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The "Make In India" Bet That Paid Off | Neha Kant & Pankaj Vermani (Clovia)
381 Plays2 years ago
“The customer's head has to be bursting for my product."
This powerful insight from Pankaj Vermani captures the core philosophy that drove Clovia's success. Instead of building a "vitamin" (a good-to-have product), the founders focused on creating an "aspirin"—a must-have solution for the acute "headaches" of poor fit, lack of choice, and a broken shopping experience that plagued the Indian lingerie market.
Neha Kant and Pankaj Vermani are the co-founders of Clovia, the revolutionary innerwear brand acquired by Reliance Retail for ₹950 crore (approx. USD 125 million). Pankaj, an IIT-Delhi graduate and 3x founder , and Neha, a seasoned sales and marketing leader from the India Today Group , built a tech-first brand that serves over 5 million women and sells an item every two seconds.
Key Insights from the Conversation:
- Solving the Product Problem First: The core of Clovia's strategy was to fix the fundamental product gap in the market before anything else, resisting distractions to stay focused on this mission.
- Data-Driven, Agile Supply Chain: Clovia built a proprietary tech stack and AI engine called "Monk" to manage a complex inventory of over 2,000 styles. This allows them to test new designs with small batches (as low as 250-500 pieces) and scale winners rapidly, keeping over 80% of their inventory less than 45 days old.
- A Contrarian "Make in India" Bet: Instead of importing, they built an ecosystem of local, captive manufacturers. This initially difficult path gave them shorter lead times and the agility needed to cater to India's diverse, hyperlocal demands.
- The Power of Retention: With a belief that "retention is business, everything else is marketing," Clovia focused on building deep customer trust through a feedback-led design process and tools like their Fit Test, resulting in an impressive 55% repeat purchase rate.
Chapters:
- 00:01:32 - Pankaj's Early Exposure to Lingerie Retail & Key Lessons
- 00:04:52 - Pankaj's Ed-Tech Startup & The "Aspirin vs. Vitamin" Thesis
- 00:06:56 - Neha's "Aha!" Moment: The Problem with Indian Lingerie
- 00:15:50 - The Contrarian Bet: Building an Agile "Make in India" Supply Chain
- 00:23:51 - Clovia's Tech Backbone: The AI-Powered Planning Engine
- 00:34:23 - Building the Brand: Customer Acquisition & The Philosophy of "Joy"
- 00:50:06 - The Challenges of Scaling & Balancing Ops with Growth
- 00:55:08 - The Omnichannel Play: Why Clovia Went Offline
- 01:03:30 - Using Data Offline: The "Trial to Sales" Ratio
- 01:11:23 - The Future Roadmap: New Categories, Geographies & Brand Building
#Clovia #NehaKant #PankajVermani #D2C #StartupIndia #FounderThesis #MakeInIndia #FashionTech #RetailTech #Entrepreneurship #Lingerie #IndianStartups #Reliance #BusinessStrategy #SupplyChain #Ecommerce #DataAnalytics #AIinRetail #BrandBuilding #CustomerExperience #Omnichannel
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Transcript
The Birth of Clovia
00:00:00
Speaker
Hi everyone, my name is Pankaj. Hi, I'm Neha and we are founders of Clovia.
00:00:17
Speaker
Let's talk about bras. Yes, you heard that right. This is an episode about innerwear. And for the modern Indian woman who goes out and works and is equal to men in every way, innerwear is no longer under the bag. It's an integral part of making her feel comfortable in her skin and compete with the best.
00:00:36
Speaker
Pakaj and Neha started Clovia more than a decade back. In an era where none of the enabling ecosystem around startups existed, they did not have that level of access to capital, plug-and-play logistics solutions, or so many other things that founders today take for granted. And this episode is really a masterclass on how to build a business using first principles.
00:00:59
Speaker
Pankaj and Neha have built an amazingly successful business in a very, very capital efficient manner, and the reward was massive. Reliance Retail recently acquired Clovia for about a thousand crore rupees. And this episode really is a masterclass on how to build a brand and build a business in an area which might be considered taboo. You're listening to the Founder Thesis Podcast, and I'm your host, Akshay Dutt.
00:01:32
Speaker
So my father used to be a lingerie seller. My dad would ensure that at least for two hours every day, I have to be at the store and just to get a fee. But I think those are the fundamental values that he built very strongly. I think all the way from managing cash flows to managing customers to servicing to how to make the sale. I mean, I think those fundamentals continue to help. Then I used to be fairly okay in studies and my teachers pushed him and you know, the smaller towns, everybody knew each other. So he just pushed him that he wanted to let him study a little bit.
00:01:57
Speaker
more, went to IT Delhi, did a very small stint in our software services industry, a couple of years of job. Then after the first year and a half, we were very certain that, and who is we here? So there were three other friends, two from IT Delhi and one from IT Bombay. And so, and the three of us used to work together. And the fourth guy basically was related to one of the other guys. So the idea spawned from one person and then we said, okay, let's start thinking around it. So we made a travel search comparison engine, which was a peer to peer platform, very hardcore techy tool.
00:02:24
Speaker
like a like an exigo travel search. So if you remember that time Kaza was there, Napster was there. So there was a lot of those peer to peer sharing that was happening and bandwidth was at a premium. So our thesis was that if somebody is searching from let's say SFO to LAX, then the search result will be valid for the next five seconds or four seconds. So if person A has searched, then can person B and C also use the same search? That was the thesis of and we wanted to get a peer to peer network.
00:02:50
Speaker
where you could do the same for books, you could do the same for multiple things. Kayak was doing very well, Sidestep was doing very well in the US, and we said that kind of similar thing happened here, but with the much faster and much more efficient, where instead of using bots, humans literally contribute to each other's searches. So we're pretty, pretty cool thought versus very cool theses. While we were looking out for funding for the business, we met with this company, which is the fourth largest art network in the world, and we're trying to pitch. Did you know funding came out in the first time?
00:03:26
Speaker
So we were basically trying to figure out a way to monetize the tool. So we reached out to these guys and we said that our pitch was very simple. You said that Google has gone from search to advertisements. You guys are doing advertisements. Why don't you kind of see if you can monetize search? And that's what you kind of pitch them. And who is them here? Who did you pitch to?
00:03:43
Speaker
This is a company called Exponential. They were the fourth largest ad network in the world that point of time. And that time they were called Tribal Fusion. And so while we were trying to figure out a way to bring them on board to kind of give us a way to monetize our tool, they made us an offer we could not refuse. So they acquired us. We set up their indie office then.
00:04:01
Speaker
Acquihire, basically. Acquihire, yes. We thought they were acquiring the product. We were pretty excited about it, but it was Acquihiring in its true essence. And so we set up the India office. It was a pretty phenomenal time. I think some of the smartest folks in the industry, all technologists were able to bring under one roof. But then also in 2004, five timeframes, India was still all about services. So everybody wanted us to be the R&D center, the backend, and we still wanted to be the product people who would make a great product out of India for India.
From Edtech to Lingerie: The Clovia Shift
00:04:30
Speaker
What was fascinating us was content. We thought that there were small destinations which would be phenomenally well in the US. And we thought that a lot of content consumption will happen in India also. So that's what was driving us. But starting point was travel. We thought that travel could be something that would be a lot of consumption in the future, which eventually happened.
00:04:46
Speaker
So we did that for two years. Then once the golden handcuffs were over, we moved out and the same group of people, we started a company. We started an edtech company way back in 2006, way ahead of its time. And our goal and our whole thesis was very simple. We thought that every educational institution will eventually want to go online. So, for example, for Akash, we were the first guys who brought them online. We were the first online partners. Brilliant tutorials. We used to run 14% of the national sales in the correspondence because
00:05:13
Speaker
So JEE and the prep courses is what we took up and we started doing two things. One is that let's build a destination where a lot of people will come to consume content, which was our first thesis. And then to monetize it, we said that can we start providing services to the institutions which these students would eventually want to work with so that we could provide some sort of an online testing assessment platforms and which would be a plug and play kind of model. So by the time it was 2011. Like what say a TripAdvisor would be doing where people come to TripAdvisor for content.
00:05:44
Speaker
So TripAdvisor blended with the booking.com effectively, right? So if you're coming to TripAdvisor, then what else can you do to kind of provide that service? And this bringing online, was it like a SaaS? You were charging a subscription from Akash? Yes, it was an absolute SaaS model where you would charge a dollar per month for every kid that was coming online.
00:06:05
Speaker
And how much revenue was it making as a business? It was, I think we were at a run rate of like 2 million was what we were kind of going at. And which was, again, this is 2010. Which is like about 14-15 CR. And Briti still continues on a standalone like...
