)
How does one differentiate in a crowded e-tailing market? Anant Nahata, the scion of the HFCL group answers: Make substantial investment to scale up, have patience since the capital-intensive business turns profitable only after about four years and focus clearly on a chosen market.
The economics graduate from University of Pennsylvania launched Koovs.com, an e-tailing portal selling westernwear nearly a year ago. He has been able to forego PE funding, which could have created pressure for quick returns. The HFCL group, which till now played in telecom - either through manufacturing equipment or partnering for telecom services with Reliance Jio - is backing the venture. Nahata has put in over Rs 130 crore (out of which Rs 65 crore has been spent) to build Koov.
Koov has stuck to affordable western fashion rather than a varied range unlike some of its competitors. "We don't sell Indian ethnic dresses. We address middle-class working women in the age group of 18-30 years. We sell designer wear that range from Rs 900 to Rs 2,000," says Nahato.
Nahata is extending beyond apparel to footwear, bags, jewellery and fragrances in order to reduce the share of clothing from the current 65 per cent. But differentiation in womenswear could still pose a challenge.
Nahata is banking on speed to make Koov stand out. The company has an in-house design centre in London which churns out two new collections every two months. "While most fashion labels have new collections four times a year, we have them six times a year" says Nahata. As a result, Koovs offers 20 new designs every week.
Nahata has his eyes set on margins, especially the extra 25 per cent that its private label affords. Apart from private labels and high-street brands, it has also tied up with UK-based brands Little Mistress and Glamorous.
Nahata has also roped in British multi-millionaire Lord Waheed Alli as the chairman of Koovs.com. Till recently, Alli was the chairman of the $3-billion (Rs 17,800 crore) British online fashion major Asos.com.
Marketing costs, says Nahata, will remain high at 70 per cent of sales but would stabilise at 25 per cent eventually. Using digital media, apart from fashion magazines, to advertise could hasten the process. "We are making applications for Android and Apple iOS. These are cost-effective in reaching potential customers. Surely, 4G will help but the ways customers buy on a phone and on a PC are different," Nahata says. Social media provides about 10-15 per cent of visitors.
In distribution, it gets about 30 per cent of sales from smaller markets. It claims a growth of 15 per cent month on month.
However, the conversion rate of 40,000 unique viewers who hit the site daily is only 1 per cent. Koovs is planning to launch products for men by next year, increase inventory from 7,000 products to 25,000 by the end of this year, and weighing ways to deliver to Southeast Asia.
According to a study by Internet and Mobile Association of India, e-commerce in India is estimated at Rs 40,000 crore in 2012. Of this, e-tailing is the second fastest-growing sector after online travel bookings.
