Born on the internet, how should Suta grow?

Introduction

A well-crafted story for a sharply defined segment and served with a passion for quality - that was Suta.

Flashback to three years, while sipping a cup of tea in their apartment in Mumbai, India, the founders Sujata and Taniya took a decision to quit their well-paying jobs and immerse themselves completely in Suta - their small and dynamic entrepreneurial venture of smart office wear for women[1]. Since then sales had grown rapidly from INR 1.5 crore in 2016 to INR 5 crore in 2018 as did a loyal customer base. The sisters had painstakingly crafted and nurtured Suta's brand image in the minds of their customers, through distinctive designs, quality processes, exemplary customer service and experience. All this through a strong yet responsible supply chain that nurtured weavers in rural India.

Now, in March 2019, once again, they were at a crossroads. Their growing popularity amongst young women attracted investors and fashion portals who offered them investment to scale their venture quickly. Sujata and Taniya had observed other brands in the start-up ecosystem, which had grown exponentially with the help of investor funding. However, the product quality and customer experience of most of these brands appeared to have suffered. The pursuit of growth had resulted in a drop in quality, process failures and employee attrition. They had just finished reading a recent article on Techcrunch that had highlighted the risks of scaling too fast[2]. Venturebacked start-ups faced great pressures to perform and venture capitalists often compelled companies to prematurely scale-up. Scaling too fast seemed to pose a risk to quality performance.

"We realize that business growth is critical for long term survival - not only for the brand but also for the many weavers who were dependent on us for work and livelihood. However, does growth need to be at the cost of disrupting the very foundation that we have built?" questioned Sujata and Taniya. They were apprehensive of adopting the greedy for growth route through investor funding that many start-ups had followed and eventually compromised their customer experience.

They weighed the strategic options for fuelling their growth. Should they bring in investors to accelerate their plans for growth and risk losing control or should they grow organically? The latter would mean that they depend on operational cash

The Suta story

Founders Sujata and Taniya combined the syllables in their name (Su+Ta) and the result, Suta, magically meant "thread", which tied in perfectly with their idea of celebrating traditional weaves[3].Back in 2014, as working professionals in the beautiful yet sweltering city of Mumbai, the two sisters were always on the lookout for comfortable office wear that would also look elegant and smart. To their surprise, the market did not have much to offer. This motivated them to design their own clothes and get them stitched by a local tailor.

Very frequently, young entrepreneurs would explore ideas on new ventures that they could start. One such idea was around Taniya's passion for photography - wedding photoshoots and portfolios for aspiring models. To showcase her photography skills, they put together a portfolio of a few self-designed clothes with Sujata as the model. These were uploaded on Facebook seeking photoshoot assignments. To their surprise, there was a far greater interest in the attires that Sujata was modelling. The designs became very popular and the girls were quick to realize the business potential there!

From 2014 to 2106 they ran Suta alongside their corporate jobs - mostly late evenings and on weekends. They absolutely loved doing it: designing clothes that they themselves could not find in the market, namely, dresses with big pockets; halter neck blouses that looked equally good when paired with a casual saree or comfortable denim; short palazzos[4],[5]; pants with shorts lining. While the market was highly competitive, consumers always appreciated distinct designs with quality and demand for their products grew.

For communication and marketing, they chose social media and digital channels. On Facebook and Instagram, they promoted their designs to their friends. Word spread fast through likes, comments and shares. Their popularity grew amongst working women in not only the large cities in India but also the smaller towns. By December 2016 they had about 6,000 Facebook followers.

The Suta woman (target group)

Su and Ta wanted Suta to stand for honesty, comfort, pride and designs that were minimalistic, simple yet artistic. The Suta woman was comfortable in her skin and valued comfort and believed in her own style rather than conforming to trending fashion. She was a decision-maker, independent, educated and self-aware and between 18-45years of age. This was a niche segment of women who valued understated elegance. She was also someone who valued art and respected the effort a weaver took to create the fabric.

