Harsh Lal, co-founder and director of The Souled Store, tells WARC how, in just eight years, the online apparel brand has carved out an enviable niche for itself among a young, pop culture crazy audience looking for authentic quality clothing; how it seized opportunities during the pandemic; and what is the e-commerce startup’s omnichannel focus going forward.
This article is part of a Spotlight series on on what e-commerce 2.0 means for brands in India. Read more
- When it started in 2013, The Souled Store decided to go online because offline was more expensive and online could reach the whole country.
- The pandemic gave rise to work from home and was a boon to The Souled Store because of the kind of products it sells, which is essentially casual wear.
- For the company, online will always expand significantly faster than offline as it cuts across geographies but offline stores are a great branding opportunity.
- Customers seek value and not discounts, which are gimmicks that help only in the short run, with The Souled Store delivering great quality and great value instead.
WARC: How did The Souled Store journey begin? What were the needs you were looking to fulfill?
Four of us started the company in 2013. None of us liked what we were doing then in our jobs straight out of college. When we look back, all the things we learned in our jobs are helping us even today. But at that time, it was a question of whether it was really what we wanted to do for the rest of our lives. The short answer was no!
One thing all of us have in common is that we all are pop culture nerds, be it movies or TV shows or WWE. I am one of the few people who still watches WWE, even after 20-25 years. We are fans of these things. And we realised that back in 2012, if you wanted to buy a T-shirt, whether it's your favourite IPL team or Star Wars, Batman, Superman, WWE etc, you had two options. The first was to buy it for a few thousand rupees, order it from somewhere outside India and send it to India, paying all that money for a product that was probably manufactured in the neighbouring city. It didn’t make sense.
The other option was to probably buy a low quality fake T-shirt off the street for 200-250 rupees. It was a decision between a 2,500-rupee T-shirt and a 250-rupee one. For most, no matter how big a fan you are and how much you like quality, 2,500 rupees is not a straightforward price point. If I won’t pay, why would I expect someone else to?
That was the major lead that we saw. There is a need for good quality products. So how do we get that great quality merchandise, great design at a price that we will actually be able to sell and do so officially? We didn’t want to just take logos and splash them all over T-shirts, which is what a lot of other companies do. We were confident that being fans of these properties, we will be able to do it on a much bigger scale and in a better way than someone else, and this is one of the reasons we've grown to where we are. Everyone, from our design team and marketing team, to our supply chain team, everyone at the end of the day is a fan. So we understand what the customer wants.
What we understand is the kind of design fans would like and we can serve the fans with better designs, better quality products. We go down to the minute detail. For example, if you are a Harry Potter fan and you buy a Harry Potter T-shirt from the website, you get a cool Harry Potter product and some small freebies as well – the Hogwarts letter or The Daily Prophet, for instance. Similarly, for a Big Bang Theory product.
As a fan, you know when you are buying a T-shirt, you expect a good quality product but when you get small freebies with it, it creates a much stronger experience. Our licensors are happy because we are going above and beyond, whether it is in terms of design, product quality or freebies.
Most importantly, through all these things, we managed to grow our company very profitably for the past seven to eight years. We are probably the only apparel company that managed to grow in the last 12 months despite the pandemic.
WARC: In 2013, when e-commerce was taking off in this country, was it strictly word of mouth and online communications only?
We started with an initial investment of barely about 5.5 lakh to 6 lakh rupees (one lakh is 100,000). With that initial investment, we grew to about 30 crore (one crore is 10 million) in the next four to five years, which is when we received our first round of funding. One of the major reasons we managed to grow is essentially because our company's philosophy is by the fan, for the fan, of the fan. Therefore, we were able to do a much better job at licensing than a lot of other people.
When we started in 2013, e-commerce was at a very nascent stage. Today, pretty much everyone has a smartphone with cheap data. Everyone is streaming content. When we started, data and internet penetration were heading to the next level, so the timing helped.
Also, when we started, the decision to go online was because offline was a much bigger challenge as it was more expensive. We also knew that online was going to grow quicker. Sitting in a small Mumbai garage, four or five people targeted every single person in the country. You can’t do that from the biggest, most fancy offline store. We had a clear idea – online sales was the way to go because we were bootstrapped.
Our first licence was The Big Bang Theory. The Big Bang Theory was a bit of a gamble for us because it wasn't as popular back in 2013 as it is today. But we are fans and one of the things that we did really well is design the products very differently so that fans could appreciate this. This is what even the licensors appreciated. We got a lot of positive word of mouth. We then found our second licence, which was F.R.I.E.N.D.S. Again, it was great timing because, at that point in time, F.R.I.E.N.D.S was just about becoming popular again.
These things definitely helped us initially. As and when we started proving to the licensors that we can take the brands and do justice to them, more licensors started getting in touch with us and we slowly grew a licensing portfolio. Today, we sell merchandise of more than 150 characters and licences on our website. That is the kind of journey we have had over the last seven or eight years.
