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E-Commerce platforms are asking fashion brands to shell out more margin. Is online and offline cost the same now?

E-Commerce platforms are asking fashion brands to shell out more margin. Is online and offline cost the same now?
If you thought that e-tailers were making profits as they avoided costs of building a brick and mortar shop, this will prove you wrong.

The online apparel business is turning out to be as expensive as having a shop in mall of a tony market as the e-Commerce companies are increasing the commission of the fashion brands.

Fashion brands that entered the e-Commerce platform in past half a decade claimed that they paid 30-40% commission to platforms like Jabong, Flipkart, Amazon, Myntra and Koovs for sales and product delivery.

Last year apparently, Myntra has increased the margin it sought from brands to 36-40% from 28-32% - higher than the 30-35% margins that several apparel, footwear, fashion and lifestyle vendors were giving to brick-and-mortar franchises then.

Experts say that this is as expensive as a shop, which includes costs like rental, staffing and utilities and maintenance and discounts.

"When you're working with these established players like Flipkart, Snapdeal or Amazon, they have their own cost of operations. They need their margins," said Manish Mandhana, joint managing director of Mandhana Industries, which markets Salman Khan's Being Human lifestyle brand.

The apparel brands can save around 8-10% in costs online only if they don't offer much discount.

Many fashion brands lose profits in e-Commerce as they offer brilliant discounts than physical rental costs.

(Image: Thinkstock)

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