In an interview, the founder and CEO states that the company is aiming to add nearly 100 dark stores over the next 12 months, taking its total dark store network to about 200
Sharpening its expansion play across geographies and format, IGP, a direct-to-consumer (D2C) gifting platform, is looking to expand its India footprint from 30 to 100 cities, while also taking its United Arab Emirates (UAE) operations across the wider Gulf Cooperation Council (GCC) and entering Southeast Asia, its top official said.
In an interview with BW Retail World, Tarun Joshi, Founder and Chief Executive Officer (CEO) of the company noted that the company is aiming to add nearly 100 dark stores over the next 12 months, taking its total dark store network to about 200, alongside an expanded retail presence that will touch 20 offline stores. Backed by strong demand, IGP is clocking revenues of around Rs 500 crore and growing at around 40 per cent annually, a momentum Joshi expects to sustain for at least the next five years. Edited Excerpts:
IGP has introduced 30-minute personalised delivery across over 30 cities. How do you see hyper-fast fulfilment shaping customer expectations and competitive positioning?
We have seen a huge amount of behaviour change in ability to order products last minute. That is clearly pushing the consumption up. From a data standpoint, we are seeing about 20 per cent of our orders getting ordered with a hyperfast delivery. The question is what kind of choices is a brand able to provide in such a fast delivery ecosystem. Clearly, there is consumer demand and there is this behaviour change which is happening.
The more choices you are able to provide in this as a use case, consumers are opting for it. It is not that these consumers would not have purchased, but there is a high amount of preference if it is available fast, because a lot of these purchases are also very impulse driven. I just think about something and I want to celebrate it. If it is available now, I will do it.
When it comes to financial priorities, is the focus more on profitability or unit economics or market share expansion going ahead?It is the right balance, but I would say that Profitability is very important because now the business is looking at a certain scale. We are already profitable as a business. Now we are in the phase where we are deploying rather than depending a lot more on external capital, but actually deploying a lot of our profits generated back into the business through expansion.
It will not be a mix. I would not say that external capital is not needed because it allows you to grow faster. But once you prove the unit economics right on a profitability standpoint, it is always better and the business becomes far more understandable from a financial veterans perspective.
So, are you not looking to raise external funds right now?
No. with external funds, we see that as a journey every two to three years, but it provides us larger opportunity. Last time after raising money, we opened a lot more dark stores. We opened about close to 50 dark stores right within a span of a year. That journey is continuing. Then we expanded internationally.
When you take these massive steps, you obviously need external capital. It cannot be generated from internal resources. For us, the plan is to move our United Arab Emirates (UAE) operations to entire GCC and enter Southeast Asia. These are the two international pieces that we are looking at. In India, we are currently in 30 cities. We need to go to from 30 cities to 100 cities. So there are an additional 70 cities which have to be added.
What is the revenue goal that you have in mind going ahead?
Currently we are at about Rs 500 crore. We are growing at about 40 odd per cent every year. We seem to continue looking at that growth least for the next atleast five more years.
While you have a very strong online presence across the country, what is the update and the progress on the offline expansion part as well?
Last year, we opened our first few retail stores. There is very strong demand because it is a very different kind of consumer who gets a touch and feel. Our thinking is yes, omnichannel is the right way to go for almost all brands. It has to happen at a certain size and scale of the business.
If we are covering a city with close to about 10 plus dark stores, then we feel that there is a need of having at least one offline presence where these consumers are coming because once a consumer gets to notice a brand via an offline store, later the journey is still going to be online. It is not always offline heavy, but the confidence and trust factor increases quite dramatically.
We are currently at about 100 stores, as I was saying that we need to immediately hit about 10 kind of offline presence stores. But for every 10 dark stores that we look at, we look at creating one offline store. We are like almost hoping to hit another 100 more dark stores in the next 12 months. That would include the retail presence to go to about 20 and total dark store presence to go to about 200.
Our direct presence is again first starting with our dark store network, because obviously it is very expensive to create retail outlets in overseas geographies. First, we use a dark store to understand the consumer taste and preferences in a country. Once we hit about 10 dark stores, then we think of opening a retail store over there.
You have deployed proprietary compact personalisation machines across your dark store network. Can you elaborate more on this?
We have developed a proprietary machine, which is a capability to print on any surface. Whether it is, it is flat, curved, round surface. Now consumers increasingly prefer that there is a utility product and if I can communicate my emotion via that product itself. Historically, what greeting cards would do is now getting done a lot more via printing on the products. So these machines are capable of doing that within a few minutes on almost any surface, which allows a lot of consumers to opt for this as a product and a service combination.
Which product categories are driving the highest level of growth for the company right now?
Close to 70 per cent of our consumers are below the age of 30 years. If you see the preferences or choices are in terms of things that consumers end up using a lot more in their day to day life. Most of them are recently or new office going people. Drinkware plays a very important role. You would see almost every youngster carrying up to like a one litre bottle, but it has to be a much more curated bottle. Everybody carries bags. Bags may be from a brand, but they like to accessorise the bags in a very good way. It would be different kinds of keychains. We saw the labubu phenomena as well.
Some of the other categories are car accessories, products which can be put up in a car with multi utility, or different kinds of keychains for use on bikes. There is a good uptake in jewellery that we are seeing, which is the fashion jewellery. Girls are getting more and more fashion conscious.
In a landscape where players like Swiggy and other quick commerce platforms are entering gifting, how does IGP differentiate its value proposition and retain customer loyalty?
The first point is product differentiation. Gifting is all about unique products. It is not that I am searching for very branded products. When I am gifting, I have budget in mind, but I want the most unique item in that. The second is once a product has been selected, I want the best kind of packaging. It should not go in just a brown cardboard box, it should go in as nice product. The third is with every product people prefer to put message, because the message is almost as important and touching upon the greeting card. Greeting card was a pure form of message.
Now consumers are choosing a product and along with that, either they want a message to go as a nice piece of card along with the product. Ability to personalise, ability to package very well, ability to communicate an emotion. The last piece is also people like to put a bundled offering. If I am buying a gift, I am always thinking, let it have like two, three, four items nicely packaged in a box and a hamper.
What is the key trend that you think will dominate the particular sector in the next year?
The sector is evolving from just selling flowers, cakes to a lot of gifts and accessories. People are increasingly buying more and more of utility products. Category expansion to cover a lot more use cases is picking up the fastest from a sector perspective.
Another important thing is apart from the generic Valentine’s day or Mother’s day or Rakhi, things are now moving a lot more into smaller events. We are observing like secret santa becoming almost as large as Diwali because every office is celebrating, every employee is buying for each other. In fact, in Diwali, what you observe is employer buying gifts for the employees, but these kinds of special occasions where employees are buying for each other, is a very, very new trend in India.
