The Aditya Birla Fashion and Retail Limited have announced to shut down its flagship e-commerce website ‘abof’ by 31st of October, exactly one year after shutting down previous venture Trendin.com.
As the two e-commerce biggies continue to shower festive sales, another big name has ventured out from the market and its none other than Abof (all about fashion), the primary e-commerce website of Aditya Birla Group. The decision has come after it failed to attract a substantial following and the company doesn’t believe that the e-commerce sector is getting profitable anytime sooner.
Look what Santrupt Misra, HR director at Aditya Birla Group, has to clear about the move, “Looking at how the big and long-term e-commerce 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.”
This isn’t the first time when a company with big backing like Birla has decided to opt out from selling online. Earlier this year, Kishore Biyani, CEO, Future Group, had shut down all their online ventures for next two years, which included properties like futurebazar, bigbazardirect, and fabfurnish. He took the route after they observed a loss of 250 crores in all three ventures.
“It’s stupid to be in the online space. In lifestyle, the e-commerce industry revenue in India will be around Rs 2,500 crore, and losses too will be of an equivalent amount. Mobile and electronics, too, do not make money online. Having burnt our fingers, we have decided to take a break of at least two years before even thinking anything remotely about online.”
– Kishore Biyani, CEO, Future Group
Why Abof failed to create following?
Aditya Birla group was an early player in e-commerce place when compared to other two Tata CLQ (Tata) and Ajio (Reliance), which entered just last year.
What Abof lacked was an omnichannel promotional strategy to attract customers. They started Abof in 2015 with an aim to sell their own brands, along with few other brands liked by millennial’s. Now, why would a person choose an in-house brand at full price with less familiarity, over brands like Levis, UCB, which Flipkart and Amazon sell at a discounted rate?
Next, they burnt a lot of time in planning a long-term strategy for Abof when e-commerce space changes in every 6 months. With Flipkart having Jabong and Myntra in its folly, and Amazon creating its own presence, one needs to have a more focused strategy to acquire customers in the Indian market.
So, what happens with the employees?
One good thing about the Aditya Birla group is that it stays up to its reputation. All 208 employees at Abof have been given a choice, either to join other departments with the group or they shall be given with 4 and half month’s slary as a compensation.
Final word: It took Amazon more than 10 years to get profit. E-commerce is a lucrative but challenging space. With patience, you need to hit the point with the trend. Indian market is diverse and its really tough to compete when biggies are burning so much cash to build customers.