10 years On, The Souled Store Still Earns 90% Of Its Revenue Via D2C: Cofounder Vedang Patel

SUMMARY

About 90% of our revenue comes from D2C and about 10% from marketplaces: Patel

According to Patel, brands should offer products at homogeneous prices on marketplaces as well as from a long-term perspective

Earlier this year, The Souled Store raised INR 135 Cr in a strategic funding round led by Xponentia Capital

Even a decade after its inception, lifestyle D2C brand The Souled Store still earns 90% of its revenues from the D2C channel, the cofounder and director, Vedang Patel, said at the fourth edition of Inc42’s D2C Summit.

“About 90% of our revenues come from D2C channel, and about 10% comes from marketplaces, even at today’s scale,” Patel said, adding that the brand has built its customer base and enjoys a high retention rate.

“I think if your product is aspirational, then marketplaces become a little bit different as you don’t want people to say that they have shopped on marketplaces like Amazon but you want them to say that they have bought this on The Souled Store,” Patel added.

After establishing its brand presence through D2C, the startup is now building its presence on marketplaces, which is the next opportunity for growth.

According to Patel, brands should offer products at homogeneous prices on marketplaces as well as from a long-term perspective.

Founded in 2013 by Patel, Rohin Samtaney, Aditya Sharma and Harsh Lal, The Souled Store started as a branded merchandise apparel brand and later morphed into its current D2C casual wear brand form. It also sells other products such as backpacks, sneakers, shoes and socks to customers ranging from kids to late adults.

Earlier this year, The Souled Store raised INR 135 Cr in a strategic funding round led by Xponentia Capital. The round also saw participation from its current investors Elevation Capital and RPSG Capital.

Despite nearly doubling its operating revenue, the startup recorded a net loss of INR 26.72 Cr in FY22, marking a sharp year-over-year decline from a net profit of INR 51.27 Lakh. This occurred at a negative EBITDA margin of 10%, Patel revealed in a recent conversation with Inc42.

Patel also stated that the startup has achieved an annual revenue run rate (ARR) of INR 400 Cr in Gross Merchandise Value (GMV) for the current fiscal year. He anticipates a positive EBITDA margin of 2% for FY23 and is targeting a 15% EBITDA margin by FY24. The startup boasts 5 Mn registered app users and has set a goal to surpass INR 1,000 Cr in GMV within the next three years.

As per Inc42 data, omnichannel and D2C startups raised $1.7 Bn in funding in 2022 and emerged as the most funded sub-sector within the larger ecommerce arena.

The homegrown D2C sector’s total addressable market opportunity is expected to surge to the $300 Bn mark by 2030.

The D2C Summit 2023 is presented by Google Cloud, co-presented by Simpl, and powered by Emiza and Salesforce.