Styline Collection Founder and CEO, Khobaib Chowdhury, explains the growth of the modest fashion company, how Styline is building a fashion retail brand at the intersection of online and offline, how Styline has grown to where it is today, Styline’s ambition, the most important job of a CEO and why smart people should take more risk.
Future Startup
It has been almost two years since we last spoke. Styline has grown significantly. You have turned yourself into a marketplace, opened 4 retail stores in three different cities and so on. Could you please give us an insight into how much has Styline grown and evolved since we last spoke?
Khobaib Chowdhury
Let me first talk about Magic Accelerator Program because I think we last spoke right before we got accepted to Magic. Magic was a wonderful experience for us and has been a good influence on how Styline has turned out as a company. We got the idea of building a company at the intersection of online and offline retail from there. While at Magic, I had this mentor in Malaysia, the co-founder of FashionValet, Fadzarudin Anuar. They experimented with this offline retail while they are a predominantly ecommerce company. When asked, he told me that the Malaysian market is not like the US market. And, even if you look at the latter, you will see that despite a lot of fuss about Amazon, Walmart is still selling and doing very well and Amazon is investing in physical retail.
I personally try to follow 2 international brands in Modest Fashion: Fashionvalet (Malaysia) and Hijup.com from Indonesia. They sell the same kind of products that we do here, with a similar theme of the modest lifestyle. So, Fadza told me that customers initially come to the brick-and-mortar store and check out what it has to offer. Then they convert to online.
Having an offline presence makes online conversion much easier especially for lifestyle products. In many ways, Kuala Lumpur and Jakarta are similar to Dhaka. The traffic situation is not good in either of these cities. People do not really want to commute to buy a single product. Consequently, e-commerce has a real potential in Bangladesh. But the conversion has not reached a satisfactory level yet. And it can't be done overnight, of course.
At Styline, we built our first store in September 2017. We have set up four stores so far and aim to reach a total of six stores by the end of this year. This doesn't mean that we will increase the numbers in the same way in 2019 and so on, That's not our plan. The six that we have built will be operated as our regional hubs. We have one in Chittagong, one in Sylhet and the rest in Dhaka. This is one of the major changes in the last couple of years.
We have raised an internal round of investment recently, mostly from friends and family who have invested before. I can't mention the exact figure, but the amount is fairly large. Our average inventory size has increased significantly. We had to take a new warehouse beside our old one. Products are distributed to a number of places from these warehouses. Besides making deliveries to customers who purchase from our website, now we have to distribute products to our brick-and-mortar stores as well.
We consider our website as another store. We sell more online. Our objective is to motivate the people who visit our physical stores to become our regular customers and purchase online. If we can implement this plan all the way through, it will be an important development in the e-commerce space. We spent months on R&D activities to come up with this idea. We talked to several retail joints, some of which deal in perishable goods. Business is more challenging for them. We tried to incorporate learning from those discussions into our plan.
Our vision is to become a one-stop lifestyle solution so that people have this idea that they can get whatever they want in their daily lives here. To that end, we are going to introduce new products and services as well. We don't think it will be tough to popularize these services since we already have a community of customers. We know about them and we can attract them based upon that understanding.
We began Styline in 2015 with a single line of products: hijab. After two years, we have recently launched a range of cosmetic products. The cosmetic market is highly saturated in Bangladesh. So why would people come to Styline? We have thought hard about that question and decided to follow our own differentiation strategy. We sell cosmetic products that are organic and halal. This has a great prospect in Bangladesh. The segment has been seeing a rapid growth across the globe. I became more assured of this trend when I visited Indonesia last month. In simple terms, the SEA (South East Asian) market is a little advanced than ours. The demography, lifestyle, and purchasing power - these factors have many things in common between these two economies. Take, for instance, hijab. When we started our operation, we weren't confident that the hijab would be so popular among women in such a short time. And this is not a short-lived fad, this is here to stay.
The case is the same if you look at Malaysia or Indonesia. This applied to cosmetic products as well. Demand for halal and organic products is growing consistently. People who use traditional cosmetics products develop a sort of dependence on them. Their skin doesn't respond well when they stop using them because of the use of chemicals. People will always want cosmetics. That's why we brought this exclusive cosmetics platform. We launched this new platform only three months ago in April. The huge response has been tremendous. We are working with several local brands, however on a smaller scale, which is working on organic cosmetics and doing quite well. Besides the Malaysian and Indonesian brands we offer, these Bangladeshi brands are doing pretty well in terms of sales. We also feel that they should be properly represented.
