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Fashion E-Tailing in India: A Deal or Raw Deal for the Sellers?

CASE FLYER, E-COMMERCE AND E-GOVERNANCE
ET Cases, 5 pages

Case Preview

Fashion E-Tailing in India: A Deal or Raw Deal for the Sellers?

 

Expected Learning Outcomes

  • • Indian e-commerce market and Indian Fashion e-tailing market
  • • Competitive and business dynamics of fashion e-tailing market in India
  • • The (gross) margin war between market places and fashion retailers/fashion brands

 

I. E-Commerce in India: Fashion E-Tailing Market

1. Analyze the different categories of e-commerce in India.
2. What do you understand by inventory and consignment business models in e-tailing context? Illustrate the same with appropriate examples from Indian e-commerce landscape.
3. Name few Indian fashion brands/retailers and classify them under the given categories:


a. Exclusive online fashion retailers
b. Exclusive physical/brick-and-mortar fashion retailers
c. Hybrid-store fashion retailers

 

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Teaching Note Preview

Fashion E-Tailing in India: A Deal or Raw Deal for the Sellers?

 

Synopsis

During 2014, Myntra.com increased its margins (from the fashion retailers/fashion retailer brands) from 28%–32% to 36%–40%, higher than the 30%–35% margins that were sought by brick-and-mortar stores, while other e-commerce sites too followed suit. This came as a blow to the fashion retailers who had ventured into or were planning to venture online, as running an apparel business online had become equally expensive as that of running a brick-and-mortar store in a mall or placing your apparel brand in any other retail stores. But, most of the big fashion retailers/brands do not prefer to spare more than 20% as margins to the e-commerce portals. Despite that, they do not save on costs, they would incur on physical retail (rental) because they give away more as discounts online. However, with increasing footprint of online fashion e-tailing in India, players like Jabong, Myntra, Amazon, Flipkart, etc., even with their robust technology platforms and aggressive marketing campaigns are throttled with margin pressures. In addition, the brick-and-mortar stores are joining the online bandwagon to sustain their business prospects.

This case flyer introduces the students/participants to the Indian fashion e-tail business dynamics, especially the contours of discounts, margins and fashion e-tailers’ commissions and their effect on the business prospects of fashion retailers/fashion brands.

Prerequisite Conceptual Understanding/Before the Classroom Discussion

The students/participants should carry out the following pre-class exercise to have effective learning outcomes out of this case flyer:

  • • Visit www.jabong.com
  • • Study the product lines, product depth and width and the brands available
  • • Understand the underlying business dynamics between Jabong, fashion brands, fashion retailers,
  • suppliers, vendors, logistics and the end-consumer

 

Case Positioning and Setting

This case flyer can be used for either of the following:

  • • MBA Program: E-Commerce/E-Tailing course – To understand the types of fashion e-tailers, the business models and the cost and revenue drivers
  • • Executive MBA and Executive Development Programs: Fashion E-Tailing’s Business Model and Business Dynamics module – To understand the underlying logic for fashion e-tailers to demand hefty margins from fashion retailers and fashion brands
  • • MBA Program: Strategy course (Industry Analysis module) – To understand the competitive and business dynamics of fashion e-tailing industry in India

 

Preamble to the Case Flyer and Suggested Orchestration

This case flyer gives an understanding about e-commerce/e-tailing in general and fashion e-tailing in India in particular. It further helps the students/participants in understanding the competitive dynamics, business dynamics and the Critical Success Factors (CSFs) of the fashion e-tailing industry in India. An analysis of the facts given in the base article1 would help students understand about the gross margins prevalent in the industry and the basis for e-tailers seeking higher commissions and margins. A comparison between the costs incurred in fashion retailing and fashion e-tailing also gives an understanding of the reasons behind the rising commissions and discount wars between the players in the industry. The classroom discussion was carried out as presented in Exhibit (TN)-I...........

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Abstract

This case flyer, based on The Economic Times article1, is an attempt to introduce the students/participants to the Indian fashion e-tail business dynamics, especially the contours of discounts, margins and fashion e-tailers’ commissions. With increasing footprint of online e-tailing in India, especially in fashion/apparel retailing, even the brick-and-mortar stores are joining the bandwagon to sustain their business prospects. With the likes of Jabong, Myntra, Amazon, Flipkart, Shopclues, etc., leading the  pack with their robust technology platforms and aggressive marketing campaigns, the fashion apparel brands/retailers seem to be throttled with margin pressures.  While Myntra increased the margins (from the fashion retailers/fashion retailer brands) from 28%–32% to 36%–40%, others too are following suit. With a focus on gross margins, along with discounts, how would increasing margins affect the business prospects of fashion retailers/fashion brands? Is there any, economic case, if any, for fashion e-tailers demanding hefty margins?



Pedagogical Objectives

  • To have an overview of Indian e-commerce market and Indian fashion e-tailing market
  • To understand the competitive and business dynamics of fashion e-tailing market in India
  • To discuss and debate on the (gross) margin war between market places and fashion retailers/fashion brands and examine the efficacy of margins for fashion retailers/fashion brands

Case Positioning and Setting
This case flyer can be used for either of the following:

  • MBA Program - E-Commerce/E-Tailing course - To understand the types of fashion e-tailers, the business models and the cost and revenue drivers
  • Executive MBA and Executive Development Programs - Fashion E-Tailing’s Business Model and Business Dynamics module - To understand the underlying logic for fashion e-tailers to demand hefty margins from fashion retailers and fashion brands
  • MBA Program - Strategy course (Industry Analysis module) - To understand the competitive and business dynamics of fashion e-tailing industry in India

1 Prabha Raghavan, “It’s a Steal for You Online, but for the Seller, It could be a Raw Deal”, The Economic Times, September 22nd 2015, page 5

This Case Pack Includes:
- Abstract
- Case Flyer
- Teaching Plan (**ONLY for Academicians)
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