India is currently standing at a juncture where the share of millennials and GenZ account for 52% of the country’s total population, which is higher than the global average of 47%. Given the extremely rich demographic dividend of the nation, an increasing number of brands, both domestic and international, have started queuing up to attract the attention of these consumers with the latest fashion trends.
In their endeavour to woo this breed of consumers, many players are constantly upping the ante in the apparel and accessories space to cater to their demands in the ever-evolving world of fashion.
Until now, China’s Shein, an online shopping platform, was an unclaimed leader of the space. However, after its ban by the Indian government due to security concerns, none of the existing players has been able to fill the gap.
The massive opportunity has also given players like London-based Urbanic to enter the Indian territory to tap into the Genz user base, but given the fast-changing market, and user preferences, the market is ripe for disruption.
Recognising this challenge, Bengaluru-based startup newme is attempting to build a homegrown fashion brand, similar to Urbanic or Shein, with a focus on GenZ.
“We are targeting 375 Mn Indian GenZ customers, especially the 50 Mn who are on Instagram,” newme’s cofounder and CEO Sumit Jasoria said. newme was launched in 2022 by Jasoria and other cofounders Vinod Naik, Shivam Tripathi, and Himanshu Chaudhary.
Talking about the target segment, he said that when it comes to fashion, this generation looks not only for trendy products, including apparel but also the ones that reflect their individuality.
According to Jasoria, newme is trying to bridge that gap as marketplaces like Myntra, Ajio and others only offer mass-produced designs. He added that contrary to the popular belief of ‘the more the reviews the merrier the sales’, GenZ tends to buy items that have fewer user reviews.
“GenZ is a generation of digital natives who are selfie-savvy and understand the importance of their appearance in building confidence. Their fashion aspirations are higher than those of an average Indian citizen, and they have a keen eye for design. While they look for an affordable price point, they are not willing to compromise on quality for cheap products,” Jasoria said.
newme’s Game Plan
Understanding the pulse of the new-age consumers, newme, which was launched in August 2022, is focussing on designs for western wear. The startup launches 500 fresh designs every week and soon plans to scale up to 1,000 designs a week. The platform follows a low inventory model, and keeps two weeks’ worth of inventory, compared to three months inventory maintained by most fashion brands.
Currently, newme only sells apparel to female consumers. The platform reaches its customers directly and does not list its products on marketplaces such as Ajio or Myntra.
From designers to supply chain, newme relies on its in-house team. It is investing in data science and building a tech stack to efficiently launch fresh designs every week.
“We have different trend dashboards now. On these dashboards, the team looks at what is trending for the last seven-eight days and they also look at sales data. The tech team creates moot boards based on trend and sales data. These moot boards create designs, which then go to supplies both in India and international markets. The factories are informed of the designs that are resonating with consumers, allowing them to produce the most in-demand products,” Jasoria explained.
While Urbanic is one of its biggest competitors, Jasoria clarified that it primarily caters to Tier 1 cities, whereas newme is highly focussed Tier 2 and Tier 3 cities, where most of the existing western wear brands are also focussed. Jasoria noted that 70% of the company’s orders come from non-metro cities, indicating a strong demand for trendy and affordable fashion in these regions.
Talking about why a consumer would prefer newme over Urbanic, Jasoria said that the latter is building for the westernised customers. However, newme is closely following the fashion choices of smaller cities in India.
“Indian consumers have diverse body shapes as well and very different preferences even in western apparels. We keep all these factors in mind when designing our products,” the cofounder said.
Keeping Costs At Bay
The platform, which went live in August 2022, has been delivering to all pin codes across India and has acquired 5 Lakh registered users so far. Further, it has seen 30% month-on-month growth in terms of new users.
Currently, the customer acquisition cost of newme is 30% of the average order value, which the CEO aims to bring it down to at least 25%.
According to Jasoria, the repeat rate on the platforms is higher compared to the industry average. According to industry estimates, repeat buyers account for around 55% of the overall GMV of leading marketplaces.
“Since November last year, we have grown almost 7-9X in terms of revenue. We are targeting to grow at least 5X by the end of this year. We have a low inventory, and our capital loss is very minimal. That’s why we pay our manufacturers on time. We are building a capital efficient company and aim to turn profitable in the next few years,” the CEO added.
Challenges Ahead
Although few fashion brands are currently focussing specifically on GenZ, it won’t be surprising if more start crowding the space. For instance, Myntra recently launched FWD, a separate fashion experience portal for GenZ on its platform. Myntra aims to add 10 Mn GenZ users to its customer base over the next two years, as it had nearly 8.6 Mn GenZ customers in 2022.
Other marketplaces like Reliance-backed Ajio and Nykaa Fashion may also introduce GenZ-focussed features in the future. Since these players are homegrown, they have a good understanding of Tier 2 and Tier 3 audiences as well. In such a scenario, it could be challenging for small brands to keep up with the competition.
Further, newme is entirely built on the concept of fast fashion, which globally faces criticism for its environmental impact and poor wages, among other issues. Although newme has made a good start, it will need to address several concerns to sustain in the long run.
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