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Chinese online fashion retailers give tough competition to domestic players

Chinese online fashion retailers give tough competition to domestic players 001India’s e-commerce battle is heating up with the entry of Chinese retail brands. Several Chinese e-commerce firms are taking the sector by storm, led by Hangzhou-based fashion e-tailer Club Factory, which entered India in 2016. As per Delhi-based data analytics firm Kalagato, which surveyed around 1.5 million smartphone users in the country, around 12.18 per cent Indians had installed Club Factory’s app on their phones by November 2018.

The app has gained huge popularity overtaking popular Indian brands like Jabong and Limeroad, and even billionaire Mukesh Ambani-owned Ajio in terms of the number of smartphones it is installed on. Its popularity is second only to Myntra, a homegrown fashion e-tailer owned by Flipkart, which has been around since 2007— almost a decade before the Chinese brand debuted in India.

Companies like Club Factory and Shein, another Chinese online fashionChinese online fashion retailers give tough competition to domestic players 002 retailer are gaining popularity due to their right combination of price, variety, and trendy designs. The company, which started off as a data analytics platform for manufacturers, built relationships with thousands of manufacturers. Now it has aggregated over 100,000 suppliers which enable it to offer a great variety.

Cheap products, non-traditional marketing fuels demand

Besides Club Factory, AliExpress, ROMWE, and JollyChic were some of the top 10 best performing cross-border e-commerce Chinese apps in India last year. India is one of the main markets of focus for China’s cross-border e-commerce players due to consumer demand for cheap products and the potential for high economic growth.

Chinese fashion brands have also cracked the code to reach young Indian shoppers through non-traditional marketing tools. They are tapping new customers via Instagram and Facebook advertising as well as through Indian social media influencers on YouTube. For instance, shy styles, who has 676,000 subscribers on Youtube, and The Quirky Miss, with 210,000, posted videos of Club Factory hauls and even of visits to its offline store in Delhi. The company has received over 30,000 user-generated-content videos on YouTube of users unboxing their parcels and sharing shopping experience.

In mid-2018, Club Factory went big on marketing, roping in Bollywood star Ranveer Singh and Miss World 2018 Manushi Chhillar for a campaign. The brand has also brought its shipment timelines down to under 12 days on average compared to the few weeks rival Chinese apps take to deliver. And even as a survey of 200 customers cited unreliable sizing as a major concern, 60 per cent of respondents said the quality of the apparel on the site was decent.

Lack of trust to impact demand

However, Chinese apps always have problem of trust as any policy change can impact business. The government had already cracked down on the way these products are being shipped given it is a cross-border transaction. Though these apps still have a strong runway to work on, they are likely to see a plateau and then decline.

Under current Indian customs rules, personal gifts priced at under Rs 5,000 are exempt from duties, a provision the Chinese have been exploiting, Indian seller-portals complain. The customs department red flagged such multiple “gift” deliveries being made to the same address and heavy 15 kg parcels with declared value of a mere Rs 3,000. So, the government is considering cracking down on the practice by tracking the source country and consignor-consignee details, besides limiting the number of such orders.

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