Mobile is the future. Hence, making our app popular is a priority for us. However, it is a challenging feat to make customer download and use the app on a daily basis. Moreover, if there is not a regular and important use case for an app, people would not download it either because you can have only too many apps on your mobile phone. We have to ensure a regular use feature to make our app sustainable. If someone has our app on their phone and has made a purchase only once, it would be similar to not having the app at all. We are trying to adopt a more service-based and content heavy approach which will give more use cases for the app.
As part of the efforts to make the platform more service-focused we are planning to are integrating lifestyle services for our users such as beauty parlor service. Our users will be able to schedule beauticians using our app. We have already spoken to a number of beauty parlors and saloons and they are interested. And if we can integrate this feature into our app, it would be of great help to the customers and give a regular use case. This is not going to be an easy endeavor. We will have to educate the saloons as well. They will have to learn to manage the appointment requests coming from customers. We will have to design a separate interface on our app for that.
We launched a new Android app immediately before the Eid-al-Fitr in May. Next month we had the Zuma Fest and had a lot of preparations to make. Our servers crashed due to the pressure. As a result, we couldn't make any transactions online during the last week before Eid. We only depended on physical retail. We have learned the lessons and this time we are not going to make the same mistakes. This time we aim to build a seamless experience for our users. By the end of this year, we predict that we are going to have 50,000 active users on our app. Although the number is not too high, if you look at the type of users we are talking about - women, it can change the entire dynamics of our business.
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Future Startup
How big is your team now?
Khobaib
We are a 34 people team. We have 3 major teams - Sales, CS, and fulfillment. Besides a fleet is working in our retails.
We began Styline in 2015 with a single line of products: hijab. After two years, we have recently launched a range of cosmetic products. The cosmetic market is highly saturated in Bangladesh. So why would people come to Styline? We have thought hard about that question and decided to follow our own differentiation strategy. We sell cosmetic products that are organic and halal. This has a great prospect in Bangladesh.
Future Startup
Are you planning to raise external funds?
Khobaib
We have been talking with a number of venture capitalists for a while now. There are some challenges there, of course. It is sometimes challenging to convey to them the vision we are working toward and have them buy-in to it. We don’t want to have people who are in it for money alone. We have also approached a few foreign investors. They seem quite interested in our venture. However, it is not easy to raise money in Bangladesh.
While we have plans to raise investment, right now, our focus is on building a strong leadership team in the company. We have been struggling with it. The fund we need to invest in it has already been arranged for. We are set for at least another six months. For now, our priority is building the business. I believe if we could build a solid business, raising investment should not be a challenge.
Future Startup
How are you doing in terms of revenue?
Khobaib
We are generating revenue to the extent that we can meet our month-to-month operational expenses. For our expansion, we plan to use external funding.
Our online business has been seeing consistent growth. As for online retail, we are making couple hundred deliveries per day. In case of our brick-and-mortar business, I don't have the exact statistics with me right now. I can tell you that our Sylhet and Chittagong store is performing well. Every day we are selling, at least, 30 to 40 customers there. This happens mainly because people are still habitual in making physical purchases outside Dhaka. Our stores in Dhaka are also doing well.
Future Startup
How does your marketing work? What are the things you doing to attract customers and grow your business?
Khobaib
Since we have both online and physical store, we try to connect them with each other. I don't know whether you're aware of this, many retail stores in markets like the US and Singapore is shutting down. I think the same change will take place in Bangladesh as well. A balance in terms of the number of brick-and-mortar and e-commerce businesses will transpire soon.
As a preparation for that transition to digital, we are trying to come up with ideas about how we can use the physical store as a bridge to the online store. We have introduced some campaigns in that respect. One of them was the Hajj Tour campaign in which customers could come to our stores, order customized hajj outfits with proper measurements, and we would then send them to their home. The process could be done online but they experienced the campaign physically. Besides that, there are always Eid seasons when we always offer something new.
Our marketing tactics now emphasize more on customer retention. We currently have a customer base of around 30,000 people. If only half of them visit our stores once a month and buy a single hijab, our business will grow tremendously. We have added cosmetics and apparel products as well. If we can retain the ones who buy from us, new customers will be easily attracted to us.
A trend that sometimes upset the growth in this market is customers' preference for discount deals. Many people buy online only when they get discounts. It has a negative impact which the Indian market has suffered from. Their market is growing but they are burning cash like wildfire in order to make way for the discount deals. Besides, always selling below par doesn't do well for the brand value as well.