Reviving the traditional Indian saree

One category in which Suta created an excellent customer connect was their sarees. This was surprising, as over the years the saree had moved from being the apparel of daily wear to one mostly meant for special occasions, especially for the modern woman in urban cities who found it an inconvenient outfit and one that took time to drape. However, Su and Ta saw this as an opportunity of reviving the traditional graceful attire of India, in the wardrobes of the urban working women.

Suta with its emphasis on comfortable elegant office wear introduced the "mul saree" - an extremely lightweight saree that could be categorized as muslin cotton[6]. They had an interesting description for it that read: "made in heaven mul cotton are aptly named as they are feather light and baby soft. This is one of our favourites that is why Su uses them to wrap her baby in it". The sheer quality of the fabric ensured an easy effortless drape and was perfect for comfortable wear on a long hard day at work. Su and Ta realized that through this beautiful drape there was a possibility of influencing young Indian women to keep alive the traditional elegant Indian saree.

The other category in which Suta grew rapidly, was the blouse, an accessory that went hand in hand with a saree. Traditionally, sarees would be accompanied by an unstitched matching blouse piece that the lady would custom design. Suta introduced designer blouses that could be mixed and matched with all types of sarees and could also be wornas an accompaniment to denim. The blouses were fashion statements in their own right. The ability to mix and match sarees and blouses increased the variety in women's wardrobes.

The industry and competition

The ethnic wear market in India was estimated at INR 126,210 crore (for 2019) and the women's segment represented 82 per cent of the market. Within that sarees accounted for, 50 per cent share (Exhibit 1)[7]. The market was fragmented and Suta operated in the niche segment of contemporary ethnic wear using hand-woven fabrics.

The pioneer brand in the space of branded contemporary ethnic wear was Fabindia, with an estimated turnover of INR 1,060 crore in 2017-2018[8] that included apparel and accessories beyond sarees. An increasing number of small brands that competed with Suta in a similar space was Jaypore (which had subsequently moved to a business model of curation of other brands in addition to their own in the handloom ethnic wear segment)[9], Tjori, Aks, Rustorange and a few others. Like Suta, they were digital natives, born on the internet and had unique exclusive offerings. Many of them were moving away from their niche offerings and quickly gaining new customers through investor funding.

Marketing

During the early days, Suta participated in a series of exhibitions across the large cities of Mumbai, Delhi and in most of these exhibitions their product would sell out completely. These exhibitions provided additional insights into Suta's customer profiles and confirmed that the Suta woman stood out subtly from the rest without being too loud in her dressing.

The simple, minimalistic comfortable designs appealed to her.

The power of social media enabled them to be accessible to women all over India. From February 2017, they focussed their marketing efforts on their Instagram page #suta_bombay. Within six months they had a follower base of 35,000 with very low spends on advertising. Their initial success could be attributed to the striking visual content on their Instagram feeds. Ta's photography skills and Su's carefree modelling style created a very distinct look for their page. Their exponential growth on Instagram was led by #sutaqueen, an apt mnemonic for a woman who wears a Suta. As their designs were unconventional, a person choosing Suta over others had a certain personality - someone who could wear what their mind told them to and feel good and powerful about it. #sutaqueens shared their photographs wearing a Suta attire and these pictures would then be posted on Suta's Instagram feeds along with a brief yet very genuine appreciation and compliment of the #sutaqueens' personal style and free spirit (Exhibit 2). Successful marketing to Su and Ta meant selling 10 sarees to 1 #sutaqueen rather than selling 10 sarees to a mass audience.

Order, supply chain and quality management

At a fairly early stage, around December 2015, Suta experienced the growth pangs associated with increasing demand. So intent was they in designing and creating products that they underestimated the operational effort required to fulfil orders. Initially, orders were booked and confirmed on Facebook. There was a time when they would pack, dispatch the orders and maintain records themselves. They used earnest, trustworthy workers who were semi-skilled to help them with the routines tasks such as dispatching. However, these workers could not be delegated tasks such as accounting and reconciliation of orders received, dispatched and payment and much of their time (that could be used for growing their business) were spent in such tactical operations.

