Death Of a Salesman
The announcement that the Aditya Birla group will shut down abof.com will serve as a classic example of what India's business houses don't get about business on the web.
The decision to start an online retail business was taken two years ago by the group. When the older etailers were probably going through their second major churn.
That the Louis Phillipe's, Van Heusens, Raymonds and others had missed the bus was very obvious. They didn't get it when Myntra and Flipkart who were initially buying last season merchandise, leftovers from eoss, started buying fresh and even made to order merchandise.
Caught between their existing channel partners whom these groups did not want to antagonize, and the rapid growth of online retail driven by low ticket prices, India's big business groups have not really conducted themselves with any sort of distinction. It was really a devil and deep sea situation. Damned if you do, damned if you don't.
Partly due to the silos that were staffed by those more comfortable with offline retail. Turf tactics made them convince their bosses to ignore the etailing wave or watch it for some more time, or the eternal 'It's not going to affect us' thinking.
Shutting Abof.com is not so surprising to me as I kept wondering how this business would conform to the Famed Birla parta system of reporting. The Parta system is a daily reporting structure that business houses of the Marwari community are famous for. I had mental images of the financial reviewer in Leonidas garb kicking the online business head into the well of darkness shouting.."This is Parta!!". How childish.
And it is precisely this disconnect that makes me unable to understand how the logic behind starting it in the first place. It's very difficult to understand why these Industrial conglomerates would get into a start-up mode. Maybe I give them little credit but this example has strengthened my belief that owner led groups are tightly controlled focused ships that are a far cry from the turn on a dime chaos that these online fashion retailers are. It's crazy. They have nothing in common.
Look at the others...Equally unimpressive. Ajio is still in the fray...and if the Reliance retail and Reliance Brands examples are anything to go by, it seems Reliance has a longer horizon on these businesses. It's unlikely they are making any money. Raymonds is not really serious about online. Tatacliq started out as a premium retailer. Still has a few days to review positioning. But the bleeding is on. Arvinds NNNOW is a nnnnon-starter.
But what do these people think? That we have the investment money and the infrastructure and can hire managers to set up businesses for us? Has to be. Otherwise, how is a Jabong not picked up by these players while another start-up manages to raise funds for the acquisition? Their thinking is worlds apart. they don't get it. It seems they never will.
Not one of the big online fashion retailers is owned, backed or started by the big textile and garment companies of India. Yet they have managed to create private labels that rival many decades-old brands.
And they would be wise to wise up. The offline retail channel is drying up faster than a seasonal stream and if they don't crack their fashion e-commerce game they will be going the way of the black and yellow taxis. Around but only because they have nowhere else to go. Like yesterday's men.