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Lokesh Daga spills the beans on bootstrapping to a 100 cr revenue | (D2C growth story)
261 Plays1 year ago
Lokesh Daga built up what could arguably be called as the next generation of an Indian family run business. Nasher Miles makes cool and useful trolley bags for travelers who care both about looks and convenience. He shares D2C success hacks, the advantages of offline vs online, and the path to becoming a 1000 cr business.
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Read more about Nasher Miles:-
1.How Nasher Miles is Redefining Travel with Quality and Style
2.How luggage brands can drive engagement and sales through influencer marketing
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Transcript
Introduction to Nashor Miles and Its Achievements
00:00:00
Speaker
Hi, I'm Lokesh Daga, founder and CEO of National Miles.
00:00:17
Speaker
If you have ever bought luggage on Amazon or Flipkart, then you would have surely come across some very attractive luggage products by Nashor Miles. And though the name sounds like it's a Western company, it's actually a very rare homegrown D2C giant that is completely bootstrapped. Lokesh Daga has built up what could arguably be called as the next generation of an Indian family-run business. He started Nashor Miles with his brother and wife and they have managed to cross 100 crore ARR without raising any external funds till date.
00:00:47
Speaker
Stay tuned for this episode of the Found a Thesis podcast featuring Akshay's fascinating conversation with Lokesh Daga where he shares his insights on building a D2C business in India, the advantages of offline versus online and the journey for national miles to become a thousand crore business.
00:01:15
Speaker
Okay, so give me an elevator pitch of National Miles. So National Miles is a D2C luggage brand. We started our journey in 2017. We had three co-founders, Abhishek, Shruti and myself, all our family. We started when luggage was just about to start in the online space and we realized that the market was so big because people wanted to travel.
00:01:41
Speaker
So we created our National Miles as a not as a luggage brand. We believe National Miles to be a fashion brand. We want people to travel and that's what our suitcases bags enable them. It's full of colors. It's full of design. It helps you stand out because in today's generation people want to travel and people want to travel far. And that's what National Miles will help us. We are here to change how the...
00:02:09
Speaker
In the luggage category, there are segments like premium, mass premium, and so on. Which segment are you? We are a mass premium brand. That's how National Men's is positioned. Brands that you would compete with? Our immediate competition could be American Tourista, Skybags, and in the D2C space, there's a brand called Uppercase, which has just started. Got it. These are immediate competition, if I have to give you an reference.
00:02:39
Speaker
And what percentage of your sales is online? We are strictly due to see companies. So 100% is online. We don't do offline at this point of time. We don't do offline as of now. And what's your current ARR? So we are 100 plus growths. So we are 100 plus ARR growth, totally bootstrapped. And yes, more importantly, EBITDA packed positive since day one.
00:03:05
Speaker
Unbelievable. Okay. So I want to know the story of how you built this up. What, you know, you've been through like the corporate world stint and all that. So, you know, what, what made you want to leave corporate
Lokesh Daga's Journey to Founding Nashor Miles
00:03:18
Speaker
world? I think your last job was with Phillips. Yeah. Yeah. I was working with Phillips.
00:03:23
Speaker
So what made you want to quit Philips? How did the idea get born? What was that year-to-one journey? So I finished my MBA from SPJ and marketing and that's how I got into Philips campus placement. In Philips I was a part of the sales team.
00:03:40
Speaker
on and out, in and out, poor sales departments starting with traditional trade, modern trade. And in my last 10, I was heading the online channel for Philips. This was in the year 2012 to 2014. And those were the years when Flipkart and Amazon were just about to start in the country, in the categories which Philips used to lead. So I was working very, very closely. I still remember in June 2013, when Amazon rang the bell and they started the first order, we were actually there.
00:04:10
Speaker
In the one to two years of working very closely with this e-commerce giants, I realized something big was happening. That was the time when I said, e-commerce revolution is not a country.
00:04:27
Speaker
And in the next decade, this is where the action will happen. And we thought, me and my wife, who also had a good job with ICSI, we said, let's give it a shot. Okay. We've worked for five years. We've had some savings. We are ending it enough. We'll come back.
00:04:57
Speaker
And your wife were like batch mates from college or something.
00:05:08
Speaker
And then we started, you know, we had to be there just to see what was happening. And luckily, luckily, at this point of time, after 10 years, I think it was a wise decision because the revolution has happened in the country. Revolution has happened in terms of how countries shopping.
00:05:26
Speaker
preferences have changed. People believe that online is the next go-to channel available apart from the other channels which are already there. So that's how, so basically, Philips went for a sales experience and that's how probably, you know, she was working with ICCA man in the credit cards department.
00:05:45
Speaker
Marketing, sales, what? Yes, marketing, marketing. So she handles marketing for us in National miles. I handle, so I'm the CEO and we are one of the co-founders who happens to be a elder brother who handles the orbs, the HR, the finances, but that's how we are restructured. What was your brother's experience?
00:06:03
Speaker
So he was working with US. He was in US for a while. He worked over there. And he had already seen what Amazon was at that point of time in US. And he had come back to India. And he really liked the idea that he was online.
00:06:37
Speaker
To be very honest. And I'm glad we could take the risk. There are different phases in life when you want to take the
Nashor Miles: From Distribution to a Vibrant Brand
00:06:45
Speaker
And that's how all three of us came together. Worst to worst, like I said, our biggest USP was...
00:06:45
Speaker
risk. And those were the phases where we took the risk. And that's how we started. How much corpus did you start with?
00:06:52
Speaker
I mean, at the end of the day, in terms of purpose, we started with one crore, okay? But then, I mean, all three of us are Marwadis, okay? So, by nature and by DNA, we are frugal, okay? And that's how business we've established. As in, when we did like... Decide nuggets from day one?
00:07:19
Speaker
With the idea of online selling. So in 2014, because I was working with Philips, I pretty much knew how Philips cut demand or let's say other categories cut demand. In 2014, we actually started off
00:07:38
Speaker
as sellers, where we were enabling other brands to sell on the online marketplaces. So, between 2014 to 2017, we were working with 100 plus brands across 15 different categories. Let's say from watches, from handbags, from furnitures, from small appliances, from electronic appliances, everything. You name the brand because what are USP to the brands was, we are your online e-commerce distributors.
00:08:05
Speaker
Like you have an offline distributor, you have a voluntary distributor. We are your online partners. We will help you scale up. Because those were the years where brands also didn't know what is online channel. And because of a little bit of background that really helped us to get entry. Those were years where Flipkart, Amazon, everybody wanted to grow, grow, grow, grow, grow.
00:08:29
Speaker
So from Kuzan 14 to 16, we distributed like 100 plus brands. We were aggregators. So it was like a commission business or you were charging a fixed fees? No, we were buying inventory. I mean, that was it. So we were a distributor. So we were buying inventory. Because our family business had some finance background, we could take a lot of money from a debt. We were able to do that.
