Khalid Raza Khan, Founder & CEO, YourLibaas (Source: Company)
Seven-year-old designer apparel commerce platform YourLibaas is not a regular fashion portal. Having created a niche in exotic lawn cotton, the company proudly claims to be catering to the premium segment, with an average ticket size of Rs 5,000. It sells its products only through its own website.
In an interaction with Moneycontrol, Khalid Raza Khan, founder of YourLibaas talks about the company's expansion plans, decision to restrict its distribution channels and the impact of marketplaces such as Amazon and Flipkart on Indian small and medium enterprises and independent online sellers.
YourLibaas has managed to remain loyal to a very niche segment of apparel which is lawn cotton. Was this a conscious decision? What's the market opportunity in this segment?
We started in 2014 when e-commerce was very nascent. At that time we did not have the one-size-fits kind of marketplaces in existence. We were exploring what we could do online which had a lucrative market and we got into apparel. Within apparel there were some players who were into generic salwar kameez or western wear but not so many players in these categories. So we started exploring different specialties and finally narrowed down to lawn apparel. Being loyal to it was a conscious decision. It is a niche market but within the Rs 47,000 crore salwar kameez market in India it still has a sizable figure of close to Rs 600 crore. This fabric is a finer version of cotton which is not available in India. So it is exotic and has unique properties -- it is light and airy which makes it a perfect fit for summers. If you compare the price with designer apparel segments in India, the prices are also on the lower end. All this keeps buyers hooked on to it.
Slowly we moved into party fabric also but a sizable amount of revenue is still coming through lawn apparel.
You have also kept your distribution channels restricted. Why did you decide not to sell on marketplaces like Amazon and Flipkart?
The marketplace opportunity is huge. A lot of wind is moving towards marketplaces but the reason why we have not made this move is because it will definitely dilute the brand. We have been in operation for seven years now and we have a huge customer base with close to four lakh people directly connected to us via our social media channels -- Pinterest, Facebook, Instagram and WhatsApp. This is rare in case of other small brands. Besides this, the demand for lawn apparel in India is higher than the supply we have.
Secondly, there are unfriendly policies. One example which applies in our case is that if you are wanting to sell apparel on marketplaces, usually they require you to crop the background and just have a plain white background. That wouldn't work with our product.
Then there is a higher return ratio. Customers will keep on ordering and they will return. Return could be two ways -- one customer could not be accepting the orders saying they haven't ordered this product. The other one could be them returning the product after examining it. The first kind of return, we have tried to optimise it over the years because we have more control over the supply chain with direct integration. We can quickly follow up.
Third, marketplaces cater to the masses and our average ticket size is close to Rs 5,000. If the apparel was priced at close to Rs 700-1,000, it would have been a better fit for marketplaces. Within this price range it doesn't really fit in for the kind of audience available.
How many orders do you get on a monthly basis?
Our revenue is close to Rs 24 crore out of which Rs 14 crore was from online retail operations. The rest comes from wholesale which is offline. So the monthly number of orders would be close to Rs 2,400-2,500.
This is only in India. What about the other markets?
We expanded in the UAE very recently. Then there were orders primarily from the US, Canada and UK. Close to 15% of our orders were international.
You consciously decided not to sell on marketplaces like Amazon and Flipkart. But according to you what is the impact these marketplace have on Indian small and medium enterprises and independent online sellers?
There is no clear answer to this.
It is detrimental to a lot of small retailers and mom-and-pop stores. A lot of consumers who are visiting physical stores are understanding what the products are, taking demos and then eventually ordering it online because of superior return experience and a better price which these small retailers cannot offer due to volume constraint.
But at the same point in time, we have independent sellers, direct to consumer brands that have come to the market only because of these marketplaces. They started experimenting full fledged without having to worry about logistics, operations, payment gateways, marketing to consumers. You can talk about brands like Wow Skincare which basically were non-existent earlier.
But then again, there are concerns around marketplaces getting so much market share. You would have seen marketplaces selling either private label items. They would offer you a charging cable or even a refrigerator from their own brands. With the kind of data available to them, they first try to understand what products are lucrative, what are the order margins like, what are the order figures like and then eventually get into that particular product outsourcing the manufacturing to a third party and preferring their own seller on the platform.
What's the revenue target for the current financial year with all the expansion you have made?
If we were only concentrated on India, we were working on a growth of 20-25 percent year on year, but given that we have entered new markets, it is difficult to comment. We are still trying to penetrate into these markets, spending a lot of money on marketing campaigns, and will be partnering with other players there. So if we talk about India then revenue will be close to Rs 29-30 crore. For the new markets it is difficult to comment.