requires a lot of time and a lot of study. It’s not necessary that we make any other plans in eCommerce space. As of now, this is it!
You don’t believe in any discounting strategy so why don’t you have any volume growth targets?
There is no target. We have some internal estimation but nothing that we can share right now. This is not a business where one can give out specific targets. And because our price points are sharp we don’t require discount routes.
Will you ever go for funding for this brand?
We are open to have investors at the right time and at the right valuation. We will be getting foreign investors for Abof.
Like other online retailers would you be bringing International brands through this gateway?
We will be exploring that too, but selectively. We will be very focused on figuring out what will work best for our consumers. Right now this is only focused on domestic market.
Will online business be your focus from now on?
No, like I said this is a very different product company. We will have to be focused on our offline businesses . . . Madura Garments. With Abof, we are going with both mobile app and website and that’s a choice that we have made.
How do you think eCommerce landscape will change in the country where players like yourself and TATA are venturing into the space?
I don’t think the landscape will change. For us the advantage is that we understand this space and the industry, because of our presence in the offline fashion space. It is such a splintered industry and what happens in other countries is that there is always a process of consolidation that takes place. It’s not a one-winner-takes-all strategy but there are emerging dominant players among a few small ones.
Do you think online discounting will fade out completely?
I don’t think so! Discounting is very much part of this industry and it seems like its going to continue for now at least. None of our brands offer discounts. And we don’t intend to offer discounts with the kind of demand that we have.