Online fashion brand Yepme to raise $7-12 mn for expansion by year-end
Men’s private label brand Yepme is targeting a turnover of $25 million in the first year, scaling to over $500 million in the next 3-4 years.
Published - 08-November-2011
Men’s fashion and accessories portal Yepme.com – a brand of Vas Data Services, launched as a full-fledged private label brand in August this year – is in talks with 2-3 investors and has plans to close the deal on private equity funding to the tune of $7-12 million by the end of this year.
Vivek Gaur, CEO, Yepme, commented, “There is a lot of investor interest with many who understand the space very well taking bets across the spectrum. In our first round, we received financing from Helion Ventures, which has also invested in MakeMyTrip, RedBus, Azure Power, and GETIT Infoservices. There is a lot of activity happening in the e-commerce space. We have seen Myntra.com and Flipkart raise funds from Tiger Global and Zovi from SAIF Partners, among other e-commerce players.”
Yepme aims to be India’s biggest fashion brand, bigger than any offline/online fashion brand. The site was launched in April 2010 by three alumni of IITs and IIMs – Vivek Gaur who has extensive experience in e-commerce start-ups, COO and founder Sandeep Sharma, specialist in technology development and operations, and President Anand Jadhav, merchandising and supply chain expert. Gaur stated, “E-commerce mainly suffers from problems in the supply chain as it is difficult to get a supply chain in order. To address this issue, we decided to launch our own brand and are looking out for like-minded people to expand our operations.”
The brand is targeting a $25 million turnover in its first year of operations and scaling up to over $500 million in the next 3-4 years. The main target audience for the portal is Tier II and Tier III cities where the big brands don’t have many stores although there is a large target audience.
“Around 69 per cent of our orders come in from Tier II and Tier III cities with 31 per cent from Metros due to the presence of bigger brands. In small towns, there is lack of availability of good merchandise as many big brands down have their stores here. Westside, for instance, has only 57 stores all over India. As an e-commerce player, we don’t have a geographical restriction. Also, most offline brands are at best Rs 1,000-2,000 crore. If e-commerce sites are dependent on them, they can only get a fraction of this turnover and hence can’t scale. Moreover, many brands have an online-offline conflict. Dependence on brands present in these areas to fill the supply chain gap may fail as they may not deliver. So, the key is to launch your own brand and strengthen it,” Gaur stated.
The brand has seen good traction in the social media space with more than 3 lakh fans on Facebook. Their advertising primarily takes place in the online space. “We plan to begin advertising on TV in another month and a half since the medium has the highest reach. We will also look at ads in print in vernaculars in smaller towns. Our media mix is 70-75 per cent towards online, 20-25 per cent towards TV, and 10-15 per cent towards print media.”
According to a report brought out by Technopak in 2009, the apparel market is estimated at $33 billion and is expected to touch $100 billion by the year 2020. Close to 43 per cent of the $40 billion market presently is focused on menswear. Over the next 3-5 years, 15-20 per cent of the apparel market is expected to shift to the online space. Gaur elaborated on the reasons for this trend. “Mainly, there is no geographical constraint for an e-commerce brand. As per the IRS, 50% of the internet connections in the country belong to the Tier II and Tier III cities. With better broadband facilities, the proliferation of DTH in remote areas, and tablet prices being slashed, brands in the online space will see rapid growth. However, brick-and-mortar retail will not move very fast due to cost considerations and infrastructure facilities required for the set-up.” For investors, after the first two years of covering the acquisition cost, an e-commerce brand offers the advantage of a healthy gross margin of 40-50 per cent.
Yepme claims its sales have jumped to 150 per cent in the last three months when the brand officially took off as a full-fledged private label this August. Customers can take their pick from shirts, trousers, jeans, footwear, and accessories. The category seeing the largest number of sales is the shirts and trousers segment contributing 65 per cent of the total turnover. The products are also competitively priced, at 60-65 per cent of that of Wills Lifestyle, although the brand has a private label. The price band for all the products offers ranges from Rs 249-1,999.
According to Gaur, a retailer needs to make certain only two points to succeed – have a supply chain in place and build the brand. Talking about the USP of Yepme over other e-commerce players, “Most of them have branched out to include many categories with no USP as such. Some offer ‘Cash on Delivery’ as a USP. How can it be a USP if every other brand is offering the option? In that sense, our premise and main differentiator is ‘dress well to attract the opposite sex’. We also have an empty packet put in along with the home delivery package so that customers can return a product that they are not satisfied with.”
On being asked about e-commerce players which will do well in the coming years, Gaur said, “Flipkart will do well since they have raised a considerable amount of money and can afford to experiment at this stage. Travel sites will continue to do well. Earlier, people were looking for good deals and therefore, went online. Gradually, it has turned into a habit, a convenience.”
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