DARE - Because Entrepreneurs Do

Personalization of products and gifts, though a well established concept outside the country, is still in infant stages in India. The concept has of late seen an upswing and is estimated to become a Rs 5,000 Crore industry in India in the next few years.

About the market for on demand personalization of products and gifts
I came across the field of personalization about 5-6 years back. I noticed a lot of innovation happening in the area of personalization of products. However, these were all in countries other than India. The idea of this business is simple—inputs are taken from the customers and the product is worked upon as per the inputs. While some people ask for simplistic personalization such as printing their name on a product, there are some who desire more complex personalization like custom made furniture, toys, and such. There was no such model available in India; at least not as an organized sector.

To come up with the initial business model and plan, we tried to relate the overall Indian market context with what was happening in the personalization field across the globe. For visibility, in the earlier days, we focused mostly on our tie-ups with large number of portals - such as CricInfo, IndiaRocks, iBibo, BigAdda, etc. The idea was to leverage on the sizable traffic that all these sites had. Later on, we started our own online marketing using SEO and SEM. Besides this, we did some local radio campaigns in Bangalore; were able to get reasonable press coverage and a combination of all such activities. We have not gone ahead with mass media advertising yet, as we do not have the on ground presence to take full advantage of such advertising. We are just a small company with only 70 people, with offices in Bangalore, Delhi and Mumbai.

As for the back end of this business, we have tie-ups with numerous vendors across the country, who we source raw material from and at times outsource the order fulfillment. Besides this, we have tie-ups with four courier companies, who take of domestic as well as international deliveries. We have a dedicated client servicing team; customers can send us an email or call our customer service number. In case of genuine problems, we offer free replacements and so far our metrics of customer satisfaction is very high. We have a huge list of designers who keep fresh designs coming in. These designers are mostly freelancers, who we encourage to send us designs that we could use, and with every sale of a product with that design they can earn royalty. To keep track of all this, we bank on our technological expertise and have developed a custom system to take care of all logistics and processes involved.

Coming to competition, there are many players operating locally, spread across the length and breadth of the country, albeit in a highly unorganized fashion. We are also seeing several other players coming into the online business with similar offerings. But like I said, this sector is vastly untapped and holds a lot of potential in the next 5-10 years.

What would you say were the key factors that helped you get funded?
Fortunately, in the last five years, we have seen a lot of VC firms coming to India. We have had three rounds of funding for Myntra.com. The initial bootstrap funding happened with me putting in some money to get things going. In about nine months, around August 2007, we got some angel funding. Last year, around September 2008, we raised a serious round of investment of about 5 million dollars, which was contributed together by three different funds.

The investors are looking for companies with good ideas and exceptional team with a promising business model. For them, if they believe that the business has the potential to become a large business; only then it’s worthwhile to put in their substantial amount of capital. Besides this, what helped us was the fact that we were 6 people in the management team, mostly IIT graduates with 8-10 years of work experience.

However, yes, getting funds has been difficult since the last 6 to 9 months, but I am sure that things will soon change.

Where is the big bucks—corporates or individuals?
Both have their own advantages , the volumes come from corporates but the margins comes from consumers.  We started off as a primarily online business. Over a period of time though, the business model has evolved. While we have a strong focus on consumers, we have a lot of inquiries coming from companies and colleges. So, we have developed a B2B business model to cater to that. Some of Myntra’s major corporate clients are Yahoo, Mphasis, SAB Miller, Accenture, and the various IIMs & IITs. Myntra has also designed and set up brand shops for large corporates like Tech Mahindra, Birlasoft & Headstrong.

Also, we are expanding to retail by implementing a online-offline sort of hybrid model. The idea is to reach out to a much bigger set of consumers through this offline point of sales. The rate of returning consumers has been good for us so far - both online and offline. This hybrid model is at its infancy stage, where we have tied up with Reliance Web World and several other gift shops, where the customer gets to see and touch the products in person, as well conveniently pay by cash.

As for the online tie-ups, we approached various portals asking them to offer this service at no additional costs to them and worked out a revenue sharing deal with them. We have a business development team who approach these online portals as well as corporates in a systematic manner. It takes a long time to explain, convince and get the contract, but in the end we succeed at it.

Global slowdown definitely must have hit this line of business, right?
There has certainly been an impact of the slowdown. Many a companies reduced their budgets on corporate gifting around this time. However, we are a very new entrant in this largely untapped market that has a huge potential. It is too early for this market to be affected by macro level market trends. When one is trying to increase the market share very marginally, say from 0.25 percent to 5 percent, there is not much scope for a slowdown to affect the overall growth of the company.

Yes, the average corporate customers’ order size has gone down, but we have clocked from 40 customers to 300 customers in this time frame. Keeping this in mind, this financial year we are targeting to grow three to four times as compared to the previous year.

Comments (0)

Subscribe to this comment's feed