00:06:23
Speaker
No, we sold it off. We sold it off to a tablet maker who was doing a brilliant business overseas. And so this became like a solution that they were able to embed into their third party products. So at least the product journey was pretty cool. It continued. And then I ran an incubator for a Swiss fund for a couple of years. And by that time they had already decided that, you know, Clover is the next thing that she has to do. And when you started discussing this together, of course, she'll tell that story better because of that idea.
00:06:50
Speaker
Okay. So Neha, what was it that you wanted to execute and see what it'll become? So, see, like I said, I grew up in a very small town. So we had very limited retail account is there. So I, it's very weird, but up till the time, almost to the time that I got married, I never bought my own underwear. My mother did my diet shopping. So I never went to the store. The storekeeper never saw me. My mother and he figured out some size for me. And that's how I grew up.
00:07:18
Speaker
So I grew up a bit being a bit uncomfortable. I always thought that maybe I'm just too tall or too broad. And something is not right. I was never comfortable. And as a person who also played sports quite actively at school, the problem was sort of compounded for me. In fact, that's why I see a lot of my classmates, girls.
00:07:36
Speaker
drop out of active school. It's a genuine concern for gringles. So I always knew that something is not right and then Delhi went to corporate. So by the time 2010 came, I was making good money. I could spend, I could shop for malls and I was living in Delhi, so high streets of Delhi.
00:07:54
Speaker
The situation had not really changed too much. When I would walk into a store, one, there would be no information about the product. And second, there would be no product at all. So there would be very basic sizes and fits being stored there. Even in malls? Yeah, malls also.
00:08:10
Speaker
I think there were a couple of stores and then even at my I was earning I think fairly I was ahead of the curve age and salary wise but despite that the prices were maybe my middle class upbringing the prices were a bit prohibitive for me so what I could afford I felt that it just is not keeping pace with how my outerwear is evolved because now I'm not wearing stiff cotton kurtas taking dupattas to work I'm wearing a lot of Indo western and a lot of finer fabrics etc so I need to be better but
00:08:38
Speaker
You know that level of comprehension had not hit me. I just felt that there was a problem with underwear and I'm not getting the right underwear but the lack of confidence and being able to carry myself better had not yet hit me that what is the problem. In 2010 I travelled to Germany for some work and there I just walked into a very average looking laundry store and got fitted.
00:09:00
Speaker
Like the salesperson approached me and said, let me fit you first. And then she gave me a bra, which fit me like a, which was perfect. And it just changed. And that's when, that is when, you know, it hit me that this is what I had been missing. And what is the problem? I'm back home. If an average store here in Europe can offer me this, then why can't we make, I'm not a very expensive product.
00:09:20
Speaker
And why can't we make similar stuff back at home? And so we came back and I started to discuss this with Pankaj in 2007, 2011, went by like that. Again, middle class, it's a bit, Pankaj was already involved with Riti, so one person had to keep working. So I think Pankaj's exit from Riti was, was well timed. That was this idea I'd struck at the same time. So. Did you make some money in that exit, Pankaj? Like some, something which could serve as seed capital.
00:09:47
Speaker
Yeah, so overall life has been kind, so that was all okay. Yeah, but we blew a big chunk of our seed capital in one accident that we had.
00:09:59
Speaker
So actually that's what I think maybe possibly happened that both of us got into an accident, we were bedridden for a month. So while staring at the ceiling, both of us in the same room, we gave shape to this idea and finally went there. So it's okay, I mean you can always imagine an engineer just thinking about laundry for one month, right?
00:10:22
Speaker
Very acceptable. So while we knew that we had to do this, but I think it gave us a lot of time to do nothing but just keep creating Excels in our eyes.
00:10:34
Speaker
What did you start doing then? I mean, that ecosystem was not there where you have a playbook of how to build a business.
Innovating Lingerie: Product and Retail Challenges
00:10:41
Speaker
So you had an idea, okay, buying an underwear for a woman in India is a very poor customer experience and it can be made a lot better based on what you saw in Europe. And so then how did you actually go about
00:10:53
Speaker
So first I think there were two problems that we zeroed on that I felt was one was of course the lack of experience or lack of advice on the counter but the second big problem that I felt was the lack of product itself in any recent store also like a high street store there'll be one there are not many brands even today
00:11:12
Speaker
in India, but let's say there were a few brands and that store few brand or semi-brand so to speak and some Chinese imports, but they would have very limited range and very limited like couple of sizes. Even cup size at that time in 2010 was still not something which all brands did. It was still sold by the bank size. So just for my clarification as someone who's never bought lingerie, bank size is what is like 28, 29, 30. Those numbers are
00:11:37
Speaker
So there's a yeah, yeah, and then there's a cup size which is ABCD. So that's how and the girl didn't understand the shopkeeper didn't offer and many brands also didn't offer. They just went by.
00:11:47
Speaker
standard size fit all kind of an approach. Then the second part of the fit is that every burst shape needs a different fit. There are at least five or six burst shapes and we've been able to arrive at about 80 body shapes but those burst shapes or body shapes need to be addressed so that wasn't there. At least on the top three that would cover about 60-65% even they were not being covered.
00:12:09
Speaker
So this is now I'm saying with some perspective but at that time I felt that there's a serial lack of product and also as a person in 20s I felt that what's wrong with I'm in my 20s why should I wear this like this is what my mother wears and I wear very different clothing and she wears very different clothing this is not a salwar or like that suit and saree kind of a thing and also like a bit of color some bit of excitement some
00:12:34
Speaker
something good to look at. So that's that's what I felt that why people are not making the right products or at least something else in India. So we started the first thing we did was to dive into this more and still why people are not doing it. We went into we did a lot of research ourselves plus we also engaged on some friends from advertising to do it more to put some structures at research. Then we went to Meerad, Haridwar,
00:12:59
Speaker
our hometowns, as well as some other cities, like I think that in Saranpur, Muradabad. Like you went to retail outlets to ask them, why don't you keep more varieties? Retail outlets to girls living in those cities and asking them, so walking through their entire experience. And what we understood that now, by now there is a bit of awareness. There's a lot of aspiration also. There is an understanding that, okay, there is a Victoria's Secret, there's Marksman Spencer as well.
00:13:26
Speaker
But when you walk into the store, same experience as me, there should be something, but it's not there. So I'm picking up whatever best I can make out of. And that was still the evolved set of living in here, but there was still a larger set of being unaware and also being unaware of the fact that because they don't wear the right bra, that's why they don't feel that confident and there's a problem.
00:13:45
Speaker
And then the next step was to figure out that vibe. One quick question before next step. What is the connection between bra and confidence? You said that women don't feel confident because they don't get the right bra. And I'm just, as an outsider, I'm asking. I was just thinking of an analogy to give.
00:14:02
Speaker
So let me, yeah, so think of it and I think this is literally toning down the problem 100 fold, but you're a guy, you shave and you get this one thing left here through the day and you'll keep. So imagine this 100 times more complex. So it's something as simple as that your strap shows, your strap keeps kind of going down all the time while you're walking. So I think even the posture by the end of the day you start feeling a little bit of discomfort.
00:14:24
Speaker
largely it's a body part or organs that need to be one-handed well so if you are not well fitted then you will for example girls will not run behind a bus to catch a bus if they're missing the bus they would rather say bye-bye then do so once your activity level through and that will also impact like through the day you will feel uncomfortable secondly your clothes will not fit you well
00:14:56
Speaker
Like you'll choose loser clothes. Loser clothes are not necessarily, but your clothing will not fit you. And that became the thesis of Clovey also eventually. And secondly, largely and most importantly, it is in our subconscious. It makes us conscious. Women, by and large, get conscious. It's a little different from West, but you get conscious of the fact that you would rather have it well placed, well covered, nothing to indicate that there are breasts there.
00:15:12
Speaker
you will make different choices of clothes something that would fit you well a different show show entire
00:15:24
Speaker
Okay nothing to indicate you would rather on any given work day you would rather walk in thinking like you are any other person in that room so that's how you should be you should at a point become unaware of the fact that you're built differently. So yeah so you were talking about the next step so you decided you don't want to be a retail business you want to be a product business like like you want to actually build or manufacture undergarments.
00:15:50
Speaker
So, the problem basically what we are saying is problem was not discovery, problem was not privacy, the problem was the product itself.
00:15:56
Speaker
So again, so when we started to speak to retail counters, we realized that here on their stocking, they're working in a four by four or a very small, usually these are all over the counter experiences. There's no trial room. They can only stock as much. So therefore they go by, you know, with two fits, two sizes, and that's what they push. And when they push, that's the feedback that goes back to the distributor, to the carrying and forwarding agent, to the final manufacturer.