Online was always going to be the growth driver for us. Sitting in a small office in a garage reaching every single corner of the country, you could only do that online.
But ironically, now in the last two years, we have opened a couple of offline stores. A part of our future journey is also to open about 30 to 40 offline stores. We have managed to ensure that every offline store of ours is profitable including pre-lockdown and post-lockdown, which is not something a lot of brands have managed to do.
WARC: The pandemic, the lockdown and the economic impact were unforeseen. What was your immediate reaction to them? Was there a sense that a major rethinking of marketing strategy was required?
We were as badly hit as anyone else and it was completely unforeseen as a brand that is essentially selling non-essential items. One of the biggest concerns for us was the uncertainty. We were not able to ship products and in such a situation, it didn’t make sense for us to spend money on marketing. Offices were shut, our production was shut. Everything was at a complete standstill. The only thing that we were able to do is to take orders and tell customers once the lockdown is lifted, we will start delivering.
We never burnt money as a brand to acquire customers. Our repeat rate, even post-lockdown, is over 110%, which means if 100 people buy today, 110 will organically come back in 12 months, even if I switch off my marketing to completely zero. This means that the company can sustain without spending initial money on marketing purely on repeats. We have been able to achieve this with very strong practices, keeping a tight eye on the budget.
We did two or three things differently when the lockdown hit. All of us took some time to understand what was going on. It was completely new territory – offices were shut, people were working from home. We have our in-house manufacturing unit for T-shirts and apparels. The first thing that we did was recalibrate the machines to start making face masks, which was an essential item.
While it was a difficult time for us and a lot of other companies, we also realised that there were probably a lot of people out there for whom it was a lot tougher. The first thing we did after we converted our manufacturing unit to make face mask was donate a lot of masks to the police and essential workers because we saw there was a massive shortage of masks back in March-April. Today, everyone is wearing a mask and there are several companies selling it but it was not this easily available back in March-April last year.
The second thing we did was being very transparent with our customers. We didn't know when we could ship out products because of the lockdown and restrictions. We told the customers if they supported us and placed their orders, we could offer them a discount because we cannot ship but the moment we have clarity, we would start.
We were actually overwhelmed with the response we got from our loyal customers who were willing to wait for those one, two or even three months. Normally, people are a lot more impatient online. You place an order today, you expect it to be delivered tomorrow, otherwise you cancel it. Transparency, both internally with our team as to what the company was going through and what the situation was, and with the customers, really helped.
The third thing that really did wonders for The Souled Store was the entire work from home concept. The kind of product that we sell, which is essentially casual wear, is something everybody is getting into, a sort of a comfort zone. You want T-shirts, you want shorts, you want slippers, you want trousers that are comfortable to wear at home, you get it here. Some people have also started wearing these outside. You see a lot fewer people wearing shirts and formal attire, and more wearing casuals. The moment we could start our shipping and operations around June or July, we actually saw a tremendous increase in orders. The last five months have been the strongest ever in the history of The Souled Store.
All of us are very grateful for our team members who have supported us. They understood what the company was going through, they understood that we had to make certain decisions that were difficult. We are proud of the fact that we were able to come out of the whole lockdown without having to let go of a single person because of financial reasons.
WARC: Did you use this opportunity to expand your reach to beyond your regular customers?
The mentality has changed. With an online brand, people want to know if the product they buy is going to be the same as they see online – they want to touch and feel the product. That is also one of the reasons why we started our offline stores.
We launched our first offline store after six years of being an established online brand. We already had a steady set of customers that trusted the brand, who were shopping from us online but there were a lot of new customers too. Knowing that the brand has an offline store offered a sense of comfort.
Coming back to the change in habits. One of my favourite examples is the fact that my mother is regularly watching the shows on Hotstar, Amazon and Netflix. That is something I wouldn't have expected ever. From that to ordering groceries from Big Basket. I forced her to download the app, I taught her how to use it and she now extensively uses Big Basket. She doesn't go to the nearby store to buy groceries. The fact that someone like her, who probably never thought of buying groceries online, is now comfortable to do so embodies the fact that people are now shifting online.
There is a lot more comfort in shopping online and we have seen how it has helped us in our most successful months. So we are growing aggressively online. Our product, casual wear, is what people want. These factors have helped us grow and going forward, we are planning to expand into a lot more categories in comfort wear.
The kind of sales (dip) we have seen offline with our stores being shut for three to four months has been more than offset by the fact that the total online audience has increased tremendously over the last six to 12 months, with so many people now being comfortable shopping on an app.
So while it has been a tough time, there have definitely been some positives for us as a brand and we are confident that this mindset is not going to change.
