Licensing finds its mainstay online

Ecommerce players have fit themselves between the demand andprice clashes and demographics and most importantly, have recognised brand licensing and merchandising industry as an integral part of...
Licensing finds its mainstay online

Ecommerce players have fit themselves between the demand and price clashes and demographics and most importantly, have recognised brand licensing and merchandising industry as an integral part of mainstream retail, but the concept is yet to be fully utilised. Tom & Jerry’ or ‘Dora the Explorer’ have a mass reach, courtesy the penetration of television, but retail accessibility is yet a question for the large fan base of these characters. Noticeably, a majority of licensed retail market is dominated by unorganised players and therefore, the availability of products is dependent on the understanding and choice of distributors rather than the trends.

Moreover, the spending power of a city also affects the demand and availability of licensed merchandise. In simpler terms, a retailer in a small town of Jammu may not be willing to stock merchandise of Dr. Heisenberg – the well-known character of Breaking Bad fearing inventory blockage due to ‘demographic sensibility’ based on his understanding of the catchment. But, on the contrary, there may be some ardent admirers of this American drama series elsewhere. Meanwhile, sensing the enormous potential that is yet unlocked in licensing and brand merchandising industry, eCommerce players have fit themselves between the demand and clashes of price and/or demographics.

According to industry reports, eCommerce contributes around 5 to 7 per cent of the total revenue from licensed merchandise. Backed by rising use of smartphones, the Indian eCommerce market is poised to grow 36 percent during the 2015-20.

eCommerce - a strong channel for licensed merchandise Going by the changing dynamics of retail, the online players have swiftly moulded themselves and most importantly, have recognised L&M industry as an integral part of retail. The modern format of retail stores and MBOs helps to cover and create brand experience in metros as well as sub-metros. As per Akhil Saxena, Director Operations, Amazon India, over half of their traffic and sales come from Tier-II and Tier-III cities just as over 50 per cent of the sellers come from non-metro cities too in India. In the words of Abhishek Maheshwari, VP – Consumer Products, Disney India, “eCommerce is fast emerging as a strong channel and brands offer a wide variety of products across categories.” Moreover, L&M is sought to be a very metro oriented concept, leading physical retailer of a small town to keep away from such merchandise, however eCommerce addresses to demands irrespective of the demographics.

For instance, Angry Birds has 800 different products in India, but only 300 of them can be accessed because brick and mortar retailers choose only those. As such, consumers have no choice but to select from that particular range of product categories even though the brand has much more to offer. This gap has led to the growth of licensed merchandising via the eCommerce platform, which facilitates and provides more opportunities for consumers and companies alike. Striking a similar opinion, Saugato Bhowmick, SVP – Consumer Products, Viacom 18 said, “Modern retail helps to cover and create brand experience in top 20 cities, whereas eCommerce has wider reach. Via digital retailing, nearly 400 towns of India become immediately accessible as more than 50 per cent of revenue of eCommerce sites comes from small towns.” “Of late, retailers are realising the potential of online business and everybody is pulling up their socks and targeting licensing business online,” claims Lubeina Shahpurwala, co-founder of Mustang Socks & Accessories.

eRetailers turning into Licensees A study conducted Snapdeal and KPMG claimed that Indian eCommerce sector is projected to cross $80 billion by 2020 and apparel and accessories are one of the key market segments exhibiting promising growth. Analysing the growth of eCommerce, one can say that this mode of retail has come of age from being a mere addition to the existing channel, as a lot of eCommerce players are getting into the shoe of a licensee.

To name a few, Myntra inked a pact with Disney India for its in-house brands Anouk and Koock and Keech, Red Wolf – the T-shirt portal known for its pop inspired merchandise is now the official licensee for Breaking Bad and Better Call Saul and many more. Prasad Kompalli, Head – eCommerce Platform, Myntra shared, “It has always been our continuous endeavour to enhance our portfolio and provide our shoppers the latest and widest collection from the best of brands. Licensing alliances help us cater to audiences by enabling easy access to the licensed merchandise.” Emphasising on the business aspect of e-tailer becoming licensee, Chitra Johri, VP, Bradford License India said, “Such agreements increase and develop customer loyalty for eRetailers because eCommerce platforms often have a particular brand due to which consumers come again and again. Moreover, while exclusive deals make the eRetailers hold onto the brands for a few months, licensing helps them to hold the brands for a comparatively longer time.” Taking a leap, now online licensees are offering the consumers DIY option to customise the product, which is again a big hit. In the words of Renu Nair, Head of Consumer Products, Mattel, “Today, consumers have a varied choice to go to for their preferred fashion and lifestyle needs. Consumers get to not just choose, but create their own designs on their favourite lifestyle products.”

Checking on counterfeit merchandise a challenge While eCommerce is changing the way L&M industry operates, there exist some areas demanding special attention. The expansion of counterfeit merchandise is being pumped up by eCommerce as the portals lack mechanism to check licenses of retailers registering on portal resulting in quite a handsome sale of counterfeit products online. Moreover, many a times, counterfeits are sold by some well-known brands. Nevertheless, the strong growth prospect of the licensing industry has helped the licensors to remain ‘bullish’ about their offerings.  

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