00:08:55
Speaker
During this journey of 2-3 years, we were also distributors for VIP. We were the brands who launched Caprizi handbags as a category in Amazon. VIP, Skybags, Scaldurn, Caprizi. We were distributors for that, even for Wildgraph for that matter. And as we moved along, we were actually an online aggregator. I don't know whether you've heard of Cloud Tailors and aggregators in Amazon. No, it's not existing.
00:09:24
Speaker
As the journey evolved, Amazon had other aspirations. We had other aspirations. Amazon rightly said they wanted to partner with a bigger seller. And the sooner, the later we realized that, but what the first two years, three years helped us to understand the online ecosystem. We knew how to sell now. Now, what to sell was a question.
00:09:52
Speaker
And Ismail, you were getting decent margins? Yeah, I mean those were golden years. Those were golden. Like I said, from 2014 to now, we have been profitable as a company every single year. How much margin would you earn? It isn't. But easily, depending on what your requirement is.
00:10:13
Speaker
But you've done enough margin from day one. That's how we came across luggage as a category because pretty much it was a try, a holistic market where only three big players were there. And luggage was just about to start as a category in the online space. Okay. And that's how Nashamais was born in 2017.
00:10:43
Speaker
And now probably, yeah, that's what we do. I mean, yeah, now we are amongst the top D2C luggage brands in the luggage space. How did you create a suitcase? You have no legacy understanding of how to manufacture a suitcase, how to design it, you know, all of those things about what features are important, etc. So how did you actually create your product?
00:11:10
Speaker
At the end of the day, a suitcase is not a technological product. It is pretty much a functional product. It's not like a watch, where you need some tech intervention. There are a lot of things like telescopic handles and design. There are designers who help you do it. There are factories who pretty much make it. You just have to
00:11:31
Speaker
go to the ground, figure out the source. And that's what we did. And like in 2017, 100% of the manufacturing was happening in China. And that was also a go-to strategy. China, I think we stayed there for like a month or so. Hard work, if you look at the ground reality, like you said, like you said, the wheels, the wheels, the cooler, China was the hub at that point of time. And that's how we started.
00:12:02
Speaker
You will pretty much get to know the nuances of it. And that's how it happens. So you reach out to the right factories, you reach out to the right partners. They help you make, they customize your designs. They will do whatever you would need. I mean, there is a price for it. And that's how we
Product Strategy and Market Positioning
00:12:18
Speaker
started our suitcase journey.
00:12:20
Speaker
What were some of the early mistakes you made? As outsiders, I'm sure you would have made some mistakes in your first few orders, whether it could be the design, what you thought, some learnings which you would have got.
00:12:36
Speaker
The early mistake is when you start a brand and more so a consumer facing brand in the product space, you would want to assess the product market fit of a brand. When you go to a market like China, when you go to any of the factories, let's say in India also, there is a product at every price point.
00:13:07
Speaker
However, when we started, we probably doubted ourselves a lot.
00:13:16
Speaker
That's what we thought. Okay. Let us gain some confidence. But then we realized, then slowly, slowly we started increasing the pricing of a game. So, I mean, it's not that by design, we wanted ourselves to be mass premium. It's over a period of two, three years, four years where we realized that, okay, you know what?
00:13:41
Speaker
mass premium is our positioning. As a brand, we can command that premium for our products by having these features and charging the customers accordingly. So I think that was one of the mistakes. We probably doubted our capabilities a lot. I think we could have done much better in the early years, but it's fine. These are part and parcel of any journey.
00:14:01
Speaker
So right now it becomes much easier for us. So when we launch a product, when we launch a new design, it is very, very clear in my head, what is the pricing, what is the kitna product, kitna stocking, in terms of forecasting, inventory planning, all these things are pretty much there in our mind. So yeah, these were mistakes which we did, but good mistakes. It had to happen. I mean, as a journey would have been incomplete, I would want to say.
00:14:26
Speaker
What prices were the initial SKUs at? How many SKUs you launched with? One SKU we launched. We were selling a set of three suitcases, I remember, categorically at 749.99 in Amazon. When we launched at 749.99, a set of three suitcases, there was a Hua Ki Bhaiya suitcase, 749.99.
00:14:48
Speaker
But yes, it was possible because nobody else was doing it. And then we realized, okay, seven, four, nine, and so then we increased to seven triple lines. Then we started at eight, four, nine, nine. Then we started in triple nine. And that's how a journey is right now. Our ASP is very, very high at this point of time.
00:15:05
Speaker
RASP is around 10,000 for a set of three or 9,500. So that's how we realize. I mean, those were very, very early years. I mean, I remember still very clearly August 10th, 2023 is when we launched. I mean, because it first year was pretty much understanding the market.
00:15:31
Speaker
So I remember the figure exactly. That was the number we did in the first year. But that was the building. What was your first year? 2.18 crore. Which year was it? 1718. We started in August 10th, 2023.
00:15:56
Speaker
That's what I was getting confused. So in 1718, you did about two colors with one SKU set of three suitcases. Then how did it progress from there next year?
00:16:10
Speaker
As a luggage brand right now, Nashamesh provides everything. We have around 2,000 products. You start with something called Hard Luggages. Hard Luggages are the same. And of course, as a brand, right now we play with a palette of colors. Think of a color we have in a portfolio.
00:16:28
Speaker
But when we started, we wanted to be conservative. Black, blue, grey. To be very honest, because we knew these are evergreen colours. I remember when we were researching a market study, everybody told us, I have a yellow suitcase. A pink suitcase. You've got an audience. And white. People are very, very funny. That's what we said.
00:16:54
Speaker
And in a country like ours, there will be a small audience who will like these colors. And that's what we're asking. Let's have a strategy wherein, but we'll make the bright colors as a USP. A light blue will have to be there. We have to have the pastel colors.
00:17:18
Speaker
And I'm very glad we took that route because right now, if you see our entire portfolio is full of colors and people appreciate us for that. Because that's how you try to stand out. I mean, light blue, I mean, when you stand in a conveyor belt, when you're traveling in a flight.
00:17:37
Speaker
People struggle to identify the suitcases. People try to put a pink ribbon. They don't realize it is not their bag. And more so, the older generation, the elderly people generally struggle. Because that was the assortment. Black, blue, grey, brown. Now think about it. The positioning was, we give you loud colours.
Production Shifts and Future Goals
00:18:04
Speaker
So now it is standing out day, it is easier for people to identify and people are liking variety. So when we started, 2017 only had limits. We started expanding our portfolio.
00:18:22
Speaker
And yeah, that's how we are. I mean, this year is expected to be 100 plus growth for us. I mean, even much more, even much more can happen. But yeah, that's how we've been able to strongly and steadily grow ourselves team. We have developed our team. Yeah, that's how it works. What's the revenue split? Hard luggage, backpack, soft luggage and accessories.
00:18:45
Speaker
So, for us, luggage is a very, very big component. Around 95% of a sale comes through luggage. Backpacks and accessories is a very small component at this point of time. However, that is something we are working on as a brand and that's how the opportunity lies. Even between hard luggage and soft luggage, the split is 85-50.
