What The Financials
Inc42 unveils and deciphers all the important financial metrics of Indian startups across industries. Find out revenues, unit economics, profit & loss and all the important financial metrics to judge how the startup will perform in the coming years.
In 2011, Richa Kar gathered her life savings and started selling lingerie online in the country. The Zivame idea was revolutionary and far ahead of its times, as women consumers in India were not really habituated with shopping for lingerie in the open — even on the internet. Over the past eight years, Zivame has become a byword for lingerie shopping in India.
In the first few years, the company underwent management reshuffles and since 2017, it has focussed on growing sustainably mixing online and offline strategies. As a result in FY19, the Zivame’s losses have reduced nearly 39% reaching INR 19.56 Cr from INR 32.11 Cr in FY18.
According to the company’s filings for 2018-19, the company reported total revenue of INR 141.89 Cr in the fiscal year with total expenses of INR 160.01 Cr for the same period.
With this filing, Amisha Jain, CEO of Zivame, in a media statement said, “Last year has been phenomenal as we have strengthened our position across categories and deepened our presence in the markets. With tech, data and innovation at the heart of everything we do, we are set up for exponential growth over the next few years.”
The company said it will continue with its aggressive retail expansion and take store count to over 100 stores in the next 20-24 months. “We will also deepen our presence in Tier 1 towns and focus in key Tier 2 and Tier 3 markets,” it added.
However, it is to be noted that Zivame has been targeting 100 stores since FY18. At the time of filing for FY18 results, the company planned to reach 100 stores by FY19. However, this has yet again stretched to next 12-24 months.
Inc42’s detailed questionnaire on the company’s financial performance for FY19 remained unanswered till the time of publication.
Omnichannel Strategy Shows Revenue Growth
Omnichannel route is the clear strategy for the company, which is visible in Zivame’s growing retail presence as well. The company said that its marketing expenses have also decreased by 18% in FY19. Hence, we have a closer look at how the company is earning and what it is burning cash on.
In an earlier analysis, Datalabs by Inc42 had noted that Zivame spends 45%-60% of its total expenses on marketing and advertising as well as on its staff expenses. However, when we today look at the focus on company, it has shifted towards inventory as marketing and employee expenses made up nearly 30% of company’s total expenses.
The analysis had revealed that if Zivame can control its cash burn, manage its resources better, and garner some support from its investors, it can arrive at a place where it can perfect its business model and start to win back the ground it has lost to its competitors.
On examining expenses, we noted that the company’s costs on traded goods increased by 54.5% reaching INR 94.47 Cr in FY19, as against INR 61.13 Cr in FY18. Further, the company’s commission paid to other selling platforms reduced, which may indicate its increasing dependency on its own platform rather than other ecommerce platforms. The company’s employee costs increased merely 4.4% reaching INR 24.28 Cr in FY19.
In terms of revenues, Zivame’s major revenue is its sale of products, which was INR 137.42 Cr in FY19, a 59.49% Y-o-Y increase from INR 86.16 Cr in 2018. The growth rate is similar to what we saw last year when the company announced 56% higher revenues.
Further, the company’s sale of services remained constant at INR 48 Lakh while other income reduced to INR 3.98 Cr.
Zivame CEO Jain had said that the company has hit INR 340 Cr annual run rate for FY20. Jain further said that the sales from Zivame’s mobile application have increased from 50% share of overall sales in FY18 to 65% in FY19. “We should be able to break even in the next 12 months.”