WARC: The fact that people are staying at home and watching more OTT content would also help a brand like yours. People watching reruns of their favourite shows and then coming across a F.R.I.E.N.D.S. T-shirt on The Souled Store would work in your favour.
Not just restricted to the lockdown but over the last three or four years, we have seen contribution of Tier II and Tier III cities to our overall revenue increasing 40-45% to close to 60%. One of the biggest reasons behind this is internet penetration.
Marvel is one of the most popular franchises in the world. Now if you ask most people, including me, about Thanos a few years ago, we wouldn’t know about it. Now, even someone in a Tier II or III city has watched the Marvel movies, knows who Thanos is and has a Thanos T-shirt.
Superheroes, TV shows, cricket etc are no more an urban phenomenon. Internet penetration has helped us widen your base. Also like you've mentioned, there are a lot more people sitting at home and consuming content. There is certainly stronger demand for movie and TV show merchandise. The rise of OTT, in general, has definitely benefited us over the last couple of years.
WARC: You are betting big on e-commerce. Your physical stores went through a tough time but the online rise compensated for it. What's the future? Are you are looking at an omnichannel play here?
One thing we are very clear about is that online is always going to expand at a significantly faster rate than offline simply because it cuts across geographies. Online is always going to contribute to a significant percentage of our overall revenue as well. There are a couple of things that we want our offline stores to solve.
First, to add a bit of tangibility as far as the customers are concerned. If I have to sum up our offline strategy in one sentence, for us our offline stores are essentially to add significant brand value and tangibility while ensuring they are profitable.
We never had the mindset or option to burn money to grow because we were bootstrapped for the first five years. That's one of the reasons we managed to successfully and profitably grow even in the last year. We are essentially looking at opening 35-40 offline stores pan-India in the next three to four years.
For us, as long as our offline stores are making money, it’s a great branding opportunity. More importantly, when people enter the store, we have over 70% conversion at our offline stores, which is unheard of in the offline industry.
Our average offline order value is more than one and a half times that of online. When you enter the store, the whole human experience, the conversation essentially is something that will always happen offline and will be very difficult to replicate online.
If we are able to grow our offline stores profitably and if we can have 40-50 across the country, it will be great for a brand like ours. That's why we still want to go ahead with our offline strategy. Coupled with the fact that rentals have gone down to some extent because of the pandemic, it is a good time for us to grow aggressively.
WARC: You keep saying how you were bootstrapped and didn't spend much money on marketing but then you choose the leafiest locations in Mumbai to open your physical stores like Bandra and Colaba. No compromises there.
That is a very interesting observation. We first opened an offline store in May 2019 when we were about to complete six years of online presence as a brand. We did not have any offline experience. How do you open a store? How do you choose a location? What rent made sense? Is it going to last a year or would we have to shut it down in six months? There were lots of questions and uncertainty.
We had one simple philosophy in mind. We were going to open one store to begin with and see how it goes. We were going to give ourselves the best chance, choose the best location with the best branding and the highest possible footfall.
A lot of people come to Bandra to shop. There are a couple of colleges in the neighbourhood. The 18-, 20-, 21-year olds regularly frequent the area. Yes, the store is on the main road and the location is premium and therefore there is a premium attached to the rent as well. But we were very clear about one thing – if we were not able to succeed at a location like this, then we would not succeed offline.
If you can open your store on Linking Road in Bandra with that kind of rental and run the store profitably, you are a hit! You would either go bang or bust, there was no in-between. But if you're going to choose a location with lower rentals, that is not going to receive a lot of footfall and not take care of your branding issues, when the store doesn't do well, you will never know the answer to the question of location issues or if The Souled Store offline concept makes sense. With a high-risk option like Linking Road, Bandra, if we succeed or fail, we will know the exact reason behind it.
From first month, our Bandra store was profitable. We recovered our entire capex in the first six months of operations. This gave us the confidence to open a second offline store in January 2020 at Viviana Mall, Thane.
We were going to open our third store in Colaba in April 2020. The plan was to coincide with the Indian Premier League because we are also official partners of Mumbai Indians and the home team would play at the Wankhede, 10 minutes away from where the store would be. Unfortunately, the launch got delayed to August 2020. But I am happy to announce our fourth offline store is coming up by April or May.
WARC: The year that went by, was it a revelation of sorts? Are strategies changing?
One thing all startups can probably relate to is the fact that at any point in time, there are 10,000 things happening. Your attention is diverted #, everything is going in multiple directions and it becomes difficult to see the bigger picture.
In March, April and May, and to some extent June, we were forced to reassess a lot of things, to not just understand where we were but also where we want to be in terms of design, strategies, offline expansion and how we want to take this business ahead. Even hiring. As a startup, one of the most crucial things is hiring the right team. We reassessed things as basic as improving our interview process, hiring more people in senior roles to help grow the company.
