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Can fashion retailers start online sales during Lockdown 2.0?

Many of the hotspots are in cities such as Mumbai, Delhi, Chennai, Hyderabad and other large cities which contribute close to 50-60 per cent of business for these e-retailers, leaving them concerned

twitter-logoAjita Shashidhar | April 16, 2020 | Updated 22:22 IST
Can fashion retailers start online sales during Lockdown 2.0?

Government announcement that e-commerce deliveries of even non-essential products would be allowed starting April 20, may sound like a welcome news to the fashion retail industry which has come to a complete halt post the coronavirus lockdown. However, retailers aren't too sure if deliveries will be hassle-free. As many as 170 virus hotspots have been identified, and these hotspots wouldn't be open for any form of business. Many of these hotspots are in cities such as Mumbai, Delhi, Chennai, Hyderabad and other large cities which contribute close to 50-60 per cent of business for these retailers. "We can't take orders from areas which are in red, so we are evaluating the government's order. However, we have already asked our backend to be ready for a April 20 launch," says Kavi Mishra, CEO, House of Anita Dongre.

Not only can't they not deliver in virus-infected hotspots, the worry is also whether they will get adequate manpower to do the deliveries. "I am not sure if all our manpower would be back, whether we will be able to open all our warehouses," says Ameet Panchal, CEO, Ethnicity.

"The major impediment will be fulfilment of the demand surge, as labour will take time to come back. When they return to work, there will also be a wage inflation," points out Rishav Jain, Senior Director and Consumer & Retail Sector Lead, Alvarez & Marsal. Jain says that it took over a month for 80-90 per cent manpower to come to work in China, and that too with a huge wage inflation demand for health and safety protocols in certain locations.

Siddharth Bindra, MD, BIBA India, sounds more optimistic. "Our sales had come down to zero and e-commerce opening up will provide some cash flow." Bindra is confident that he as well as other platform partners will manage the manpower crisis too. "People are keen to come back to work. There could be delays, but deliveries will happen."

Though many fashion retailers are sceptical whether e-commerce deliveries during extended coronavirus lockdown will give them too much respite. All of them are banking on e-commerce for their bounce back post the lockdown. While the likes of BIBA got over 20 per cent of its revenue out of e-commerce sales, a host of other retailers had just about started planning their full-fledged digital presence prior to the lockdown. "We had started piloting our e-commerce presence through our omni-channel platform and had got a good response during the festival season. Post the lockdown, we will be far more aggressive with our online strategy," says Lalit Agrawal, Chairman and MD, V-Mart.

Panchal of Ethnicity says that prior to the lockdown the company was putting its e-commerce strategy in place and had set a target of getting anywhere between 10-15 per cent of its revenue through online sales. Though neither Agrawal of V-Mart nor Panchal want to hazard a guess as to how much e-commerce would contribute to their overall sales in the new normal post COVID-19, they are quite sure that online contribution going forward would be much higher than their original estimates. "Earlier, we sold limited SKUs on platforms such as Amazon, Tata Cliq and Myntra, but now we will start selling our entire collection," Panchal of Ethnicity further explains.

Online sales contributes around 15 per cent to the overall revenue of House Of Anita Dongre, but the company largely sold its previous season collection and that too at a discount. Mishra says that come April 20, the company for the first time will launch its spring-summer collection online. "We are expecting a lot of customers who buy at full price at our stores would shift to buying full price on e-commerce. The new normal post COVID-19 could be a point of inflection for full-priced fashion on ecommerce," Mishra further explains. A bulk of fashion sale on e-commerce platforms happens on the back of discounting of the earlier season's merchandise.

However, Jain of Alvarez & Marsal expects high discounting of fashion products in the new normal. "Apparel and footwear companies have high inventory levels, and one could witness advanced and / or extended end of season sales and discounting." He once again cites the example of China where he says, non-season merchandise have witnessed up to 70-80 per cent discount, while in-season inventory is also being sold at a 30-40 per cent discount in certain cases. "New collections could potentially get discounted in India too," he adds.

Also Read: Coronavirus India Live Updates: ICMR-NIV approve 23 antibody rapid tests, 9 to be made in India

Also Read: Coronavirus lockdown: Amazon, Flipkart may resume full operations after April 20

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