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One of the leading brands in the lingerie section which claims to have busted the taboo in the society about women being reluctant in making the right choice of their undergarments, seems to be trying something new this time as it has been unable to peep into the private spaces of people and seems to be finding it difficult to establish its brand amongst the mushroom growth of lingerie brands in India.
A quick look of Zivame’s history and the Market Potential.
Zivame was founded by SAP consultant Richa Kar. The idea clicked when she discovered the growing online sales of one of her company’s client Victoria Secrets. She really got fascinated by the potential of lingerie sale through online medium. While for India, it was pretty new concept yet if executed well could bring a great traction amongst users. She starts off with her Partner and CTO Kapil Karekar.
She launched Zivame in May 1, 2011 and grew at a rate of 300% YoY growth. The company claimed a total investment of $49 Million three investment cycles with leading investors such as Kalaari Capital, IDG Ventures and Seed Capital from Ronnie Screwvala and Ratan Tata. The company proliferated in the early years and stood at the number one position in its segment. Now the company market share is unable to see the hockey curve which is a great worry for the investors who are looking to experience the 300% growth since there is a market which they are unable to tap.
The Total Market share of Lingerie in India is estimated to be around $183 Bn and is expected to grow with a CAGR of 18.3% leading Lingerie to be as one of the most sellable commodity in women’s fashion.
A brief peek into some of the leading Lingerie ecommerce websites in India.
|Major Players in Ecommerce Lingerie Section||Launch Year||Pedigree||Investments So Far|
|Zivame||2011||Richa Kar was a SAP consultant took the inspiration from Victoria Secrets online Sales& Kapil Karekar||$ 49 Million Total in Series A + B + C|
|Pretty Secrets||2012||Karan Bahl||$ 8 Mn in Series A + B|
|Clovia||2013||Neha Kant||$4.69 Million in Series A|
|Amante||2007||It’s a brand much before it came in online sales||NA|
|Enamor||2012||It’s a brand much before it came in online sales||NA|
|Lovable||2013||It’s a brand much before it came in online sales||NA|
The company had been selling Bra, panties under its brand name and seems to have been completely operating its own Supply Chain right from the stitching till it reaches the user’s home. Of course they have partnered with Logistics firm and should have outsourced their manufacturing units, but the company has owned the process of making and delivering the undergarments right to the people’s door. The company’s Business Model to “Own the Experience of the User” will now be altered, and they shall be playing on discounts and brand image of the existing players which have huge demand since ages, in the community of women which they were unable to tap through their own brand and online medium. Below are the listed possible reasons for the shift in the Business Model
- Unable to penetrate to Tier 3 and Tier 4 cities and saturated market size leading to no growth.
- Market place means bigger horizon, may involve Cosmetics, Sanitary Pads, Female Condoms, Intimate Wash or Lubricants resulting in greater revenues and a wider buyer audience.
Possible reasons for pivoting the Business Model and the Founder Resignation.
Instead of beating around the bush and fabricating the reality to put across to users in a subtle way, is something The Startup Mojo doesn’t believe, hence we would like to help you understand Actually, why the company is pivoting from its model?
The moment the company has taken investments as big as $40 million, it is equally essential for the founders to match the pace of the growth as perceived by the leading investors of the organisation. Right from the board to the operational fixes, the investor’s people are all pervasive and they continue to breed a culture which is to only follow numbers and should result in increasing market share. Much of the times, the founders find this a bit suffocative and stressful, leading to their exit from their roles as their “Idea of the company” seems to have been hijacked by the “Innate Desire of Growth” amongst the investors.
The clan of investors who appears in the board decided to move fast and to bring a bigger market share by relaunching the portal as Marketplace, enabling the local players to bring in the element of trust worthiness through their brands, as well as the ease with the comfort and the sizes of the establish brands in the lingerie segment.
Whats wrong in the growth?
There is nothing wrong in the Growth, but the matter lies in its Quantity and Time period allotted to it. While the founders really find it difficult to strengthen the lurching operational arms of the organisation, the investors will seek to bring more growth/customer acquisition by bringing new features, or for that matter pivoting the Business Model. All of this should happen quickly, and they should be growing at a pace which brings bigger market share, thus making the company visibly existing in the eye of bigger VC’s for buying it out.
India is Marsly distant with the US: Tapping the people’s motivation in smaller cities is hugely different!
What we claim to have excelled, is just a few million people who are quite receptive to the online world. I am talking of the current pie of 100-150 million (Mainly in major metro cities of India) of Smartphone users which are comfortable in buying stuffs online, since they are exposed to the idea of buying online through experiential learning or in the society they live in. The actual India lies in the below picture and not what we think it is! Do you think the women in the picture below would ever be concerned about cup shape bras and comfort which is the USP of Lingerie Companies? Real India which comprises of 60-65% is like that, so build your business plan keeping in mind the Real India and not what we see on the facade of the the Lingerie companies.
What we as founders have to understand is, still there is a challenge for users, especially female to know about online lingerie for few listed reasons.
- She is afraid of the fact that somebody would notice her looking at the nude pictures or for that matter bras and undergarments online.
- If at all she is able to make a choice, she wouldn’t have the ability to pay for it as she would need husband’s help in placing the order, cash on delivery is never an option too. On the other hand the unmarried shall be just overlooking the idea of doing all this.
- If both the aforementioned user types are able to pass these milestones, the package that comes will have to surpass through the eyes of the their father, fatherinlaws , brothers etc. She would never want a courier guy coming to handover the Lingerie packet to her father, even if its a discreet packaging. She will always have the fear about her male family members asking for it, or shall open to see it. This could be disastrous as a situation and women in smaller cities would not even think of imagining it, forget about doing it.
Takeaways for Entrepreneurs
- India is not like the US: Cultural sensitivities and religious impediments in the smaller regions should be incorporated in your Business Planning. India is not like the US where you just print and paste it on Notice Board and the users are going to follow it.
- Investors Clutch: Sooner or later you will be handing over the company’s progress or deprogress to the clutches of investors, if you don’t manage to earn enough for your operational expansion through company’s profit income. Ensure that you are balancing the “Investor’s intent” and “Your Idea of Product” by minimizing the funds accrued in the form of Equity Financing.
- Don’t loose on your Equity Stakes too early: One of the major reasons of the declining cohesion is the percentage of equity holding in your organisation. You have to understand the Science of Equity which states that Equity Stake is directly proportional to Entrepreneurial abilities.
- Stop believing in changing the World, you might become a deterrent to your own Success: As an Entrepreneur it is essential to know that if you are becoming the change agent then money and growth cannot be your God and Business cannot be a motherland. Hence there are other creative ways to bring change to people’s lives, probably Entrepreneurship in Business is to bring prosperity while Social Entrepreneurship is going to empower societies. Choose wisely which type of Entrepreneurship you should plan to go with!