Flipkart has today announced the launch of its first private label in the fashion category — Divastri, which aims to tap into the demand for women’s ethnic wear.
With the launch of this Divastri private label, the company is targeting unstitched garments category. So far, the category has been mostly served by long tail merchants in a bid to control quality and pricing in the segment.
E-commerce companies are now looking forward to building their own private label brands. The reason being that it earns a larger gross margin than products sold by other vendors, even at a discount.
Rishi Vasudev, VP of fashion (retail), Flipkart, said,
We have some basic line of private label but Divastri will be our first brand in the fashion space. We have selected over 20 sellers, some of whom double up as manufacturers to licence the brand and sell on the Flipkart fashion marketplace. We have started with a selection of 1,500 and will soon ramp it up to 2,500.
Flipkart says that fashion accounts for more than 60% of all units sold on the e-tailer’s platform. Among the 60%, nearly half the units sold are in the ethnic wear and Indian contemporary wear category.
Vasudev says that Flipkart will be introducing new labels in the coming months as part of the fashion vertical. The current line will meet quality standards with a uniform design story for its offerings.
While this is the first private label brand for Flipkart, Myntra — the fully-owned subsidiary of Flipkart already has fourteen private label brands, including Roadster, All About You, Mast & Harbour, and Moda Rapido among others.
It recently acquired HRX by Hrithik Roshan, which is already a ₹120 crore brand. Myntra expects to close FY2017 with 21 per cent of its revenues from its private-label brands.
Last year, Ananth Narayanan, CEO of Myntra said that the company plans to scale up all its private labels, especially ethnic wear, and sell some of its labels on Jabong, which Flipkart acquired in July for close to $70 million.
Flipkart’s biggest rival Amazon India has also launched its own private label brand — Symbol, in September last year. It was the first private label among the six brands that it plans to launch.
According to the report by RedSeer, the share of fashion in Flipkart’s gross merchandise value has remained static between the first quarter of 2016 and that of 2017. It also indicated that fashion made up 20-23% of the overall e-tailing market in 2016.