Being able to pivot and tweak the business is what entrepreneurs are known for.
That is exactly what BG Krishnan did with his online venture, eShakti.com Pvt Ltd. He was selling lifestyle products to Indians living abroad, particularly in the US. The merchandise included Indian clothes like salwar-kameez . The salwar-kameez was also custom-tailored to turn them into tunics and pants. “We found a lot of Americans were buying them,” says Krishnan.
This roused Krishnan’s interest, who tried to understand why Americans were buying these clothes. He also tried to figure out what American fashion was all about. To his surprise, he found that there was a lot of variation in size and shape, and not all Americans were able to get the exact fit. This was a huge market and, gradually, eShakti dropped all Indian lifestyle products – films, movies, food and books – and started hawking only clothes.
“The idea of clothing became stronger because it was a high margin product and was serving Indians as well. Suddenly, the market expanded when we looked at clothing,” says Krishnan, in his office located on Chennai’s arterial Anna Salai.Western line
Simultaneously, eShakti launched its western line of clothes. This business grew and accounted for a fourth of the company’s total revenues. Krishnan wondered why Americans preferred to buy Indian clothes, rather than the western clothes that were on sale. “I felt that our entire branding was obviously not clear. We dropped the Indian clothing line one fine day. In 2008,” he recalls. This change in business seven years after the venture was launched proved to be a turning point for eShakti. “After that, we never looked back. The volumes just multiplied,” says Krishnan.
Was it not a difficult decision to drop a business that accounted for three-fourths of his revenues? For an entrepreneur, it is not such a difficult decision to make, according to him. Entrepreneurs go where the opportunity is; he was starting from a 25 per cent base rather than a zero base. The market size also played a role. The Indian market in the US was about 1.8 million, while the US market was 300 million. “I felt that the 75 per cent was holding my other 25 per cent from growing. I wanted the larger market to be the one we served. I didn’t want to be seen as someone selling ethnic clothes, because the market then would be limited,” says Krishnan.Change in strategy
As if to approve eShakti’s change in strategy, venture capital firm IDG Ventures invested $3 million in the company in 2011. From then, the numbers have multiplied ten-fold, Krishnan says, without divulging details. Further endorsement of the business model came in September 2014 when eShakti raised another $5 million, the bulk of it coming from IvyCap Ventures with IDG also participating.
So, what does eShakti do? It is an online women’s apparel retailer that sells to customers in the US. It sells, what Krishnan describes as, day-to-evening wear clothes, kind of smart casuals. eShakti offers both off-the-shelf and customised outfits and competes with the best brands in the most competitive market in the world, says Krishnan.
Almost half the customers are those who buy without any customisation. This, Krishnan says, is an important index, as it means that the fashion is competing with other brands in the market.
eShakti offers a full-size selection, which means it pretty much guarantees a woman that her size will be available. Custom styling includes changing the size to fit that particular customer’s requirements, be it in the upper body cut or the sleeve length or to suit that person’s height. The standard garments in the US are for an average height. “In our case, we go by the exact height of the customer,” says Krishnan.
He says even though customisation is the company’s USP, he prefers to tell his customers to buy from him because “we make clothes that make you look your absolute best.” They are not buying customisation; they are buying clothes that give them a far better shot at good fit and fall.
In terms of pricing, there are the budget brands, the moderately priced ones and the premium brands and eShakti, says Krishnan, has plonked itself a notch above some of the moderately priced brands, say, a notch above a JC Penney.
eShakti was earlier stitching the garments on its own, but has now outsourced it to a company in Gurgaon. eShakti has a design director based in New York and a design team in India. It will expand the design team and increase the number of products on its site. It has a large pattern studio. For all practical purposes, all garments are made once virtually. Money will go into fabrics, designers, sampling and strengthening the top management team.Fund raising plan
eShakti will look to raising the third round of institutional capital in the first quarter of the next financial year, something upwards of $20 million.
Krishnan believes that eShakti has built both scalability of the business and competitive barriers and what it needs to grow the business is enterprise – vision, strategy, capital and team.
“We would ideally like to measure twice and cut once. At the same time, we don’t have the luxury of going too slow. Merely because we don’t have any major competitors now doesn’t mean someone is not showing up tomorrow. We have to get ourselves to be the king of the heap as quickly as possible,” says Krishnan, a physics graduate from Loyola College, Chennai, and an MBA from Jamnalal Bajaj Institute of Management Studies, Mumbai.