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Fashion retail has very poor inventory (working capital) rotation
Increff, founded in August 2016 by former Myntra executives Rajul Jain, Anshuman Agarwal and Romil Jain, is a technology and analytics enterprise that helps fashion and lifestyle brands improve inventory turns through smart merchandising and efficient fulfilment via single view of inventory. Co-founder and CEO Rajul Jain discusses issues Indian apparel retailers face and Increff's plans to go global.
Increff recently received a funding of $3 million. What kind of expansion do you plan to head into?
We have so far raised total funding of $5 million in two tranches-one was the seed funding of $2 million in 2016 and the other was the Series A funding of $3 million in early 2019 from 021 Capital (Sailesh Tulshan) and Binny Bansal. The fresh funds will be used to fuel the next phase of our growth for entering international markets, expanding our customer pipeline in India and enhancing our current product offerings. We will also continue to attract the best talent from premiere institutes (NITs and IITs) who can stay invested for the long term to create cutting-edge and innovative technology solutions for our clientele.
What percentage of Indian apparel brands are victims of mismanaged inventory?
Almost every brand / retailer in India is struggling with inefficient inventory. Even large players or brand houses and retailers work on Excel models or plain vanilla ARS (auto replenishment systems). There is hardly any intelligent solution in the market.
What are the biggest reasons for brands to be either out-of-stock or over-stocked?
Fashion retail has very poor inventory management and rotation in India. It does about two turns in a year compared to global brands like Zara doing 10-12. This is primarily due to (a) legacy processes-long supply chain; (b) large and constantly changing variety; (c) low depth and size complexity; (d) multi-channel retail. Lower inventory turn leads to significant revenue and margin loss and high working capital needs which is very detrimental to growth.
Who are your major clients in the apparel and textile industry?
We have 17 clients for whom we manage about 30 brands. Clients include likes of Puma, Wrogn, Reliance Ajio, Myntra, Mango, Esprit, Cultfit, Roadster, Arvind Group (Ruf n Tuf and Newport), D:FY, Brooks, Turms, etc.
How do the solutions you provide help in forecasting trends and make stocking decisions?
Our end-to-end merchandising product Increff Iris helps brands take intelligent decisions in terms of (a) what, how much and when to make or source, and (b) what inventory to showcase and when at each store with the help of its four modules namely:
1.Smart assortment plan,
2.Ideal buy plan,
3.Optimal store allocation, and
We do it by performing individual store level analytics (no clustering of stores), considering business as well as product attributes at a most granular level and by doing humongous amount of calculations with 300+ algorithms. With this level of information, brands can easily capture market trends and plan accordingly. The ideal buy plan module helps brands decide on stock by considering nuances of complex category like fashion accounting for all operating business constraints (planogram, minimum order quantity (MOQ), lead time, etc.).
What kinds of insights do your solutions provide? How is the data collected offline?
Increff delivers incredible efficiency in sales and inventory via its two Enterprise SaaS solutions (Iris and Assure) and warehousing as a service (WaaS).
Increff Iris is an end-to-end merchandise planning and distribution software. It has four modules-Smart Assortment Plan, Ideal Buy Plan, Optimal Store Allocation, and Business Intelligence. These modules help brands take critical decisions on what and how much to buy, when to buy, how to distribute the right inventory to the right store and what decision to take based on business insights. Given that fashion is an extremely complex category, Increff Iris adds huge value by enabling granular data driven decisionmaking. Till now this is being done via excel sheets which is highly inefficient.
Increff Assure is a unique order fulfilment and warehousing platform which allows brands to expose single view of inventory, in warehouse, to all sales channels (online and offline) channels, thereby dramatically increasing sales velocity. It takes away the need of physical automation and instils digital automation. Here, technology takes all the decisions eliminating chances of human errors and showcases single view of inventory to all sales channels. Instead of fragmented inventory, the platform allows room for consolidated inventory and improves inventory efficiency drastically.
Increff WaaS is warehousing as a service. It allows brands to set up a warehouse anywhere, anytime without incurring Capex. It's like a controlled marketplace of warehousing. So, we move the capex heavy model of warehousing to a completely Opex model for them.
We pull data through ETL (extract, transform, load) from clients' ERP system, POS system, warehouse system, customer panel of large format retailers & e-commerce marketplaces.
As on date, is Increff only limited to the Indian market or has it expanded to the foreign markets as well? What are your future growth plans?
Increff aims to become the most impactful technology solutions company in world. After successfully proving the model in India, we are now focusing on global expansion.
In India, we get good inbound enquiries and most of our existing customers have come via word-of-mouth. We believe nationally, the growth ball has started rolling and have built a very premium positioning in the market.
We now are focusing on international market and are at commercial discussion stage with a very large client in the Middle East and PoC (Proof of Concept) stage with one of the largest supply chain companies of Europe. We are now appointing partners who will help us sell our products in international markets.
Our focus going forward will be to a) grow revenue by 10x, b) expand internationally in Europe, Middle East and South-East Asia and c) become a global leading technology platform solving supply side of problems for brands and retailers.
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