NEW DELHI: Foreign fashion brands are increasingly choosing to test the Indian market via specialist online retailers rather than investing in stores and battling labyrinthine regulations.
UK-based brand Dorothy Perkins and Miss Selfridge are among those following this route, and will be soon be available through fashion retailer Jabong.com, which will import them and sell them through a micro-site.
Arun Mohan, chief executive and co-founder of Jabong, told Livemint the company had been in talks in recent months with many fashion brands looking to enter India.
"These brands were even seeking potential partners to open brick-and-mortar stores, but online seemed to resonate better," he said.
A similar pattern is emerging at rival online retailer Myntra, which has launched at least ten foreign brands in India in the past few months, and expects to have around 50 in its portfolio by the end of the year.
"Brands would obviously prefer specialist online retailers rather than horizontal players," said Ganesh Subramanian, chief operating officer at Myntra, pointing out that upmarket fashion brands entering a new market would not want to be sold alongside electronics and discount brands.
"Premium brands want the comfort that the site they are choosing has the right collection, image and capability to sell their merchandise," he said.
He added that the arrangement complied with India's rules on foreign direct investment as the brands were selling wholesale to intermediaries and not selling directly to consumers.
"It's FDI compliant as these brands are selling wholesale to us and not selling directly to consumers," he explained.
But some questioned the economics of these schemes, arguing that high import duties would make the brands unaffordable and products would therefore need to be made locally.
"You can keep prices reasonable if you have a local sourcing partner, otherwise the customs duties, freight charges and other costs make it prohibitively expensive to sell international brands, even online," said Arun Sirdeshmukh, chief executive and co-founder at online retailer Fashionara.
Data sourced from Livemint; additional content by Warc staff