The Gray Hair Speaketh

Advice that is largely Unsolicited..

InkFruit.com – Design your own T-shirt

Kashyap Dalal presented the story of InkFruit.com, at the Startup Saturday event.

InkFruit.com

InkFruit.com

What is it about?

Inkfruit.com enables the design community, or even amateur designers, to design their own T-shirt designs and submit. Based on user votes on the designs submitted, the best ones are chosen as winners. The designers win prizes, and the designs also become available to inkfruit.com to make into T-shirts and sell via their website.

What more?

The site is really about “design”. The main pitch is to get good designs on T-shirts. All logistics are managed by the company. Printing of T-shirts is done with high quality screen printing or by transfer printing process. This is to ensure good quality and longer life of the printed T-shirt. The business of about 1.5 years old, has reached a healthy run rate of Rs. 2 crores gross merchandise sales annually, and there is significant room for growth, considering the T-shirts market.

New initiatives include affiliate marketing options, selling it via offline stores and also branching into other custom design products.

Competitive pressures do exist with few good, well established offline brands, and other personalized T-shirt offers online.

Other Observations:

Inkfruit is not necessarily printing on the fly, once orders are received. In fact, they print and keep a small lot of each T-shirt design ready. When a product is offered on sale, it is already ready duly printed. The large inventory exposure however, is only in the plain T-shirts.

In recent days, they have had foreign designers also put their designs on the site, and as a consequence of these being featured on the site, some sales of such T-shirts are also trickling in from foreign customers. Retail level orders are shipped from India, to execute these orders, by Inkfruit.

Wisdom Nuggets:

1. As I see the proposed growth paths of offline retail, new products, affiliates, etc., I have a specific question to pose. What is the real business? Are you about T-shirts, about all designer products, about distribution, about online retail, etc.? Based on that, the suitable growth steps need to be taken. If enough thought is not given to this fact, there is a risk of creating a lot of activities, but which do not necessarily add up to cohesive value creation.

2. The e-commerce market in India has not really grown to seriously large numbers. While e-commerce is theoretically assumed to be a lower costing option for retail, it is only so after crossing a certain minimum level of volumes. Until that happens, the economies of purchase are nowhere compared to offline players. And also the additional cost burdens of cross-border shipments (as against in-store local sales) such as shipping costs, taxation like sales tax, octroi, etc. make the proposition not very attractive economically. Designer T-shirts fall into a clear niche segment of business. Even if designer stationery or other similar products are added, these are still not high volume sales products. How does the business scale up in revenues rapidly?

3. Offline business opens up a different challenge. In reality, it is almost a different business. Or of course, its a different channel of distribution – whichever way one sees it. Undoubtedly though, the challenges are of a very different nature. From extending credit, from inventory replinishments, from returns of sales, sharing a healthy commission, etc., there are a set of issues that come up. Doe Inkfruit really want to go that way? And if it does, then that offline sales initiative should be taken with all vigour, and in fact, in that case, the online sales will become trivial compared to the offline one!

4. New products bring a different set of challenges. From the production aspects, to begin with. There is a clear repeatable process of printing T-shirts, and there is, numbers wise, a reasonably predictable market. And also if there is inventory stuck up, if a sale is done periodically, at lower cost, the T-shirts may move off. But say, there is a designer calendar, or a designer pen set, or something like that, even at low cost, it may not move at times. Then, inventory management and dead stocks may open up newer challenges. Put another way, if T-shirts are doing say, business worth 100, would you add 10 new products and take business to 120, or focus on pushing T-shirt sales and take it to 110, if not 120? Also what is the right size when expansion of products should be attempted? When T-shirts have reached a fairly mature market size.

5. There is an opportunity worth exploring, which Inkfruit has just accidentally touched. Which is of delivering the T-shirts to customers outside India. In a designer T-shirt, there is a cost of design. Which in western countries, might equate to a number even higher than the cost of the shirt itself. Indian amateur designers will be cheaper. Further the T-shirts itself come cheap from sources like Tirupur, which are anyway, one of the manufacturing hubs for global supplies. Finally the other overheads of business are also cheaper in India. If these are appreciated and Inkfruit chooses to thrust itself full blast into the international space, it could well generate far higher growth rates than what it gets from Indian market. Yes, the logitics cost and its challenge will need to be factored in. There are ways to work on those. But this could well be a useful and highly productive move for Inkfruit.

    In conclusion, while a top line of Rs. 2 crores looks interesting, since it is a semi-trading, semi-manufacturing, plus service (retail + CRM etc.) business, it may not be leaving enough room at the bottom line. To make serious money from the venture, the top line needs to go to at least Rs. 10 crores level or so. That means, selling 5 times the number of T-shirts, on an average, from what they are doing now. How confident is InkFruit of getting there in the next 2-3 years at most? And after doing that also, the business will be Rs. 10 crores, which for a trading or retail business, still looks small. There is a clear need to examine the business model at that base level, and see what they need to do, to expand and grow very rapidly from this point.

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    February 22, 2009 Posted by | Ecommerce, Startup | , , , , | 4 Comments