00:16:21
Speaker
or the brand. Most brands in India were also here. Yeah, most brands in India at that time also ran their own manufacturing. Who were the brands in India at that time? Brands in India typically are, you know, the jockey, lovable,
00:16:37
Speaker
These were the two, three top national brands but then there were a lot of these semi, I call them regional brands or 100 kilometer brands which operated in their own
Tech-Driven Operations and Production Strategy
00:16:46
Speaker
region. So what happens really for a brand perspective, if you see India is not one market, it's like multiple markets put together and there are different sizes. So there are so many factors that go into deciding how much to make of what. So one is the sizing ratios and there are for any typical bra we do a minimum of 9 going up to 28 sizes.
00:17:04
Speaker
So one is size, then when you go to customer size, then the geography version lives in, which defines our preferences on different geographies will mean different size ratios will also mean different fabric. Like hot weather, cold weather. Size ratios also body structures, then hot weather, cold weather, then also between metro, non-metro, slight difference of the kind of your AC environment, non-AC environment, clothing that you wear, then the life stages.
00:17:32
Speaker
which is true for all of India, but different life stages. You are a teenager, you're a young girl, maternity, post-maternity, so on. So many factors. So therefore as a brand, you can only do as much and you decide, okay, two by two, this is what I'm going to do. Because I am also managing a factory whose output and efficiency is also my concern.
00:17:49
Speaker
Yeah, you don't want to produce something which will not sell. Yeah, because in a business like ours, inventory and marketing are the two big levers and inventory, unsold inventory can one season can really throw you out of the gear. So I think more important to understand that this is not specific to linger if typical apparel business also has the same problem. And we've seen global brands kind of go out of business just because two seasons were failures.
00:18:10
Speaker
And those are SML, Excel kind of businesses. Here you magnify the problem multiple because of 40 sizes, right? So it's 28, 32, and then there is ABCDF. So you multiply minimum sizes of 40. So that also increases the complexity of the inventory that you want. So that's predominantly the reason why you would want to ensure that if a manufacturer is making that we will end up saying, boss, let's just, because I'm giving to distributor, he's going to retailer, retailer is punting his money. So retailer is a boss, I can't take 40 sizes. Give me like these four sizes, these two styles.
00:18:38
Speaker
these 8 SKUs, I'll push whatever. So, a majority of places where girls would walk into a store and say, even if she knows that my size is 32B, she'll end up being convinced by the retailer saying, no, no, 32C will fit you. Why? Because not because that was his size, but because that's what he had available. So, people end up wearing the wrong size. How do you fight the guy on the other side saying, boss, you're saying he's wrong?
00:19:01
Speaker
You end up just accepting and coming back. So that was, I think that was one of the key reasons that we felt that we should solve this problem. And there's this little funny thing that we have in our office that one thing British has taught us was divide and conquer. We don't use it very well everywhere. Why don't we break down the problem into smaller problems and all of those problems can disappear, of course. So different rendition of the statement. But so that was the whole thesis. And yeah, I think we realized that internet probably could be that beautiful medium where this distribution could be disrupted.
00:19:30
Speaker
because the whole distributor, retailer model would always keep you constrained in terms of the variety that you wanted to offer to the end consumer. So internet was developing as the biggest democracy in the world and the one key fundamental of democracy is equal opportunity to all, right?
00:19:45
Speaker
But like before we come to distribution, like so you did step one was market research and step two you figured out why more inventory is not available. Then what was step three? Like maybe Neha you could finish that thread which you were talking about.
00:20:01
Speaker
Then we worked for three weeks, absolutely on a morning, noon night to create, to write down the blueprint of our business. And we took care of the miners detail that at that time was smallest of the detail that we could think of, but we created a very descriptive blueprint of how many products that we must do research. Extensive secondary research, we did a lot of research. How many body types will be featured?
00:20:26
Speaker
then marketing, the entire P&L, cash flow, and then the whole timeline, Gantt chart on when we launch what. I think it also helped us as entrepreneurs. I think one must also remember what can we do? What do we know? So far we've evolved. I've worked for 10 years, Pankaj, for almost 12, 13 years by that time. What is it that we know? And so I knew digital marketing very well. I knew sales very well. I understood customers. I knew how to engage with
00:20:53
Speaker
my direct selling experience, engaged with customers very well. Therefore, combined with that and with Pankaj's experience in technology and as one of many things that he knew at that time, we felt that internet is the way to go for us to launch our product first. You know, D2C today is a very common term, but at that time there was no, nobody said the D2C, there was nothing, this concept didn't exist that you could, you will have a brand that you can take online. There were mostly marketplaces, like Amazon kind of learnings people had,
00:21:23
Speaker
Even internationally, people would ask, can you ask a question? It's a very common question when you start to go and pitch your business. So we couldn't find many, like one odd thing in China, something just coming up in the US, but it wasn't really taken off. But like, how did you figure out building a product? Like you decided you want to build a product, how did that happen? Yeah, so once that happened, so again, between our capabilities, one big factor was missing, which was how to build a product.
00:21:52
Speaker
So we started to speak to our friends and then we were very fortunate. We were already, there's a third co-founder with us. So one who we were connected from before through common friends. So we reached out to him and he's a, he's a designer by education and by profession.
00:22:10
Speaker
and he had been working in lingerie brands for but at that time it had happened been 16 years I think for him and for domestic brands as well as sourcing getting manufactured or designing for international brands so you had seen the entire spectrum from making bras for hinterland of india as well for the mainstream or mass commodity product to making high priced super premium lines for
00:22:37
Speaker
Hollywood celebrities like Sara Jessica Parker. So he had seen my entire spectrum source from 40 countries and he said exactly this is what I had been thinking as a designer I want to do so much but I get limited by my sales and my entire supply chain distribution chain telling me
00:22:55
Speaker
not to experiment too much. When we discussed this in detail, then he also agreed that internet would be a great way to picture products to customers and see what works for does not and make it a more feedback-based, iterative kind of a product. This fit is very important and how do you test fit by showing it to some
00:23:13
Speaker
to eat having girls wear it. You can only do as much on your pattern cutting table and on your cat. So he felt that this is perfect that I made a smaller quantity that tested on some girls and then bases that iterate further and then we go into mass production. So that's the third, that's a big piece that fit in. Okay, so did you like try to raise funds first or did you just start building product iterating like what next?
00:23:36
Speaker
See we knew because it's an inventory based product so model so it's not seed fund wouldn't have been enough to create the range that we wanted.
00:23:45
Speaker
At that time, internet space had already, it was quite hot. It wasn't that easy to market. So there were two big requirements. One was building the tech stack, which we had already started to do. And there was a decent amount of personal money being deployed. And then there was the additional bit, which was around kind of helping set the whole factory bit up, which probably Nia will talk about later. Did you want to set up a factory or work with third party?
00:24:11
Speaker
No, no. So we worked with third parties, but we worked in a blended model. That's why I'm talking it for now. So, but that also required certain amount of investment. So, so we went into a hybrid where after kind of deploying some of our capital, then we took a initial seed funding at a very early stage. And thanks to our experiences, we were able to raise it pretty quickly. Like institutional or friends and family? So this was more institutional, like, you know, people don't do three different continents. So it kind of helped us.
00:24:36
Speaker
Like based on your networks, you were able to. Exactly. Exactly. So that prior ecosystem only affected. Okay. So once the money came in, then what, how did you execute? Yeah. Then the clock started ticking. Then the clock started ticking. How much money came in, like in that scene? As for those times, there was a lot of money. It was almost like approximately a couple of million dollars. So it is a lot of money.
00:24:58
Speaker
As per that time. And so, but then from that day till today, we've been super judicious. So we probably raised really, really less capital when it comes to building a DTC brand and we kind of use that money for a very long time. So, so, so basically the way it happened for us was there was a three prong requirement. One was a tech stack. Other was the product. Maybe now you could talk about the, how we build out the product. And third was kind of building the whole supply chain around
Data and Feedback: Clovia's Customer-Centric Approach
00:25:22
Speaker
it. So, so there are two parts of the supply chain. One is like distribution shipping logistics, like
00:25:28
Speaker
Right. So the front end and the back end, it's literally like fighting over a two fronts. Everyone does the same thing and beat a marketplace. So, so, so I think forward and backward integration, what we did well, and we did smartly at the very beginning was that we use technology as the denominator for everything. Yeah. And that, I think that kind of helped us scale much faster, optimize almost everything that we did. So maybe now you could talk about how we went about getting the whole product piece into the place.
