Online fashion retailer Koovs said that it is looking to raise £50 million to fund its acceleration plan, and that a significant part of the fund will be spent on marketing. The company did not share details such as timeline of the funding and investors.
Besides increasing its marketing spend, the fashion e-tailer plans to increase the proportion of its private label from 40% currently to 60% by 2023.
Effect of Demonetisation
According to a research report by Hardman & Co Research, the company was impacted negatively by the demonetisation drive in India, and that prompted the need of funding for the company. The report reads that until now, Koovs has been funded on an ad hoc basis. But it was hit with slowdown after demonetisation in India (November 2016), plus the company’s funding dried up – just £9 million was raised in 2017 in convertible bond form.
In order to preserve funding, Koovs had to slash its marketing budget from around £600,000 per month to around £150,000 per month and shrink its clothing range from 10,000 units to 5,000 units or fewer. This impacted its sales, and it expects its sales to fall to £2.6 million, making £6.5 million for the year to March 2018, a reduction on the year before of 25%.
Koovs, which sells fashion clothing and accessories in India, was launched in September 2012 and was listed on the London Stock Exchange in March 2014. Since its listing, Koovs has raised an additional £45 million of equity and £9 million of convertible debt, making £75.5 million in total.
In India, Koovs competes with the likes of Amazon, Flipkart, Myntra, Jabong, Lime Road, Voonik, Ajio, etc. In terms of market share, the same Hardman & Co Research report says that Koovs currently has a market share of 1% while, Amazon has 16%, Flipkart 26%, Myntra 25%, and Jabong, Lime Road, Voonik, Ajio has 7%, 2%, 3%, and 1% respectively. The report collated this data from research firm RedSeer Consulting.