00:19:08
Speaker
In an ideal world for a company which is heavily dependent on the online space, the split could be 70-30. That's where another opportunity lies for us because we need to increase our portfolio more for soft luggage.
00:19:22
Speaker
But yeah, hard luggage is very, very big for us. 85% of our revenue comes through hard luggage because people want colors, people want styles, people want designs. Unfortunately, soft luggage by the structure of that product cannot offer those many things. And hard luggage is willing to offer that. So yeah, hard luggage is the preferred option. I think industry is also moving towards more of hard luggage. So yeah, and online with the hard luggage.
00:19:50
Speaker
I think young people definitely... My father's generation used to use that. So yeah, I definitely always go for hard luggage. Everybody likes hard luggage. At the end of the day, it is the function of the color of the fabric. And that is what it is.
00:20:16
Speaker
How has your sourcing strategy evolved? Because, I mean, you know, sourcing for 2 karors versus today you have to source for 100 karors. So you must have become smarter at your supply chain management. Tell me the journey, the learnings.
00:20:34
Speaker
Yeah, but one thing we were very, very clear from day one was let's get partners on board who are experts on that. Our strategy was to grow, not to save cost. So which means go to China, figure out a partner who is there in China. They will charge a commission, but they will help you to sort out your China operations.
00:20:56
Speaker
So, because he has that partner, we also take an expert margin, but it is worthwhile to have a partner who will take a premium, a little bit of premium, but it is a bit of a benefit for us. Because from day one, we have had a partner in China who is based out of China. They should be like a sourcing agent.
00:21:14
Speaker
Yes, they are mediators between the factory and the brand. So, the brand and factory design will probably help you to execute. The products are shipped from time, the products are done quality check, all the payments, everything is being taken care of. And as we started, I have to tell you till 2020, February, March, 100% of our products were being manufactured from China.
00:21:43
Speaker
Okay. We didn't have anything. And the day COVID happened, the travel is not happening. We as a brand were saying, okay, now what to do? I mean, travel in Iran with the product of each and each of them, because at that point of time, it was a question of survival. And that was a time where first time we pivoted into, and there was a, there was a wave of anti-China to be very honest. Okay. The entire country, not even the country, the entire world was talking about China, China, China.
00:22:13
Speaker
It was coming like that. People were resenting the fact that these products are made of China. But ultimately, to be very honest, almost 90% of the products are still made from China. You like it or you don't like it. People don't realize that fact. Some components, China is the hub. That was the first time we pivoted to a made in India operation. We started with
00:22:37
Speaker
N95 travel mask in 2020. The strategy was simple. The mask was the flavor of the season. We have people working on it.
00:22:53
Speaker
So, we thought, let's do N95 mask. N95 mask, maybe some black or white. This is a white mask, a grey mask. This is the color of the print. And the brand was there. You can sell it to an online audience. And that was the time we started in the middle of the operations. And from 2020 onwards, I'm very, very proud to say right now, around 20 to 25% of our sourcing is happening in India.
00:23:19
Speaker
It is not that we went out to the market and found those partners. Those partners were not even there. But in the last two years, what has happened is a lot of people have got to believe in the construct of Made in India. People have set up factories. And that's how right now we are working with 8 to 10 different factories in the country.
00:23:39
Speaker
Our entire software packages are being made in India. Our entire backpacks are being made in India at this point of time. Our entire accessories are being made in India at this point of time. Last year we launched an entry-level brand called Stony Brook. This was an entry-level brand that is 100% made in India at this point of time. We feel in five years time our ratio will be 2080.
00:24:04
Speaker
So, 20% will be China and 80% will be India.
Growth Plans and Funding Needs
00:24:08
Speaker
However, the journey cannot change overnight. The entire ecosystem needs to change. There are a lot of elements to help us understand India products even from as small as power.
00:24:22
Speaker
We don't realize the reason power is very, very important. Labour is very, very important. Space is very, very important. Transportation is very, very important. Those things are happening in India. And we see very, very clear results in Panch Salme as a company around probably 20, 80. 100, 0, 0, 100. But identistically, we'll be very, very happy if the ratio is 0, 0, 20, 80.
00:24:49
Speaker
Okay, got it. By 2020, when Covid hit, what was your headcount and what turnover were you doing? 2020, I think, just saw Covid, our turnover was 12.5 crores.
00:25:04
Speaker
Okay. You must have been like more than doubling each year. So in 2019, we had already touched a turnover of around 24, 25 crores. Okay. These are basic numbers. 40, 50% cut the budget straight away.
00:25:22
Speaker
But now, we always talk to people, when it's like, PC and AD period. So Covid is that period, you know, before Christ was out. It's like that kind of thing. Like for us, Covid is the base.
00:25:40
Speaker
So we talk about we'll be growing like 10x in three years time. That is our goal. We've been doubling our turnover. People are traveling with the vengeance we feel. It's good for us, right? People are cherishing small, small moments in life. People are not waiting for the entire year to take a vacation. People have found a reason to believe after this COVID that COVID is important.
00:26:09
Speaker
And that's helping us, the entire industry. And if you see the numbers, even airline traffic, every month, we are blocking the highest number of people who are traveling for airlines. Where are those people going? I don't know where are you based out?
00:26:34
Speaker
We are very, very glad that we are in the right space. We would be growing 10x in three years. That's what it's looking like in this year. So, first tell me this. From 2CR top line to 24CR top line, zero external funding. How did you do it?
00:26:56
Speaker
There's no rocket science. But basically, at the end of the day, we as a company and three of us, we didn't want to believe in the process. So valuation is an end product or it's a byproduct of whatever you are doing.
00:27:22
Speaker
It was very, very easy. There was no reason to... And that's how we realized, yes, everybody was raising funds. Why do we need funds? You have to buy an X, you sell at 2X, for example, whatever that margin is. And then there are... And we were very, very clear from day one that whatever profits we made,
00:27:44
Speaker
Making from Japsia Bunaagha, a profit company. There were people who were willing to give us money at debt. If money is available at debt, why not? Why do you want to dilute the equity?
00:28:06
Speaker
If you are able to incorporate the rate of interest as a cost and still able to deliver a margin, it is fine. So we have reached a level. Now we have realized that the game has become so big and there are a lot of strategies now to scale up.
00:28:22
Speaker
Well, from 100 to let's say 500 in the next five years, or let's say 1000 in the next five years, we will need a lot of support. Okay. Okay. For the last six years, you've already done that with our money. Okay. So for an any investor, we are a very, very lucrative proposition at this point of time.
00:28:46
Speaker
What we lack is, there are a lot of small little nuances, which we realize where we are lacking money and we need money to scale up now. And that's so probably I think from by next month, we are in fact, coincidentally hitting the market. Okay, we've just signed an investment banker for ourselves. And we realize let's try to give away some equity and you know, scale up the business.