Order management

It dawned on them that for all their management degrees from the topmost B-schools they were not making the best use of their creative resources. In April 2016, they started hiring people skilled in managing the back-end processes. Over the next six months, they transitioned their manual order management process to a cloud-based e-commerce platform (initially on a local platform Zepos, before the moved to Shopify in 2018)[10], which enabled them to manage orders, streamline online payments and fulfil orders through thirdparty partners. Access to a full-service e-commerce platform, helped them automate many customer service processes such as messages for order delivery tracking, an intimation of availability of products previously out of stock, customer queries on products and so on. They also integrated the platform with their supply chain processes for procurement and last mile delivery.

In India, many online customers preferred to pay cash on delivery (COD) when goods were delivered to them. This mode of payment was instrumental in increasing online retailing penetration in India. While the industry average was 80 per cent (COD) and 20 per cent (online payment), Suta had a ratio of 40 per cent (COD) and 60 per cent (online payment) as they charged INR 200 for the COD option, as a deterrent. This also ensured a happy outcome of improved cash flow.

Sourcing, supply chain and quality management

In early days, around January 2015, the fabric and mul sarees were sourced from wholesale bazaars in Mumbai and Kolkata (a city in Eastern India) and subsequently processed with the Suta design elements[11]. However, quality control (QC) in sarees was a challenging task, at the sourcing level, as well as at the time of processing of the design. The sisters were very clear that the Suta saree would be a hallmark of quality and if necessary they would go the extra mile to deliver it. The quest for quality took them to handloom villages of India in the States of West Bengal[12], Meghalaya, Manipur and Orissa in December 2016, where they got in direct touch with the weaver communities in these villages. Over the next year, they worked diligently, not only to develop the supply chain from the weavers in rural India to their warehouse in Kolkata and Mumbai but also to lay down stringent QC processes in each of their 11 sourcing villages.

In every location, they took time and effort to develop a team of quality checkers whose sole work was to inspect each saree that was produced. The multi-stage process of QC included checking the length and breadth of saree, colour, smell, inch by inch, tassels and embroidery (Exhibit 3). The QC team was trained to identify any defects. Such was Su and Ta's paranoia for quality that for every defective saree that was identified they paid the checkers two and half times more than a saree that was found to meet quality standards. This process ensured that weavers were careful of the quality while weaving it. It took considerable time and effort to set up these processes. Their time spent with the weaver community helped build a strong bond with the weavers and their families.

Scaling Suta

Suta was turning out to be a well-crafted story for a well-defined customer delivered through a fanatical focus on quality. They knew they needed to scale. In Su and Ta's words "if we do not grow, other companies will grow faster. They may acquire our customers and we will vanish. It took us three years to reach where we are. Then, now it is time to invest in the right growth strategy". They would have to ensure growth without compromising on quality.

On one hand, scaling Suta meant increasing sourcing and production. However, an equal focus was required for increasing demand from the right profile of customers. They would need to ensure that the digital marketing strategy and campaigns attracted customers whose profiles were similar to that of the #sutaqueens so that the engagement experience on their digital and social media platforms was not compromised.

They needed to be prudent about the sourcing and production of their sarees. They had been approached by suppliers who wanted to provide them with large quantities of sarees to help them build their scale. Some of these suppliers had access to as many as 25,000 weavers across the country. "It was tempting, but we did not want to adopt that model of growth in which we outsource the quality checking process. A saree that has to go through 4-5 points for making tassels, embroidery, etc. It took time to train our people on the elaborate quality checks and we trust only our own team to meet the customer promise. While doing this we build a relationship with the weaver families and when we grow we want them to grow with us. A 10 time's growth is possible, but we are not greedy for growth at the cost of compromising quality".

Su and Ta were clear "while we want to grow, we do not want it to be too fast. Growth from INR 3-4 to 15-20 crore by end 2019 is manageable and will not be at the cost of quality". Critical to growth was the automation of back end processes required to manage the increase in customer demand and production. They upgraded their Shopify plan to strengthen their digital marketing spends, customer service management and supply chain processes. The platform allowed them to embed analytics in their decision-making. Working on a platform like Shopify would prepare them to manage their growth well when they launch their next range of products.

