This startup by IIT alumni grew 10x since inception by changing how the apparel industry views inventory
With fashion and apparel consumption on an all-time rise, manufacturers often deal with situations where they run out of stock. Bengaluru-based startup Increff has been helping these clothing companies by providing intelligence technology that understands consumer behaviour and maps it to the supply chain.
While solutions from biggies like Oracle and SAP work in silos across stores and inventory, there is often no single point of truth that gives a company a clear view of the data on items to be sold, where they need to be sold, and how much to stock in a particular cluster.
Increff founders Rajul Jain, Anshuman Agarwal and Romil Jain are IIT alumni—from Delhi, Kharagpur, and Bombay, respectively—and have worked in various corporate roles. Rajul was the Co-founder of Yebhi.com, before it folded, and he joined Myntra, where he met Anshuman in 2014. The duo realised that if they could create a platform for brands to automate and distribute merchandising then they would have a winner.
“Most technologies are focused on replenishment and distribution. They are not made for the fashion industry and serve only the FMCG industry. They are expensive and not intelligent,” Co-founder Rajul says.
The founders’ past journey in the ecommerce industry has helped them understand the problem statement.
“Take a T-shirt, for example. It is created in finite quantities, but the varieties are plenty and constantly changing. Brands run into problems when they need to figure out what to stock. We know what works by understanding consumer sales and Increff can help these brands scale up their merchandising and distribution decision making,’’ he adds.
The duo roped in Romil Jain in early 2016 and began building the platform. Today, the startup has more than 17 brands as clients, including Reliance AJIO, Wrogn, Mango, and Puma.
In 2016, Increff raised a seed round of $2 million from Sequoia Capital and a clutch of leading domestic angel investors. With that, the startup built innovative technology products and services and proved product-market fit. Earlier in 2019, it raised Series A funding of $3 million from 021 Capital (Sailesh Tulshan) and Binny Bansal. The funds will be used to fuel the next phase of growth by foraying into international markets, expanding customer pipeline in India, and enhancing product offerings.
Over two years, Increff has grown from $150,000 in sales to over $2 million in sales. Increff was also part of the Oracle Accelerator, in 2018, and Oracle helped it connect with clients and VCs.
The team size is over 70 and the startup plans to cross more than 120 employees by the end of the year.
Stock turns, and how Increff helps
In the apparel industry you have to do multiple stock turns—a measure of operational efficiency to see if your inventory matches your sales—to see if the business is growing.
Indian fashion retail has very poor inventory (working capital) rotation, doing only about two turns compared to international brands like Zara doing 10 to 12. Rajul explains that is primarily due to legacy processes leading to long supply chain complexities, which are focused on pushing out varieties rather than focusing on what is selling. “Lower inventory turn leads to significant revenue loss and margin loss, and high working capital needs are very detrimental to growth,” he adds.
Increff’s technology products and service bring in efficiency on the supply side to maximise inventory rotation.
Assure is a fulfilment platform that allows brands to have a single view of inventory at warehouse, to all sales channels (online and offline) channels, thereby increasing sales velocity.
Iris is an end-to-end merchandise planning and distribution software helping brands take critical business decisions like what to buy, how much and when to buy, and how to distribute the right inventory to the right store.
WaaS is warehousing as a service. It allows brands to set up a warehouse anywhere, anytime without incurring capex. It’s like a controlled marketplace of warehousing.
“Increff is an enterprise tech product and platform. Today, brands cluster stores and send stock based on the size of each store. However, management of these brands have to realise that each cluster behaves differently and is dependent on consumer behaviour,” Rajul explains.
Getting it right with Wrogn
Once the apparel comes to the warehouse Increff is able to tell retailers to move their product to any sales channel of importance, be it ecommerce channel or offline. “We give a unique code to each piece, which drives up the sales velocity of the brand. There is 99 percent correctness of your inventory and fulfillment. This helps the brand in managing working capital and understand their sales channel well,” he adds.
When Wrogn approached Increff they wanted their warehouse to be managed efficiently by ensuring that the right merchandise went in to each store. They now showcase single view of the inventory for all ecommerce and stores.
“We started building the product based on our experience and talking to clients,’’ says Rajul.
The apparel industry in India is of considerable size. According to data from McKinsey's FashionScope, India’s apparel market will be worth $59.3 billion in 2022, making it the sixth largest in the world, comparable to the UK’s ($65 billion) and Germany’s ($63.1 billion). Disposable income too will increase with aggregate income of the addressable population (individuals with more than $9,500 in annual income) expected to triple between now and 2025.
Increff competes with players like Manthan, Intelligence Node and ProConnect.
On its future plans, the Co-founder notes:
“Increff has entered into partnerships with various organisations to help them in business development across the globe. We will be automating quite a few elements on the supply side of things for our customers via their various SaaS products. Increff is mainly focusing on growth as the we believe profitability can be achieved in a year. Increff hopes to become a multi-billion-dollar company in 5-7 years from now,’’ Rajul signs off.
(Edited by Evelyn Ratnakumar)