‘The Lost Founder Series’ today’s story is about an e-commerce fashion store Kaaryah. Let’s know the reason behind the failure of the ecommerce fashion store startup, the reason behind shutting down, the economical impact, overall impact on the industry and the mistakes they made which led the start-up towards Death Valley. “The Lost Founders” is a series in which we will discuss the start-up stories and the reason behind the biggest failure of the start-ups. Let’s begin with the e-commerce fashion store startup Kaaryah story behind the failure – the Indian start-ups’ shutdown in 2017.
Founder(s): Nidhi Agarwal
Headquarter: Gurugram, Haryana
Category: E-commerce Fashion Store
Closed in: Dec 19, 2017
Funding: The startup had raised $499.5K (INR 3.2 Cr) amount of funding from SAHA. Kaaryah had secured an undisclosed amount of funding in Pre-Series A from former Infosys veteran TV Mohandas Pai and the SAHA Fund, in December 2015. Prior to that funding, in June 2015, Kaaryah had raised an undisclosed amount of funding from Ratan Tata.
Gurugram-based startup Kaaryah catered office wear for women, a technology-enabled and data analytics-driven apparel brand in relation to their appearance and lifestyle. The startup was providing the solution for customized Indian women with feminine, functional & fashion-forward wardrobe to them who mean business. The startup was deal in non–casual wear providing the trendy western outfit that fits in 18+ sizes, at the doorstep.
Well, the major loss is to the employment sector, the job opportunities raised by the startups also demolished with that startup too. A pure loss for investors and the initial amount invested by the co-founders all got in vain. The reason behind shut-down id due to fund crunch, the startup was in seek of fundraising and approached various investors from last 18 months before shutting down of Kaaryah. At last, the startup pulled the shutters.
As we always discuss the loss of employment cause it is linked in many ways other than sitting job done by the workers, the loss of employment. Due to the shutting down of the Kaaryah, employees lose their jobs. Kaaryah had the workforce of around 50 to 60 people. According to Nidhi Agarwal, they had given a notice period of two months to all the employees of the startup. Some employees were referred elsewhere and given job placements outside in other companies.
“It was not sudden. We have been trying to raise funds for the last 18 months. We had broken even twice in 30 months. Honestly, my aspiration for the brand was to take it to Rs 100 crore revenues within 4-5 years of having started it. It looked very realistic should we have received normal amounts of funding, given that we were a very capital efficient and working capital-light company,” said Nidhi Agarwal.
The reviews about the startup are very limited to analyze or to conclude anything about the startup. Still, we are representing some reviews about the startups from their ex-employees and customers. Let’s know what their reviews are and experience with the startup. Below are some reviews:
“…great workplace to enhance leadership skills, with the freedom to experiment & innovate…new opportunities are given to team members to help us grow & build cross-functional expertise as well…” an ex-employee
“…purchased one dress from kaaryah.com…product is nice…overall the site is simple and products are really up to the mark…” – a customer
“…6 days working…you will spend more than half your day in office…its not even an office…its a factory/warehouse…high attrition rate…you don’t get leaves and if you do manage to get a leave, people will call/message for work…designers are blindly making clothes just to meet their targets…no importance given to quality or customer feedback…you get hired for a particular role but end up doing something completely different…hire more people and try to retain people…” an ex-employee
We can easily analyze the review about the company from the customers and employees review. From the above reviews, we can’t conclude anything as the reviews are very limited. Whereas there are some positive reviews as well there are negative too.
The founder of the startup Kaaryah is now working as a startup consultant guiding the startups to build their own brands, who are passionate about their startups.
Lack of Proper Outlining:
In India, the professional wear is not a culture, very few women’s uses these professional dresses in offices. In India, there are no such dress codes in offices and the women’s who preferred to wear this are very less and mostly this type of clothes women’s buy as per their choice and desire, there is no such compulsion to wear particularly professional dresses. The culture of professional dresses, skirts, formals is not much effective as in foreign countries, generally women’s wear kurta-legging, suit, jeans-top, etc. other than formals. And those who wear such clothes they easily access it from nearby stores at cheaper prices.
Undoubtedly, Kaaryah grabbed the best segment of the apparel market of non-casual wear, which was not easily available in the market but the weak point is that the market for such specific professional clothing is very low. Not only the segment they targeted, was already covered by the big market players, but the variety was also greater with other players. Kaaryah was providing 18+ fits to their customers. The point which they were targeting was good but at a niche level, was not a good idea for the startup; this could possibly make a way for the startup towards Death Valley.
According to the customer psychoanalysis, there should not available more than 3 or 4 options for a customer if it does then it creates confusion for the customers to go with any particular one, and the customer will put on hold and later on will not buy anyone from all the available options. If the customer put on hold then there will be a delay and more chance of decreasing the sale. According to the business theories: the more availability of the option so the confusion; less availability of the product more chances for the customer to get satisfied and purchase it at the time.
Where did Kaaryah Lack?
Kaaryah was a thoughtful but a risky venture definitely and shutdown of such an ‘all-good-startup’ is a loss of the industry. The innovative strategy of Kaaryah probably backfired the startup and led to it towards the shutdown. As the site was new and the customer wouldn’t go easily to any new site like what would be the return policy? Will they return or not? Quality? and lot more… It is a general business theory if someone is launching any product they should limit their product, very basic theory. Where a company getting 100 customers but the more availability of the product and sizes the customers get confused and while later on deciding which one to buy the company only get 25 customers out of 100.
“The net sales of KAARYAH Lifestyle Solutions Pvt Ltd for the financial year 2015-16 was Rs 1.7 crore and loses were Rs 4 crore.”
The startup approached so many investors for funding. It’s quite possible there was some mistake in their approach or something else was missing? There was no such problem in their idea, in the company, not in the founders but it was one of those startups from which we can expect and it closed unexpectedly. The problems which occur theoretically and practically were because of the niche segment of the startup, where already big players were available in the market and were very well established. Where the big market players in the industry already have their market, more quantity and quality. Whereas in Kaaryah the availability of more number of sizes backfires the startup.
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Tags: Craft Driven, Craft Driven Market Research, ecommerce, Kaaryah, market research, Neha Agarwal, ratan tata, startup