-By Ankita Dutta.
Reliance Industries is set to use its past playbook to dominate the fashion market: low-cost products. Ajio Street, the fashion retail arm of India’s richest man Mukesh Ambani’s company, has launched a platform that offers a vast selection of clothing and accessories starting at INR199 ($2.4). Ajio’s website promises the “lowest price” and a straightforward returns process. The decision has been made as Shein, a Chinese company, collaborates with Reliance to reintroduce itself in the highly profitable Indian market. Industry analysts cite India’s notoriously price-sensitive consumers as key to an emphasis on affordability.
According to the Economic Times, Reliance aims to target consumers in smaller cities with its zero-commission Ajio Street model, putting it in direct competition with SoftBank and Prosus-backed Meesho. Since launching in 2016, Ajio has captured more than 15% of India’s fashion e-commerce market. The market is largely dominated by Flipkart, the owner of Myntra, with more than 60% of the share, whereas Amazon holds approximately 20% of the market share.
Reliance’s affordability-led strategy has a track record of success, having shaken up India’s wireless sector in the past decade with Jio, which offered cut-rate data and free voice calls. Today, Jio’s subscriber base surpasses 430 million, dominating telecommunications in the South Asian market. Shein previously entered the Indian market in 2019, targeting young adult women, before being temporarily suspended by customs authorities over suspicions of violating local guidelines.
The fashion market has taken a hit during the pandemic, although online sales have remained stable. According to McKinsey, fashion sales in India declined by 30% in 2020, while online sales of discretionary items, such as apparel, fell by 12%. The market is expected to recover in 2021, with McKinsey predicting growth about 6% above 2019 levels.
Meanwhile, Amazon and Flipkart have extended their grocery delivery services throughout India as online grocery sales grew during the pandemic. Amazon has invested $6.5bn in its India operations since entering the market in 2013 and reportedly plans to invest a further $1bn over the next five years. Amazon recently announced its intention to begin manufacturing in India, launching in-house brands such as Symbol and Myx. The country’s retail market is projected to reach $1.3tn by 2025, driven by factors such as rising disposable incomes, urbanisation and an increase in online sales.
