Many fashion brands, including adidas, Pepe Jeans, Jockey, Manyavar and Mad Over Print are jumping on to the quick commerce bandwagon to meet the growing demand for apparel on short notice. These platforms are ramping up their logistics networks, ensuring they’re connected to dark stores and ready for rapid deliveries.
So, what’s fuelling this shift? In an exclusive interview with Apparel Resources, Yogesh Kabra, Founder and CEO of premium men’s innerwear and lifestyle brand XYXX, spills the beans on why his brand is now available on quick commerce platforms.
Yogesh, who secured around Rs. 110 crore (approximately US $ 13.5 million) in a Series C funding round led by Amazon Smbhav Venture Fund, with participation from institutional investors like Sauce.vc, Anicut Capital, DSG Consumer Partners and Singularity Growth Opportunities Fund, also shares his insights on raising funds and utilising them effectively. Started in 2017, the brand has raised a total funding of US $ 35.3 million till now. Its last fiscal year concluded with a revenue of Rs. 110 crore.
Currently, internet channels account for half of XYXX’s revenue, with marketplaces being the highest contributor at around 50 per cent. Its Direct-to-Consumer (D2C) and quick commerce channels provide another 15 per cent of its revenue. The remaining revenue comes from offline channels, which include a mix of General Trade (GT), Modern Trade (MT) and EBOs. Amongst these, General Trade (GT) generates the highest revenue in the offline segment. Innerwear contributes to 70 per cent of the sales while the other categories constitute the remaining 30 per cent.
Looking ahead, Yogesh also discusses strategies for targeting customers, sourcing tactics, the future of the athleisure market and more.
AR: What is the current state of start-up funding? What strategies can fashion brands use to successfully raise capital during challenging times?
YK: I feel that the start-up funding winter is slowly easing and will soon return to the earlier scenario. It is important to understand that in a crowded market, it’s crucial for fashion brands to differentiate themselves by building a strong brand narrative to attract investors seeking for something fresh and compelling. It is essential to provide evidence that your brand has traction in the market, including data on sales growth, customer retention rates and other key performance indicators that demonstrate demand for your products. Operating efficiently with limited resources can also be attractive for investors. Highlighting future plans, especially those focused on achieving profitability within a reasonable timeframe, can effectively capture investor interest. Transparency is key when seeking investment, particularly during challenging times. Be upfront about the challenges your brand is facing and the strategies you’re implementing to overcome them. Investors need to trust the founders first; once that relationship is built, capital can be raised effectively.
AR: How to best utilise the raised capital?
YK: It varies from brand to brand, but there are certain areas that generally deserve your attention. For instance, investing in product development is essential for staying competitive and meeting the evolving needs of customers. Focusing on brand building is also crucial. Effective branding ensures high brand recall and recognition, making the brand memorable and top-of-mind for consumers. Additionally, invest in building and optimising your e-commerce platform, including website design, user experience enhancements to create a seamless shopping experience for customers. As your brand grows, consider expanding into new markets or distribution channels to reach a broader audience. Allocate funds towards opening new retail stores, partnering with wholesalers or distributors or expanding into international markets to capitalise on growth opportunities.
AR: How do you appeal to the specific needs and preferences of your customers?
YK: We primarily target men aged 18 to 35, including both Millennials and Gen Z, with a focus on medium to high-income segments. Our marketing efforts are often directed at urban and semi-urban areas, where disposable incomes tend to be higher. The brand’s presence in upscale retail environments and on e-commerce platforms aligns with the shopping preferences of higher-income groups.
For Millennials aged 25-35, particularly those in their late 20s, there is often a desire for premium quality and comfort, reflecting their established careers and higher disposable incomes. Our products for Millennials emphasise luxurious comfort, seamless fit and sophisticated design. We integrate modern yet subtle aesthetics, ensuring our collections resonate with their professional and lifestyle aspirations. For the younger Gen Z audience aged 18-24, our designs focus on trendy and vibrant styles that cater to a dynamic and active lifestyle. Features such as odour cancellation, moisture-wicking, quick-drying and temperature control are crucial for this group. Our innerwear, loungewear and athleisure collections are crafted for breathability and support movement, reflecting the energetic and fitness-conscious nature of Gen Z.
