In the last quarter of 2016, the top two players of the Indian ecommerce market Flipkart and Amazon launched a host of private labels. It became clear that the next battleground for the ecommerce war is private brands.
Besides benefitting from high profit margins, it also helps the online marketplaces to meet customers’ demand for good quality products in low prices. With the help of their own seller entities (WS Retail, Cloutail), Flipkart and Amazon can easily distribute their own labels without the need to retail it on any other platform – offline or online.
While Flipkart’s private labels include Smart Buy, Flippd and Citron, American ecommerce giant Amazon’s own brands include Solimo, Symbol, Kindle, Amazon Basic and Echo. Myntra, Jabong, Nykaa, Big Basket and other etailers too have their own brands. It has come to the rescue of many troubled digital start-ups and online marketplaces.
Amazon wants to repeat the US success story in India
With over 2 decades of experience in the ecommerce industry, Amazon has launched many successful private labels in the international market. The ecommerce giant wants to do the same with its India unit. In the US ecommerce market, Amazon has many tech in-house brands. But in India the focus has been on the fashion category, in order to compete with Flipkart-Myntra-Jabong trio.
Amazon India’s spokesperson said,
“Private brands play a role in providing great value to the customer by reducing costs from the value chain (optimised design for ecommerce) and providing this as value to the customer. There are customers who are willing to try out a new brand, provided it offers a reliable product at an attractive price point.”
Private label, the key to Flipkart’s future growth trajectory
Flipkart’s head of private labels shared,
“We considered hundreds of categories while evaluating private label opportunity and are focused on segments with significant price, specification and quality gaps.”
It is anyone’s game at this moment
As of now, neither Amazon nor Flipkart has the upper hand as far as private brands are concerned. Therefore, either of the online marketplaces can win in this segment.
Experts believe that for this strategy to work in the long-term, etailer would have to think like retailers and not just as tech-enabled companies. It would take a lot more effort to stand tall amongst the famous established brands and inexpensive unbranded ones.
“While I see no reason for these technology-centric etailers not getting 15-20% of their business from private labels, they will need to quickly learn old school retail skills of sourcing, design, manufacturing and quality control to compete in this market,” asserted Pragya Singh, VP at Technopak.