Analysis: India's online grey market for U.S. clothing brands

Thu Aug 2, 2012 7:57am EDT
 
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By Nandita Bose and Nivedita Bhattacharjee

MUMBAI/CHICAGO (Reuters) - While India's politicians dither over rules allowing foreign retailers into the country, some online stores are already selling discounted clothing from companies such as Abercrombie & Fitch Co that have yet to officially enter the market.

Homegrown start-ups including fashionandyou.com, myntra.com, snapdeal.com, dealsandyou.com, yebhi.com and HomeShop 18 - which is eyeing a U.S. initial public offering - are introducing India's growing middle class to mid-market U.S. brands, at discounts of more than 50 percent.

Reuters interviewed nearly two dozen online retailers, distributors and officials from U.S. and Indian firms to try to determine how some of the hottest Western clothing brands, including Abercrombie, American Eagle Outfitters Inc and Aeropostale Inc, ended up for sale on these websites.

None of these U.S. chains have opened stores in India, and they have no official licensees. Abercrombie and American Eagle said Indian websites were not authorized to sell their products.

"Our brands do not have any authorized third party websites anywhere in the world; all of our stores and official websites are owned and operated by A&F directly - we do not license or franchise our front-line sales," Abercrombie said in a statement to Reuters.

A unit of online daily deal company Groupon Inc in India stopped offering some Abercrombie and American Eagle clothing in July following questions by Reuters.

Some of the clothing available on Indian websites found its way through distributors in Asia, the Middle East, Europe and the United States who buy off-season or overstocked merchandise and sell it in countries where they hope demand is higher.

In other instances, online retailers bought from local manufacturers who supply the global brands. Those manufacturers are not supposed to sell apparel with name-brand labels, two Indian lawyers said.   Continued...

 
Employees of Snapdeal.com, an Indian online discount shopping website, work inside their company office in New Delhi March 1, 2012. REUTERS/Parivartan Sharma