00:25:54
Speaker
You know, that time I travelled quite a bit. I went to Sri Lanka, Bangladesh, China, speaking to different factories. But, you know, everybody had one demand. Great idea. We are with you. But give us an order of at least 5000 pieces per whatever you want to make. So I said, oh, same problem. Then I can only make two fits, three, four sizes, etc. So defeats the purpose. So we kept going in this loop. And then someone, when he joined and we decided, okay, let's, you know, and this was also
00:26:22
Speaker
a good time when we said okay let's make in India let's do this in India and let's not I think you can make quality products in India let's just see what will it take us to do this in India and then someone had this great idea he started to speak to production in charges or patent masters people basically who are in these factories working in these Sri Lankan Chinese or Sri Lankan Bangladeshi or some of Indian factories
00:26:45
Speaker
and who understand product and who are in charge of the quality and efficiency of the floor. And Apsuman said okay join us in this madness of entrepreneurship. You set up your factory will help you with buying of the machinery to start with. Small setups, not massive, but small setups. We will book your order book for a year.
00:27:04
Speaker
So you don't have to worry about sales ever your workforce going wild. We will manage all of that and that gives them a big boost. They came up, they brought in labor, they brought in their expertise. We help them set up machinery.
00:27:16
Speaker
And from then on the lines had to work as per us. There was a bit of inefficiency, I understand. But then we could make any design, any style we wanted to test. We could test with as low as 250 pieces also. Although the number was a bit high, but we could start with making really small numbers. It may cost us a bit more.
00:27:35
Speaker
But initially we picked up on those costs and then slowly then this model really took off. And then we grew from that very small 250 number to higher 800,000, 2000 number quite fast. And then the machinery also got paid back through a year of ordering. The cost got back to us. Like you paid them upfront so that they could buy a machinery and that got adjusted when you were buying the product from them at that time.
00:28:01
Speaker
Yeah, when we kept buying the product, we did some support in the initial raw material, buying of fabric, faces, material, etc. That part we put up. And there was some decent amount of heavy lifting in terms of helping them train how to run it also, because a lot of people would know how to manage shop floors, but they would not know how to recruit the right way, how to do the intonation of people working on it. Manage their own, yeah. Compliances.
00:28:27
Speaker
One good thing happened that we had this ecosystem of people who wanted to build good product were willing to invest time, energy and money also in making sure that the product comes out superbly well and the one that customer likes whatever it takes. So for a year or in fact actually one and a half year we just did that
00:28:47
Speaker
getting a supply chain to work smoothly where we could do a large number of styles and sizes with KU's but optimally. On the other side, Pankaj was building a system of one full tech stack to run that retail shop online but also a very strong feedback gathering system.
00:29:06
Speaker
So a lot of automated triggers that helped us collect the feedback whenever the product would get launched. And then the understanding of that feedback by our very limited handful of people in design and merchandising and sales, that what does this feedback mean? Whether we need to correct the last day, we need to correct the pad, we need to correct the color, we need to correct the pricing, the visual. That time we worked a lot on how, what kind of model we should shoot the product on. Even that made an impact to the say speed of sales. So a lot of work.
00:29:36
Speaker
What did you learn about the visuals? Like what kind of... Like blonde doesn't work. Warm skin tones work. With first, it's genuine with blonde. Like, this is what you see on unreal, it's do. No, but most people, warmer skin tones, fuller body types. I'm not saying like average body types. Like more Indian looking, basically. More Indian looking, but not so every day. You know, you need to, as a brand, you need to keep that slightly. Girls like to
00:30:04
Speaker
Aspire. It's not like oh she looks like me I will buy that. That's the natural answer if I was to ask any customer but it's not worth how it happens. You look at someone you want to be like her even though you know it's a very different body structure but this is a little bit of aspiration but keep it as close to Indian bodies and Indian skin types.
00:30:25
Speaker
So that's what you were at this stage, essentially selling directly on your own website. And you were building multiple SKUs with small lots and not just on our website, but also on other at that time, we had started listing on marketplaces we had gotten into. So that was the sales part that I was doing. I getting into arrangements with Mintra like fashion and you and
00:30:51
Speaker
Yeah, different people. How did the feedback mechanism work? Like, was it like a review rate and review and give a five star rating or whatever like that? Or was it? Yeah, ratings a lot of triggers. See today, what comes naturally, like you're saying ratings and reviews is not so natural.
00:31:08
Speaker
at that time. So even to customers, so we started to track the speed of the product movement from the time it went on, went live and also in conjunction with whatever other variables. So basically, there are three, four things that kind of drive it. So the moment the product is shipped from the warehouse, right, that's where the clock starts ticking. The moment it's delivered to your house, what we'll do is
00:31:30
Speaker
7 days after delivery we'll ask you how was your feedback with the product, we'll ask you after 30 days, we'll ask you after 90 days because there is a long activity also which is involved and for India it's very important how resilient is your product. So all those are captured back and if you were to give feedback then we'll give you let's say 5, 10%, 15% coupon for your next purchase. So you're incentivized to do that.
00:31:52
Speaker
So that gives you feedback score on the product. And then it also gives you a lot of deeper insights because that form will ask you like some detailed questions for briefs, it has different pattern, but it has different questions and all. This is one factor. And then the other factor is we try and capture seasonality. We try and capture geography or different geography, how they respond to certain products. Then there is speed of sale of individual products.
00:32:12
Speaker
Speed of sailors also has its own complexities. So you can't do speed of sail for posterity. It will be something called speed of sail optimal. So all the statistics probably that are all back in college and a lot of math in our bachelor's.
00:32:34
Speaker
But I think statistics played a huge role. The size ratios I think was the biggest one to crack. In what size ratio should you make the bell curve that happens right? I mean because certain sizes will sell more others will sell less but
00:32:46
Speaker
For specific prints, the size ratios will change because certain prints probably will be more relatable to younger kids. Younger kids will have more petite bodies, so they will end up buying products. So probably the smaller sizes will sell more, certain padded sizes will sell more. So we said that you have to decouple this from Excel. We said anything where Excel planning is required is something that we need to automate, and that became our thumb rule. And we built something which is called the manga, and that's the sense side with the sixth sense to predict the future.
00:33:14
Speaker
So Monk is basically now the back end of our entire planning system. In fact, when the brand crossed 200 crores when we hired our first planner, that's one pride we take a lot. For a business which has always been run by planning teams and stuff at back end, it was just a technology which was doing it for the longest time. So 250, 500 products.
00:33:33
Speaker
let the engine tell you whether you should make 5000 or you should just time this product. So the risk that you were taking at any point of time was not more than 500 pieces. And I think that's the power of what you do and let the customer decide. So there was a week when we actually pushed 100 styles and of course now we do 250 in a month. And we just said that and the risk was what 500 into 200. That was our risk all put together 50,000 pieces. And
00:33:55
Speaker
And out of that, we saw, oh, out of these 100, there are like 20 winners. There are five was stellar winners, but this is something we'll bet our thing on. And the other learning that we talked, which Suman worked very hard on was that if you have found a winner, then how do you scale it from 500 to 220, 25, 30,000 pieces in a span of a month? Because then you would need to involve multiple vendors. Yes, it will be an opportunity loss. And we went through a lot of opportunity losses also before we were able to track that. So it was a journey. So that was another journey.
00:34:23
Speaker
How did you do customer acquisition? How did you start? So you built the ability to produce. Tell me about how you built the ability to sell.
00:34:32
Speaker
I think first, first is everyone's, I think is Facebook. We did a lot of digital marketing. We tried a lot of different things. In fact, at that time, a lot of publishers did not allow our advertising to happen. They would take down our ads. So it was difficult to actually display, browse and breathe. So a lot of like well-known publishers, we couldn't run display ads easily. But with Facebook, there are certain guidelines. We could follow it and they were a bit more.
00:34:55
Speaker
It was easier to run ads there. So they were our first supply of customers. And then whoever we were acquiring, we were engaging with them very well. So we built our ability to engage with customers in the beginning. In what way? Like, how were you? So in regular communication, in keeping our communications personalized, in creating customer buckets and addressing them according to their whatever. So a lot of customer data we were gathering. We had something called Fittest.
00:35:22
Speaker
where for the first time I think an Indian girl would have seen that okay there are so many different kind of birth shapes we all thought what we see on the screen is what everyone is and I am the odd one out and but we showed like a birth settle how are they shaped there are a lot of there are differences not all girls are like
00:35:38
Speaker
And so they could pictorially go and visually see the kind of shape they are and the kind of problems they're facing with their current bra or bra size and then we will make that recommendation, size and fit recommendation. So that fit test and now the data that we gathered from their age and their life stage, etc. So we started to make communications which are which are as per their particular need and life stage.