00:29:14
Speaker
Okay. Okay. Got it. I'm guessing also that largely in the initial years, this would have been like a trading business. You would not need, for example, like, you know, if someone is building a SaaS company, so they have to invest in building a product first. So they need funding. So you were able to manage with it. And this would have been like the venture debt or revenue-based finance.
00:29:39
Speaker
You mentioned revenue, revenue based, I mean, because we are from families where, you know, people are into businesses, people are willing to give you corpus at interest. That's about it. Nothing else. Nothing else, no revenue based, nothing else. I don't care what you're doing with that money. I don't care what you're doing with that money. I don't care what you're doing with that money.
00:30:08
Speaker
And that's how we realized. That was a very, very good strategy for us. Okay. That has helped us to grow. And as your business improves now, then banks have started lending into the money. Our primary lender is banks only. I mean, that's how we've done that over the years. Got it. Very interesting. So you said give me an example of some of those mistakes.
00:30:34
Speaker
When you try to deal with 2000 products, you realise that not everything will sell. There will be non-moving inventories. You take those bad bets. There will be something aging inventories. At times, certain products might not do well. You realise that you are not doing well.
00:30:55
Speaker
Let us say in terms of when you're growing at such a fast pace, in terms of let's say inventory management, in terms of let's say warehousing capabilities. It's not that we knew that from day one. We realized the biggest learning I'm telling you for every D2C brand.
00:31:15
Speaker
is returns, okay? That is where the money lies. How are you able to solve a hack for the stocks which comes back from the customers in terms of return? That is where the hidden cost lies, you know, to be very honest, where Amazon and Flipkart will talk about it, but they charge a lot of money in terms of reverse shipping. We realized, and we didn't realize from day one, we also lost money here and there, but we realized those were learnings, okay?
00:31:40
Speaker
Now, we pretty much know that it is a percentage return. So there is a cost of doing business in the online space. If you want to have found a return, you can cry whatever you want. But you can't say whatever you want. So you build that into the cost. So everything is taken care of.
00:32:04
Speaker
And there are a lot of things. I mean, mistakes. Why not? Mistakes are part and parcel. I think you're not learning fast enough. You're not growing fast enough. And that's how we realize. It's OK. Absolutely. Amazing. How do you deal with the inventory which comes back?
00:32:25
Speaker
Fortunately, we are into a business of making luggage. It is not like a glass product. It's not like a fragile item. Fortunately, Joe products are still in a sellable condition. Yes, there could be scratches, there could be dents here and there because
00:32:48
Speaker
I mean, at the end of the day, the customers are, the e-commerce portals are so pro towards customers. Even customers can use and return it back. It's not a big deal. At the end of the day, there is a value for it. At the end of the day, there is a value for it. Second, the market is also very, very huge in India. So, luckily, because the products are in the right condition, because we are able to sell it at a price. So, you liquidate that in the second market.
00:33:16
Speaker
I have a beauty about the Kandar countries. There is a price for everything in the market. It is very simple. There is a market for it. There are people who are willing to take second products. There are people who are willing to take products with scratches a little bit. You know, it's possible.
00:33:37
Speaker
And have you done something to reduce the return rate? Of course, of course. When we started, we realized that the return of the product could damage us. We were working with 3-ply cotton. 3-ply cotton used.
00:33:53
Speaker
But then we realized that our theme of our carton is let us say hypothetically, this is what it is. If you upgrade yourself to a 5-ply sturdy GSM paper carton, your chances of returns will reduce. So it is better if you upgrade your customer. The way the last month delivery, you really don't know whose fault it is. Because the delivery partners, the end customers, there are many levels at which the product is being transferred.
00:34:21
Speaker
And it is coming back also. So are you willing to take so much risk for that X benefit? Okay. So you rather invest into a good quality five ply solid GSM product, which at least minimizes your little bit of damage dense. So that was one of the biggest learnings. Okay. Invest into packaging. Okay. All e-commerce portals. If you have to save cost, don't save cost on the packaging. I will have to sell.
00:34:56
Speaker
So that's what we have done to reduce our returns. It is very, very important.
00:35:06
Speaker
Okay, got it. And you said one of the other learnings was you made some bad bets like product. Is there a system in place now to help you choose wisely? I mean, system is the team we have right now. The team is very, very equipped to understand.
00:35:28
Speaker
You've developed a sense of judgment. I mean, of course, we realized when we started, we realized that, you know, backpacks are premium backpacks. That's where the market is because everybody is doing an entry-level backpacks. Let's create premium backpacks.
00:35:52
Speaker
But when we got into the market, we struggled as a brand. We still struggle to sell premium backpacks. It is a different ballgame because there are way too much competition plus the cost of acquiring a customer in the premium space is very, very high.
Operational Challenges and Marketing Strategies
00:36:06
Speaker
And with the constraints, we were working it with an eye of profitability. It didn't fall for our place. That was one of our bad bets. But then we realized, India,
00:36:16
Speaker
There is a price point. Pura category, even from an American tourist or a safari or sky wax, they work at a $9.99 to $1.99 price point. And the moment we realize that fact, our game for backpacks has changed for the last six months. We have realized we have unlocked a new category per se. And I'll be very, very honest, but backpack, the next financial year will be 10% of our revenue. That's how big backpacks will become.
00:36:44
Speaker
And we realized that. So, these are made. So, we realized our strategy. Our strategy is to make 999 to 1499 products. It will sell in the country. It will give you one.
00:37:23
Speaker
It's a function of supply and demand. But historically, in the e-commerce marketplaces, our cost of acquiring a custom is around 350 to 400 rupees. And for our website, the cost of acquiring a custom is around 1300 to 1400 rupees. That's how it is. How much of your business comes through websites?
00:37:31
Speaker
What is your average customer acquisition cost and how is that evolved over the years? You must have optimized it to reduce it.
00:37:50
Speaker
Last year, 22-23, it is 10%.
00:37:54
Speaker
And our website is also recent phenomenon. Two years back, we started thinking of long term. Our entire Alliance was on the online marketplaces. We started hedging everything. What is the business continuity? What does India and China want to do? Let's start working on an Indian line. What if we were doing Amazon flipkart? What if the government banned
00:38:23
Speaker
Amazon flip. Okay. Okay. Yes. We need to have a website because the data is in the customers. Okay. That is the board for you. So let's start developing our website. So our strategy has been to hedge it various levels. Okay. And that's how a good businesses will, you know,
00:38:38
Speaker
I mean, showcase their strengths in a long run. So website is again, you start focusing on the other part of it, the long term vision. Very, very happy to say that it was 10% was last year. I believe this number will go to double digits this year, like 13, 14% easily or even more.
00:38:59
Speaker
And the extra cost like 300 for e-commerce and 1300 a website cost of acquiring a customer. Is that 1000 rupees made up by better margin because on your own website, you're not giving a margin to Amazon Flipkart?
