 "Cosmetics")
At a time when start-ups are downsizing to pare back costs and book profit, a four-year-old start-up on beauty products has been an exception.
Purplle.com, which was founded by two IIT-ians with a seed capital of Rs 40 lakh (their life’s savings), has managed to turn ebitda-positive in their key markets. By October, they are expected to turn profitable nationally.
The company’s gross merchandise volume (GMV) touched Rs 150 crore in FY16, and it is expected to touch Rs 300 crore in FY17.
The founders say increased focus on automation helped them get better returns on investment. The 100-people strong organisation is able to run with a smaller headcount, as more than 95 per cent of their marketing is automated.
Speaking to Business Standard, co-founder of Purplle.com Manish Taneja said, “We have turned ebitda-positive in west and north zones, which contribute around 60 per cent to our business. This includes our operational costs. As for south and east, we do not have local warehouses yet, and thus the logistics costs are high.”
Taneja claims logistics costs are a significant portion of the GMV, and as a percentage of GMV they are around 7-8 per cent on an average. When one has local shipment options, then these costs reduce to around 2-3 per cent of GMV.
Purplle.com plans to have warehouses in Bengaluru by September, which will help them turn their southern operations profitable. At present, it has warehouses in Delhi and Mumbai. It has tied up with India Post to deliver pan-India.
Taneja added that their increased focus on automation not only helped them improve profitability and cut costs, but also avoid errors and increase efficiency. This led to less hiring. “Competition with about the same GMV or similar business size and expanse would at least be 350-people strong. We have a headcount of less than 100, including warehouse staff,” Taneja said, adding that they have managed to consume one-sixth capital compared to their competitors to come to the same level.
Purplle.com has also tied up with 6,000 salons across 12 cities and at present 100 customers book appointments daily using it. It plans to take this number up to 500 soon, following which it would monetise the service. Beauty products account for about 95 per cent of the start-up’s revenue.
The beauty segment in India is fragmented and the products segment is estimated to be around Rs 48,000- 60,000 crore. Taneja feels the online share in beauty is still around 1.5-2 per cent. “Smaller brands would get a larger portion of their sales (around 10-20 per cent) from online platforms. As such the offline space in beauty is growing at 15-20 per cent CAGR,” he added.
Commenting on Purplle.com’s business plans, Gaurav Sachdeva, managing partner of JSW Ventures which has invested an undisclosed sum in the start-up earlier this year, said, “While electronics is the highest volume category in e-commerce, beauty products is the highest margin category. We expect the online space to contribute around 10 per cent of the overall turnover in beauty products over the next five years or so.”