00:36:02
Speaker
So that was our first set of acquisition and also retention. So we created, we called hunting and harvesting. So we made sure that, you know, it's not just hunting and losing customers. So we kept. So today also our repeat purchase is really very good, about 55%, even in the times that we are acquiring new customers aggressively comes from repeat customers.
Building Clovia's Brand and Customer Relationships
00:36:23
Speaker
Within a month, we see 15% of our customers coming back in the same month. And then by the time the quarter closes,
00:36:31
Speaker
30% of strong billion from us. So I think one interesting thing that your team ended up doing very well was the whole marketing, the way it was done. So the entire thesis of brand was built around joy. I think when we were starting the conversation, we were telling what is confidence and things like those that you were discussing about.
00:36:48
Speaker
So we said, can Clovia be that one thing that prepares you for whatever's coming next through the day? And can it deliver joy in that little moment of dressing up in the morning, own those 10, 15, 20 seconds that are just yours, and kind of prepare you for whatever's coming next? You know what? So you would ask me, how does it make a difference to your confidence brand? So exactly, this is how we thought of a brand that a girl should think of Clovia.
00:37:12
Speaker
for exactly 10 or 15 seconds in the morning when she dresses up and after that she should forget about us till the next morning or till the night when she's taking her off. So first to put on and last to come off those are the only 20 second windows we have with her and apart from that we don't want her to think of us at all.
00:37:29
Speaker
And during that time, she should just enjoy her life. So we decided to not talk about comfort, hygiene, quarter, keep it around that. Even though the other talk, if you ask reason to purchase, reason to select the product, functional attributes, this is what a girl would say the fit should be best. But this is too much. This is too basic. And this is what everybody is doing. Let's just do something beyond it. Somebody needs to make underwear cool in India. Somebody needs to say it's okay to speak of underwear, okay to enjoy wearing good underwear and okay to
00:37:57
Speaker
who enjoy the confidence that you get from it. So we built a lot of quirky, witty, intelligent content around our category. We started to speak to girls now.
00:38:07
Speaker
And you know, eventually I learned not from working in advertising, but from by launching and owning a brand or running a brand was that a brand is often an extension of our collective personalities, people who are running it. So it really helped that at that time we had a set of young girls in that late twenties age and we were speaking to the same set of customers. So our brand became our extension and we had always even the name Clovia.
00:38:34
Speaker
We had thought this was particularly, I wanted a short girl's name, an international sounding, but a girl's name.
00:38:42
Speaker
so that we could eventually render our personality. Slowly, slowly. It turns out to be a personality. You can, when you think of Clovia, you can see a girl having a voice, opinion, doing fun things, somebody you would like to gossip with on our social sort of thing, enjoy with. And so that's how we build brand. And I think we were very, we did that well and we built a very nice, intimate, trustful relationship with our users and also very enjoying like a fun friendship.
00:39:09
Speaker
That really helped. I think word of mouth is also huge for us. So when we do research on our customers, 84% of our customers have either been recommended Clovia or have recommended Clovia. That's a very high score. How did you figure out scaling up production? Like if a 500, like an SQL, which did 500 sales and now you want to produce 30,000 of it.
00:39:31
Speaker
So one, it obviously didn't happen overnight. If 500 to 30,000 doesn't happen overnight, or even if the data was predicting, we did not take that step. I think that's the nature of people running the show. But we took structured steps. So 500, we went to 2,000, to 10,000, to 30,000, the product, because there's a little bit of seasonality. And there is also often there could be a fad around that trend or some thing. So you need to factor all of that and be careful before you scale to that level.
00:40:00
Speaker
And secondly, in India, manufacturing is also quite unstructured. The commitments were not kept right from fabric sourcing from material to final output. So we created a whole, so Pankaj actually wanted to speak about product planner and
00:40:16
Speaker
So the way we kind of ended it was that we kind of broke down our product production ecosystem into like a, it was literally a three cross three matrix, right? Where we said that one is the category of products, right? One axis, other axis of the complexity of product. And third was the scale of the product. And everybody was kind of blocked at certain places.
00:40:37
Speaker
and scale of product is where we started to identify and this is literally like a VC right where you say that there are 20 companies with which one are entrepreneurs who can scale and so we identified that there are four people who can really scale and we said boss now we want to double down on you and by that time they didn't even need our money to scale we said that now we are ready to give you the scale and we'll put in the capital investment required for let's say fabric and all and then now can we kind of take this to the next level
00:41:00
Speaker
So, we kind of started building out that infrastructure for scaled ecosystems and that kind of started to help us. So, then the problem was just about once you've identified a product, you have already tagged it in your planning engine as replenishable and non-replinishable. If it is replenishable, then it's just a function of your merchandising team triggering to buy the fabric because you have the guys who can take the scale to the next level.
00:41:24
Speaker
And all this is happening via technology. There's no manual intervention. I think that's the beauty of it all, right? If you have tagged the product and the vendor right at the first time, then the technology to match them is like child's play. It's not complex at all. Of course, it is still moving target. Now the same problem to solve for a hundred thousand is different.
00:41:40
Speaker
I must say that eventually we did figure out the top. So it's like handling so many of SKUs would always deter your supply chain. So you need to find a middle path. And today I'd ask you also 80% plus of our business comes from only 15% of our fits. And we may do many colors of them, but those fits now are so strong. They have such high success rate that even when a girl is shopping online, not seeing the product, not trying the product.
00:42:08
Speaker
Only 11% of them feel the need to change the product and only 4% of them ask for their money back. The remaining can just figure out by changing one side, some whatever change they may take.
00:42:23
Speaker
but only 4% people eventually decide not to buy from us, which is, I think the highest that any retail store would also with their trial room, assistant, et cetera, can achieve. How did you figure out shipping? Like at that time, there was probably not like plug and play, like today's plug and play. There was no plug and play. We had to go and usually have arrangements with all the service providers at that time, but it helped us because
00:42:49
Speaker
like career companies for different career companies. But I had already, I had been doing this for six years plus. So this all of this. So I knew where I came today. I had done that whole scaling of business from not just from sales perspective, also sourcing and merchandise as well as how to set up operations or at least keep scaling on the operations. There were different set of people who are running it.
00:43:10
Speaker
But all of that I had understanding of. But probably the return logistics would have been a new angle here, right? Like in India today, there was probably no returns. Yeah. Initially we had to rely on the customer to send us and it was a big dead end. Then reverse pickup service had been launched by BlueDart at that time. It was expensive when we took that service and then eventually other partners also joined it.
00:43:32
Speaker
But what was different in our case was that if you make a return, the person accepting the return, the person who comes to pick it up, checks what are you returning. So that was a big letter. And the girl didn't want to show a brow or underwear to a Korean person who was walked to my door. So we gave instructions that there will be no checking. You give a closed box.
00:43:53
Speaker
We placed our trust in our customers saying that you will not send us wrong product, you will send us the right product. There will be no check on tags, user, use products etc. Just send us whatever you want to send. So yeah, a little bit of fraud happened. Every now and then we get like really strange objects coming back to us from use socks to cutlery.
00:44:14
Speaker
But that's like a fraction of what, but it really helped our customers. Then they could shop unhindered with no doubt in their mind that their money is safe. Of course, on certain like briefs, we don't allow returns for hygiene perspective. But even so, it's like customer comes first for us. So if there's a problem, we do whatever it needs to keep her happy. How do you bring down returns? Like how do you ensure that the customer is able to place the order for the right size fit, et cetera?
00:44:41
Speaker
So we have a fit test which allows her to take the right fit. There's a size calculator. In fact, we had earlier madder sizes to other brands being sold in India. In fact, a lot of them actually sold one. They had their own manufacturing or they were working with different
00:44:57
Speaker
contract manufacturers so they did not have size parity is what we realized so we fixed and we had that size parity because we went from a different process they went from a different process so that eventually we dropped mapping to other brands but we
00:45:13
Speaker
But there's a lot of hand holding that we ended up doing. So one was, of course, the glugia fit test, right? So it's a proprietary tool, trademark tool, glugia curve. So then pictorially we're able to help you understand your body and then we recommend you products. We'll say this is your size. These are the four mistakes you're making. And this is what will solve those problems for you. It's as simple as that. So how can you take away
00:45:35
Speaker
human intervention and still trying to build something which is really helpful. So that is one. The other option that we tried to do was we said what more is happening in the customer's mind, how we can ensure that we could support the customer there. So we started doing things like graph your dress, if there's a specific dress that you are wearing, then can there be a specific bra that kind of goes with it, things like those.
