Why e-commerce companies focus on fashion to become profitable

According to a survey conducted by Morgan Stanley, 60% of consumers said that they would buy more clothing on Amazon if it sold a wider selection of well-known, fashionable clothing brands. In December last year, “Buttoned Down,” a private label premium shirt brand which is available exclusively to Amazon Prime members was introduced. Reports suggested that the company is also planning to develop its own workout apparel line and is maybe buying apparel company American Apparel.

Amazon is already the largest seller of clothes online in the U.S. and is likely to achieve a market share of nearly 20% in the U.S. apparel market by 2020.

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If the world’s largest e-tailer is focusing on fashion to earn revenues, it must be the way forward for the e-commerce industry.

Wider Selection, Fast Fashion, Private Labels Can Boost Profitability

For Flipkart, India’s biggest e-tailer Fashion includes Myntra and Jabong, which accounted for nearly a third of gross sales for the e-commerce firm in the September quarter.
Flipkart has also been increasing its focus on private labels, which offer higher margins because e-tailers make gross margins of 35% to 45% on regular brands and it can go up to 60% to 65% for private brands.
Private labels accounted for 20% of the Myntra’s gross sales in 2015.

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Myntra also bought out a major part of fitness and sportswear brand HRX, launched by actor Hrithik Roshan, to boost its private labels. Myntra owns 11 private labels, including Roadster, All About You, HRX, Worng, Anouk and Ether. All About You is a tie-up with actor Deepika Padukone and Worng with cricketer Virat Kohli.

An online platform has an advantage over physical retailers to bring newer designs more quickly to consumers through a supplier network, without inventories piling up.

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That means that maybe cost-cutting for e-commerce companies can start with some cloth-cutting.