Cement-to-telecom conglomerate Aditya Birla Group is reportedly downing the shutters on its fashion e-tailing venture, Aditya Birla Online Fashion Pvt. Ltd (Abof), as it fails to compete against the deep discounting-led model of rivals Flipkart and Amazon.
The company management informed the staffers that it will not operate beyond December 31, a report in The Economic Times said.
“Looking at how 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,” Santrupt Misra, HR director at Aditya Birla Group, told the paper.
All 240 employees of the company would be given four-and-a-half months’ salary as compensation if they quit, Misra added.
Abof’s private label, Skult, will be absorbed by Madura Fashion & Lifestyle, the group's apparel division.
Email queries sent to Abof did not elicit a response at the time of writing this report.
Abof was floated in May 2015, when the group consolidated its branded apparel business under lifestyle retailer Pantaloons Fashion and Retail India Ltd. The e-tailer sold apparel, footwear and accessories, housing its own merchandise as well as other brands.
This is the second e-commerce venture that Aditya Birla Group has shut down. It had shut down Trendin.com last year for similar reasons.
Traditional retailers have been venturing into e-commerce of late, albeit with limited success.
Tata Group's Cliq follows a phygital approach—shoppers can order, collect, return and exchange products either online or at brand partners’ stores. Reliance Industries launched fashion e-commerce portal Ajio in April 2016.
Abof also competes with Flipkart-owned Myntra and Jabong, besides horizontal e-commerce players such as Amazon and Snapdeal.