Aditya Birla group, which recently surpassed $50 billion market cap (Rs 3,25,000 crore), has decided to shut down their fashion and apparel website Abof.com.
Last year, they had shut down Trendin.com.
Does this mean that the mighty Aditya Birla Group has accepted their ecommerce defeat? How will it affect the entire ecommerce industry in India?
Abof.com To Be Shut Down
Aditya Birla Group had launched Abof.com (Aditya Birla Online Fashion) in 2015, with an aim to target niche and portfolio apparel customers and fashion enthusiasts.
Although we didn’t receive much data and information regarding their sales numbers and performance, it seems it was disappointing and below their expectations.
Yesterday, senior officials from Abof.com held a 20-minute town hall meeting, and informed all employees that they are shutting down their operations.
December 31st would be their last day of operations.
From the available comments and reports, it is clear that Aditya Birla Group lose their patience, and will to continue with a business model which is bleeding money all over.
Santrupt Misra, HR director at Aditya Birla Group justified this decision by saying, “Looking at how the big and long term ecommerce businesses continue to struggle and are unlikely to make money for some time, it did not seem logical to continue as if everything is all right in the sector,”
In case 240 dd employees of Abof.com decide to quit the company, they would be receiving 4.5 months salary as a compensation package.
Abof’s own exclusive clothing line Skult would be now merged with group’s branded apparel division Madura Fashion & Lifestyle, which are into offline retail and wholesale of apparels.
Discounts & Offers Are Killing Fashion Ecommerce?
Interestingly, almost 70% of products offers at Abof.com are being offered under discount. In March this year, chief executive Prashant Gupta had said that their “target consumer is not the guy who is looking for a deal”.
If we do a closer analysis of the online fashion and apparel industry, then we will find that discounts and low brand loyalty are proving to be costly for the entire industry.
In March last year, Future Group founder Kishore Biyani had said, “The cost of doing business in online fashion retail is not profitable,”, adding, that the “model of spending so much money to acquire a customer” is troublesome.
He had specifically said that “At the moment, no, we won’t get into online fashion retail..”
Games2Win founder and ace digital entrepreneur Alok Kejriwal had done an interesting, in-depth study over the nuances of online fashion retail, and tried to decipher how brands like Zara & Tommy Hilfiger are churning our billions of dollars of profits; and why Indian online fashion retailers are burning money.
Is a combination of online and offline retail is the ultimate solution?
Nonetheless, shutting down of Abof.com is indeed a sad ending for an ecommerce venture, which was once rumored to be interested in acquiring Jabong; and had acquired clothing brand chain Forever21 for strengthening their brand positioning.
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