How do you differentiate and be profitable on a “lingerie” thin margin business in India?


How do you differentiate and be profitable on a “lingerie” thin margin business in India?

There are more than 30 eRetailers selling women lingerie and innerwear, and this number is increasing constantly. Considering the dynamics (inefficiency + poor infrastructure) of the internet industry in India these numbers look high, however they are only poised to go up in the context of the tremendous underutilization of the client base.

There are 2 types of eRetailers offering women lingerie and innerwear to the market –

  • Multi-category apparel players (eg  Myntra, Jabong); and
  • Niche women’s lingerie only players (eg Zivame , PrettySecrets).

These are two very distinct models that require quite distinct approaches (“cross-sell tactics” for multi-brand vs “specific key-word targeting” for niche players) to gain critical traffic mass and healthy client conversions within the existing digital framework. The reality at the moment is that the pricing between the two models is almost similar (chart above) however; the number of brands (and total number of products) on e-display in niche category is significantly lower than their multi brand counterparts. This shows lack of inventory carrying risk appetite and weak supply chains within the niche retailers’ category and hence, are not able to capitalize on their “niche-ness”.

Give your label the chance to succeed

Brand positioning

The problem with the industry today is twofold:

  • The lack of established brand identity; and
  • eRetailers inability  to really differentiate themselves.

As a result, brands displaying on these sites are going after the mass market option pressured to increased hits and one off transactions by external stakeholders. It is becomes a “quick results” triggered decision to go with the multi-category eRetailers however the message (brand recall) can easily be lost between the large numbers of brand occupying the space:

Lingerie Brand
The size of the bubble represents relative number of brands

Mixed identity

  • Mass market brands: Brands selling to Multi-category eRetailers
  • Mixed Identify brands: Brands selling products to Niche and Multi-brand eRetailers
  • Specialist brands: Brands selling products to Nich eRetailers

Rule #1: You need to know your brand

Rule #2 you need to value your brand and the long-term objective

If you are considering going after the mass market and looking to gain quick market share then the multi- category eRetailers should be your preferred choice. If you would like to create category specific footprint and client retention value, a niche eRetailer is the preferred approach, however in both cases it is crucial that the brand identify is communicated clearly to the public (or else the result will be brand deterioration and/or mispricing (see chart below) and leakage of revenue).

Average price

Aligning a “Mixed identify” brand to the average price and still remaining price competitive by applying a moderate discount can result in USD 200,000 – USD 350,000 uplift per year (Price differential  X Order size (1.5 # of units per basket) X 100 orders per day (conservative traction)).

Where is the opportunity? Relationship covered with a private label veil

A clear gap and opportunity exists for a brick and mortar (offline) established player to capitalize on strong supply chain, offering depth and breadth of inventory and already established understanding of client buying behavior and demographics to enter the digital market place.  This is particularly valid in this marketplace where the customer is very conservative (and in most cases conservative = loyal).

Considering that it is all about the margin, private label is the logical way to go and the large number of brick and mortar only retailers are very well positioned to explore this opportunity. Repositioning your product and price realignment (graph below) can result in bottom line gain of as much as USD 300,000to USD 500,000 (Price differential  X Order size (1.5 # of units per basket) X 100 orders per day (conservative traction)).

Private Label Lingerie Brands in India

“Conservative” is not static but a constantly changing state. Launching a private label allows you to be innovative and risky so maybe is time to bring “sexy” back in India!

Word of caution: it is not enough just to launch a website, a catalyst (eg trendy man offering considering that this is the most internet affluent audience in India, or specialist offering such as Plus size & Maternity collection – currently offered by less than 25% of the market) is needed to make the switch successful.

Your label can not succeed without a comprehensive marketing strategy

Companies need to put the customer at the center of the marketing universe. Effective ROI can be attached through multi-channel communication. This can be achieved by providing a consolidated view of efforts and how to model/plan the following:

  • Revenue & outcome
  • triggered and dip campaigns
  • channel optimization & execution
  • faster cycle times

The marketing strategy needs to allow for a dynamic keyword insertion, based on insights from data and product research. Utilization of long tail keywords which leads to higher conversions rates is critical for attaining economically efficient conversion ratios.

Incorporating all of the above allows for measuring the entire series of events across all channels and results in stronger qualified traffic, more unique visitors and page views. Such a ROI driven customer engagement framework with a clear goal of gaining organic traffic leads to creating overall long-term brand recall.

[Guest article contributed by Sanjeev Sularia, cofounder and CEO of INTELLIGENCENODE, a pricing and business intelligence firm. We recognize problems prevalent within the e-retail ecosystem, and have created trust behind technology to help make e-commerce simpler and more rewarding.]

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