As e-commerce players continue to scratch heads on whether to continue with crazy discounting and pare it down to more reasonable levels, apparel maker Allen Solly has firmed up its own strategy on how to deal with the phenomenon of growth without profit in the virtual marketplace.
As e-commerce players continue to scratch heads on whether to continue with crazy discounting and pare it down to more reasonable levels, apparel maker Allen Solly has firmed up its own strategy on how to deal with the phenomenon of growth without profit in the virtual marketplace.
Sooraj Bhat, chief executive officer, said Allen Solly has to ensure that discounts on its apparel brands shouldn't be offered all though the year but only during stock clearance sales, which comes twice in a year - from January 15 to February 15 and from July 15 to August 15.
Second, discounting strategy for Allen Solly should be same for on-line as well as off-line sales with the sole purpose of pushing unsold goods.
Third, there is a conscious strategy to raise share of sales of full-priced products gradually during the discount season.
Fourth, do extensive research to launch latest fashions weeks before competition, thus blunting the pain of selling old stocks of previous season at discounted prices.
Lastly, experiment with its own e-commerce initiative cautiously.
"We are uncomfortable with the levels of discounts existing in apparel and clearly don't want growth in the e-commerce space driven by discounts," said Bhat.
Bhat's views reflect what PwC said in a recent report highlighting the losses suffered by the e-commerce industry till now.
E-commerce companies have suffered combined losses of around Rs 1,000 crore due such heavy discounting strategy, the PwC report said commenting that this model is not feasible in the long run.
To fight the menace, Allen Solly, which famously coined the term 'Friday dressing' and recently tied up with Wimbledon to launch its latest Solly Sport range, has its own strategy in place, Bhat disclosed.
"We have single policy of how the brand should conduct itself across channels. So, we have told all our partners including the e-commerce players that for our brands discounting will happen only when there is a Sale, or in case of a festive promotion campaign, which will take place across platforms both in the off-line as well as on-line. Another thing we are doing is that we are bringing in more and more full priced products during periods of discounts. And we have found out that contributions of full priced products are now about 20% of end-of-season sales. It was about 15% last year and this can go up to right up to 30%," Bhat said adding that discounts typically ranges 30%-40% for fashion and apparel products during the Sale period.
"While we normally consider February 15 as beginning of end-of-season sale when new merchandise is brought in, we have started introducing new trends a bit early, by fourth week of January and this help us to address a mix set of customers interested in discounted as well as full prices."
Being conservative in its strategy towards on-line sales extends to Allen Solly's own e-commerce initiative trendin.com.
"That's why we have kept share of e-commerce at 4% of our total sales. We will grow our on-line business in a right manner and not driven by discounts," he said.
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