Consider the numbers. In three years of operations (2012-2014), Jabong and Myntra's combined top line has hit Rs 1,000 crore for the year ended March 2014. Growth has been more than blistering.
Jabong sales in 2013-14 jumped to Rs 527 crore, from a mere Rs 4.6 crore in 2011-12 — that's an eye-popping 11,357% growth in sales. Myntra's Rs 441-crore top line in 2013-14 was an only slightly less staggering 558% jump from 2011-12's Rs 67.1 crore. And in these three years, Jabong's and Myntra's top lines have outperformed those of brick-and-mortar fashion biggies, Zara, Levis and Marks & Spencers, which have been in business in India for between 5 and 10 years.
Plus, growth in the big brickand-mortar chains, Shoppers Stop and Future Lifestyle Fashion, which have been in operations for two decades or more, has really slowed down in comparison, over the same period.
As Amazon chief Jeff Bezos had said, the big success of fashion etailing is the biggest learning he's taken away from India. And market analysts and fashion-conscious urban middle and upper middle classes are saying the same thing differently.
Analysts say a tipping point has been reached in e-tailing fashion. Consumers say the sheer convenience of browsing through thousands of big label options from the comfort of one's home or office and the ease of returning clothes that don't fit are the reasons they will stay with buying a dress through a mouse click.
"Where will I get international brands such as Dorothy Perkins, Mango, FCUK, and not-so-highpriced Harpa and Femella all in one place? I won't ever get to browse 5,000 designs at stores and I can't go there every day braving the traffic. But I can go to the virtual store every single day and if I don't like what I have shopped, I can just return, all from the comfort of my chair," said Ruchi Sally, director at retail consultancy Elargir Solutions and an online shopper explaining the growth of online fashion retailers.
"Online retail has passed the inflection point as customers have stopped questioning its viability and authenticity," said Devangshu Dutta, chief executive at retail consultancy Third Eyesight.
Fashion e-tailers attribute their success to multiplier effect from good customer experience and some serious brand-building efforts.
"Apart from the acceptance of e-commerce at a macro-level, we have, over time, built our reputation through customer experience. This will now translate into higher sales as we laid a strong foundation," said Praveen Sinha, co-founder of Jabong.com. "There has been a lot of focus on branding and investment to build fashion properties and technology which will help in the long run even as though it impacts profitability now."
Jabong and Myntra also attribute their growth to an increase in its product portfolio and exclusive tie-ups, especially with international brands.
The Indian online retail market is estimated to grow over 4-fold to touch $14.5 billion (over Rs 88,000 crore) by 2018 on account of rapid expansion of e-commerce in the country, according to research and consultancy firm RNCOS that projects compound annual growth rate of 4045 % during 2014-18. The current market size of the online retail sector has been pegged at $3.5 billion (over Rs 21,000 crore).
Fashion e-tailing, say market watchers, is poised to become the top category in the near future. RNCOS says while online sales account for nearly 4% of the overall apparel market, as compared to 15% for smartphones and between 5-10% for flat panel televisions, digital cameras and personal care gadgets, the hierarchy is set to change.
"It is likely that few years down the line, apparel and accessories will take over the top slot from electronic gadgets," the RNCOS report said.
Fashion e-tailing in India, say pundits, is going through the classic e-commerce growth pattern at a quick pace. In a very short time, the likes of Jabong and Myntra have crossed the first two stages — attracting the first enthusiasts and seducing a wider set with product promotions. The third, really defining stage will come when clicking for a dress becomes an even wider habit.
"Initial growth came mostly because of early adopters. The second set has come because of variety, good deals and promotions as part of customer acquisition strategy, triggering high growth. This two categories itself represent a large market opportunity. The big-bang change will be when a majority of consumers start buying fashion online, just as the first two categories are doing," said Gaurav Gupta, Deloitte's senior director, retail.
The twist in the fashion e-tailing thread is the same as that for all e-commerce — the red-hot growth phase that's bulking up losses. Jabong's losses climbed from Rs 16 lakh to Rs 16 crore between 2012-14 and 2013-14. Myntra's went up from Rs 134 crore to Rs 173 crore in the same period. In fact, the combined losses of e-commerce's leading lights — Flipkart, Amazon, Snapdeal, Jabong and Myntra — is Rs 1,200 crore. But pundits say losses in the big growth phase is a pain all e-commerce firms have to bear and investors look at future market grab potential. On that count, analysts give a thumbs-up to the likes of Jabong and Myntra.
Fashion e-taliers are not carefree about their losses, though. Myntra, which has a more unfavourable revenue loss metric had told ET last week that it is working on cutting costs, improving back-end supply chain efficiencies, seeking more margins from brands and boosting private brand business. All this in a bid to break even in the next 15-18 months.
Analysts also say the next test for e-tailers is to keep customers happy even while reducing discounting sales. But a significant inflection point will be when a bulk of the sales will be on non-discounted products: Third Eyesight's Dutta makes the point that Jabong and Myntra should now prepare for life with non-discounted sales, since that's where sustainable success lies.
But while, like most other etailers, Jabong and Myntra must turn their losses to profits at some point of time, they have received validation of their business model from most the unlikely sources — their bitter business rivals in brick and mortar.
E-tailers' customer acquisition strategies has produced sharp reactions from brick and mortar chains. But physical stores are now allying with e-tailers to expand their market share, including in apparel. Future Group is with Amazon and Fabindia is in alliance with Myntra.
Even brick and mortar, it would seem, has seen the future.