00:39:12
Speaker
To be very honest, for an e-commerce company, for a D2C company, you cannot take channel-wise margin. You cannot treat that as it is. If you take that, I'm telling you 99% of the D2C websites will never make money. It is not a profitable channel. It is not a profit because the cost of acquiring a custom is very, very high. But yes, what we believe is,
00:39:36
Speaker
We are a D2C company. We don't have any physical assets. My website is my digital asset. That is the asset where I would want my customers to come to our website where we showcase products as per what we want in a virtual world. There are a lot of costs which you cannot attribute.
00:39:56
Speaker
We do ads in YouTube, Facebook, Google. I would want to believe, rightly so, if the customer sees our ads, they will say, OK, OK, who are they? Let's look at them on Amazon and Flipkart. Because the Amazon Flipkart doesn't have any customers. If I buy a product,
00:40:20
Speaker
I will return it back and my money will be taken care of. Now that confidence has happened over the years of hard work for these e-commerce websites. I don't see, I mean, in our website, most of our customers are tier 1 customers because they are a little evolved in the online buying process. Wherein, in the e-commerce marketplaces, a lot is tier 2, tier 3 and the rest of the world, you know.
00:40:45
Speaker
It is a very hybrid cost. You cannot look at it in a standalone basis because those people would be still buying it.
00:40:55
Speaker
from elsewhere. It is highly possible. They can buy from e-commerce marketplaces. What we like to view is, the sum total of all the performance marketing as a sum total of sales, is it falling under a percentage. If you are taking care of your attribute, it is impossible to do that.
00:41:18
Speaker
And what is that percentage for you? Performance marketing as a percentage of... 13%. And that's a healthy number, according to you. Very healthy number. So what is your cost structure like? So 13% is cost of acquiring customer. What is the cost of goods sold? And what are you left with? Very rough broad level.
00:41:42
Speaker
So more or less, I mean, gross margins are on 50 to 53 percent. OK, then your market performance, marketing and your other marketing costs are on 15 percent. Then your manpower cost is a small. It's around warehousing cost is another big cost for us that warehousing and logistics. And this is around 10 percent. OK, which miscellaneous expenses, employee expenses that we deliver, we've been delivering last year, we delivered in EBITDA of 14.7 percent. That's how it is.
00:42:12
Speaker
Okay, amazing, amazing, amazing. And what is your headcount now? How many people? We are a team of 39 people. Which is very lead for... Very lead, very lead, very lead.
00:42:24
Speaker
Very late. We are a very little company. We don't have people who are bored in this work. They love the work. So that is what I can tell you. But what we tell our colleagues over here in Nashville is...
00:42:42
Speaker
You will be expected to do everything from everything. There is no rules defined at this point of time. Even myself, I'll be involved in everything, even everybody. The team is like an all-rounder of sorts. You say, I don't know whether you follow IP or not. That's how Dhoni works. That's his mantra.
00:43:06
Speaker
That's how we also believe. You are all-rounders at this point of time because when you are growing, because when you are all-rounders, people are able to do a lot of other things that will help you to scale up faster. But once you grow to a size, then you start specialising into certain products and you get people ad-specific. But the team is good. Very, very good.
00:43:25
Speaker
It's a hard-working team. And that is what it is. At the end of the day, our team has a set of processes. We will be able to reach 100 crores. We didn't even think that that was a dream. But just that we did the right things at the right point of time. It is a byproduct of what you put. It's as simple as that. That's how it is.
00:43:51
Speaker
How did you build a great team? What are some of those learnings you've had about building a good team? How do you hire and select people? Post is very important when anybody is selecting a team. I mean, you need to understand, when you talk in meetings, you need to understand.
00:44:19
Speaker
We are building a company with certain mindset in mind. And the person is that person able to fit into our team structure. That is one of the biggest things. That is number one. Second, one of our biggest filter of having anybody on board is knowledge of Microsoft Excel.
00:44:48
Speaker
If you don't have Excel knowledge, you have to filter it.
00:44:53
Speaker
The high roles, you need that? Not really, but most of the roles, let's say you're starting from apart from the people who are doing cataloging part, but let's say people who are doing performance management, people who are doing operations in terms of let's say forecasting, people who are doing sales, a sales analyze, you know, a lot of things. If you are not good in Excel, I think there is some amount of filter which we do at our head.
00:45:19
Speaker
We feel that Excel is a very, very powerful tool. I don't do anything but Excel the whole day. I see everybody around me using only Excel because that's what it is. So this is how you start slowly developing your team. But for development, what it means is we realize post COVID is yes, everybody went work from home. Work from home is important.
00:45:49
Speaker
So, we also look at the part where do people stay. We are in Bombay. So, train connectivity is the best. How do you reach out? So, we also realize that there is a lot of jobs. But the amount of time, how much time you are reaching your office. So, these are some of the factors which you realize that really helps. We really prefer people who are in and around our office area.
00:46:12
Speaker
We really prefer people who are very near to railway stations. These are very small grids which we realise.
Team Structure and Brand Development
00:46:22
Speaker
You talk to 5 people, 10 people, you get that one gem.
00:46:31
Speaker
And that's how we've been able to develop our team very, very slowly. But what people who are very, very hungry, people who are hard-working, these are some of the important traits which we look at. So that's how it is. And what is the split of these 39 people? How many in which function?
00:46:52
Speaker
So, mentally, it is so equally split. So, let's say in terms of marketing, I would say there'll be around five, six people, okay. You'll be spending your performance marketing budget.
00:47:04
Speaker
Yes, but those five, six people, I also include myself in that people because I also spend a lot of time in performance marketing. They would be also doing the sales part in other e-commerce. So, for us as hybrid, like I said, it's an all rounder team kind of a thing. So, the performance marketing, the e-commerce channel, let us say a small channel, let's say Tata Click, which are very small. Let's say Mintrad, this point of time is a very small channel for us.
00:47:28
Speaker
So that's how it is. Or probably somebody would be looking at Amazon for that matter. There is a team at cataloging and content because that is an important part of there are like five to six people. Okay. There is, there is this sales and this marketing team. I would want to say there are like four, eight or 10 people over there. Okay. Then there is operations guys. Operation is a huge team because you need some people in the ground. Then accounts team is also very, very important for us. That's how it is. And then we have one HR. Okay. So yeah.
00:47:58
Speaker
And why is cataloging and content very important? How does it help? Very important because you are listening, you are trying to sell your product in a world where human interaction is zero. You cannot interact with the customer. When you go to a shopper store, when we go to a promo store, there is a person coming to assist you. Sir, what is your requirement?
00:48:23
Speaker
So, what do you require? You go to a store, let's say a Chroma store, you will say, I require a 42-inch TV. He will take you to the place where he will show you five different TVs and then you will ask him questions, he will answer you back. In online, all these things are not possible, which means your cataloging should speak that language. Each and every detail should be clearly mentioned because if a customer has landed onto your page,
00:48:47
Speaker
You should be able to comprehend everything. That's why we take a lot of pride in cataloguing. We take a lot of pride in terms of imaging because that's how brands are created. You want to show your brand.
