New Delhi: Seven months after venturing into the offline space, online fashion retailer Yepme is planning to set up as many as 1,400 outlets over the next three years—part of a plan to get physical stores to contribute 75% of its revenue.
Gurgaon-based Yepme, which sells fashion articles under its own brand name, is shifting its focus towards becoming an affordable fashion brand across not just online but also offline retail.
The company’s offline expansion would largely be focused on tier two and three towns such as Haldwani and Hapur in Uttar Pradesh and Jawali in Himachal Pradesh, as it looks to tap lower middle class customers.
Yepme chief executive Vivek Gaur said that smaller towns of the country have a huge market for fashion retailing; however there is a lack of availability of good brands at an affordable price range. Yepme is seeking to address that gap.
Gaur, who spent close to a decade as a regional manager in Hindustan Unilever Ltd before starting Yepme, believes it is about creating availability.
Yepme, which offers fast fashion at prices ranging from Rs.299 to Rs.899, wants to replace local brands with Yepme in the smaller markets where there is minimal or zero presence of branded apparel. The size of the stores would range around 750-1,200 square feet and will be set up through franchisee route.
Yepme, which started out as an online fashion aggregator offering a mix of private labels and branded apparel, today has around 27 stores, mainly franchise outlets, across metro and smaller cities.
The stores will also act as warehouses to facilitate deliveries in and around areas. Ideally the cost of starting a franchisee store comes to around Rs.20-25 lakh.
Yepme was incorporated by Gaur and Sandeep Sharma in 2011 and currently claims to be getting 300,000 orders on an average per month online for an average cart size of Rs.700.
According to Gaur, there is a huge difference between the average cart value at the offline outlets compared to online. In physical outlets, the average kart value is Rs.1,500.
According to Gaur, the offline expansion will help Yepme build a brand in smaller markets.
“Today many online brands are evaluating setting up offline models through a franchise model, which brings in a new customer set in to the picture. They are focusing on reinforcing the online brand for the large cities and offline brand for Tier 3-4 cities,” said Sreedhar Prasad, partner, e-commerce, KPMG.
“Also, in smaller markets, it is more about availability and variety than discounting. Online brands are looking at capturing this market through franchise route because their product availability, range and the fast fashion designs could be far better than what is currently available in these markets. Further many of the current online brands could be comparatively cheaper than the brands available in smaller markets,” he added.
However, building a brand and getting accepted in markets that are largely dominated by unbranded goods, could be a challenge.
In the last couple of years, many e-tailers including e-commerce portal FabAlley, online furniture marketplace Pepperfry and eyewear portal Lenskart have launched offline stores.
Nearly 74% of Indian consumers shop across all channels including local retailers, modern trade outlets and online, said an August 2015 study by customer marketing firm Hansa Cequity and lobby group Retailers Association of India (RAI).
Gaur said that the larger stores in Gurgaon had already started to do Rs.1,100-1,200 per square foot of sales every month. The flagship outlets range from 2,000-4,000 square foot each.
Yepme has also been testing the foreign markets and set up a subsidiary, Yepme UK Ltd, around five months ago. It has started selling its products on UK-based asos.com.
Yepme (VAS Data Services Pvt Ltd) raised close to $75 million in September from Khazanah Nasional, Malaysia’s sovereign wealth fund, and existing investors including Helion Venture Partners, JS Capital, TCS Global, Capricorn Investment Group and Morpheus Media Fund.