00:45:59
Speaker
Like they could upload a picture and then there would be some... No, it was all bizarre. They would say that, hey, are you wearing a backless dress? Is it a Western dress? Is it a short dress? Now let us suggest you. Or this could be the level of problems that you could end up facing in a dress like this. Ever since I got into this line of business, ever since we launched Clovia, every party, every social interaction had a girl taking me to a corner and asking, this is my problem. What should I wear with this?
00:46:25
Speaker
You know, this is not fitting me, can you help me? So that led me to thinking, you know, let's just create it into a wizard. So, so the top things that girls asked me to put that there and help them reach to the right heart. Cool. So, okay. Like we've spoken about how you built up all of these capabilities. Now, like tell me how the business grew. And so what 13 is when you started selling, like which year did you start selling? 2015 is when we launched the brand.
00:46:55
Speaker
Prior to that, basically, we were just trying to figure out ways to make money because the supply chain had to kick in. And for the supply chain to kick in, we started doing a lot of private labeling. We would do television shopping. So whatever we could find bulk business, you would do that, which would help us build a supply chain.
00:47:13
Speaker
and by that by the time the supply chain was all set building it for other brands basically like no so it was less on other brands more on can we do a direct sell through a certain channel where where we are still owning the process but but but we're not but we hadn't launched clovia yet
00:47:29
Speaker
So we would do it under some pseudo names where you try to kind of sell bulk so that we had enough volumes to kind of build that ecosystem. You know, a lot of serendipity also happened. We got lucky with certain channels which work well for us. But that helped us set the ecosystem. And once we are ready in place, then of course, then the entire D2C kicked in. Before 2015, before that time, we took to build our tech and
00:47:52
Speaker
supply chain, but also we had tested a lot of fits during that time, making smaller quantities. Slowly, slowly, we had enough to stock to launch Clovia with a set of good products, tested products. We had done that. So, but those brand names were, but they were not really brands. We were just sending the product out. In India, anyway, brands put together at that time owned only 1% market share.
00:48:17
Speaker
So women in India were used to buying unbranded local kind of products. Essentially, you were just applying to retailers to get it out there and get feedback. Even on internet. So we knew what is working, but it's not working. When we launched Chloe, we had some sense.
00:48:32
Speaker
The first set of products were not untested. Got it. Okay. Okay. So 15, when you launched that, what kind of sales did you do 15 and how did it grow year on year? Like tell me about that journey. Once all these pieces got built up, then the journey after that. So from a growth perspective, I think first year was fairly small. I think seven or eight grows. Seven, eight grows. But post that, I think on a, on a CAGR basis, I think the company's grown around 60, 65. 2000 foot, uh, financially a 40 was seven, 16. That was 15. We were all.
00:49:01
Speaker
Well, we already had 15, 16 caravas that we didn't use from Amaze. Clovia wasn't that big. So the brand contribution, yes, was over 50 lakhs a month. So now the same number is that we were shipping a piece every two seconds now. So that was from a volume perspective, which is very sizable.
00:49:20
Speaker
Like pre-COVID, what kind of top line did you have? Like that financial year, 1920. So numbers, we are, of course, it's in public domain. So I think the published number would have been around 70 odd cross prior to COVID. And of course, now the same number is, it's multifold. Like what are you estimating to end this year at? Like this financial year, 21, 22. You were like doubling every year.
00:49:50
Speaker
Yeah, doubling every year. What were the challenges in doubling every year? If you're doubling, that's like a fantastic pace of growth. And as the scale grows, that doubling becomes even tougher. So how did you manage to keep it up, being able to double every year? I think the challenge, predominantly, and I think it's not just for us, for a startup, which is capital efficient. I think that's the biggest thing is
00:50:14
Speaker
How do you manage your sales versus your operations? Because if you overdo on the ops and the sales catches up, basically what you ended up doing is you've overspent your money and kind of not been able to give the right thrust because the same money would have been put in marketing. If you overdo on your sales, then you end up putting in a very bad customer experience and under-delivering on your promise.
00:50:33
Speaker
So I think that the biggest challenges and it has nothing to do with just us alone. I think it's always to do with how do you my zone these two together? And I think that's what we also ended up learning a lot on. There was a time when we just went bonkers, selling more. And then we realized, oops, I mean, you're our backend is not ready for it. We, there was almost a three month time when we got super flat from customers because our shipping time had kind of reached to almost like eight days and people were like, this is not acceptable.
00:50:57
Speaker
And all the big marketplaces had already started footing the game to a 24 hour, 36 hour delivery timeframes. So those are the kind of challenges we definitely faced. Our other thesis was where we went wrong was where we felt that launch is not something somebody would want the next day because it is something which it's not like I need it now. It's not sanitary pads, right? So it's not impulse purchase here.
00:51:19
Speaker
It's not, it's an impulse purchase, but you would not want immediate gratification of having it in your hands. But that was our, that was our thesis, which was absolutely wrong because we realized that the customer is restless for everything. It is agnostic to category. It is agnostic to anything, right? So be it breathe like a hard boiled candy to her, to her to a lingerie. If she's paid for it and if she's set her eyes on it, you better deliver it to her as soon as possible.
00:51:43
Speaker
What is the planning function deliver to you? What are the outcomes of that planning function? Like what do they tell you produce this quantity of this SKU or like what is. Oh, it is rockstar, right? So to give you an answer here, we are right now, every morning, all the team has to do is just to go and check out what product needs to be made in what quantities for what timeframes, how many of these purchases are already, or productions are already in place and how much are they lagging.
00:52:12
Speaker
Then it will also tell you in what size ratios should be broken. There also it is very specific to an individual product. So because at an individual product level, it will kind of break down and kind of give you a very deep down analysis that this specific product you should make in this specific category. Then offline, we started something very cool recently that you just put in a pin code of a certain location and you say that, hey, I have a six cross six wall here. Then how should I fill this up in this pin code to have the maximum ROI?
00:52:40
Speaker
And it will just fill it up and tell you that, Hey, this is the kind of products and this is the sizes that you take, because we know that, for example, in Punjab, this location, you would see BNC cups being sold more than probably a D cup. And red is a much more preferred color than probably a pink and padded is selling more than non padded. So the whole idea is with so much of data points with you right now, can you optimize on how to maximize on your sales output? And at the same time, how to optimize on your production output. So it's working both ways now.
00:53:10
Speaker
So essentially this system would tell your team what they need to order so that the sales are met. So that the predicted sales are met. Like it would predict that, okay, these SKUs are going to sell in these colors, in these sizes. But that's the problem there, right? If you were to just think of it like that, then you are killing the main essence of this business, which is gut feel, which is designing, which is the designer's gut, right? The creativity. The creativity.
00:53:37
Speaker
So we are saying the other way around. We are saying you keep drip feeding creativity and we keep telling you which of your creative ones are working better and once you've identified them, we'll tell you how to optimize their scale. So the first stop is not to stop the creativity from being hampered. Do not make it
00:53:54
Speaker
do not make it so much of a size that the art of it goes away and that's where the key of the whole play is. The power of the gut is something which drives a business like ours because in spite of even the basic products would almost be 60-65% of a business but the brand gets built from the rest 35% fashion which is in trend and it comes from many things where there was this
00:54:15
Speaker
movie which came with the protagonist was wearing a cage bra lot of those crisscross at the back and we saw that we made it in a week and we made a killing out of this made a category out of it now everybody's selling cage bras so so that that cannot go away but will you get excited around and say boss i'll make 50 000 this is gonna sell that we don't like that technology will tell you
00:54:36
Speaker
So there's like a separate new product function which is all about creativity and there's like an operations team which is using the insights on which new products should we double down on.
00:54:46
Speaker
Absolutely. And I think there's a single thumbnail of any brand and be it offline, D2C or anything is that the hubris cannot kick in. At any point of time, you cannot feel that I know it all. This is how it'll happen. Because the customer just changes overnight. She is the one who knows everything. The brand is brand will always be that dumb, crazy dude who doesn't understand what's going on and always discovering that's the power.
00:55:08
Speaker
So when did you go offline? Like, and what is the mix between online, your own website, online marketplace, offline, like large format
Offline Expansion and Retail Strategy
00:55:16
Speaker
offline? Almost three years ago, yeah, we went seriously to offline almost a year and a half before COVID and then of course there was a patch.
00:55:23
Speaker
At its pre-COVID, the number of offline revenue was almost touching 15% and it went from 0 to 15 in almost 12 and a half, I'd say 15 months, 13 to 15 months. And then of course now it is down to 10% because the other revenues grow much faster. It's not like...
