The Problem
We don’t imagine ourselves going out in just a shirt or trousers or belt.
Yet, most e-commerce sites assume that, showcasing and selling individual fashion apparel. This results in:
- Higher chance of users dropouts (due to confusion).
- Lower revenue per customer (no cross-sells).
- Customers miss out on great pairs for their outfits.
Solution
A scalable mobile app where users see fashion garments and accessories as a “combined look” and can shop for each product individually or as a package.
How It Works
- Any listed “look” will have a top, bottom, neck, waist, shoe, hand, and accessory slot.
- Slots may have nothing or multiple products (like a jacket over a top).
- On average, each look will have 6 products.
- Procure your first 48 products which can be mixed and matched into 120 unique looks.
- Get 2 models to shoot the looks, helping users visualise better.
- Users can sort and filter through these looks in-app.
- Provide reward points on purchases and product reviews.
- These points can be redeemable for store credits to win a loyal fan base.
- Add 30 products each quarter, adding 75 looks every 3 months.
- Send beautifully-crafted notifications to keep the users coming.
Pricing / Business Model
We should procure affordable products from multiple sellers, as long as the quality is good.
Our USP will lie in “look curation”, helping users visualise and shop. For every look, the individual components will be priced around 5-10% more than the average retail price, giving us at least 50% in gross margins (adjusting for reward points).
But the overall look, when bought together, will be highly discounted, with just 20% gross margins for us.
Expected Revenue
Assuming the average sale price (across garments and accessories) to be ₹900, we get a gross profit of ₹450 (50% of ₹900) on every product sold individually, and ₹900 on the combined look (20% of ₹900 x 6 products).
With regularly added looks guaranteeing high “repeat user” traffic, asset-light operations and incredible opportunity for cross-sells, you can expect similar revenue for the first year into operations:
| Mobile App Installs (A) | 1,00,000 |
| First purchases (B = A*2%) | 2,000 |
| Repeat purchases (C = B*5) | 10,000 |
| Total purchases (D = B+C) | 12,000 |
| Single product revenue (E=D*90%*₹450) | ₹48,60,000 |
| Looks revenue (F = D*10%*₹900) | ₹10,80,000 |
| Total revenue (G = E+F) | ₹59,40,000 |
| App install expense (H=A*₹15) | - ₹15,00,000 |
| Other marketing expense (I) | - ₹3,60,000 |
| 4 Model shoot expense (J) | - ₹2,40,000 |
| 138 display pieces expense at ~₹450 each on avg. (K) | - ₹62,100 |
| Packaging and logistics (L = D*₹100) | - ₹12,00,000 |
| Annual pay for 4 ops staff (M) | - ₹14,40,000 |
| Annual tech expense (N) | - ₹3,00,000 |
| Total expense (O = H+I+J+K+L+M+N) | ₹51,02,100 |
| Total Y1 profits (P = M-O) | ₹8,37,900 |
Even if one spends between ₹6L to ₹8L building the mobile app, one can easily break even from the first year itself, with a fully scalable model! That too with no specialised skill requirement (apart from fashion sense :D) and a small team. Customers won’t leave after a year, resulting in a high Life Time Value (LTV) per user and compounding YoY profits.
This business can certainly be a VC-darling, fetching a valuation worth 50-80x of revenue, if executed properly! 😉
Technology
With technology at the heart of the business idea, you will need a mobile app that can support millions of concurrent buyers, searching for the best look. User experience and performance will be key. We (Timespade) would love to build the platform for you. This would include proper brainstorming, UI/UX designing, development, thorough testing, and optimising it on regular basis for success.
If you’re interested, let’s get on a no-strings-attached, discovery call and discuss doing it together 🙂
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