Abof Hopes To Be One Of India’s Top Three Fashion E-Tailers In Five Years
Aditya Birla group owned Abof has reached annual gross merchandise value of Rs 200 crore in its first year of operations, and has set its sights on becoming one of India’s top three fashion e-tailers in the next five years.
“We should be able to grow our revenue anywhere between 50-75 percent on a year-on-year basis,” the deputy chief executive officer of Abof, Kedar Apshankar told BloombergQuint in an interview. The company will steer clear of discounts and focus primarily on millennials, Apshankar added.
However, retail consultants are of the opinion that Abof will have a tough time trying to be among the top three players as established players have already managed to acquire online customers.
“This is just an option created by the Aditya Birla group to sell their merchandise. Customers who shop online will traditionally prefer shopping on the already established players site as they offer a plethora of options, and discounts are also steeper," said Prashant Agarwal, joint managing director at Wazir Advisors, a retail consultancy firm.
Here are edited excerpts from the conversation with Abof deputy chief executive officer, Kedar Apshankar:
How has your experience been so far as one of the latest entrants in the e-commerce market?
So, I think we have scaled up to an annualised run rate of Rs 200 crore GMV (gross merchandise value), probably the fastest in the industry, within the first one year, which normally doesn’t happen.
What has been your strategy so far?
We were clear about our consumer, and the segmentation strategy that went with it. We are sharply focused toward millennials, so we don’t end up confusing the consumer with plethora of products.
Everyone is trying to have a more generalist kind of a positioning, and not a specialist positioning, so we were very clear about the positioning, we were very clear about millennials as our target audience.
We were very clear about the fact that we will be 100 percent curated and we will not have a long tail of merchandise. We will have few brands, and we will invest upfront in technology.
At the heart of it, our belief is that the all-encompassing customer experience which is what the technology and other aspects of the portal will provide, will help us move away from any discussion around discounting and pricing.
This is because we truly believe that there are consumers in India who are not looking for discounts, but for real fashion.
How big will the online fashion market will be over the next five years?
The current online fashion market is close to $4-5 billion and my sense is this market, over the next five years, will at least triple.
Where do you see yourself positioned in the next five years?
We have always said that we are not in this market for the sake of numbers. We do understand that, a) we are late entrants, b) we are not chasing discounts and not chasing customer acquisition at any cost.
So it is not really our strategy to be the largest player in this market. Our strategy is to be a very unique distinctive and differentiated player on the back of technology, service, quality and content, the four pillars of abof.com.
Using these four pillars, we will definitely be among the top three fashion e-tailers in the country over the next five years. We may not be the largest, but we will be the most differentiated.
Abof’s Three Levers
How will you combat the discounts that rival e-commerce companies offer?
We are not going after discounts. Having said that, we work with about 120 brands; whatever these brands do in physical retail, we mirror that. That’s one lever. The second lever is the form of content that we publish.
We believe that there are enough customers out there who are wanting to consume fashion content and then take their shopping decision. Our strength is content, I don’t think there is any other fashion e-tailer today. So content is the second best lever, good quality lever.
The third lever is the whole customer experience, starting with technology. Our website is the fastest website that loads from a customer experience point of view. We have something called a 3D trial room which no one else has; we have invested in visual search. We do Sunday deliveries and a have great call centre to look after our customers’ needs and feedback. Hopefully our consumers love us and stick with us.
How much more do you plan to invest in technology?
We are investing in this business keeping the next ten years in mind. So there will be adequate investment and the large part of that investment is going into technology.
Expanding The Portfolio Of Brands
How many more brands do you plan to add to your portfolio?
It will be a gradual build up because we have scaled up pretty fast. We added 120 brands within the first one year, which is a lot.
My sense is that from here onwards, it will be a gradual build up towards 200. We will be very selective about who we work with.
I think within the next 18 months we will add a few other categories that will also revolve around fashion. We may add a few international brands and a few saree brands to our portfolio.
Growth Targets And Partnerships
How much do you expect your revenues to grow in the next five years?
We should be able to grow our revenue anywhere between 50-75 percent on a year-on-year basis.
You recently tied up with Amazon. Are you looking to partner with other e-commerce players?
No, we are only going to go with Amazon and that is also only for our own brand Abof. It is only a small part of our catalogue that we are making available to Amazon on a trial basis.
How much revenue will Abof merchandise contribute?
Our own brands’ contribution to revenue is in excess of 30 percent on Abof.com. This is only Abof, the fashion brand. It will be our endeavour to increase it to at least 40 percent in the next two years. We will keep playing in the affordable range.