In a bid to increase its margin for the fashion and apparel category on the platform, Amazon India has today launched its own private label – Symbol. The private label has been launched by Cloudtail India Pvt. Ltd., Amazon’s largest seller.
Cloudtail is a joint venture between Amazon Asia and Infosys Ltd founder N.R. Narayana Murthy’s Catamaran Ventures. Cloudtail is also expected to launch other fashion brands by the end of the year. Amazon currently also offers headphones, charging cables, bags and a few other accessories under the AmazonBasics brand through Cloudtail.
As per the report, the company is planning to launch at least six private labels by the end of this year. The competition is very fierce in the Indian e-commerce market and the customer acquisition cost is also high. Thus, private label seems like a good option to increase margin — given that fashion and lifestyle is the second largest category for online retail.
To handle private labels and its push in the fashion market, the company has hired former Myntra executive Gautam Kotamraju. Under Kotamraju, Myntra enjoyed unprecedented success with private labels such as Roadster and Mast & Harbour, which now account for 25% of its overall sales.
The private labels will definitely impact Amazon’s revenues, and are likely to help it overtake Flipkart and win the battle for more market share. Flipkart currently owns Myntra and Jabong, two of the largest specialty online fashion retailers in India.
Fashion and lifestyle is expected to be the single largest product category in online retail by 2020. It also offers much higher margins than books and electronics, according to a report by Google Inc. and A.T. Kearney. Furthermore, private label offers fatter margins to marketplaces compared with third-party brands and enable them to lock in customers.
In order to be the market leader, Jeff Bezos had invested around $2 billion in the Indian unit. Later, he committed additional $3 billion for the Indian unit, making $5 billion in total investment for the Amazon India. Since 2015, Amazon Seller Services has already received Rs. 8,618 crore, and over Rs 9,600 crore since it was set up.
By the end of this year, Amazon India aims to have 27 Fulfillment Centers across states covering a total area of close to 2.5 million square feet and a storage capacity of 7.5 million cubic feet. It currently has 12,500 IHS centres across 50 cities for facilitated last mile delivery through small stores.