SUMMARY
Flipkart Has Partnered With Hong Kong-based Giordano Under A Franchise Model
Ecommerce giant Flipkart has partnered with foreign apparel and accessory brand Giordano. As per a recent report, Flipkart will operate as a Master Franchisee of the brand.
Talks between the two companies are in advanced stages and a licensing deal may be signed soon. The contract will allow Flipkart to sell the Hong Kong-based retailer’s products in India on its digital marketplace as well as in physical outlets. It will also operate offline stores of the brand. This marks Flipkart’s first move towards brick-and-mortar stores.
Founded in 1981, Giordano International Ltd is a fashion retailer with over 2,800 stores across 40 countries, including Taiwan, China, Japan, Australia, Myanmar, Vietnam and others. Led by CEO and chairman Peter Lau, the company’s most successful labels are “Giordano Junior”, Giordano Ladies” and “Concepts One.”
The chain of offline stores will be managed by sub-franchisees, sources revealed. According to recent reports, Flipkart’s decision to enter the brick-and-mortar market has been a long time in the making and, is geared chiefly towards accelerating growth. In addition to opening a slew of offline stores across the country, the ecommerce giant will team up with other international brands as well to establish a strong foothold in the fashion domain.
An email sent to Flipkart did not elicit a response at the time of publication.
Slowdown In Ecommerce: Companies Opt For Offline Stores
In recent times, Indian ecommerce has undergone a slowdown. The current ecommerce space is full of old and new players, resulting in increased competition and high burn rate to offer more discounts. This has prompted ecommerce companies to move into the conventional brick-and-mortar space. Companies like Myntra, Urban Ladder, Teabox, Nykaa, Pepperfry, Zivame, BabyOye and Lenskart are examples of the same.
Myntra, for instance, signed a franchise agreement with Spain’s clothing brand Mango in February 2017. As part of the deal, the Flipkart-owned fashion marketplace has already appointed sub-franchisees to handle operations of all Mango stores in India. Later in March, the company also opened the doors of its first physical outlet for its private label Roadster in Bengaluru.
Brick-and-mortar stores allow companies to reach out to their customers in a better, more efficient way. Falguni Nayar-founded Nykaa’s recent plans to open as many as 30 offline shops are aimed at capitalising on the gap that currently exists between consumers and the ecommerce market. Teabox is another such startup that has forayed into the offline space with a new shop in central Bengaluru.
Flipkart and Amazon’s Burgeoning Fashion Rivalry
Flipkart’s biggest competitor Amazon also took a similar route last month, when it opened 12 temporary offline stores in Mumbai, Bengaluru, and NCR as part of its ‘end of season fashion sale’ between June 23 to June 25, 2017. The offline stores were aimed to give the consumers a sneak peek into the collection and brands that were available in the upcoming sale.
Amazon is currently focussed on its growth in India. It has recently poured in about $260 Mn (INR 1,680 Cr) into Indian Seller Services. So far, the company has infused a total of $2.1 Bn (INR 13,800 Cr) into its Indian arm. This comes after Jeff Bezos said Amazon was India’s most popular marketplace. He also promised future investments that will help solidify the ecommerce platform’s stronghold in the country.
Flipkart, on the other hand, is currently embroiled in a merger tussle with online marketplace Snapdeal. The latter reportedly rejected the latest $700-800 Mn buyout offer. In June 2017, Flipkart made headlines for raising $71 Mn from South African Internet and media conglomerate Naspers. Prior to that, in April 2017, Flipkart raised $1.4 Bn from Tencent, eBay, and Microsoft. Existing group of investors including Tiger Global Management, Naspers Group, Accel Partners, and DST Global also participated in the round. As a part of the funding round, eBay sold its eBay.in business to Flipkart.
Flipkart is also currently looking to dominate the online fashion space. In the last few weeks alone, the ecommerce poster boy launched its private label for men – Metronaut and women’s ethnic clothing line Divastri to delve deeper into the Indian fashion sphere.
Amazon, competing closely, within Q1 2017 has already launched close to 25 top fashion brands including Under Armour (online and offline exclusive on our marketplace in India), M&S, GAP, and Mothercare to name a few.
“Millions of customers are buying fashion from Amazon and it is one of our fastest growing categories. One in three purchases for Amazon Fashion happen through PRIME which shows the kind of positive response we have been receiving from customers. This is the biggest differentiator for us that enable unlimited one-day guaranteed delivery to customers – especially for a category like Fashion, that’s also driven by impulse shopping, as customers continuously look for instant gratification,” stated an Amazon spokesperson to Inc42.
The Sachin Bansal and Binny Bansal-founded company is turning ten this September. To mark the same the company also launched the ‘End of Reason’ sale. Post GST-rollout, both Flipkart and Amazon removed their price barrier of INR 5,000 in UP, Bihar and Gujarat. The companies reportedly took this decision because the new GST norms have helped ease off many tax and billing related difficulties.
Whether the newly-forged partnership will help cement Flipkart’s position in the fashion domain against rival Amazon is something that remains to be seen.
(The development was reported by ET)