We have shifted our focus from promotional sales. We are now trying to satisfy our regular customers by giving them exciting deals. And this usually happens in a personalized way. Recently we have introduced a loyalty program where we are issuing Prime cards to our regular customers. Cardholders will enjoy extra benefits such as purchasing always at a lower rate, free and fast deliveries, and a dedicated customer service line. The prime card cost Tk. 1,000. Given the price, we first need to show the customers the benefits of getting in such a membership program. We aren't offering it for free because we look forward to creating a premium customer experience.
Future Startup
Could we call Styline a marketplace?
Khobaib
Yeah, that's what we intended from the very beginning. More than 15 partners have been actively working with us right at this moment. We consider a number of factors before we initiate a partnership. We partner with brands that have potential, that convey meaningful value propositions and provide goods at reasonable prices. We are very cautious about who we bring aboard. This is why we make sure every product comes to us for quality checking before it is delivered to a customer.
By the end of 2018, we plan to increase the number of our partners to 50. This target comes in line with our plans to introduce a few new product lines such as baby products. We also need additional funds to do that. Because when you bring a new line of product, you need to spend on two accounts: one to build up your stock and one to create awareness among customers. We have seen that an investment of, at least, 2 million to 3 million BDT is required to add a new product line.
Mobile is the future. Hence, making our app popular is a priority for us. However, it is a challenging feat to make customer download and use the app on a daily basis. Moreover, if there is not a regular and important use case for an app, people would not download it either because you can have only too many apps on your mobile phone. We have to ensure a regular use feature to make our app sustainable.
Future Startup
You maintain your own inventory and you also operate as a marketplace; how does your revenue model work?
Khobaib
For our own inventory, the model is simple, as you now with all trading business. For marketplace, which is what we want to become over the time, we get a commission from every sale we make for a partner. The rates basically depend on the vendor. Some vendors are already popular among customers and we don't need to put extra marketing efforts for them. So, we accept lower rates in their case. But for those who are new, we have to undertake promotional activities regardless of however good their products are. That's why we charge them higher rates. To sum it up, our commission rates range from 15% to 25%.
Future Startup
How much has Styline evolved as an organization from a qualitative perspective?
Khobaib
A lot has changed obviously in two years. Only 15 people used to work at Styline in 2016. The organization largely had a flat structure. Provided that we are now a 34-people team, you can't communicate and manage a size of team our size without some formal structure. Although I personally believe that startups inherently have a non-hierarchical nature, but necessity has led us to create a layer of reporting managers. We also have some consultants with us now helping us with marketing, technology, etc. They are not full-time employees here but they offer us their suggestions based on their experience in their respective fields.
We are now quite flexible while hiring new talents in-terms having some specific skills. We do recruit people based on their qualifications, but we have relaxed our policies a little bit since we have more people with us. Now, if a new guy doesn't perform up to par, we give her/him the opportunity to improve. We couldn't afford such luxury a couple of years ago because the output of a single person mattered way too much back then. But now we can afford to allow people to level up their skills. Similarly, we have developed process and systems over the time. Let me give you a few examples. Recently we have developed a 24-points guideline that dictates how one should post about Styline on social media networks. From our experience, we have learned how we can effectively do promotional activities on social media and this guideline comes as a result. Anyone who joins our digital team can use the material to educate them.
Then, we didn't have a reporting system in the past. We used to do that orally. Now we arrange reporting sessions on a weekly basis. Every member of the three teams join together every Saturday and discuss the performance of the recently passed week, how much of the target has been achieved, what were the mistakes, and so on.
We do things with more confidence now because we have been successful in various aspects. We can negotiate with our partners with more authority. In the past, it was challenging for us to convince partners to join us, the scenario is different now. When we approach a partner now, they tend to take it positively.
Say, you have a particular level of demand at your online store. And when your online inventory is used up, you sell from the store inventory. But what if you have one inventory for all your stores? There is no limit to online selling. It doesn't matter where you're getting the products.
Our tech team is working on a tool that would allow us to integrate both our online and offline inventory and manage orders using the single software. If we can implement this system, it will allow us to solve several problems related to order fulfillment and inventory management.
We have some other interesting plans. We are thinking about introducing in-house tailoring. Till now, we make clothes on a contract basis. We have few contracts who make our clothes in different places in Dhaka and Ctg. They take care of our orders for a commission. We want to bring it in-house where we will be offering tailoring services to our customers. Traditionally modern fashion stores like us have offered apparel products that have a predetermined design and measurement. We are contemplating a new offering where we will ask our customers to bring their own cloth and we will tailor their dress ourselves; and that, too, at a very affordable price.
