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The classy just went massy: True-blue luxury brands are selling products online; what does that mean for you?

The classy just went massy: True-blue luxury brands are selling products online; what does that mean for you?

Transcending physical and psychological barriers, e-commerce has made luxury products accessible to a larger number of people

Consumption of luxury products in India has been on an upward swing in the past few years. (Image: Pixabay) Consumption of luxury products in India has been on an upward swing in the past few years. (Image: Pixabay)

Geetu Uppal, a communications professional, had dreamt of owning a Prada bag and a pair of Chanel pumps for years. But the very thought of the death stares from the sales executives upon enquiring about the prices of those products deterred her from even entering the stores. And her fears weren’t unfounded either, for there’s a popular adage among people that “if you have to ask the price, then it’s too rich for you”. But recently I saw her toting her new Prada handbag at our last get-together. She chirpily told me about her new online purchase, and how she is now saving money for the Chanel pumps, which she should be able to purchase for her birthday in November.

Generally speaking, anything that is beyond the reach of the masses can be classified as a luxury item. While everyone has their definition of what luxury is, pricey luxury goods are something that everyone finds desirable, and aspires to own. Piggybacking on these aspirations are the leading e-commerce players of India, who have launched their luxury e-stores in the past few years. With products ranging from clutches to watches and shoes to men’s three-piece suits, among other premium products, they have collections from international fashion houses—from Jimmy Choo and Michael Kors to Salvatore Ferragamo and Emporio Armani, and in some cases, even Indian fashion houses.

Consumption of luxury products in India has been on an upward swing in the past few years, with revenues from the luxury goods market expected to grow by 1.63 per cent annually between 2022 and 2027. From just $4.92 billion in FY16, the number went up to $6.94 billion in FY19, per Statista. Then, it dipped to $4.58 billion in FY20 due to the effects of the pandemic, and bounced back to $5.19 billion and $7.52 billion in FY21 and FY22, respectively. It is expected to climb to $7.74 billion in FY23, and further touch $8.16 billion by FY27 on the back of increasing demand for luxury goods. Incidentally, while the majority of this revenue still comes from offline retail, the contribution from online channels has gone up from a mere 3.5 per cent in FY17 to 6.5 per cent in FY21, and is further pegged to reach 10.1 per cent by FY25.

And it is the millennials and the GenZs, with their higher incomes and exposure to luxury designers from across the world, which is contributing to this trend. With the gradual acceptance of buying luxury products, even a designer bag worth more than Rs 50,000 just touches the lower price bracket of the luxury market. And consumers are readily buying products worth much more than that. “Luxury is growing and expected to grow further. In the past, it was an aspiration, but today, you have Indian designers who are selling bags, etc., at a price that has significantly moved up,” says Rajat Wahi, Partner-Consulting at Deloitte India.

Earlier, consumers preferred to shop for luxury items when they were travelling abroad, as in many cities such as Milan and Dubai, they could get a VAT refund. Contrary to availing tax refunds offshore, consumers pay 28 per cent GST on luxury items in India. A void was created by the travel restrictions imposed during the pandemic and most people were not able to splurge on luxury shopping abroad. This hiatus in their shopping habits was filled by the luxury-focussed e-commerce platforms that offered deals and discounts to encourage a shift to online luxury shopping.

Tata CLiQ Luxury is one of the few platforms playing in the luxury e-commerce space for the past six years, and it claims to have registered remarkable growth. “Since Covid-19, we have witnessed high triple-digit growth,” says Gitanjali Saxena, Business Head of Tata CLiQ Luxury. Focussed on offering a curated selection of global and Indian luxury brands, Tata CliQ Luxury serves 1,000+ cities nationwide. Another platform is Darveys, which started its operations as a members-only platform in 2014. As one of India’s first luxury-focussed e-commerce platforms, it started out by offering products sourced directly from international designers and boutiques to its members.

But with competition heating up in the segment, the platform switched to an open-for-all format just before the pandemic. “A lot of people go to the store to see the products, try them out, and then place an order with us because we are offering the widest collection of 300 stores on the platform. A lot of the items are priced exactly how they would be priced in Europe,” explains Nakul Bajaj, Founder and CEO of Darveys. A feat in Bajaj’s words, given that it has a good success rate in repeat customers. “One in every two people come back on Darveys, and that says a lot,” he says, adding the average sale price on Darveys is close to Rs 22,500, and its average recurring revenue will be close to Rs 100 crore by the end of this year.

An Evolving Landscape

Another challenge that the online luxury portals address is to provide an alternative to the opulent experience of shopping in luxury brand stores that are limited to a few cities in India. There are not many high streets where luxury brands can put up their stores. Even the concept of having a store in five-star hotels is quite restrictive as consumers want to enter a mall type of setting where they can check out multiple stores and brands before finalising a purchase. And while customers in metros can still walk into the stores in their cities, the aspirations of non-metro shoppers are being met via online channels. “Apart from the metros and Tier I cities, we are seeing healthy growth coming from Tier II-Tier IV cities and towns. We have a healthy mix of revenue, with almost 40 per cent of our revenue coming from non-metro markets,” says Saxena of Tata CliQ Luxury. Darveys’s revenues, too, are equally derived from its metro and non-metro markets. “Even smaller cities like Agra and Ludhiana account for a decent percentage of revenue compared to all the cities we get orders from,” adds Bajaj of Darveys.

Not only that, Reliance group-owned Ajio with its Ajio Luxe play; Nykaa’s The Global Store; and Flipkart-owned Myntra’s luxury offering in partnership with Aditya Birla Fashion Retail are also present in the luxury market in India.

Shopping for luxury is not just about the cost of a product. It is also about the experience of buying it. Right from walking into a gilded store to being greeted cheerfully and being pampered, to being offered a glass of wine, and paying attention to your smallest desire and experiencing the product—none of that is replicated when shopping online. And while there is a wide gap, e-commerce players are working towards enhancing the online luxury shopping experience. For instance, Tata CliQ Luxury introduced new experiences like the select programme and a white-glove delivery service. “Given that we have a highly engaged customer base of watch enthusiasts, we introduced assisted sales in the form of a round-the-clock chat designed to offer real-time advice to customers,” says Saxena. Moreover, consumers’ concerns regarding the authenticity of products while shopping online are comprehensibly addressed by the easy exchange and return policy.

In addition, some of the luxury e-commerce players even host sale events that enable consumers to discover and celebrate the luxe life by availing offers on the most coveted global and Indian luxury brands across categories. Some of these flagship events are timed to coincide with increased demand periods and special occasions. For example, Tata CliQ Luxury’s anniversary sale is held during the summer months when there is a fair demand for wedding purchases; and another sale is held during the festive and wedding season. “These are some of our biggest sale events that allow consumers to get access to an array of luxury brands at very attractive offers,” says Saxena.

The luxury business in India is still in its infancy, and there is a long way to go. Yet, over the past few years, e-commerce has achieved one thing that offline stores never were able to do. And that is to transcend the physical and psychological barrier of luxury shopping to make these products more accessible to more people.



Published on: Oct 06, 2022, 12:40 PM IST
Posted by: Arnav Das Sharma, Oct 06, 2022, 11:07 AM IST