00:55:38
Speaker
offering them is going down. From percentage basis, yeah, that's there. And then marketplaces would contribute around 30% and 60% of our businesses still are owned store, which is clovia.com app and the site. And that continues to be our focus because that's what gets us the feedbacks, right? And that's what gets us the view data. This offline also 35% of our revenue comes from owned outlets, exclusive brand outlets, and that we have doubled down. So we are opening two to three outlets every month.
00:56:06
Speaker
since September, October this year. And the next year, the target is anywhere between 70 to 90 stores, we have to open. So the entire team is a parameter for that. And what made you want to go offline? Like your original thesis was internet is the best way to do this. So what made you want to? So internet is the best way to reach out to the end consumer in terms of understanding their key requirements, right? I think a brand should be agnostic. And this is something
00:56:32
Speaker
Every time I go on a forum, I keep saying that and I keep telling other D2C founders also, don't call yourself an online brand. Online is a channel and brand is a brand, right? So it's literally oxymoronic to call yourself an online brand. If you're just online, you're not a brand and then you're just a channel heavy seller. So the thesis of a brand should be fairly simple that how do you reach out to the maximum number of customers? That is your core agenda, right? So either you go to the end customers or the end customers come to you, right? In the online space, there is a huge opportunity for the customers to
00:57:02
Speaker
come to you because by the power of AI, the Facebooks and Google for the world, which are the relevant guys and performance marketing will bring you the best guys in. In the offline world, you have to be present at a certain place where maximum eyeballs are. And so we said that let's do both as long as our customer experience is not going down, our gross margins are maintained, the mode of the business, which is the management of type management of inventory continues.
00:57:24
Speaker
And we are able to deliver something which is somewhat of an hour to the end customer. So these are the four fundamentals that we went with. And that was the reason why we opened up. In fact, it's a very interesting anecdote of how we went offline. There was a conversation that was going on within the organization that how do we reach out to more customers? And we were saying that let's do college events, let's do stalls at various places, let's do pop-up stores, let's do mall pop-ups and whatever could help people just touch and feel the product.
00:57:49
Speaker
And the only question that I had at that point of time was that if you will do it as marketing, it will be finite. If you do it as sales, it will be infinite. And then we brainstormed and all of us together came up with this idea that let's start going out to typical mom and pop stores and say that give us a six feet wall and we'll do a shop in shop for you. But what we'll do is we deploy some sizable capital to make that wall so beautiful that your shop kind of uplifts completely. And we said, let's put that capital expense and we think let's think of that capital expense as marketing. Okay. And these would be like moments of garment stores.
00:58:19
Speaker
Garment stores, anything which is core lingerie, minimum 350 to 400 square feet store. That was the reason. And we said that our Clovia assistant will stand there and she will sell because we don't want to take that experience away. So we're ready to take that cost also. So we set it up in one of the stores in Delhi and within the first month, we have the top seller there.
00:58:36
Speaker
So he was the number one seller ahead of all the big brands that existed. And the same guy used to run three stores in the same market. And he said that you cannot do the next store also. So we said, OK. And then one of his friends reached out to us. This is a very tight-knit community. So they said, can you give us one? And we said, boss, this is a model. And then, of course, then Neha kind of scaled it very quickly. And then we said, OK, now we got more aggressive. OK, now can we afford our own stores and see if that will be operationally profitable?
00:59:05
Speaker
And then we set up our first exclusive outlet. And they're also, again, it's even grounded. We would want to go into a tier two, tier three market. So even if it is Delhi, then we'll go to a patch which will value the value product. And we'll not do more than 400, 450 square feet store. Anywhere between 350, 450 square feet is what we do as a store. And we'll turn profitable by month too. And by month, yeah. So I think that model has worked very well for us so far. And so wherever customer is happy and the four levers are working, he said, let's scale.
00:59:34
Speaker
So right now we are presented in multiple large format stores as well as part of that. How do you ensure the tight operational control with offline? Do you do just-in-time inventory delivery and stuff like that? Tell me about some of those. Twice a week we are doing. How many times a week are we doing? Yeah, twice a week. And how does that compare to traditional brands? So again, it's a little different play. A traditional brand would be run by the distribution ecosystem.
01:00:00
Speaker
Okay, okay, okay. So that retailer would... So while they can do a daily replenishment, but the distributor is holding 90 days worth of stock. So you don't know whether it's 90 day replenishment or a day replenishment. And the other is that the product basket that we would give would be a lot more complex than a regular product basket. But there also, there is a planning engine which comes back with an Excel download saying that these 20 stores require these 80 products.
01:00:26
Speaker
and so it's literally an excel which is validated and then kind of put into the supply chain for shipments. Got it. So how traditional retail works is the retailer is placing orders that JSKU is based on and he gets that from the distributor but what you're doing now is you are feeding SKUs to the retailer that let's display these because we know these will sell which is based on
01:00:47
Speaker
So, traditional retail is a lot more interesting, right? Traditional retail, if you were to check out what most of the way the feedback is obtained by most of the brands is that one person will call distributors or will call retailers once a week and try and get some insights about the product. So, nobody's talking to the customer at all. Everybody's getting... So, the agenda that is being met is the agenda of the retailer. So, traditional
01:01:10
Speaker
I would not say brand, the traditional distribution model works for the retailer. It doesn't work for the customer because the customer is not the queen or the king as we keep saying. There the retailer is the king or the queen and that's how the retailer behaves. My dad was a retailer. I know how the retailers behave. So at Diwali time we would have this like biggest collection of
01:01:29
Speaker
gold and silver coins because they would be like, if you sell two boxes of this specific underwear, then you will get this silver coin and 10 boxes will get a gold coin. So the entire incentivization was not for the customer. The incentivization was always for the retailer. So we are saying that can the customer have a voice and that voice can translate into action?
01:01:48
Speaker
So the entire thesis, be it supply chain, be it product, be it communication, everything is revolving around the customer, at least in our ecosystem now. And I think that's the fundamental difference from any traditional ecosystem that you would talk about. This is like an asset light model, right? Because you don't actually own the EBO, like the exclusive brand outlet. You would like work with an entrepreneur to help them set it up.
01:02:12
Speaker
There is a lot of hot process went, but right now we are owning the exclusive outlets ourselves. So today we are running it as CoCo, company on company operated. A sizable majority of them, a small percentage of them are still being done by the franchisees. But the idea was the first 50 stores should be run by you so that you have absolute control on the operating levers around it. Once you understood those operating levers and we know how to run them and you have a template around it, that's when the franchisee model kicks in. So we have franchisees, but those are very close partners where we also do a lot of heavy lifting.
01:02:42
Speaker
But what is the roadmap for that, for the EBO source? So if you were to left to me personally, I would say that I would always want to own the operations because that's the crux of the entire game. If there is a way to templatize it, that's how you can ensure quality of the experience.
01:03:01
Speaker
quality of the experience, quality of the feedback collection, quality of the entire labor system. But I think over a period of time, we have started to see templates forming, right? And then now we're testing those templates out with our existing franchisee partners. The moment we realized that the templates are so tight that it doesn't require manual intervention of nudging them every day, boss, this is going wrong. The AC was turned off at six, even though it was still humid and hot. So as long as we're able to address that is when we go high on the franchisee model.
01:03:28
Speaker
What are these templates you're developing? This sounds interesting. These are operating levers. For example, one in terms of the overall customer experience. Customer experience is broken down into the showroom experience. Showroom experiences, there was incense there, there was no smell, there was no food smell, AC, lights were not broken. The billboards were the lights were turned on at the right time. All those operating levers. That can be uncomplicated. When the world is done it to death, it's not something that you really need to complicate it on.
01:03:58
Speaker
And then those are the customer data feedback points. For example, we have this very strong thesis of trial sales ratio, where we're saying that every time a woman is trying a product, we want to scan and save that data. And every time she's buying a product, we want to scan and save that data. Because if she's taking off multiple layers of clothing and trying a product and still not buying it, then it speaks a lot about that product. And if 20 people have tried that product and just do a bot, then it doesn't speak about that individual's discomfort. It speaks about the product itself.
01:04:26
Speaker
So I'm saying that's your first feedback right there which is absolutely sitting right there and you're unable to execute on that. But how do you get that data like which product was tried? How do you get that data like this product was tried these many times by these customers because that data is where the value lies like getting that data. How do you get that?
01:04:46
Speaker
Yeah, so we have an app that we that we built for our sales assistance. And so while they cannot scan what came out of the trial room in real time, what they do is they keep the login sales at the end of the day that these are the products that I sold, they do a regular audit of the inventory. So we know what was there.
