We have never done cash negative transactions and unnatural under-cutting of margins
27 Aug 2012

Pradeep Katyal joined Utsav Fashion Pvt. Ltd. as the Chief Executive Officer in January 2012. His mission is to spearhead Utsav Fashion to dominate the global online market for Indian Ethnic Fashion (IEF) by consistently re-inventing IEF in a way that invites passionate advocacy amongst India-lovers the world over. Since he took over the reins at Utsav Fashion, the business has seen an upsurge by 12% month-on-month, and more than 115% over the same month last year. In an exclusive interview with India Digital Review, Pradeep Katyal discusses his plans and views about growing Utsav Fashion as a brand in India.

Utsav started with an offline store in Jaipur and forayed online in 2003. What was the objective behind venturing online?

Through the offline store, the family had realised that a lot of our consumers were from abroad. At that time there was a youngster in the family who had done some course on web commerce. So, when it started, it was just an offshoot of the offline store and not a serious business. In 2003, the dot com bubble was not far behind and hence it didn’t have a strong business plan and it happened more as an intuitive measure.

Initially your consumers were NRIs. How was the delivery and last mile achieved at that time?

We are more of an aggregator than a retailer and at that time, most of the vendors were not willing to give their products for display in India, because they were worried that their designs might get copied etc. In 2003, the site was opened only outside India and that is when the vendors agreed to give us the merchandise. In hindsight, this has worked well for us. We have achieved growth and there are not too many players around as competitors.

One of the founder members of this business had earlier created a logistics business. So we had an expert on logistics in house who over saw the last mile delivery for us.

Presently, what is the ratio of your Indian and overseas consumers?

Presently, we are dominated by NRI customers and 95% of our business comes from them.

What is the number of transactions/shippings done on a daily basis on the site?

We get around 425 transactions everyday and we dispatch more than 900 items a day.

What was your revenue last year and what are your expectations this fiscal?

Last year we did around Rs 60 crore and this year we are expecting Rs 200 crore.

Utsav is one of the oldest ecommerce players in India but we are yet to see it doing a TV marketing campaign. Any specific reasons?

We strongly believe that the business has to be run profitably right from Day 1. We are happy with our growth and we know that, by the given industry standards now, going from 60 crore to 200 crore is anyways an ambitious number. We are doing marketing and communications in a focussed manner through digital. We have started spending big search engine marketing from this calendar year. We have been doing good in search engine optimisation and therefore our traffic has been rising consistently.

On TV, we will require going to mass media some time to reach to Indian consumers and we might start the campaign on mass media by this financial year.

With ecommerce in India, the term funding goes hand in hand. But you have refused funding from VCs. Please share with us your sans-funding survival strategy in this cash-starved industry?

I don’t know why people think that we have refused to take funding. That is not true. We are open to funding options, though I think that is not a precursor to our growth. We have demonstrated amply well that we can achieve a profitable growth in place, may not be in multiples like any other players. In rupee terms, last month our growth was 200% more than same month last year. From funding we expect some kind of value addition to come from the funding partner and we are open to funding.

We have always maintained gross margins that can sustain individual transactions. So we don’t do cash negative transactions and unnatural under-cutting of margins, and that has been our way to growth.

What are your immediate priorities as the CEO of the company?

There are two-fold priorities. One is to diversify my buying and cover more and more parts of India. We are improving our buying and selection process, so that we become a store on Indian ethnic fashion as a whole.

Secondly, we are spending on technology, both backend and frontend, to make our online activity better than offline.

Besides your store in Jaipur, what is Utsav’s offline presence presently like?

Besides Jaipur, we have a store in New Jersey, US. We are also conducting retail exhibitions in various parts of US. In terms of revenue, our offline is still minuscule as it doesn’t contribute more than 2% of our turnover.

Speaking about the current trend in ecommerce, Cash on Delivery has become a sort of bone of contention for ecommerce players in India at least. What is your take on this?

I have been hearing that ecommerce players are having trouble in coping with CoD, but incidentally, I haven’t heard the same in my company. The reason might be that we have few transactions in India and our category is really involved. We do around 2,500 blouses and salwar kameezes every month. After giving measurements and being delivered the right fit, I don’t think any customer will like to refuse and return the product. In the long run, CoD is not very conducive for high ticket items. It is good for inducing consumers and win their trust, but, in the long run, consumers will go to other mode of payments.

Speaking about ecommerce as a sector, how strong is the competition now?

There are other players in our category, but because of our early entry, we have left them far behind.

What would be your advice to a budding ecommerce entrepreneur in India?

My principle is very simple and the basics of business don’t change. Single transaction economics must work out and as long as one can make money in a single transaction, you are going to have a larger business.