It's not like this new service would strike gold. It'll benefit us in other ways. Whether a customer buys her/his clothes from us or tailors them, s/he can get do either of things at a single place. Such way, it becomes a one-stop destination. Then, we will no longer say that we offer lifestyle products; our slogan will be that we fulfill your lifestyle needs. At the same time, if we could do a good job with tailoring for a new customer, she might also try our other services.
As for product deliveries, we do 30% to 40% of them through our own delivery team. It consists of three people at present who cover three areas in the capital: Mirpur, Gulshan, and Dhanmondi. Direct, in-house delivery is crucial because it gives you more control. We have been able to extract data about the customer through direct deliveries. At the same time, it allows you to control the customer experience. For the rest of our deliveries, we partner up third party courier service.
A trend that sometimes upset the growth in this market is customers' preference for discount deals. Many people buy online only when they get discounts. It has a negative impact which the Indian market has suffered from. Their market is growing but they are burning cash like wildfire in order to make way for the discount deals. Besides, always selling below par doesn't do well for the brand value as well. We have shifted our focus from promotional sales. We are now trying to satisfy our regular customers by giving them exciting deals.
Future Startup
What are a couple of things, little things, you have done to grow Styline?
Khobaib
Prioritize your resource when a customer is not satisfied. Probably this is one reason why we stood out in the market so far. If a customer is not happy or face some issue, we solve the case as quickly as possible and we make sure there's some manager who can handle it. In most cases, we see this gives the customers comfort as they feel, although the issue has already happened, we are trying our best to take care of it. The person responsible build-up of a process and follow up time to time until it is solved. We try to log all the exceptional issues that would help the team understand and act in future cases.
We are not the largest e-commerce in Bangladesh, but probably we are one of the e-commerce companies with the happiest customer-base. And we are extremely proud of it.
I have seen that only an attractive marketing campaign can't really make a product successful. You can hire popular influencers who would promote your product on social networks and other spaces, but customers ultimately choose the brand that provides a quality product and ensures the best possible customer service.
We are constantly coming up with new ways of serving our customers. We are working on a membership product which would allow our customers to get even better services from us.
Future Startup
As a CEO, how do you approach your work? What are the things you prioritize on a daily basis?
Khobaib
Honestly, I'm still learning. A CEO needs to balance between micro-managing and delegating responsibilities. Despite being a founder of a fashion retailer, I rarely make public appearances. I don't go to a lot of events or talks.
I think a person should be celebrated once s/he really accomplishes something extraordinary. A lot of events take place in Dhaka nowadays that feature entrepreneur to share their success stories. And this type of events often left me wondering, what is a success really? Is taking part in many events a success or sugar coating each other while we did almost nothing except some social media presence? To me, the bar of success is high and it pushes me every day to keep us on the right track.
Coming back to my job, I still look after a few things on micro-level. For instance, I sit with the people who work in sales in different teams on a weekly basis. We assess our previous week’s performance and chalk out plans for the next week.
Our financial situation is changing more rapidly now. We have to tread more carefully now. Our operation has expanded. So, I tend to overview financial matters almost every day. Since I don't understand finance all too well, I consult my financial manager on this.
I try to delegate as much as I can. But it's not always possible. I keep the significant decisions for myself and delegate the executive decisions to others. In fact, for the first time, I wasn't physically present at the inauguration of a Styline store in Sylhet. And our people did great there. This is why I am particularly concentrated on finding the right people for the organizations so that the organization is well-run even when I'm not around.
Moreover, the consultants, who I was talking about earlier, visit our office multiple times every week. These sessions are quite important where we make significant decisions. I sit with them and plan what we are going to do after six months or a year. I spend a fair amount of my time looking into data and thinking about plans and priorities for the future.
Future Startup
Have you found something which you first took as something important but later realized that it was a distraction?
Khobaib
It's hard to recall any particular thing right now. But I'd tell this that CEOs should let people manage their own work. CEOs in Bangladesh often make this mistake. They don’t delegate and don’t find giving up control comfortable. This is why most of the local companies are a one-man show. It's one of the reasons why they don’t scale much.
At Styline, we want to get out of this phenomenon because we want to grow. We often understate the importance of delegation. I used to be quite a micro-manager in the past. I have learned to give off control and allow my colleagues to make decisions and take initiatives. It has increased the overall speed of the organization. Micromanaging is not helpful and is often disadvantageous to our own growth.
