Wednesday, November 09, 2011: 11:05:13 PM

Retailing Guest Column

Online retailing in India: a perspective on luxury brands - Sajan Gianchandani, The Private Sales

Great opportunities lie in the online retail space in India yet challenges with luxury brands remain

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It is quite easy to be swept away by the huge opportunity that online retailing offers in India. But luxury brands have their own share of opportunities and challenges in online. At the outset, let me say that marketing a luxury brand online requires huge commitment and a long-term focus. Just because the brand is luxurious or premium, it does not mean that it does not have any competition. Luxury brands require a long-term marketing support to sustain and establish them in the market as a formidable force.

 
It is essential that these brands spend enough on advertising in offline media and position their brands as premium. Once this is done, it is essential to integrate these efforts online. There was once a perception that premium brands can be sold only in big cities. However, several realities of India contrast this perception. The purchasing power has now spread to non-metros and smaller cities. People in smaller towns have the same access to Internet, media and information which their counterparts in bigger cities have. This has created aspiration value among buyers from smaller cities. However, their cities may still not support such brands. A typical shop owner in a small city would still like to cater to the majority of the people and thus stores mostly non-premium brands. This is compounded with the ground realities of excess inventory and real estate costs, where he cannot afford to stock brands that move at a slow frequency.That is where the role of online retailing in premium brands comes into picture. They have the ability to meet the aspirations of several such buyers from across India. Thus, the typical issues of inventory of a small town store owners are overcome.
 
Premium brands
 
Premium brands have new opportunities in distribution. They can reach the hinterlands of India through online stores that will bring their brands to their homes. A case in point is our customers, based in small cities. People from cities like Ludhiana, Belgaum and Kolhapur buy premium brands like Just Cavalli, Hugo Boss, John Galliano, Versace, Gucci and so on. Small town shop owners have also woken up to this reality, but are constrained by the size of their markets. So premium brands see new opportunities in online retailing.
 
However, premium brands have their own share of challenges. In order to survive as a premium brand and still offer great choices to customers is a challenge. On one hand, brands have to offer affordable luxury if they have to penetrate the market. On the other, they have to ensure that pricing does not dilute their brand image – a fine act of balance.
 
E-commerce and online retailing in India are still at the nascent stage. Further growth in this segment will come from Internet penetration and increased buying power of Indians coupled with their willingness to embrace luxury in daily life. Currently Indian market is too big for global premium brands to ignore. Both brands and online stores are betting big on the story called “India”.
 
Sajan Gianchandani is the co-founder of The Private Sales, a leading online retailer

 


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