A report by Euromonitor states that the value-conscious Indian would not prefer to buy a luxury product online. Only 1.2 per cent of the shoppers went online to shop, according to the data percentage for 2014, fearing that goods bought online could be fake. If Vijay KG, Founder, Luxepolis is to be believed, a former Microsoft employee and founding partner at Nykaa.com – online portal dealing in beauty and cosmetics – all products at Luxepolis come with an assurance of ‘Authenticity’ and although challenging, the luxury market is set to register explosive growth in the country.
In a candid interview with Retailer Media, he explains more on the glorified ‘fake’ industry, challenges for brick-and-mortar retailers and the future of online luxury market.
Is luxury picking up in India because of online business models and easy accessibility to foreign brands?
Luxury brands traditionally chose to expand via luxury malls or exclusive brand outlets. While it worked very well for the brands in developed economies where access and high-end mall infrastructure was well developed, India presents great growth opportunities and as well challenges for luxury brands to grow in a traditional way. We at Luxepolis.com strongly believe that, luxury brands will look at entering into or expanding their presence in India. Brands will have no choice but adapt niche eCommerce channels to register growth in India. Yes, online business model is certainly bridging the gaps of infrastructural challenges that India has, increasing the accessibility and awareness across the country.
We foresee existing luxury brands going online and new foreign luxury brands getting launched via eCommerce platform. It makes perfect sense for new brands to enter into India via eCommerce platform as it presents scale, pan-India access and far less distribution and logistics challenges. We have seen that happening in Europe on Yoox.com. Luxepolis presents a great platform choice for luxury brands as we feature only luxury and premium brands and nothing else.
The concept of selling pre-used fashion is fast catching up, what has been the response so far on your site?
Yes, indeed it is. Indians, whether rich or not so rich, are value conscious. Our sellers and buyers are seeing great value in the concept of pre-loved fashion. We are seeing great traction so far. We are doing an average transaction value of Rs.15,000, which is quite a pleasant surprise for us as well.
How do you quality-check and determine the authenticity of a pre-used product?
Luxepolis invested in a best-in class global authentication team and have partnered with local gemologists and horologists. We can proudly say that we have the best luxury authentication team and processes in India. We proudly stand by every product that we sell on the platform. For the first time in India, given the confidence that we have on fool proof authentication processes and team, on all pre-owned luxury product purchases, Luxepolis is issuing an Authentication and Grading Certificate, similar to what you get when you buy diamond/gold jewellery.
Everything on Luxepolis comes with the assurance of ‘Authenticity’. The chosen brands stand for elegance and high standards of craftsmanship. There is a zero-tolerance policy for counterfeit goods. The validation process is standardised yet rigorous to ensure our consumers don't purchase anything less than the finest luxury merchandise from Luxepolis. All products are subject to a rigorous, multi-layered, brand-specific authentication process by our team of luxury brand authenticators, horologists, gemologists. Luxepolis has partnered with the best authenticators all over the world to ensure that no fake products are (ever) shipped from our warehouse.
Luxepolis's global authentication team inspects all goods for appropriate product material used, hardware used, zipper quality and make, leather trimming, seam line stitch consistencies, brand markings and logo printing and embossing, date codes or serial tags and hologram stickers.
We are also registered with leading authentication groups, forums and industry bodies that most luxury brands are associated with.
How do you view India as a market for luxury brands?
For the reasons mentioned before, Luxepolis envisions that more and more global luxury brands will enter into India and existing brands will start the expansion spree sooner. Luxury market size was pegged at US 14.8 bn in 2014 and is expected to grow 20-to-twenty-five per cent CAGR to touch US 30 bn by 2020. A recent report by International payment transfer company, Paypal, indicated that Indians have shopped a whopping 54,000 crore of goods on foreign websites. Out of this, 55 per cent was spent in purchasing high-end fashion goods. This kind of highlights the latent demand for luxury and premium labels in India. Traditionally, we have always undermined the potential of luxury brands in India. But the scenario of changing fast with the rising disposable incomes, discretionary spending and increased global outlook for many Indians.
What could be the challenges for an online business like yours?
This is a challenging business to be in. Hence, there are barriers to enter. First and foremost, convincing luxury brands to go online is a major challenge that I faced while at Nykaa. However, we persisted and attained a huge success there. I now know what the luxury brands care for and what is that we need to do address their concerns.
Second, booming fake market in India. We put in a great deal of effort to review and reject all possible fake product submissions that we receive everyday. A recent report suggested that India will have fake luxury products account for nearly 10 per cent of the luxury market share, global average is around 8 per cent. However, we believe that fake luxury market is far higher than this number and the unfortunate issue is that the fake product vendors have developed very sophisticated means of digital marketing and are using eCommerce to reach out across India.
Third, luxury consumer is demanding and at Luxepolis, we always strive to wow the customer and exceed the expectations. Fourth, COD beyond Rs.20,000 is a real risk for our business and our courier partners. Some customers prefer paying in cash and this is a challenge to overcome.
What all segments do you deal in? SKUs? Number of products that the site sells in a day and unique visitors/ month
Luxepolis has launched with 4 categories, viz., Women's fashion, Men's fashion, Watches & Jewellery and Luxury automobiles. We currently have 5000 SKUs on the catalog and are planning to have 10,000 SKUs by March. We are selling high single digit orders per day (this is huge given that we are a month old in the market and deal with expensive products) and our average transaction value is Rs.15,000. Our traffic is growing every week at 100 per cent.
Where do you source the original products from and challenges pertaining to procurement, if any?
We source all brand-new luxury and premium merchandize directly from the brands or brand sources. We believe that in order to sell 100 per cent genuine products, our sourcing has to be 100 per cent authorized and brand represented. There's no other way to ensure that all our brand-new product merchandize is authentic.
As for pre-owned, we take a great care in ensuring the products listed are genuine. Right from validating our seller credentials to applying our fool-proof authentication procedures, we put in a great deal of effort to all our pre-owned products are authentic.
So far, we have seen no issues in sourcing pre-owned products. We see expensive pre-owned luxury watches, shoes, bags, cars, designer apparel getting listed everyday. We are seeing increased number of listings happening on our site everyday. We believe that this is going to increase.
How do you onboard the sellers, tell us more about the prerequisites.
We have a rigorous vetting and profiling process in onboarding our sellers. We execute fool-proof legal agreements to ensure that our sellers are completely signed-up in supplying 100 per cent authentic products. We vet the paperwork to verify the sources of legal procurement channels etc.
What's the future of the luxury market in the country?
Extremely bright. We envision luxury market is set to register explosive growth in India over the next two decades, we see aggressive adoption of eCommerce and new brands getting launched via online channel and finally a greater awareness to going to built about these brands.
Where do you see yourself five years down (future, growth plans)?
We see ourselves as the pioneer in Indian online luxury industry and expect us to be a household name across metro-urbane and tier-two/three cities. Near term, we plan to expand to Delhi, Bengaluru, Kolkata, Chennai, Hyderabad and set up local offices.