Tata Group enters e-comm mkt with apparel, electronics website

Local conglomerates only lately entered the fray. Reliance Industries Ltd started an online apparel shop last month, while Aditya Birla Group and Mahindra and Mahindra Ltd recently launched online retail platforms.

For big business houses, e-commerce is an opportunity to capitalise on middle class growth and rapid internet adoption. By 2025, online merchandise sales will hit USD 220 billion in India from USD 11 billion last year, Bank of America Merrill Lynch estimated.

But the market has fostered cut-price competition, with the top three players incurring millions of dollars in losses due to heavy discounts.

Tata said its focus was profit margins and unit economics, and not just growing sales via discounts.

"We don't want to get into the discount wars, we want to serve customers with great products and build a sustainable business," said Chief Executive Ashutosh Pandey of Tata Unistore, parent of the operator of Tata Cliq.

To keep costs in check, Pandey said Tata would use its money establishing a large number of warehouses like other e-commerce players have done, and would instead build inventory networks around existing store locations owned by group partners.

The group, whose businesses include steel production, tea packaging, information technology services and automobiles, has bet on new businesses in recent years with mixed success.

Its retail businesses including sellers of gold ornaments, sunglasses, apparel and electronics have successfully expanded, but its mobile phone venture Tata Docomo is a marginal player.