Over the past year, a stream of Indian conglomerates jumped on to the e-commerce bandwagon by launching their online ventures but a first look at their sales numbers indicates it’s not been a flying start for the old guard. Aditya Birla Group’s Abof.com, textile major Arvind’s NNNow.com and Reliance Industries’ Ajio, all fashion and lifestyle e-tailers, are expected to be clocking a monthly gross merchandise value, or GMV, up to Rs 10 crore, people familiar with their numbers said.Some like Abof recently started selling on Amazon to gain from its traffic and prop up its visibility amid competition from well-entrenched ecommerce heavyweights like Flipkart-owned Myntra and Amazon Fashion.
These traditional retailers say they’ve steered clear of heavy discounting compared to their online-only peers who gained heft through this route. According to industry estimates, Arvind’s NNNow.com is registering about Rs 4-5 crore of monthly GMV, while Abof.com is doing around Rs 10 crore.
GMV is the value of overall goods sold online without factoring discounts and cancellations. Reliance’s Ajio is in a similar situation with a monthly GMV of about Rs 5-6 crore, but the company may ramp up its investment early next year as it tries to build an ecosystem around its 4G venture Jio.
These retailers dismiss GMV as the right metric to gauge the growth and scale of online businesses. Abof.com, which was launched exactly a year ago, claims it’s different from the existing e-commerce pack as its core proposition is to create a mega lifestyle brand online which will run across categories. Kedar Apshankar, deputy CEO, Abof.com, says the company’s path to profitability is very clear and at such an early stage its private brands account for 40% of its business. He says by March 2017, Abof will shore up Rs 170200 crore in GMV with a huge focus on Abof, its umbrella brand.
Kulin Lalbhai, executive director at Arvind who is heading NNNow.com, said, “We are not chasing GMV-led discounting instead are focusing on an omni-channel strategy for our business.Out of 1,200 stores that we run 350 are live with NNNow.com where consumers can place orders, which will act as warehouses for NNNow.com.” A Reliance Ajio spokesperson did not reply to an email sent by TOI.
To put things into perspective, Myntra recently clocked $1 billion in GMV on an annualised basis post discounts and further increased its dominance with Jabong’s acquisition in July. Together, they command almost 70% of the Indian online fashion market. Amazon, too, has been sprucing up its fashion play by introducing private brands. According to data collated by TOI, the combined daily shipments for fashion for Flipkart and Myntra stands at about 3 lakh, wherein Flipkart contributes 1.6 lakh, while Myntra does around 1.3 lakh and Jabong stands at 50,000.
“The brand perception is still that these are offline retailers and they are using the online medium to clear some inventory off. They are not discounting compared to what we see from e-commerce players which is making customer acquisition difficult for these companies,” said Satish Meena of Forrester Research.
While, e-tailers moved aggressively with their annual sale events recently to make up for flat sales earlier this year, these newer online ventures stayed away from deep discounting. “The traditional retailers are taking a long term view of these businesses. It is an important channel for them but they are still figuring out the navigation and other tech aspects so less traffic is not a surprise. They are still nascent players and being very cautious ,” said Pragya Singh, analyst at retail advisory firm Technopak.