After electronics, big daddy Flipkart is betting on fashion

India’s largest e-commerce venture, Flipkart, is not only emulating Amazon by selling high-priced items like furniture andfridgesbut is also going one step further by launching its own fashion brand. And now it may be looking to acquire existingdigital apparel companies like Zovi and YepMe in order to increase sales of high-margin private label fashion, The Economic Times reported today.

“It is better to acquire a brand with its own established team and expertise than build the category on its own,” Arvind Singhal, chairman of advisory firm Technopak, was quoted as saying by ET.

[caption id=“attachment_876717” align=“alignleft” width=“380”]  The latest funding round takes the total funding to $360 million in its recent fund raising drive to build and strengthen technology and bolster its supply chain.[/caption]

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The major reason for etailers getting into private label seem to be margin as most of the etailers are selling branded products at thin margins. Also,private labels don’t incur the marketing and promotional expenses that are attached to brands. And in-house labels lend a lot of flexibility for the seller in terms of quantity of merchandise.

Flipkart had started selling apparel a year back, giving a run for money to Myntra and other fashion online stores. But now, it plans to beat competition by launching a private label.Since Flipkart has an ambitious target of recording $1 billion sales by 2015,launchingits own fashion label makes sense since margins in private label fashion can be more than 60 percent while in electronics it is less than 10 percent. Flipkart already hasin-house brands in electronic accessories for laptops, mobiles, cameras and gaming.

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However,building a private label brand over internet means Flipkart will have to establish credibility and aspiration for the brand. And this could prove to be a challenge, which is why it makes sense for the company toacquirean existing online label .

Creating private label brands to boost profits is now becoming an industry phenomenon and is notexclusiveto Flipkart or Amazon. For instance,apparel major Inkfruit was bought by Zovi last year while Shersingh was bought by Myntra in 2012. In the future, Freecultr, Bestylish, Fashion&You could probably be bundled up as one asset.

Other private label e-tailers include DoneByNone and Shopnineteen. Going by their numbers, all these players score on popularity and brand loyalty of consumers.