We got a lot more time to think and reassess the processes. How do we improve our inventory systems? How do we make it leaner? How do we make sure we are not stuck with dead inventory? How do we improve our in-house manufacturing because we are one of the few e-commerce brands that successfully manufactures ourselves? Our in-house manufacturing contributes to over 50% of our total orders. There were a lot of these things we were forced to think about.
We were not in the office, not meeting the same people, not doing meetings, not travelling. It actually helped us gain lot of time. It gave us a lot more time to think about the bigger picture. To be very honest, if this pandemic hadn't happened, I don't think we would be able to take out that time from our lives. It was a blessing in disguise.
WARC: Delivery is now a critical component of not just service product fulfilment but also a major brand touchpoint with consumers. However, the marketing function does not have much of a control over this last mile. How are you navigating this to ensure that consumer experiences are consistent and positive?
There are two parts – there is operation pre-delivery and then there is shipping. Most e-commerce players do not have in-house shipping. You rely on third-party courier services to make sure that products reach on time, are not damaged in transit, etc.
If you are buying a T-shirt, a non-essential item, more often than not, the customer is okay waiting for a couple of days to get it. The brand must be very clear saying when a T-shirt is shipped and when the order will reach the customer. Transparency in communication is very important.
Since our entire operation is based out of Mumbai, we moved from one shift, which is essentially an eight-hour shift, to three shifts. This basically meant we were able to pack and ship out orders a lot faster. If you live in Mumbai, more often than not, you will get your orders within 24 hours.
One of the reasons we also want to expand to 35-40 stores (offline) across the country is that each of them can essentially work as a mini-warehouse. If you are in Delhi and order a product from The Souled Store, if the product is available in our Delhi offline store, we can even commit to same-day delivery. And our eventual goal is, based on your location and neighbourhood, we deliver a T-shirt within two to four hours. You order a T-shirt online and get it within four hours, it is a great customer experience. You are then very likely to come back.
We have essentially tripled the number of shifts to pack orders faster. We have also spoken to our delivery partners to make sure they come thrice a day to our warehouse. If you order a product before 2pm, we can ship it out the same day. If you ordered post-2pm, we now work with the delivery team such that it has a second shift late in the evening and the product will reach you by tomorrow morning or afternoon.
This is something we have successfully done with our Mumbai warehouses. But through our offline stores and through warehouses outside Mumbai, we are planning to offer this facility across all major metros where most of our audience is.
Yes, there are certain things that are not within our control because we are relying on a third-party delivery partner. We are essentially making our back end and our ops much stronger to effectively work with the delivery partner and make sure customers get their products as soon as possible.
WARC: Do you think the Indian consumer is largely going to stay online now that he has realised the convenience of shopping from home? As a marketer, what have been your key learnings about e-commerce in India? What is e-commerce 2.0 to you?
Online shopping has increased significantly, obviously. I definitely see this as being a mindset change and not a temporary one. Hopefully, with the vaccine coming out right now, by the end of the year, I am hoping that every last one of our population will be vaccinated. I am also hoping that there is no second or third wave in the country.
The pandemic has brought about a massive mindset change. For example, even after the vaccine and when everything is okay, I am 100% sure that I will have a bottle of sanitiser on me. People who are shopping online, even though the vaccine has come out, I don't think they would want to enter crowded areas. This mindset change over a longer period of time is great for online brands like us.
What is the biggest learning? I think it's the wrong perception that discounts are needed for sales in the online and e-commerce space. A lot of people believe if you want to grow as an online brand or in the e-commerce space, it’s just easier to sell with discounts. I personally don't see the consumer as discount-seeking or sale-seeking; they are more value-driven.
If you are able to convince the consumer that you are providing a quality product at an affordable price that is going to be long-lasting, the customer will be smart enough to value that over a cheap T-shirt that will go bad in three to four months.
We are a discount-less brand. What we are confirming to customers is great quality and great value for the price they are paying. We have managed to establish that. We see this with the increasing sales and repeats.
WARC: What advice do you have for fellow marketers looking to further develop their own e-commerce marketing strategies?
Customers are seeking value and not discounts. Your discounts and offers are gimmicks that will help you in the short run. Your offers are definitely going to give you a spike in sales for that day or week or that month but at least for us, it was never a long-term strategy.
Instead of trying to win your customers over with the cheapest product possible, try giving them the best quality, the best service at an affordable price. You will derive much longer-term value from them. They will not be married to your price but to your quality. This also means if tomorrow, someone else is undercutting or selling a T-shirt at 10-20-30% less than you, your customers will still stick with you because they trust your quality.
If your only USP is that you are cheaper than the next brand, at some point in time, someone is going to come with bigger funding and undercut you. This learning has only become stronger in the last 12 months for us. It is harder work and takes a lot more effort. But it gives us strength over a longer period. You are definitely more likely to succeed focusing on this than short-term gains, gimmicks and discounts.