Private label products are those manufactured by a third-party manufacturer and sold under the retailer’s brand name. While in 2016 the market share for such products had a limited impact, they are expected to grow into a much more formidable force by 2017.
The market share contributed by private labels for horizontal players is less than 5 per cent, it goes up just under 20 per cent for the grocery sector and 25-30 per cent for fashion e-tailers. However in the online furniture sector, private labels stack up more than 50 per cent of their GMV.
While the fashion industry has lots of products from private labels brands, it is still expected to rise in the coming year; whereas electronic peripherals – one category which is largely untouched by the private labels’ effect is also expected to experience more growth in this segment.
Anil Kumar, founder and CEO of RedSeer Consulting said, “Private Labels offer significantly higher margins to the e-tailers, and are helpful in converting entry level customers, who are less likely to make costly purchases on ecommerce platforms early in their adoption journey. The market share for these products is likely to go up to ~18% by the end of 2017, which has forced even the biggest horizontal e-tailers to increase their investment in this segment.”
RedSeer is a research and advisory firm launched in 2009. Headquartered in Bangalore, RedSeer has emerged as the leader in market facing, research based consulting engagements. It is one of the fastest growing advisory firms with over 150 clients. The company works across multiple verticals with expertise in the consumer internet space.
