Struggling brands look to sell Trade-Licence to Online Marketplace

Fashion is an easy but a tricky business. While many brands have made a powerful launch, they have often failed miserably too.

But thanks to the growth of e-commerce marketplaces, apart from bringing fashion to the remote corners of India, it is also giving struggling brands a second shot at success.

The online marketplaces also act as the dumping ground for the apparels and clothes which do not fin its buyers in the same season of their launch.

Given the potential of e-commerce, now the home grown brands too are eyeing online model as a way to sustain business.

As per the reports, Arvind Fashion is in talks with Walmart-owned Flipkart to give away its India licences for numerous of its brands. Flipkart is likely to get the trading license for brands like Izod, Nautica, Gant and Ed Hardy.

International brands taking online route

Online selling has long been preferred by international labels for testing the water in the preliminary stage of their launch. India’s booming e-commerce horizon, pegged to surpass $ 100 billion mark by 2020, makes the choice even more reasonable. In fact, several international labels have either changed their business models or have shutdown their offline stores due to the increasing online upheaval in India.

The trend to enter a market taking the e-commerce route started in China, where many international players chose to foray online due to the massive retail evolution happening around. Understanding the market need thereafter helped them to root a strong offline presence in the later stage. Over the last 2 years, Indian eCommerce majors such as Myntra, Snapdeal, Amazon etc have joined forces with more than 100 international brands.

In another development, US-based Vans brand is also likely to sell its India licence to Flipkart. 
Many other international brands like British luxury menswear brand, Alfred Dunhill shut its stores in 2012, Italian fashion label Versace too made a comeback with a new pricing strategy and American fashion brand, 7 for all mankind, which opened its store back in 2010 now largely operate online. But selling of the trade license is something new on the cards.

The online move is obvious for the brands which cannot woo its customers in the offline model. Since online is an effective and a low-cost medium due to its zero fixed-costs, brands are finding it feasible to shift their operations online.

Besides, online medium enables to find the customers where they actually are.

Why Flipkart?
Walmart owned Flipkart, and its sister portals of Jabong and Myntra, collectively control nearly 65% of the online fashion business in India.

Flipkart is the largest homegrown online selling company in the country. Though Mukesh Ambani-led Reliance’s giant entry is being talked about, no formal launch of its e-commerce business has been made yet. India’s branded and high-end e-commerce is leading in South Asia. India’s luxury market is set to scale by 86%, larger than that in countries like Malaysia (62 percent), Indonesia (59 percent) and even China (74 percent).