Voylla eyes offline expansion, targets Rs100 crore revenue in FY17
Jaipur-based fashion jewellery e-tailer Voylla Retail Pvt. Ltd is focusing on expanding its business offline and targets revenue of Rs100 crore in fiscal year 2017, a four-fold increase from Rs25 crore reported in the previous fiscal year, co-founder Vishwas Shringi said.
Voylla expects its offline sales to surpass online in the next three to four months and contribute most of the revenue by March 2017. Revenue is expected to grow two-fold during fiscal 2018 to Rs200 crore, Shringi said.
“Offline stores trigger impulse buying in customers. Also, because the customers are able to see and try the product, they usually end up buying more units in a single purchase,” Vishwas said.
Backed by private equity firm Peepul Capital and Pune-based Snow Leopard Technology Ventures, besides angel investors, Voylla, raised $15 million in its latest round in October 2015. Vishwas said he aims to make Voylla a Rs500-crore brand by March 2020.
Founded in 2012 by Vishwas and Jagriti Shringi, Voylla sells jewellery online through its own website, a mobile application and 25 marketplaces including Myntra, Amazon India and Limeroad. Online sales contribute 50-60% of its total revenue at present.
The brand started expanding into offline markets last year through kiosks and shops in addition to partnering with retail stores such as Future-Group-owned Central. Voylla is in talks with the Reliance Trends and Shopper’s Stop retail chains for similar arrangements.
At present, Voylla retails in 50 cities through 94 offline stores, of which 60% are kiosks with areas of about 300-500 sq. ft and which cost Rs15-20 lakh to set up. Each kiosk takes three to four months to break even, said Vishwas.
The company aims to double its offline presence over the next year and is adding about five to seven kiosks every month. “Being present through multiple channels helps reinforce the credibility of the product in the fashion jewellery space, because wherever the consumer goes, the particular brand is present, said Sreedhar Prasad, partner, internet commerce, KPMG.
“Moreover, most of the market places have a dedicated category for this, where they (online fashion jewellery start-ups) can be a very strong supplier,” he added.
Mint reported in May that the company was to launch its first international shop-in-shop outlet in the United Arab Emirates (UAE) by June-end. Internationally, Voylla is present in five marketplaces spread over the US, Germany and UAE. Online marketplaces overall contribute 15% of revenues. Voylla aims to launch kiosks in the US after April 2017.
International sales currently contribute about 5% of the company’s total online sales. Voylla’s main focus is to continue growing domestically. “We think that Indian market itself poses a huge opportunity; that it is our main focus allowing international (market) growth to be organic” said Vishwas.
Voylla, which has 300 employees of which 100 are in-house karigars (artisans), clocks Rs10 crore in gross merchandise value (GMV) per month by servicing 7,000-8,000 transactions a day at an average ticket price of Rs800-900 and earns 50-60% net margins, Vishwas said. Net margin is gross margin minus discounts.
The company has 15,000 products listed online across fashion jewellery and accessory categories such as earrings, necklaces and bracelets. About 20% of Voylla’s revenue comes from earrings and it sees a 25% monthly repeat rate among customers.
The online fashion jewellery start-ups with which Voylla competes include Mumbai-based Pipa Bella Accessories Pvt. Ltd. that raised $600,000 in pre-series A funding last year and Gurgaon-based Fourseven Services Pvt. Ltd. that raised Rs3 crore last year.
Prasad pointed out that in terms of challenges, these companies need to work out the logistics costs that they can afford. “The average delivery cost for an e-commerce company is Rs100-110. And for a relatively lower average order value, if you need to spend over Rs100 on logistics, the (business) model may have long term viability issues, even though it is a high margin product,” he said.
He added that the cost of acquiring more customers is high for such single category companies. Companies in the fashion jewellery retail space thus need to innovate on what more they can offer from a product category perspective to their acquired customers and at the same time increase average order value or repeat purchase rates.