01:05:04
Speaker
And then at the end of the day or a couple of times through the day, whatever does not succeed in trial room and it gets dumped on the side of the trial room, goes back on the shelf. So just before peeking on the shelf, they scan it and they tell us the scan. So we know what failed. So once we know what failed, then we can just basically from percentage basis figure out that what has higher success rate and what does not have higher success rate.
01:05:27
Speaker
Now this model is not like 100% something that you can implement across sales counters because it is dependent on whether the girl can carry a phone onto the floor, et cetera. You can have your staff do things. You can drive that for the staff, but a lot of times because in multi-brand outlets where the retailer may not allow the phone, et cetera, on the floor, there it's a problem. But we still, even if we get 5% sample, which is enough to then extrapolate and then figure out the overall trend.
01:05:53
Speaker
And on our own brand outlets, then they help us in building that initial, not just conversation with customer, but also this feedback through our own outlets is priceless. Okay. So like the plan to open, I think 70 or 90, you said EBOs next year. These will be company owned or like these will be with entrepreneurs.
01:06:13
Speaker
Now, so it's a mixed model. The operations we will continue to run for next 100 stores at least. Operating partner will be us. However, the investment in the store will keep a mix. Some will be company owned, company operated. Some would be franchisee owned, but company.
01:06:29
Speaker
So offline, I imagine would need more funds, right? Because you need to do that upfront investment in physical infra, be it that wall in a mom and pop store or these EBOs. So like tell me about the funding beyond that first seed round you did a couple of million dollars.
01:06:46
Speaker
Yeah so working capital needs to be managed because unlike our other model of internet selling, here you are investing in kpix. So therefore here also we take our math very seriously and so for example post-covid we iterated our model to assume that only you will get your store operational for 70% of the year.
01:07:07
Speaker
30% of the year will not work out because either customer sentiment or lockdown or some other reason. So then you select the locations as understanding whether the trend and Capex math investment is working out and having a very tight discipline or ensuring that your Capex is getting returned to you in about 18 months and then thereafter and
01:07:30
Speaker
It also helps store level recommendation engine. That really helps because otherwise what happens is really the turnarounds in the store or inventory turnarounds in the store should not be short of six months. It also should be higher, even ideally for us. What does this mean, inventory turnarounds? What I mean is that your store should not be left with unsold stock. Okay, beyond six months. Anything going to the store should get sold in the next six months.
01:07:58
Speaker
No, not just that. Sir, you should at any point of time hold only. Your store should sell enough that if the store capacity is, let's say, 5,000 units, then you are moving at least 2,500 units every month. So two times the inventory only is what you're holding. It shouldn't be that you are selling only about 300, 400 units, but you are talking about 3,000 units. So then the store size, everything could fall, et cetera, has to come right.
01:08:23
Speaker
How do you figure out that this is where the football is and stuff like that? Those are the basics of I think retail scouting. We scout the market. We spend some time in it. We speak to a lot of brands. We try and position ourselves next to women's wear brand where there is already traffic of people coming, women walking in to buy. They're out of it. So we position that. So it's not like we won't put ourselves next to food court.
01:08:46
Speaker
like say GKN block market that that would be like a yeah those GKN block and block good places but then the we are not yet there we are in different other addresses of Delhi but so you have to for us that way Scrovia we have a way we always have an eye on our bottom line so we never treat a store
01:09:04
Speaker
as a marketing tool. We never put a store where there's no revenue, but oh yeah, we have a store in GKM blog. So that kind of, we don't use it for marketing, but for that different marketing tools are available. The store has to be profitable and our stores give excellent returns. What is the price point compared to competition? Like is it premium pricing? Is it mass market pricing? What is
01:09:27
Speaker
So we provide premium product at affordable pricing. So the pricing is at a slight premium to your local or regional brand that you would buy in local market. There's a small premium to it, but it's cheaper by about 20, 25% from any mall brand. Okay. Like a jockey and all it will be, or jockey is more like mass market.
01:09:50
Speaker
Yeah, similar priced, similar price, but Jockey does more sporty functional products. We do a lot of different kinds of ranges. So like to like a comparison is not possible, but yes, in the categories that overlap, we are similarly priced, but our product is far more fit based and the kind of range sizes, options that we provide are larger.
01:10:13
Speaker
somebody who's like a like the right kind of like let's say an equivalent of size medium may have many options but equivalent of a small large excel for a lot of them our age is much more suited and from a very cheap locally sold kind of a product there's a small premium but the there's a multi-fold difference in quality and fitting they get and also the brand experience
01:10:37
Speaker
How do you train your sales assistant? Is there a playbook for that in place so that they are able to help with fitting? Like online you have wizards, how do you replicate that wizard experience? Yeah, so we created a detailed playbook. One store operating process we wrote down when a girl walks into the store, the first thing she has to offer is the fit advice, is to say that I let me fit you first and then from there how to fit, be created.
01:11:04
Speaker
We've given them printed charts on how many inches etc. will lead to what sizes and then slowly they also develop expertise. So a lot of time is spent on training. They go through a detailed training program before they put on the floor. So what is the roadmap for Clovia going forward?
New Product Lines and Market Expansion
01:11:23
Speaker
So there are three ways that we're thinking about and we are aggressively working on. So first is we added new categories which had the natural extension from the brand attributes we had. One was the whole joyful, enjoyable, useful experience that our brand gave.
01:11:41
Speaker
and second was the intimate trustful relationship that we built so basis that we got into more performance oriented categories like active wear we also did sleepwear big time it grew very well during lockdowns but which came naturally from lingerie but active wear in performance oriented lot of aspiration build but again a limited
01:12:00
Speaker
availability at affordable price points. So that category is growing very well with us. Then we got into personal care because again, a lot of these problems get shared by our customers to us, a lot of people writing to us about different problems. So we just searched and we got into offering solutions around that and leveraging the same expertise that we've built so far in understanding from the customer directly and then iterating on the product. So we are building on our categories and that has propelled our growth.
01:12:29
Speaker
Second is we are building on geographies. So right now, while we're going fast in India, we've also launched in MENA region, Mideast. And we are looking at other geographies also. And one after another, we'll start. Online or offline?
01:12:45
Speaker
We started with online, so we'll follow the same model. We'll start with online. We're also present in offline shop and shop kind of model because post COVID, one good thing that happened was that as a brand, we had this unique ability, which we didn't realize was to be able to service a customer in her home. And that it's not just about delivering the product, but having that range, that experience to be able to serve that first pre-purchase experience and then post purchase. So we had that expertise.
01:13:11
Speaker
And once we had been working on our international expansion just then, and then lockdown just helped us push that agenda forward faster. So we started with online, but we have some presence in offline also. But online we have a good presence. So how do you service internationally? Do you manufacture in India and then ship in bulk over there? Yeah, we manufacture in India. In some cases, we ship directly from India, but we also stock in those locations, in those geographies.
01:13:40
Speaker
So we'll add more rupees there. And third is, I think Alsenia and Clovia, we've built with very limited investment so far as compared to our POs or e-commerce space. So now I will push the pedal on building customer awareness, telling more and more girls in India and abroad about Clovia. I think we are ready for that. Are you planning to use Bollywood brand new muscles like celebrity endorsement?
01:14:06
Speaker
Yes, you will see a lot of action at Clovia marketing, yes. So far we had been Gorilla marketing. We had been doing also, you see already a lot of Bollywood faces have sported Clovia and are still sporting Clovia. Every month we see sport Clovia on TV. Yeah, now it's very much part of Bollywood and TV styling. It's like a staple there, but you will see endorsements, you will see a lot of interest in action Clovia being present.
01:14:33
Speaker
in a much larger, wider manner. How essentially your target customer is a woman? So how are you building an organization that is empathetic to your target customer of a woman? Oh yeah, that I think we've done very well. So today at Clovia, it's 70% in almost all departments and in leadership also. In our top leadership, we have 440% women. In our second round of leadership, we are about 55%
01:15:03
Speaker
odd person women so we so there is no actually honestly there's no gender it's not like we invite diversity and so there's any role one thing we did was that every time head of department or HR said that i don't want to hire women for this role because this role requires traveling long working hours etc etc we said don't hire a candidate who refuses to do this
01:15:26
Speaker
you lay down all these challenges that this job may face let the candidate decide whether she wants to she or he wants to pick it up or not but don't just don't drop resumes because of gender and don't assume on the behalf of that girl
01:15:42
Speaker
And so it happened automatically. It wasn't where we were promoting women over men. So we don't actually, one thing, we are very particular. So women don't want extra rights. We don't want menstrual leaves. We don't want anything additional. We just want equal opportunity. And that's the, that's something we adopted. And just by making it completely equal, taking out all those deep rooted biases, this is where we arrived.