Gone are the days when launching a private label was a pricing game. Today, online retailers are launching their own brands to bridge gaps in the market they have identified. In this story, the head of fashion brands at Myntra and the co-founder of Zivame share some key insights on their private label strategy

In a 1996 Harvard Business Review article titled ‘Brand vs. Private Labels: Fighting to win’, authors John Quelch and David Harding had made a very interesting point about a retailer pursuing a private label strategy. The authors said,

“Meeting the private-label challenge requires the same consideration a company would give to any other competitor.”

Earlier, there was a distinct gap in the level of quality and (as a result) pricing of private label brands but over time that gap narrowed and now, their quality levels are on par with bigger brands and this reflects in the pricing strategy as well.

This very observation holds true today in India, particularly in the ecommerce segment, which, along with rapid adoption, is seeing a rapid emergence of private label brands, some of which are on par with national and international brands.

More importantly, today, e-commerce firms are using private labels to bridge gaps in market, thanks to insights they gather from realms of data.

Take Myntra, for example, which markets its own range of fashion brands such as Mast & Harbour, Roadster and Rockstar. Targeted at the young consumers, its brands already contribute to a quarter of the overall business. “In the last ten years, while several strong home grown retail brands have emerged in India, in terms of fashion particularly among the young consumer groups alone, we saw a big white space waiting to be capitalised,” says Abhishek Verma, Head, Myntra Fashion Brands. But that’s not the only reason why private labels have seen the light of day in recent times. Richa Kar, the co-founder of Zivame, the online lingerie store, offers a different, more functional perspective. She believes that most national and international lingerie brands overlooked the value proposition in this segment, which led customers to compromise between aspiration and accessibility. Lingerie, by definition, is extremely intimate and customers want to feel, literally and metaphorically, comfortable with their purchases. We saw a glaring gap in this assortment. While international brands’ price points were difficult to match in the Indian market, the Indian brands did not have high quality products in all sizes. That is when we decided to provide private labels,” she opines.

A key challenge for private label brands revolves around the company’s ability to get the positioning. In addition to figuring out contract manufacturers, the marketing mix of the private label brand can be critical. As Kar points out, “While consumers are pre-disposed towards established brands, a compelling communication strategy can play a key role in opening their minds to newer possibilities.”

On that note, in this story, we delve deeper into the know-hows of building a private label brand by drawing key insights from the heads of two well-established online brands, Myntra and Zivame.

“The key is to create brands with long-term value”

The thought behind foraying into private label brands…

Quite straightforward… We saw a huge white space in the fashion retail segment to build strong homegrown brands targeted at youngsters. Moreover, being an ecommerce player, the initial cost of investment is lower and hence we decided to take the plunge.

Our ambition, right from the beginning was to create powerful national brands, which don’t play in the lower end of the pricing spectrum.

What strategies do you adopt to overcome the challenge of competing with well-established brands? 

Be it a decade ago or as recently as a year ago, the truth is, brands command a premium from their consumers for the assurance of quality and association to a lifestyle they offer. Particularly with respect to private label brands in the fashion segment, we see a higher appreciation for product and design among consumers and this helps overcome the stigma that only well-established brands offer that level of expertise.

Secondly, Myntra as a platform stands for premium fashion offering and we have strong brands with strong stories. With an aim to engage with the traffic which comes into the website, we not only offer premium products but also share a discourse on fashion and fashion related topics from time to time.  Here lay our key advantages.

Give me an understanding of the various factors you take into consideration when introducing a private label brand. What is your pricing strategy? 

We believe that our fashion brands need to represent a particular lifestyle of a consumer. We see it as a mode of expression. For example, Rockstar, one of our private label brands is designed for a consumer who loves the outdoors. Similarly, Mast & Harbour represents luxury and rich experiences. It is targeted at consumers who spend their money on vacations, luxury splurges and an exquisite lifestyle.

What is the marketing mix like for your private label brands?

Our marketing efforts are largely focussed on the digital medium. We believe, if we have powerful content with the right message, digital is the best medium to spread the word quickly.

For example, for a brand called Roadster, we held a digital campaign titled ‘Pocketman’. We had recently launched the ultimate utility denims with 13 pockets and several other features, specifically made for a biker. To promote this, we had an entertainer join us from Los Angeles to live just based on the contents he could carry in his jean pockets for 48 hours. The video was live tweeted and recorded live on YouTube and went viral in no time.

What can we expect in the coming years? 

We will continue to focus on improving our product offering and combining it with effective digital marketing strategies. Already, private labels contribute to a quarter of the overall business and we hope this will rapidly increase in the coming years.

In my opinion, private label is a valid play when you compete on price and hope to (as a retailer) earn higher margins. When you enter this segment, you need to have a clear objective of who you want to target and create brands which offer long term value.

“Use insights from both businesses to build the other”

The thought behind foraying into private label brands…

We saw a glaring gap in the assortment of products being offered on the platform. While the international brands’ price points were difficult to match in the Indian market, the Indian brands did not have high quality products in all sizes. That is when we decided to provide private labels. As a niche player, it needed to offer every possible product in the category.

We launched Pen.ny and Coucou in November 2013, and currently, our private brands contribute to 60 per cent of the overall revenue.

Tell us about the private label brand performance from a consumer and competitor perspective

The consumer ultimately looks for a good product and value for money. Hence, they would be willing to experiment. In addition to this, targeted data and consumer insights help us target the right products at the right consumers.

On the other hand, there are a few consumers who are pre-disposed towards well-established brands. This we see as a potential challenge from competition. We try to overcome this by designing compelling communication strategies, which convey our product features in an as effective manner as possible to the consumers.

On a product offering level, what are your key differentiating factors? 

Our proposition is clear. We fill market gaps with a wide variety of styles available in all sizes (while other brands stock only fast moving sizes), and also offer lingerie for special needs such as mastectomy bras.

The key to making private label brands a success lies in…

It’s not different from any other business. Once you have gathered enough consumer insights and can see a necessary gap or a need you can solve, you take the plunge. But you have to take a conscious call on how internal resources should be allocated to the general ecommerce business and to the private labels. It’s like running two businesses at the same time but using both to complement and grow each other.

A good strategy would be to use insights from each business to build the other and give enough visibility to both lines of business.

What can we expect in the coming years? 

As our products move from need to want, we see its consumption increasing and we add more products per transaction. We also notice that women are becoming more aware of their body and the need for different lingerie for different outerwear.

At Zivame, we want to make our in-house brands, pen.ny and Coucou a household name and we want to be present at every place a women looks for lingerie, be it online or offline.