It is not easy to run an ecommerce business in India, especially when the battle is with the likes of Amazon and Flipkart. Even the formidable Snapdeal did not survive, and will soon be merged with Flipkart.
But online fashion store LimeRoad has survived the tough times of funding crisis and has continued to grow even though some of its large competitors either shut shop or got acquired by larger players.
“We have grown at over 250%, while the online fashion industry has grown at 5% to 10%,” says Suchi Mukherjee, founder and CEO of LimeRoad. “Our burn has halved… (profits) will take possibly 18 months, or maybe 12.” In two months, she added, LimeRoad will be profitable if marketing costs are excluded.
“We have grown at over 250%, while the online fashion industry has grown at 5% to 10%… Our burn has halved… (profits) will take possibly 18 months, or maybe 12” — Suchi Mukherjee, founder and CEO, LimeRoad
LimeRoad started in 2012 as a social discovery platform for ecommerce and has raised $50 million in three rounds of funding from Tiger Global, Matrix Partners and Lightspeed Venture Partners, among other investors.
Why are we focusing a story on LimeRoad today? Because fashion is the second largest vertical in ecommerce after electronics in India, contributing 30% of overall ecommerce sales, according to consultancy firm Technopak Advisors. Ecommerce makes for just 1.2% of overall retail sales in India, but is expected to rise to between 4% and 6% by 2020 — or $45-$65 billion by value. It is a fair assumption that a significant part of this, even if not 30%, will be accounted by fashion.
LimeRoad is first among the last ones left standing in online fashion. Bigger rivals like Myntra or Jabong have been snapped up (by Flipkart) in the dog-eat-dog world of Indian e-commerce
LimeRoad is first among the last ones left standing in online fashion. Bigger rivals like Myntra or Jabong have been snapped up (by Flipkart) in the dog-eat-dog world of Indian e-commerce. Other early casualties were Yebhi.com, Zovi, FashionandYou and DoneByNone.
Today, others like LimeRoad, Voonik, Aditya Birla Group’s ABOF, Ajio, StalkBuyLove, Koovs and Jaypore are trying to find their feet in the game with an aim of bagging a share of the $70 billion fashion purchases (online and offline put together) Indians make annually.
Kalagato, a market and competitive intelligence company, ranks LimeRoad after Myntra and Jabong, followed by Voonik and ABOF.
The long tail of fashion
LimeRoad doesn’t sell branded clothes, but gets smaller manufacturers, boutiques and designers to list their products on the platform. The closest offline parallel of this would be fashion hubs like Shahpurjat in Delhi or Commercial Street in Bengaluru. To be sure, this positioning of LimeRoad is not unique — Voonik and Koovs also sell unbranded and private labels.
Still, LimeRoad has certain tricks that are sticky with buyer. For instance, it gives its customers the unique proposition of marrying listings with content. To put this simply, it allows people to mix and match their own styles and combinations to create what is called a Scrapbook, and then there is Stories, which is essentially giving a nice name and listing a bunch of similar products under that listing title. For example, in this story ‘Churidars and Salwars for Sweet Women’ by Raj Singh, the curator lists different items by different sellers. The Scrapbook and Stories feature allow customers to match clothes, accessories, handbags and shoes to create their own looks.
Divya Jain, a content writer with an American technology firm, loves to spend time on LimeRoad matching different styles. “Sometimes I buy them, and sometimes it just for fun, creating my own styles from the different products available on the site. Most of the other ecommerce sites don’t give you these options. If I don’t find something here I go to other sites,” says Jain.
The result, according to LimeRoad, is higher engagement. “The reality is that nobody has an app conversion rate of 15% (which we have),” says Mukherjee.
Eight months ago, LimeRoad segued into men’s fashion. “That has picked up. It’s already 25% to 30% of our sales,” says its CEO
Eight months ago, LimeRoad segued into men’s fashion. “That has picked up. It’s already 25% to 30% of our sales,” says its CEO. Including men and women, the platform adds 3,000-4,000 stock-keeping units (SKUs) every day. It already has seven lakh of them.
These metrics could not be independently verified by FactorDaily.
Mukherjee says that a proprietary technology built by the engineering team has helped weed out styles and products that don’t sell. The platform automatically picks up what is viewed and bought more, which helps to keep the site fresh.
“There are quite a few of e-tailers trying to sell private labels and unbranded products to address the long tail of fashion. But, at those low price points, the customer acquisition cost makes it difficult to become profitable” — Praveen Sinha, founder and former CEO of Jabong
But, it is too early to celebrate. “Limeroad has some uniqueness in the market, but it is not alone. Fashion is a very competitive space with a lot of players, but none of them are positive by unit economics,” says Praveen Sinha, founder and former CEO of Jabong. He uses the analogy of airlines in India. “…all the airline companies were in losses. Now, four of them (airline companies) are profitable.”
He is also not overly impressed by LimeRoad unbranded SKUs strategy. “There are quite a few of e-tailers trying to sell private labels and unbranded products to address the long tail of fashion. But, at those low price points, the customer acquisition cost makes it difficult to become profitable. This doesn’t mean they won’t survive, but it will take time,” adds Sinha.
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Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. Accel Partners is an early investor in Flipkart. Vijay Shekhar Sharma is the founder of Paytm. None of FactorDaily’s investors have any influence on its reporting about India’s technology and startup ecosystem.