Published Date: Mar 2024


The rise of online fashion shopping

The fashion e-commerce industry in India has witnessed exponential growth over the past few years. As Internet and smartphone penetration increases across the country, more and more consumers are shopping for fashion apparel and accessories online. The surge in online shopping is being driven by increasing disposable incomes, rising aspirations of young population and convenience of shopping from anywhere using a mobile device. Fashion has emerged as one of the largest categories sold online in India accounting for over 65% of the total e-commerce sales.

Changing Preferences of Gen Z Shoppers

A large percentage of e-commerce fashion shoppers in India belong to the Gen Z cohort who have grown up with the internet. This segment demands unique, personalized styles and are very brand conscious. They want options beyond just apparel and prefer a wholesome fashion and lifestyle shopping experience online. To cater to these evolving tastes, Indian fashion portals are pushing private labels, building stronger own brands and diversifying into accessories, cosmetics, athleisure and more. Own brands today contribute over 30-40% of sales on leading Indian fashion e-tailers showing rising popularity. Personalization is another buzzword with many platforms enabling shoppers to customize or personalize products as per their liking. Companies are also leveraging deep data analytics to understand individual shopper preferences and offer hyper customized recommendations.

The pandemic push and going hyper-local

The COVID-19 pandemic and repeated lockdowns provided a massive spur to online shopping including fashion as people avoided stepping out. Local neighbourhood Kirana stores and WhatsApp emerged as new sales channels for offline retailers to reach customers virtually. Companies strengthened their vernacular and Bharat offerings partnering with regional artisans, weavers and local design houses. The hyperlocal model ensured timely delivery even in remote areas.

Challenges of return rates and inventory management

However, ecommerce fashion industry also brought new operational challenges. High return rates of over 35-40% led to increased logistics and warehouse costs. Managing vast inventory across categories, sizes and seasons required complex algorithms and forecasting skills. Cash burns due to heavy promotions and discounts to gain market share also deterred many small players from sustaining in this competitive landscape.

Strategies adopted to overcome hurdles

Leading players have adopted multiple strategies to overcome challenges. Some introduced trial rooms or virtual try-ons to minimize returns. Partnerships with offline stores allowed for easy return and exchange at nearby outlets. Companies leverage data analytics to improve assortment, anticipate demand and minimize overstock. Many have now shifted to the marketplace model, reducing inventory risk. Focused efforts are being made on merchandising, private labels and overall customer experience.

Personalisation & Tech Innovation Accelerating Growth

To stay ahead in the highly competitive Indian e-commerce fashion industry, platforms are leveraging emerging technologies like AI, machine learning and augmented reality to enhance consumer experiences. Personalization is a major focus area with stylists and chatbots enabling one-on-one interaction. Detailed profiling and recommendation engines powered by predictive analytics are designed to replicate the feel of an in-store trial experience. AR/VR fitting rooms allow shoppers to visualize how outfits will look on them virtually before purchase decisions. Companies are also building facial feature databases to enable customised fit recommendations. Innovation hubs are launched for developing tech solutions around hyperlocal delivery, omni channel integration and alternative payment mechanisms tailored for Bharat. Rising ambitions of Indian technology startups as well as global tech giants like Google and Facebook in this space point towards further disruption and growth acceleration in Indian fashion e-commerce.

Changing Payment & Delivery Dynamics

Alternative payment methods and faster deliveries have emerged as hygiene factors for shoppers especially in Tier 2/3 cities where premium credit card penetration remains low. E-tailers are collaborating with fintech startups to enable options like Buy Now Pay Later, try and pay and UPI-based payments with no credit history. Regional language interfaces are allowing shoppers across India to access financial services through vernacular mediums. Same day and next day deliveries have become a norm in top metro areas while multi-city warehouses enable two day deliveries even in smaller cities. Hyperlocal delivery partnerships are optimizing last mile logistics. Retailers are also setting up experience stores to allow consumers to touch, feel and try products before online purchase or delivery. Omnichannel remains a key focus area blending the best of virtual and in-real life experiences.

The road ahead - Omnichannel, sustainability and more

Looking ahead, fashion ecommerce players will focus on omnichannel presence through branded stores, kiosks and online-offline integration. Sustainability will gain prominence with emphasis on eco-friendly fabrics, recycling of textiles and reducing packaging waste. Live commerce through videos and influencer marketing will acquire more customers in Bharat. Augmented and virtual reality initiatives can improve shopping experiences. If existing challenges around returns, credit and logistics are addressed, India's fashion ecommerce market has huge untapped potential to unlock.