30-35% Of Our Orders Are From Non-Metros: Ritesh Srivastava, CEO, Elitify.com
Ritesh Srivastava, CEO, Elitify.com speaks to BW Businessworld's Brij Pahwa about his latest venture into the premium e-commerce sector. Srivastava, in this exclusive, also highlights the sector trends. Excerpts:
What made you enter e-commerce when the sector is currently seeing losses and saturation?
We have always been cautiously optimistic about the future of e-commerce business in India. The macro numbers of our economy point to a huge growth potential in this space. Over the last couple of years, there has been a significant shakeout in the e-commerce sector. Businesses that have a real value proposition and that have been built with a vision to sustain financially and grow organically are the ones that will be around and will continue to thrive.
Elitify.com operates in a premium and luxury space that is still niche and has a very promising future. When we acquired Elitify.com in August 2017, we believed that the brand has a lot of potential and offers immense business opportunities. Initially, for about 3-4 months we planned and worked around maintaining basic hygiene – solving IT glitches, strategizing marketing strategies, key messaging for our valued customers etc. We evolved Elitify.com from a discounted luxury portal to a more exclusive and sophisticated portal with its product offerings.
The brand is now making some serious progress. We have witnessed an impressive double-digit growth and our cumulative customer base has grown to 150,000 plus. With this momentum, we are hopeful that we will make great strides in the online luxury and premium market of India.
Do you think luxury online market is a feasible business option in India?
Globally, the e-commerce or the online luxury market is growing at a higher rate compared to conventional retail or the offline market. By 2025, online will contribute to more than 20% of the overall luxury goods market worldwide. This segment has seen significant growth in the past few years. Indian luxury market is poised to expand five-fold in next three years and the number of millionaires is expected to multiply three times in next five years. ASSOCHAM reports that Indian luxury goods market is projected to cross $30 billion by the end of 2018, it is expected to reach $100 billion by 2025. Currently, the Indian market contributes just 1-2% to the global luxury market.
The market drivers have been economic growth, higher disposable incomes, growth in urbanization and direct or indirect presence of many international premium and luxury brands. We at Elitify.com are very encouraged by the increasing demand from Tier 2 and Tier 3 cities, roughly 30-35% of our orders are from non-metros, which is very exciting for us. Further, we have seen remarkable shift in the luxury consumer behavior, with many first-time customers placing pre-paid orders with us and are coming back to place repeat orders as well. I believe that the luxury online market is here to stay, and the Indian market is responding pretty well to it.
Won’t the Walmart-Amazon fight eat other, smaller, players out?
Globally, Walmart and Amazon have stayed away from the luxury/premium space. Moreover, Walmart/Flipkart and Amazon are marketplaces and are meant for masses. Luxury e-commerce is all about personal connection, visual merchandising and the variety & the depth of the catalog that must be spot on when it comes to fulfilling the sophisticated and ever-changing needs of the shoppers. It is impossible to create such an experience in a market place environment where you don’t have the entire control on the fulfillment. Luxury is experiential, and therefore, at Elitify.com we create personalized shopping experience for our customers. The business strategy of Elitify.com, supported with a considerably high average order value, repeat purchase rate and the double-digit percentage growth in market size, will put us in a position to create an enormous value in the very near future.
Are you looking for any investments?
We are not actively looking for any investment at this stage. We would consider investments once we achieve a point of operational breakeven and a sustained growth trajectory.
What are the current transaction numbers, profitability?
We are seeing a double-digit growth, quarter on quarter and expect to reach operational breakeven in a couple of months.
How are you planning to tackle the problem of fake products?
Counterfeiting is a global issue and has been for years. Technology has given counterfeiters the ability to make convincing fake products fast, while the internet has made it easier to buy counterfeit products. Usually these knock-offs are sold at ridiculously low prices, you would see a Rolex listed for $100 or a pair of shoes from Louis Vuitton for $50. A sophisticated and seasoned luxury/premium buyer is more aware and will not fall prey to such deceptions. The only reason why the counterfeit market continues to grow is because there is a huge demand for these products and the underlying motives of consumers that are driven by social motivations. Consumers are more likely to buy a counterfeit brand when their luxury brand attitudes serve a social-adjustive function by helping them gain approval in social settings.
The special offers that we run at Elitify.com are directly passed on to us by the brands thus ensuring realistic pricing. Since we procure directly from the brands or the authorized brand resellers worldwide, we have a strict policy in place to safeguard the authenticity and quality of the products. With over 250,000 products and over 100,000 orders fulfilled, we have never seen any concerns related to counterfeit products so far.
What’s the current strategy for brand promotion and marketing?
We believe that the best brand promotion strategy is to enhance the customer shopping experience and generate positive customer reviews. While this is the best strategy, it may take some time to show results, we have been able to build a good brand equity for Elitify.com and our repeat purchase rate is an indicator of that.
Luxury e-commerce demands a different marketing approach, one that takes into consideration the disparity between luxury and conventional mass-retailing strategies in the e-commerce market. It is vital to understand the target audience, consumer behavior, needs and desires. The most important decision any luxury brand marketer can make now is to focus on creating an outstanding shopping experience for their customers. E-commerce is the biggest and most important priority for luxury brands, and statistics show that, by 2020, online sales will represent as much as 20% of the total revenue for the luxury sector. This proves that luxury brands have the most rapid growth in online commerce, which means that the most difficult audience is now ready to shop online, as long as their preferred brands are able to provide the same premium quality for their goods and services.
Social media presence and content plays a big role in customer acquisition and influencing the customer buying decision. Our merchandising team of Elitify.com works in tandem with the marketing team and the ad agency to showcase the tastefully curated latest fashion from across the fashion capitals of the world. Our endeavor is to keep wowing our consumers with new and most exclusive catalog on every visit of theirs. For marketing and customer acquisition, we spend heavily on digital platforms like Google, Facebook, Instagram, YouTube, etc. We have recently tied up with a US based Ad agency that is among the top 3% of Google partners worldwide. To further strengthen our marketing and strategy initiatives, we work with #ARM Worldwide – a leading digital marketing and communication consultancy who help us channelize our brand promotions and media outreach.