Both Tier-1 and Tier-2 cities contribute significantly to our sales. Mumbai, Delhi, Bengaluru, Hyderabad, Surat and Ahmedabad alone account for nearly 60 per cent of our sales. As a digital-first brand with an aspirational target audience, our user base is predominantly in metro cities. However, Surat holds a special significance for us as the originating business of XYXX and we continue to enjoy strong consumer loyalty and pull there.
AR: Please tell us about your expansion plans both offline and online.
YK: Our growth has been fuelled by an omnichannel approach, tapping into various sales channels like general trade, modern trade, marketplaces and direct-to-consumer (D2C) strategies. XYXX has established a widespread network of over 22,000+ retail touch points across India through general trade and modern trade formats, mapping a network of 160+ cities and towns. We also have over five Exclusive Brand Outlets (EBOs) enabling us to reach a larger customer base and cater to the growing demand for our products in diverse markets. The D2C channel saw a 4x increase in the past financial year, boosting revenue and profitability, with website growth reaching 52 per cent in FY ’24 compared to FY ’23. We also have a strong presence on 14 major digital marketplaces, including Amazon, Flipkart, Myntra and Ajio. For three consecutive years, we have ranked amongst the top three innerwear brands.
Furthermore, around November last year, we expanded our presence in quick commerce platforms such as Blinkit (29 cities), Swiggy Instamart and Zepto and since then, we have grown 20 per cent M-o-M. XYXX experienced rapid growth, with January closing sales reaching three times the figures from November. Notably, we surpassed Rs. 1.5 crore in sales within the first quarter on quick commerce platforms alone. This achievement underscores our brand’s agility and ability to capitalise on emerging trends in the e-commerce landscape. Looking ahead, we project that quick commerce will continue to play a significant role, with an estimated 5 per cent of all e-commerce sales attributed to this channel in the coming year. We further aim to strengthen our presence in EBOs in different parts of the country.
AR: Tell us about your sourcing strategy.
YK: Currently, around 80 per cent of our merchandise is sourced from India. This includes sourcing of high-quality fabrics such as cotton, modal and bamboo, as well as other materials necessary for our products. Our vendor consolidation strategy is centred on building strong, long-term partnerships with a mix of both SMEs (Small and Medium Enterprises) and larger manufacturers. We believe in a balanced approach that leverages the unique strengths of each type of vendor.
We have a central warehouse in Surat and we have also partnered with all e-commerce and quick commerce platforms to store our products in their warehouses. This helps us reduce delivery times and costs for our customers.
AR: How do you handle demand forecasting?
YK: Accurately gauging product quantities for demand forecasting involves two main approaches. First, we analyse the previous year sales trends, observing how seasonality affects consumer purchases over a year. This helps us identify focus categories; for instance, knowing that May to August is a strong period for innerwear, we align our summer launches accordingly and ensure ample stock. Similarly, as the athleisure season starts in September, we adjust our inventory to meet the expected demand. We also prepare for significant sales events like Big Billion Days (BBD) or Amazon Great Indian Festival (GIF), stocking up on bestsellers to capitalise on the sales surge. Secondly, we review the past three months’ sales trends to determine which sizes should be manufactured in larger quantities. This shorter-term analysis is vital for a growing brand with a constantly changing customer base.
AR: How do you view the future of the men’s innerwear market in India?
YK: As Indian consumers become more fashion-conscious and willing to invest in premium products, there will be a growing demand for men’s innerwear that combines style with functionality. Comfort will remain a top priority for consumers when it comes to innerwear. There will be increased demand for moisture-wicking fabrics, seamless construction and ergonomic designs that enhance comfort and performance, particularly amongst active and fitness-conscious individuals. The men’s innerwear market is expected to expand beyond traditional categories like briefs and boxers to include a wider range of products such as loungewear, athleisurewear.