00:49:06
Speaker
In e-commerce marketplaces, it's a lot of us to take care of and we constantly do photo shoots because at the end of the day, it is a fashion product and we try to use that product through our lifestyle. So we do multiple photo shoots, we try to upload that, we also try to
00:49:30
Speaker
I mean over the years we want the brand to be aspirational. And that aspirational element can only happen as and when you slowly evolve. Like recently we just signed Rishabhanda as a brand ambassador. But that required a huge amount of exercise in terms of cataloging and cleanup. Those Haja rescue aren't
00:49:50
Speaker
e-commerce marketplaces, the product has changed a lot. When you look at it, you can see the amount of cataloging required. Also, you require a decent team for cataloging, I feel, because they will help you to speak the language what a brand would want to speak. What made you choose Rishabh?
00:50:10
Speaker
So, again, I don't know whether you're aware of it. So, 2020, when we had reached a 25 crore revenue, we thought we are big, but not big enough. Okay. What we wanted that point of, we said, you know, let's get hold of
00:50:28
Speaker
franchisee, which believes in trust and reliability, we became travel partners for Chennai Superkigs. We were travel license partners. Chennai Superkig, I don't know whether you follow IPL amount, but CSK as a team, I think CSK is a good team, and I think CSK is a good team.
00:50:45
Speaker
That was the idea where we wanted some amount of Thurasana with the trust factor to come to our brand. Because CSK has that appeal. In 2020, we became a travel partner for CSK. Unfortunately, IPL was very, very small affair. That is a game that really helped us too. So we started gaining trust.
00:51:08
Speaker
You know, in terms of customers, we realize now we have reached a stage where we have analyzed our
00:51:24
Speaker
Our mass, the major age growth, which buying is happening, is around 25 to 35 and 18 to 25. That's like a big jump for us in terms of target growth. It was very, very clear for us. India is a big deal. It's a big deal. It's a big deal. It's popular. If you want to go through the mass route.
00:51:45
Speaker
Okay. And cricket and Bollywood, Bollywood probably to a lesser extent because there are regional chat, regional movies at this point of time, but cricket cuts across all audiences. Okay. Even if you want a tier one audience, tier two, tier three, and we wanted to have a young face. Okay. Rishabhan was a very, very clear choice for us.
00:52:09
Speaker
That guy doesn't play by the roadblock. In the field also, he's a different character. He's not a Rahul Dravid. Like his uncle. I'm not saying Rahul Dravid is good or bad. I'm just making a reference. He has a different personality. He's a challenger. And that's what we also believed as a brand.
00:52:31
Speaker
And we really thought that it resonates with our target group. It resonates with what we want to come out as a brand, a young brand. I mean that's where it is. And young Bharat, young India, and Rishabh Pan was a very, very obvious choice. I mean, that's how we came across Rishabh.
00:52:52
Speaker
And how are you using this endorsement deal? Is it only on the catalog that Rishabh Bhan's photo? No. He's a brand ambassador for us for the next two years. And we've done commercial shoots. Our videos are there.
00:53:09
Speaker
Yeah, you do everything. Digital. Only digital at this point of time. Because I hope this is digital. If you create commercials around it. Okay. In terms of Rishabh. So, Abhi Hamara focus as a brand is to create brand awareness. Top of the funnel activity. And that's where Rishabh has come into the picture. We want people to believe. No, what would be national mindset. If you have an objective, you can trust them.
00:53:39
Speaker
We want to increase our brand awareness reason. We want to make national miles a little bit of a pull brand, rather than a push brand at this point of time.
Market Expansion and Future Outlook
00:53:49
Speaker
So the deal is any marketing activity, which an ambassador is supposed to do, we'll be able to do that. So that's how. Okay. So, you know, early days, 100% of your marketing budget would be performance marketing because you want to drive sales. Now, what is the split? How much is performance marketing? How much is on brand building?
00:54:09
Speaker
This year, I mean, probably post the shoot, we have got into the thought process of getting into brand building. Because in 100 crores, you are sorted up.
00:54:24
Speaker
But if you need to start thinking data, from 100 to 200, 200 to 400, you need to start spending into things which is not ROI driven, which is top of the funnel activity, which is on grand building. This is the year which you started doing. So, too early to comment on numbers in terms of percentage, because this is the first time post Rishabh you started that activity. How much do you think it would become in a year or two? Like what do you anticipate?
00:54:53
Speaker
I mean, ideally, we feel the brand building part should be around 5% to 7% of our revenue for the next two years. OK. And so total 13% you said is marketing spend. So 13% is 5%, 7%. So basically, we expect to spend around 20% in marketing. Next year. OK. So 13% for performance plus 7% for... And of course, I mean, the best part is because
00:55:22
Speaker
our other costs are there. So if the revenue increases by double hypothetically, our marketing cost increases, but not necessarily our other cost increases in the same ratio, we gain benefits. Okay. So let's say our warehousing was 8% of our revenue. If the scale increases, this cost will become let's just 6 to 5% of our revenue. Our employee cost will not raise the state of our revenue.
00:55:43
Speaker
you, it will not become 8%, it will again become 6%, you know, so the economies of scale at this level helps you to savour your other cost and then you start spending on your brand build. Okay, okay, fascinating.
00:56:00
Speaker
What was the reason to start Stony Brook, the budget or the mass brand? Because you realized the mass premium you realized, then why move down?
00:56:15
Speaker
Like in the earlier part of the interview, I said, there is a market for everybody. There is an entry-level customer who is very, very value-conscious. There is a product, there is a person who wants to give a little bit of premium to a brand.
00:56:32
Speaker
And then there is a person who wants to give a premium for the brand. And then there is an ultra luxury segment. And that's how it is segmented. Let's look at VIP as an example. The biggest stalwart in the industry. The entry-level brand is Aristo Alpha. Alpha is a brand, which is Iggammas. You will not find it in the online space. You will majorly find it in the offline tier 2, tier 3 markets. The second brand counts as Aristo brand.
00:57:01
Speaker
Third brand comes as Skybacks. Fourth brand comes as VIP. That's how they are also structured. So the reason for having different brands at different levels is because you're trying to cater to a different customer segment and with an assumption that
00:57:19
Speaker
Let's say we want to sell, we are selling a suitcase anywhere between $14.99 to $17.99. Okay. You are trying to get the mindshare of a customer at that particular price point. When that customer evolves over a period of time, they want to get into the cycle of, you know, being a little bit over the premium.
00:57:44
Speaker
We want to have a mass premium brand. We want to have a premium brand. In fact, we are launching a kids brand by next month.
00:57:57
Speaker
That's the strategy. All the customer segments for Target come with customer offerings. Don't confuse a customer because if you sell a $14.99 suitcase and a $3.99 suitcase, your customer is not understanding that language. Brand has to charge a premium. So very clear-cut strategy. Stony Bro is for the entry-level trade. That is where volumes happen. That is where a lot of the entire India
00:58:26
Speaker
To be very, very honest, that's the chunk. Then there is a mass premium, and that's how we live as a brand, as a group. I'm just wondering, is it too early to... I mean, at 100 karors, you've just scratched the surface for national miles. Why start diversifying so early?
