From left: Fynd’s co-founders Sreeraman MG, Harsh Shah and Farooq Adam
Mitesh Mehta developed his father’s garment manufacturing business into a classy urban brand that found takers in both upscale malls and select online portals. Yet, he was having trouble in utilising resources effectively. He would send out a fixed number of bulk units to each client but realised that buyers in stores and online are very different. Demand for fashion was not only seasonal but also differed from market to market. He would often end with unclaimed stock from different clients because the demand wasn’t gauged rightly.
Fynd turned his troubles around by integrating their algorithm with his inventory database. It now helps him keep track of how many units of different garments should go where, across different clients, without having to worry about wastage.
Last month, the omnichannel platform closed a Series-C round of funding. Fynd raised from the lead investor, Google, followed by active participation from Kae Capital, IIFL, Singularity Ventures, GrowX, Tracxn Labs, Venture Catalyst, the Patni family office and Hong Kong-based Axis Capital, among other angel investors in the round. While the fund size has not been disclosed, the company had raised a little over $3.4 million in Series-B last year.
“Fynd has built an impressive, tech-first, platform that has potential to scale within and beyond fashion and India,” said Seema Rao, head of corporate development-India at Google. “Its unique store-driven commerce approach, without inventory or warehouses, gives it a unique position in the marketplace.”
Fynd does not call itself an e-commerce company but as one that helps stores become more efficient. Most brands retail almost 90 per cent of their inventory through offline stores. With customers discovering products on multiple channels, from e-commerce platforms and social media to shop windows, Fynd saw an opportunity to service multiple channels from a single touchpoint, instead of catering to these separately.
“We realised that irrespective of where a shirt is physically stored, customers could have the opportunity to buy it from any of these touchpoints. We are solving the ability to integrate with retail systems for these brands by creating a virtual inventory,” said Harsh Shah, co-founder. The parent brand will continue to house the product wherever they wish but Fynd manages the demand and supply algorithm for them, provided they have an uncluttered inventory record, said Shah.
Fynd earns about 20-30 per cent on every transaction they facilitate for brands. It helps brands access buyers on e-commerce sites like Jabong, Amazon, brand websites, Fynd Store and even malls. Fynd caters to organised retailers like W, Soch and Nike. They also help connect young brands working out of smaller stores but with a larger reach across e-commerce.
The online to offline platform directly sources products across categories, including clothing, footwear, jewellery and accessories. From some of the prominent brands in the country (via their in-store inventory) and brings these online. Besides, Fynd’s in-store product, Fynd Store, helps the brand stores save on their in-store sales.
The biggest challenges for Fynd so far has been in integrating their technology with the retailer’s inventory system, apart from the actual customer acquisition and multiple channel management concerns. “Acquiring customers was a challenge, as e-commerce hasn’t yet proved its profitability in India. Also, we work with multiple demand channels, with completely different styles of working — bringing everyone in sync is always a hurdle,” says Shah.
Fynd has been breaking even on every order for some time but doing so on operating earnings is still eight months away, says Shah. It currently partners with around 9,000 stores and 320 brands across 40 cities. And, delivers to almost nine million registered customers.
Over the next year, it hopes to increase the supply to almost 600 brands and add around 6,000 stores. “We have plans to expand our flagship Fynd stores from 350 to around 1,000, while increasing our registered customer base to 12 million,” adds Shah.
Over the next four years, he says he expects Fynd to contribute up to 15 per cent of store sales for clients. “We have realised this model works profitably. With no spending on infrastructure, we make significant cash savings. Now that we have proved the model works, we have to scale it up,” said Shah.
Expert take: Fynd’s focus on O2O has huge potential
Praveen Sinha, founder of Jabong.com and MD of PinCap
Fashion has already become the largest selling category in e-commerce. However, fashion e-commerce has three major challenges in terms of profitability/sustainability — 1. discounting due to competition; 2. logistics /supply chain cost; and 3. returns cost and increasing return percentage.
Fashion being non-standardised products compared to electronics, there are various reasons for returns, such as size, colour and quality, and till now no scalable and feasible solution to returns has been found. Fynd's model is hyperlocal and online-to-offline (O2O), which gives it two advantages — lower supply chain cost because of better efficiency in inventory and almost nil warehousing cost; and 2. less costly returns.
Moreover, being hyperlocal, the delivery is much faster and hence for customers, this is an added advantage and adds to impulse purchase. Since the majority of the market in India is offline (more than 85 per cent), their focus on O2O has huge potential. However, Fynd's model has challenges in terms of time to scale and time to make each city profitable. Given the team and early traction, they are well poised to leverage their success further.