Future Startup
What are a few things that you have found particularly useful in the process of building Styline e.g. mentorship, tools, or meditation etc?
Khobaib
Being a founder is a hard journey, it's really like eating glasses. It is depressing time to time, so you need strong willpower and motivation to keep you driven and motivated. Time comes when you will feel everything will fall apart, or your experiments and projects are failing one after another and you don't know how to overcome. (if you have a co-founder, maybe you are lucky to share the situation) Building a startup is harder than raising a kid. A baby comes with a shape already (hands, feet etc) but when you are building a business, your job is to bring something out of nothing and you start with giving it a shape. One thing that I have found useful is taking time off occasionally and letting things go. Founders are super busy people and we are always in the mood of doing. But I believe that if I could get away from the game once in a while, I could focus more upon return.
I used to worry a lot in the past. I used to be a hyper-involved founder and used to suffer stress a lot. I have learned to avoid stress recently by learning to let things go. And try not to control everything. Now I try to think beforehand of what worst can happen. This change has probably come with age and experience. I learned that if you are facing a huge challenge, instead of constantly worrying over it, you need to just forget about it for the time being. First, detach yourself from the situation, relax and then come back to it. In my case, I do something completely unrelated to the problem and then come back to it the next day. Often, I could see more options to the problem and I bring a new perspective that helps to solve the problem more efficiently. This habit has been super helpful to me.
Another learning - If you want to build something, try to find out first if it really solves a problem. Do you have a one-liner problem statement? Do you believe in the solution that you’re offering? If you don't believe it yourself, how you make people believe it? Now-a-days as the startup bubble is growing in Bangladesh, we see more and more people are getting involved. It feels good to see people are coming out of traditional thinking process, now the point is do you really have a product to build the business? If you don't have a product that doesn't stand out, no matter how hard you try or you have your first sale or not, it won't sustain. First, find a problem that is worth solving, that is the most important step towards building a startup.
Future Startup
What are some other lessons you have learned throughout your journey?
Khobaib
In 2017, we have made some wrong recruitment decisions. What we wanted earlier was to bring a few experts from reputed companies who might help us to achieve our growth target. When you grow, of course, you need experienced people, but in our case, we chose the wrong guys. The experience taught us that having a work experience at a big company doesn’t always guarantee a higher capacity. Even worse, some so-called experts come with bureaucracy and office politics too. Startups are very different organisms and require a different mindset to succeed than that of a corporate. We have realized the importance of cultural-fit when it comes to hiring. You should only have people who fit into your organizational culture. This was a great learning for us for us.
Previously, I was hell-bent on formulating completely foolproof plans. But I've realized that it's a luxury for startups. Say, we want to hire a sales expert. In the past, I would have wanted to bring a highly-experienced expert in the field. But the problem with the plan was that such a high-profile professional might not be interested in working with us or might demand remuneration which we can't afford. But now I see this from a different perspective. Now I think we can do without a top-tier expert. We can get things going with a fairly skilled guy. S/he just needs to be willing to learn. Instead of waiting for a perfect plan, it is always better to get into doing things. The action eventually helps you to come up with better plans.
I have seen that only an attractive marketing campaign can't really make a product successful. You can hire popular influencers who would promote your product on social networks and other spaces, but customers ultimately choose the brand that provides a quality product and ensures the best possible customer service.
Future Startup
What advice would you give to people who are just starting out?
Khobaib
One thing I have noticed is that as a society, we tend to play it safe. I think this attitude can be traced back to our days of servility under the British rule. This is a colonial mindset. One of the challenges we regularly face is finding good people because good people tend to opt for the career options that are safe.
Working at a startup offers you more learning opportunity than a stable job at an MNC. But only smart people can pull that off. Sadly, smart people in Bangladesh avoid risks at any cost. This is not only detrimental to companies; it is equally detrimental for the individuals. I think everyone, most importantly smart people, should take risks and try things. Often the outcome of taking a risk outweighs the potential cost of taking it.
Future Startup
What are your goals for 2018 and 2019?
Khobaib
More lifestyle product lines, going global and offering our customers more convenient one-stop solution - these are what we want to achieve in next 18 months time-frame.
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Future Startup
Where can our readers go to learn more about Styline?
Khobaib
You can go to our website, download our app from the app store: iOS App here, Android App here. We have fan pages on social channels, you can learn about us there as well.
Instead of waiting for a perfect plan, it is always better to get into doing things. The action eventually helps you to come up with better plans.
