Fashion portals on profit highway

Many e-commerce companies dealing in fashion are on the highway to profit in the country, riding on substantial margins.

For online firms, profit has not been the main concern, with volumes growth taking the centre stage. But now, with investors looking for profitability in the companies their bankroll, every player is looking to earn.

Fashion portals seem to be doing better than their peers. With margins of 20 to 60 per cent, the category is being perceived as a money churner.

The fashion verticals of Paytm and ShopClues have already started raking in the moolah, claim executives.

“Our fashion vertical has been profitable since March this year. Paytm offers a two-way strategy to its users in the fashion segment. For the brand-conscious users we have 1,000 “brand stores”. For the price-conscious users, we have Paytm Bazaar,” said Sudhanshu Gupta, vice-president, Paytm.

 

ShopClues’ fashion vertical became profitable last quarter.

Fashion verticals Voonik is another company to have started making operational profits. It’s aiming to be a profitable operation next year.  

“The high margin in fashion is helping us in becoming operationally profitable and if we grow this way we will reach overall profitability by second quarter of next year,” said Navaneetha Krishnan, co-founder and chief technology officer, Voonik.

Others, too, are trying to be profitable.

Jabong, a start-up backed by Rocket Internet, was one of the early fashion portals to enter India and was in significant losses till recently. Now, it has become one of the first e-commerce companies to achieve gross profit.

Leading fashion portal Myntra, which was acquired by Flipkart, too, has targeted profit for 2017-18.  

According to a latest study by the Internet and Mobile Association of India, apparel and footwear sale has grown by 52 per cent, from ~4,699 crore in December 2014 to ~7,142 crore in December 2015.

The segment is expected to reach ~72,639 crore by end of 2016.

“Investments in this sector support this claim. Lingerie seller Zivame, fashion marketplace Limeroad, and fashion social network Roposo had raised $40 million (~270 crore), $30 million (~200 crore), and $20 million (~130 crore) respectively in 2015 alone. Offline sellers like Shoppers Stop have, in fact, launched their own online platforms to face this competition,” the report said.

Fashion-focused social networking portal Roposo, too, is on the path of being profitable by next year.

The Tiger Global-backed company raised $5 million in the second round of funding in April this year from Bertelsmann India Investments.

Others such as Spykar are now concentrating on online commerce as they see it as profitable venture.

“The e-commerce arm for Spykar will be fairly profitable by 2020. The brand hopes to reach more consumers through this new platform, not only in Tier-I but also in Tier-II and -III towns,” said Sanjay Vakharia, chief operating officer, Spykar Lifestyle.

It expects at least six to eight per cent of its total sales to come from the e-commerce space.