00:58:48
Speaker
No, it is not diversification because the point is diversification in a different category and the end of the day factories are same. Capabilities are same. Like I said in the earlier part, you will get what you pay for. You will get a product for
00:59:03
Speaker
100 bucks also in terms of buying, you'll get a product for 150 bucks also, you'll get at 200 bucks also. But what is important with National Miles, you have set up a base. All those nuances are taken care of.
00:59:21
Speaker
Right now, it is not a lot of diversification to be very honest. This is the product, this is the price point in which I want to target and I want to get this quantity product at this particular price point. We are very very big on Flipkart as a customer. Flipkart happens to be a major seller and other profile they call it Flipkart is
00:59:41
Speaker
is very, very big in PR2, PR3. That's where the audience is. I mean, who are we to decide? It is not a lot of extra effort. So yes, I would have said diversification in terms of a totally new category would have been a challenge, but we are not reinventing the wheel. Like I said,
01:00:06
Speaker
It is as simple as that. So it's like a way to get a quick boost in your revenue. We launched this brand last year, December 2022. This financial year, this brand will be $15 for our brand.
01:00:34
Speaker
This financially, we're targeting 15 crores. So why not? I mean, what's your produce? The number of headcount is still the same. Why not? We're leveraging our existing no house. This audience, you would have never been able to reach out. You didn't have to reinvent too much.
01:00:58
Speaker
Yes, what theory invited like I said, Stony Brook helped us to get into the Indian ecosystem. Now that factory who is operating at this particular product over a period of time, they will start developing a Nationalized product. And then in five years, six years, when we get economies of scale, we might have our own factory. We will justify the volume for the Stony Brook and Nationalized. Like I said, the machine is not a machine but a product.
01:01:28
Speaker
Okay. Got it. Amazing. Is there a seasonal effect on sales? Like for example, I remember some podcasts I was listening with said that...
01:01:41
Speaker
Shadia is one part of it. But historically, it is a seasonal affair. I'll tell you how. In India, there are a lot of suitcases. But as a family, you travel. Which is pretty much our summer holidays. Summer holidays are very, very big. Because that's when the countries on holidays and geography, people go on.
01:02:07
Speaker
That is one part. Now what has happened over the years. So summer history was very, very big. Then was Christmas holidays. But like I said, the occasion is very important. Okay. So, you know, it's a smaller, smaller holidays have become so important that I am not seeing a lot of seasonality as such. Okay. Meetings is of course there. So right now, a lot of students go for higher studies from the country.
01:02:35
Speaker
Okay. Canada, US, Europe, Japan. And they go in the month of July and August. Suddenly we see a spike of a larger suitcase in the month of July and August. Okay. So, I mean, I mean, she's married to both of them. I mean, barring three months of the year, which is let's say February and March, where the entire country can board exams. More or less. And there is a period of September.
01:03:03
Speaker
For all online D2C brands, the month of Diwali, from big billion day and great Indian festival sale, the sales is very, very high. Because you get deals. It is a little bit of seasonal, but not to that extent anymore. Okay. Why didn't you go offline yet? I mean, you know, one, like you chose Rishabh Pandya as a way to build trust.
01:03:29
Speaker
I have spoken to founders of other D2C brands who chose to go offline as a way to build trust. They felt that if a customer sees what they have told me, they could have been two ways to build trust.
01:03:44
Speaker
There are two things. Okay. First and foremost, I mean, online is we are still a 5% market share or even lesser than that. If I have to take a hybrid of all the e-commerce market, which is not that the other undisputed things of online. Right now, strategy is to gain market share with other players. Even if the category is growing or not growing, which is in fact, the entire category is growing. You are trying to get somebody's market shares, which is probably the big players.
01:04:15
Speaker
We want to rather focus in the online space. That is number one. Number two, we are still a bootstrap company. The cost of doing business in online at this point of time is far lesser than the cost of doing business in offline.
01:04:31
Speaker
Even with whatever we have done or whatever numbers, I live in Bombay, if I go to a store and I'm worked in the traditional trade. So it will be as good as an SOR model to be very, very frank. What is SOR?
01:04:57
Speaker
a sale or return. You only get paid when the products get sold. Now, it's not that if I'm going to offline, it's not that I can get on only one store. You have to get into 1,000, 1,000 stores in the country to tell that you are in the offline channel, which means
01:05:16
Speaker
Think about the number of amount of inventory which you will require to spread across. It will be huge, right? And it will be all paid by us at this point of time. So, if you realize there's a cost of doing business in the offline channel, we've realized, let's say, whatever the cost is. Let us develop the brand. Let the offline players, let the customers want a product. Because at the end of the day, the customer is the gate.
01:05:46
Speaker
Customers, other customers are not able to get it. So, our strategy is stick to the online space for another wire. Our strategy is by 2025, we want to get it before offline. But one year, we want to get top of the funnel, brand share, brand awareness. And when then we go into the market, the terms of trade will be much more relatable, I would want to assume.
01:06:10
Speaker
And it will be a much easier situation. People will be willing to bet. When people start wanting your product and they go to your nearest store and it's not there, that's how it happens. So I think we are staring too early. I think the level is probably 200-250. We will pivot to offline space.
01:06:27
Speaker
Got it. Okay. I guess part of your fundraise reason would also be this. The reason why you want to raise... 100%. Yeah. That is one of our major strategy because if you want to get offline, you require a different amount of skill set. Okay. Different amount of muscle power. Okay. You're fighting with giants. Giants who have been in the offline space of 50, 60 years. Okay. How do you overnight compete with them?
01:06:51
Speaker
India is a vast country. I mean, of course, you can open one to flagship stores, but that is not offline store. That is pure play marketing store. Okay. That's not a cost center where you can generate revenue.
01:07:09
Speaker
I mean, we can very well open 3-4 SS stores, but we have to have an offline strategy. We have to have an offline strategy. We have to have an offline strategy. We have to have an offline strategy. We have to have an offline strategy. We have to have an offline strategy. We have to have an offline strategy. We have to have an offline strategy. We have to have an offline strategy. We have to have an offline strategy. We have to have an offline strategy. We have to have an offline strategy. We have to have an offline strategy. We have to have an offline strategy. We have to have an offline strategy. We have to have an offline strategy.
01:07:32
Speaker
had we been 40% of the market share in the online space, we expand the business, offline had to happen. Let's go to higher single digits, the world is big enough, then probably we'll go to hyper markets, then we'll go to malls. Much easier, right, to deal with. So there is a urgent trade. Because much easier to handle. And end of the day, in any relationship, payments are also one of the main reasons, right? When you talk to companies, it is much easier
01:08:02
Speaker
It is easier for us. So, our strategy is daily online, then you go to hyper-market, modern trade and then offline would come in the list of hierarchy. How much do you want to raise?
