Only: Reliance Ajio is prepared Zero-commission online market similar to Meesho
Reliance Industries’ online fashion retail platform Ajio is in advanced stages of setting up a new marketplace for low-priced fashion items which will work on zero commission model, people aware of the matter said.
ReTale has also seen material about the new proposition from Reliance being called Ajio Street and merchants are being asked to onboard the platform with a promise of 15-days payments settlement.
This would make Reliance Ajio – which competes with Flipkart-owned Myntra, Amazon Fashion and Tata Cliq – a direct competitor to SoftBank and Fidelity-backed etailer Meesho, which specialises in low-cost longtail fashion and accessory products, as well.
Longtail items are difficult-to-find products unlike commonplace items such as electronics and smartphones.
Industry analysts and executives said the move from Reliance is worth noting as it has been positioning itself as the destination for branded fashion goods.
People aware of the company’s plans said Ajio Street is likely to have a separate space on the Ajio platform and app, offering affordable value products mainly aimed at non-metro consumers in tier II-tier IV cities and towns.
Ajio, they said, is also hoping the zero-commission model can increase its user base by tapping into the new set of consumers from these markets who may not be shopping online frequently.
In a zero commission model, sellers do not have to pay any commission to a platform. Ecommerce platforms, in such cases, try to generate money through either ads or via fulfilment services.
It is not immediately clear how exactly Ajio plans to monetise the vertical, but sources said the idea is to scale this business and acquire new users.
An email sent to Reliance Retail spokesperson did not elicit any response on Ajio Street.
“I think they are expanding into this space because they want to achieve scale and be the number one player,” said Ashish Dhir, EVP (consumer and retail) at market research firm 1Lattice, earlier known as PGA Labs. “The bigger pie lies in the smaller cities and the market size is bigger in the mass segment.”
He said the zero-commission play for unbranded fashion products would be a trade-off to its current branding of Ajio.
The low-cost fashion and accessories products typically have an average order value of around Rs 300-350 while the same for platforms selling branded goods would be over Rs 1,000 at least, Dhir said. “All said, online fashion is still 15-20% of the total fashion market in India,” he added.
A recent report from Bernstein Research said 95% of products sold on Meesho are unbranded and about 80% of sellers are retail business owners.
“They (Ajio) want to tap into this market opportunity,” one of the people aware of the matter said. “Most branded fashion sales are still driven by top 8-10 cities only. So, Ajio is now planning to try out this model.”
Ecommerce industry executives said Ajio had a gross merchandise value or GMV of around $2 billion at the end of 2022, lagging behind only Myntra.
Ajio’s core market has been top metro cities where it primarily sells branded apparels, shoes and other products. In the December quarter earnings of Reliance Industries, the company had said Ajio had expanded its customer by 33% and catalogue size by 62% year on year. Ajio also focuses on Indian and foreign premium brands.
