Why did we invest in Oyela?
1. A Pivotal Player in the Youth Space
India is a young market — 50% of Indians are under the age of 25 and 65% are younger than 35. To comprehend the intricacies of this young market, we need to discern how different this generation is from its predecessors.
As per a report from McKinsey, Gen Z are less bound by narrow constraints of fashion labels, they seek to develop their own identities, they seek to challenge existing norms to unearth the sheen of authenticity and they endeavor to build functional relationships with their peers to facilitate constructive dialogues. These desires were further bolstered by the onset of social media and its role as a facilitative medium for community amassment.
These values are reflected in Oyela and its business model. Oyela seeks to cater to this young audience specifically, by actualizing these idiosyncrasies. This falls in line with Oyela’s objective of attaining a pre-eminent position in the social-commerce landscape.
2. An Innovative Model within Social Commerce
Oyela aims to enable its sellers to create fashion-quality listings in 30 seconds, engage with their buyers, and build a fashion identity.
There are two main features that it emphasizes to innovate the social commerce model for the new generation:
1) Limited Supply of Similar Offerings: Sellers on the platform offer clothes and accessories sourced and curated by them to prospective buyers, thus limiting the available supply. This exclusivity results in the psychological effect called the Fear of Missing Out (FOMO). FOMO is the distress that people feel when they’re deprived of an opportunity their peers have availed themselves. By limiting the supply of the goods, people feel the FOMO effect and are encouraged to make a purchase.
2) Giving Budding Social Media Influencers the Elixir of Entrepreneurship: When we talk about individual creators and their ability to demonstrate their craft in front of a wide audience, India takes precedence. Over the past few years, the Indian youth has become infatuated with creating a distinct image for themselves, thus burgeoning the creator economy from $1.7 billion in 2016 to $9.7 billion in 2020. These individuals who’ve amassed a sizeable quotient of followers are called influencers. Their ability to command public perception on fashion specifically is rather coveted.
Oyela enables influencers to monetize their community and create a distinguished brand for themselves using fashion. These influencers mobilize their communities to Oyela, and in turn, get the opportunity to engage with them on fashion in a direct manner. They can offer this community articles of clothing from their wardrobe and establish personal contact. Thus, Oyela helps them foster a more interactive relationship with their followers.
3. Founders with a Demonstrated Growth Mindset
In October 2020, three batch-mates from IIT Bombay, Rahul Gope, Anjan Patel, and Shivam Garg left their respective jobs with less than 6 months of savings to start Oyela, with the sole aim of transforming the way the new generation was buying, selling and engaging with each other. When we first met them, both Rahul and Anjan were full of energy, demonstrated a positive mindset for taking problems head-on, and had a fire in their bellies to create something special. Over the last 6 months, they have constantly surpassed their targets and created a value proposition.
A key factor for Oyela’s performance is the learner’s mindset with which the co-founders seek to approach every problem. They seek to experience new dimensions of the market, implement their learning from the added experience, introspect on the viability of the changes, adapt to optimize the business’s trajectory, and then go through the entire process again to further edify themselves.
This desire to maximize their utility for the company posits them in distinguished strata of budding entrepreneurs.
4. Extremely Low Returns for an E-Commerce Model
In the initial years of the industry, return policies were used to incentivize customers to get comfortable with the idea of online shopping. However, it has transformed to be the biggest problem inflicting the eCommerce industry.
In 2020, some studies were conducted to deduce the state of the industry. It was discovered that online shoppers in India returned 25–40% of purchased apparel.
Oyela, through its unique proposition, has relatively circumvented the issue. This can be attributed to the sellers feeling personally responsible for the quality of goods they proffer to the community. Moreover, the ambition of every seller is to create a distinguished brand of their own. Selling commodities with dubious quality is highly detrimental to their image.
5. A Validated Business Model
Since its inception, Oyela has received tremendous love from its user base. The biggest indicator of this market validation is the gross market value (GMV). In the initial 6 months of operations, Oyela’s GMV has witnessed an 11x increase.
Speaking about the sellers on the platform, their quotient has been steadily increasing as well. In April 2022, they were estimated to be well over 4000, with substantial growth each month. This great spurt in the number of sellers can be traced to their ability to earn a 10x return on Oyela as compared to the competition.
Finally, with the monthly active users growing past the milestone of 100K, and 20% repeat-buyers month-on-month, buyers seem to be pretty content with Oyela as well.
The above figures show the resounding success of its model and greatly dwarf what was achieved by the competition in a similar timeframe.
Being a part of Oyela’s journey and an active participant in its growth has been an enriching journey. We are very proud of what the company has achieved so far and what the current success augers for the future.
