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Utsav Fashion: Sarees Are 50% Of Sales; Targeting Rs 200 Cr Turnover This Fiscal

Utsav Fashion was an early adopter of e-commerce in India, but the business focused primarily on the international market to begin with: it began its online business as early as 2003. In January this year, the company hired Pradeep Katyal as its CEO, with the objective of driving growth. The company sells bridal sarees, trendy Salwar Kameez, and Indian bridal wear offering exquisite collection of jewelry, traditional wedding accessories, handbags, and footwear. Here’s an excerpt from our interaction with Katyal:

MediaNama: How’s your business doing?
Katyal: Our growth rate was 200% over the same month last year. We do around Rs 10 crores per month, last year we closed at Rs 60 crore.

MediaNama: How did you start out?
Katyal: When we opened the store in Jaipur, many of our clients were tourists, NRIs
visiting India, and non NRI population, and they were buying in bulk, and taking it abroad. That’s where the business started,
when a youngster in the family created the site. This business was focused on NRIs and customers abroad. We tied up with a US payment gateway, our servers are in the US, and a lean and mean structure right from the beginning. One thing that helped the business was that Manoj Sarohi, the MD, had created a courier business, and that supply chain experience, helped in e-commerce.

MediaNama: How was the business marketed?
Katyal: We have been fairly smart on SEO from the beginning, and it took time to develop. Whatever hard work was put in the first five years, has benefited in the last three years. In the last seven-eight months, we have been spending on SEM. We weren’t spending money before that.

The growth rate was accelerated after we started SEM. Even then, incremental transactions are not cash negative. We’re a low cost player, with a low cost structure.

MediaNama: How is the business doing, in terms of India versus international?
Katyal: Earlier, you could not see our website in India, and most of our vendors were vary of showcasing their new designs in India, but things have changed int he last two years. Therefore, we opened a new site for India, which is Utsavfashion.in. The growth rate is much better abroad, and we have just started focusing on India. We do have plans for India, and we will communicate these to Indian customers in India, through SEM or advertising in this financial year.

MediaNama: Is there a difference in the rates that you charge in India versus international?
Katyal: That debate always goes on. Our view is that we’ll keep pricing the same, and rather than saying that we can get better margins. Our pricing will be same. The online difference is that in India shipping is free, whereas abroad it is free only above $200.

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MediaNama: How do you deal with foreign exchange fluctuations?
Katyal: We don’t do any hedging. We procure in Rupees, and convert into a dollar rate, and when dollar appreciates, our global customers benefit.

MediaNama: Which are your top markets?
Katyal: In a year, we delivered to over 100 countries. Our prime markets ar US, UK, Canada New Zealand and Australia.

MediaNama: What’s your typical customer profile like, India versus international?
Katyal: 
The target customer is the same, in terms of education level and income level. There’s a particular level of affluence. The difference is the maturity level of customers: Indian customers are still learning and experimenting with the Internet. There’s a difference in the average transaction size. Indian transaction size is around 50-60% of the International transaction size, which is around Rs 8,000. The number of products being purchased tends to be the same. International accounts for 95% of our turnover, and we do around 400 transactions a day.

MediaNama: What are you doing to increase that?
Katyal: Globally, we are depending on digital marketing, and we’re putting in the back end in place to cope up with expanding sales. India plan is to roll out within this financial year. We are doing minor investments in Indian market, in terms of search engine marketing. But we will be conservative as compared to other players, and we will follow sustainable business practices.

MediaNama: what are the returns and cancellations like?
Katyal: Returns are around 1%,and cancellations are around 3%

MediaNama: What are your targets like?
Katyal: Our effort is to increase our turnover, close to Rs 200 crore by the end of this fiscal. Our current growth rates suggest that we will reach Rs 180 crore easily. The only limitation to our growth rates will be our supply chain. In the long term, we’d like to double our turnover for the next three years.

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MediaNama: What are your profit margins like?
Katyal: That depends on procurement. We have an efficient buying. These are not MRP products and margins are decided by the retailer. While covering costs of transactions, and keeping a small amount for overheads.

MediaNama: How do you encourage repeat purchase? Do you have any personlization or recommendations?
Katyal: Our customers is already identified. We communicate to them regularly through a newsletter. We track repeat buys, but we don’t collect too much personal data, but we have regular surveys on our site. Consumers always want freshness and variety. They want navigation improvement on the websites. We haven’t done much on personalization and recommendation, and that is still some time away off.

MediaNama: What sells?
Katyal: A majority of our sales – half of our sales comes from sarees. India has a high percentage of salwar kameez purchases, proportionately higher than global. Second is that we take great pride in customization. We stitch blouses, offer embellishments, embroidered, and we make our consumers feel like designers. We customize as per requirements and charge for it. Many times it is one-to-one interaction. We have a customer care center in Kolkata, and we correspond through email, primarily.

MediaNama: What percentage of your orders are customized?
Katyal: Around 15-20 percent.

MediaNama: You’ve refused to offers for funding, we’ve heard?
Katyal: There have been instances because we had difference of opinion on how VCs drive business. We are not going to burn money, which is a difference in philosophy with VCs. Company burns money to develop market, and revenues will follow. I don’t have complaints with this model, but I don’t want to follow this model.

This business has grown with a lot of hard work. People in the organizations are willing to get hands on. Top management of ecommerce companies are involved with tech, these are willing. While we are a tech savvy company, with 80 member plus IT team, we are not afraid of managing certain processes manually. I might not have a state of the art CRM, but I’ll respond to customers. Technology is automation of processes. We have a business excellence department, which documents processes in the company, helping improving processes on a continuous basis.

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Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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