01:08:14
Speaker
This will be like a series A level? We've just signed up a banker for ourselves. We're just building a model. And we are launching ourselves into the market on the first week of October. But we are looking to raise around 8 to 10 million dollars. Okay. Series A level, basically. And part of this is for going offline. Part of it would also be, I guess, brand building. What else do you need?
01:08:43
Speaker
Building a team, first and foremost, like I said, all rounders, you need a sales head, you need a quality head, you need a finance head, all these things. You need people as you scale up, you need to put systems in place so that you need a second level management. So first and foremost, manpower, second and foremost, you need for brand building, you need money. You need to try to develop the brand. That's how it is.
01:09:09
Speaker
Technology, a lot of things are there and offline will come. You need to start developing your team. You need to have a good 5-6 months of survey to understand what is your strategy of going into offline.
01:09:46
Speaker
What kind of tech investment do you want to do?
01:09:54
Speaker
You want to invest in tech. Tech is everywhere, right? Let's say, we don't do it. But I'm saying, we might not be doing very good efficiency. Let's say, your warehouse management systems, your inventory management systems.
01:10:11
Speaker
The new flavor and the world of the town is AI. A lot of copywriters get redundant. A lot of our content is creating. The tech is there. Data is there. You sell to so many customers, we have data. Are we making the best use of that data? We really don't know. And that's how technology will help us to enable. Technology helps companies to scale.
01:10:40
Speaker
So, whatever technology investments we could afford, okay? But then to scale up, you need technology. But then we realized it was not working out because Amazon and Flipkart have spoiled the customer. Then we started investing into AWS servers. AWS servers are expensive.
01:11:05
Speaker
And which means if you need to provide an experience, you need to invest in new technology at various levels. And small, small cheese, customer service, Leylo, delivery, Leylo, some Java tech has to be important. Is there an off-the-shelf D2C stack for a D2C brand, product Leylo, and then it takes care of all your marketing automation and customer data and all of that? Yeah, you have to build it piece by piece.
01:11:33
Speaker
I mean, there are many companies who tell that we can offer you everything, but it doesn't work. Right now, I mean, we also went to that journey. But right now, as we speak, we have an SEO agency, we have a creative agency, we have a performance marketing agency, we have a meta agency, we have a PR agency, we have a cataloging agency, because then you start realizing, but you have to understand this journey.
Final Thoughts on Success and Vision
01:12:01
Speaker
But as you move ahead, you have to go to a jack-of-all kind of an agency. But then you realize it doesn't work like that. You need to start picking agencies who specialize in that field. You have to have a journey like all-rounder to specialize. And everybody works like that. Then you work with a campaign agency. You work with one specific agency. So that's how it happens. That's how the journey is.
01:12:28
Speaker
Back of all, our recipe is good for early stage companies, not for companies at this level. You need to go to people who specialize. Within performance marketing also, we have three agencies. One agency looks at Amazon, one agency looks at Flipkart, one agency looks at Facebook and Google. So everybody is specializing into different agencies.
01:12:52
Speaker
How much of your budget is spent on the marketplace itself, like Amazon and Flipkart, that you advertise? How much is spent on the marketplace itself?
01:13:03
Speaker
Okay, but it makes much more sense to advertise within Amazon when somebody is searching for a suitcase then. Correct. It's simple. It's because the intent is already there. You know, you'll see our ad perpetually every three or four stories, right? Even in Google and all. But yeah, that's how it is.
01:13:28
Speaker
Okay. Okay. Got it. So you have 5% market share of online right now, which you want to double, maybe triple, whatever. Will it happen through better marketing? Will it happen through better pricing? Will it happen through more product variety? You know, what will drive those? You throw a method with the advent of one more brand, which is Tony broke as it is, you are increasing the pie.
01:13:51
Speaker
There are two different brands talking to two different customer segments. That is number one. Number two, till last year, we were only selling on two marketplaces because of ABCD reasons. Post COVID-19, we were selling only on Amazon and Flipkart and our website. This year, we sell everywhere. From February onwards, Mintra, Tata Clay, Eugeo, GioMart, Nike fashion.
01:14:17
Speaker
So, people are upping the game and our own website for that matter will also increase this year. So, the journey to 100 is what? Organically plus inorganically and you also constantly innovate in terms of getting new products. We want to believe ourselves to be a fashion company. A fashion company.
01:14:38
Speaker
You cannot have the same product selling for like 3-4 years. Like right now in this month, we have like 8 new launches happening just before Diwali, which means we are widening this automate. So that's how it is. It is a mix of organic plus inorganic. And of course, brand building will be a part of it. I mean, until and unless there is a brand creation in the minds of a customer, you don't unlock that potential for a brand, you know, to be very honest.
01:15:06
Speaker
Are you directly competing with like a mokobana? No, not at all. Just that we are in the D2C space. I mean, price points are different. No, not at all. No, not at all. Not at all. They are a premium space. They are more premium than at par with Carlton, if I have to say. They operate in a very, very niche, small audience of the country. And that is their strategy. We don't operate in that space. Okay. Got it.
01:15:33
Speaker
What has been your personal learnings over these few last, you know, almost a decade that you spent as a founder? What are the things which you thought, which got changed as you went down that journey? What have been your top three learnings in this 10-year journey?
01:15:48
Speaker
Wow. My talk three learnings is very, very simple. There is no substitute for hard work, I must say. Okay. Don't go after valuations. Okay. And you've seen companies going up and up. I mean, a valuation should not be the crutch of your existence. Okay. It should be the liver of your existence. It cannot be a crutch.
01:16:20
Speaker
Don't look at short term goals properly. Let's have a bigger horizon. I'm not saying it is wrong or bad. It is my personal beliefs. I'm not saying having short term goals, but as a way, our vision should be a little longer term.
01:16:33
Speaker
You need to believe that you can create a model. Just because everybody is raising money, you don't have to have a firm to raise money. And it was very lucrative for us also. When we started, it's not that fans have not approached us. But we were very, very clear.
01:16:58
Speaker
You need money at a certain level. Right now, our objective is very, very clear that we need money for brand building. So these are one of my biggest learnings. And I feel as you grow and you realize these things. No substitute for hardware. Don't chase behind valuations. Don't chase your results. Results are always good. They are milestones. But don't chase.
01:17:36
Speaker
You know, that's how it is. So I think these are one of my biggest learning handle.
01:17:42
Speaker
I mean, work hard, get your hands dirty. I mean, the more you get into the nitty-gritty of things, as founders, you will realize, right now, I would pretty much know how to tell you my invoice, because we have done that.
01:18:04
Speaker
So we pretty much know when we try to scale up, when we develop a team. We had a wonderful three of us. We're very, very fortunate to have a good team because all of us get their hands dirty. Then you start to scale up. Get to the grassroot level because that is where the joy is and you'll be able to create a sustainable long-term solution for all your stakeholders at various levels.
01:18:33
Speaker
And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to the show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to hear them. Do you have questions for any of the guests that you heard about in the show? I'd love to get your questions and pass them on to the guests. Write to me at ad at the podium dot in. That's ad at T H E P O D I U M dot in.