INSUBCONTINENT EXCLUSIVE:
Private labels will woo price-sensitive customers and create loyalty and higher margins, say analystsMumbai: For Lalit Bisht, buying
Roadster jeans and T-shirts off Myntra, Flipkart's fashion operation, is a no brainer
It may take a week to deliver clothes to Bisht's small hometown in Uttarakhand, but the wait is worth it."The fit is perfect and price is
It's a value-for-money brand," said 32-year-old Bisht, a government worker who lives in Haldwani, which had a population of just over
3,60,000 at the time of the last census in 2011
It is a place where options for good quality, affordable apparel are mostly lacking.(A customer poses with a virtual reality headset as she
browses through a catalouge of products inside a Roadster store in Bengaluru, May 28, 2018)Bisht's purchases of at least 20 Roadster items
from Myntra are symptomatic of the appeal of private label brands for tens of millions of aspirational Indian shoppers looking for low-cost
alternatives for everything from clothes to smartphones
These are people who may want to look hip and cool but can rarely afford to splurge on the big global brandnames.And with Walmart now taking
on Amazon Inc in India with its $16 billion purchase of the homegrown online retailer Flipkart, India's e-commerce wars are likely to pivot
more toward private label brands.Up until now, the battle has more often been fought through flash sales of discounted electronics but the
losses in that game are unsustainably large.Both Flipkart and Amazon have been burning through cash to offer those discounts and a bigger
push into private labels could help them make money as they control the pricing, marketing and supply chain of these brands, say
analysts.With nearly 500 million Indians using the internet in 2018 and many just dipping their toes into online shopping, private labels
will woo price-sensitive customers and create loyalty and higher margins, say retail analysts.For example, Roadster jeans for women on
Myntra that start at Rs 389 ($5.73), could lure many more buyers than the cheapest Levi's for women that begin at about Rs 1,999 ($29.47) on
the denim brand's Indian website.Billion brandLast year, Flipkart launched its private brand Billion which sells everything from T-shirts to
It also owns electronics brand MarQ and furniture label Perfect Homes
Myntra's private brand portfolio, which comprises 13 labels, is profitable.Amazon too has been slowly pushing into private labels in India
Its portfolio includes its global AmazonBasics brand that sells everything from headphones to stationery; Solimo for dry fruits and bed
sheets, women's ethnic-wear brand Myx, men's clothing brand Symbol, and a low-cost smartphone brand 10.or."The role of private brands for us
is to fill in specific need gaps that are not being serviced," Amazon India head Amit Agarwal told Reuters in an interview last month
"We'll keep looking for these opportunities."And although Amazon says making money in India is years away, Arun Sirdeshmukh, the head of its
fashion business in India, told Reuters last month that private brands will help it embark on "a overall long-term profitability
journey".One supplier, who asked not to be named, said retailers typically price the shoes he sells at three or four times the factory gate
cost, indicating how much potential there is for the private brands to price competitively and still make a profit.Others see opportunities
for Flipkart and Amazon to take some of these Indian private label brands overseas.Following the deal, Flipkart's co-founder Binny Bansal
said a lot of the private brands it has created will be very popular with the Indian diaspora in the countries where Walmart operates
"That's something we'll be looking at," he said.Sources familiar with Walmart's plans say private labels will be a key focus for the
Bentonville, Arkansas-based retailer in India, an e-commerce market forecast by Morgan Stanley to grow to an annual $200 billion in a
decade.Walmart's fashion brands, with clothes priced from $5 to $30 an item, could also be a hit with Indian shoppers, including labels like
women's apparel brands Time and Tru, men's clothing brand George and kids label Wonder Nation, say analysts."The US private label for
Walmart has always been an entry price, it tends to be at the lower end of the pricing spectrum, I think that's how it will probably work in
India as well," said Neil Saunders, managing director of consultancy GlobalData Retail.Road to profitBengaluru-based Flipkart, founded in
2007 by two former Amazon employees, has grown to become India's top e-commerce firm, thanks, in part, to the exclusive launches of
electronics with deep discounts.Flash sales of smartphones or TVs, typically exclusive to one online retailer, create hype around a brand
and help move inventory, but hit profitability - making them a bad long-term bet, analysts warn.Flipkart reported a net loss of Rs 8,771
crore in the year to March 2017
Amazon's international operating loss grew 29 per cent to $622 million in the first quarter, partly due to its expansion push in India,
where it has pledged a $5 billion investment.Sources say Walmart could expedite Flipkart's push into private brands and help develop new
brands to differentiate and counter Amazon, whose Prime loyalty programme is growing faster in India than in any other part of the world.($1