As they scaled, they would hire professional expertise in the domain like public relations and marketing. To ensure a high level of service quality, the quality of partners for functions such as the courier and last mile were critical. Ensuring customer delight by not only addressing issues promptly but also delivering before time was key to customer loyalty. "Ideally, we want each query or complaint to be solved in 5 min. Social media can be good for us but can also be damaging, hence, the response time has to be as low as can be best managed".

Building team Suta

"Hiring the right people for the team is extremely important. We are trying to get good and competent people on the team so that the company can rest on the shoulders of this team that we build. This will form a strong foundation and that is extremely critical for growth".

With a team strength of around 30, there were still two critical positions - for an inventory manager and an executive assistant that were yet to be filled. They had hired a design expert who was empowered to take all the design calls. There was a plan to hire more design experts with specific skills and take the Suta strength to 40 employees by the end of 2019.

There was no formal training mechanism or standard operating procedure yet for new hires. To ensure that the team worked towards a common goal, Su and Ta started Tuesday meetings with all team members. These two hour weekly meetings ensured that each employee was aware of what processes the functions were following, the challenges that they faced and how they could all function as a cohesive entity. All functions would present their own reports, which were openly discussed.

Internally Suta had always been very strong on ownership and teamwork. The culture ensured that employees would willingly take on other's responsibilities if there was a need. While hiring and training they had to ensure that new employees would fit into such a culture.

As per Taniya "the best approach is to be open and transparent. Discuss responsibility openly in the meetings and link every action to customer connect and value. Another process we have started is peer rating for behaviour at work. This is factored into their quarterly incentive. We clap for the best performer and give small monetary rewards".

What next?

By February 2019, the number of Instagram followers exceeded 100,000. This was rather unprecedented because most of this growth was fuelled organically with very minimal marketing investments. The cautious approach also enabled them to achieve higher conversion rates on their marketing campaigns (confirmed by Shopify). According to their marketing agencies and investor friends, Suta's conversion rates were 2.5-3 times higher than companies that operated in a similar space and were at a similar stage of growth in ecommerce. The average order value online was 2.2 times that of the industry average order value.

So, by mid-2018, it was not surprising that they were being wooed by investors. While not completely taken aback, Su and Ta realized that they had done well enough for investors to show such keen interest. Having grown by almost 225 per cent in three years, they were well aware that to further grow they would need to invest in the business carefully. One of their concerns with investors was the culture of aggressive growth targets that could impact operational excellence. To quote Su's words "in the event of a process failure such as inventory delays in any month, sales may be impacted. However, if we are in control, we would not try to forcefully implement measures in a subsequent months such as discounts (as was common on e-commerce portals) or ad hoc increase in production facilities without quality checks to meet the targeted sales. Such an approach would build long term positive brand perception".

Firstly, large e-commerce platforms such as Amazon, Flipkart and other apparel sites with an online presence were approaching them to list their products. The e-commerce platforms were willing to offer competitive commission plans, which were lower than what they offered start-ups in the apparel space. Su and Ta's apprehension with online retailers such as Amazon was threefold. Large platforms such as Amazon, given their volume of business, would demand a commitment of a high level of inventory, which would necessitate higher production capacities in the shortest possible time, risking quality. Secondly, research was showing that[13], when platforms bring out their own private competing brands, sellers' sales suffer.

Finally, discounting on products had become the norm. As a policy, Suta rarely sold on discounts. Moreover, they had studied that products, which did well on large platforms had a mass appeal. Su and Ta took pride in the quality of the display of the product catalogue on suta.in and worried that the quality and flexibility of designing the product catalogue on

Amazon would be restricted. They would have to ensure that their carefully crafted brand Keywords: image through photographs, product quality and the personalized experience was not

Online shopping/electronic compromised. The image of the #sutaqueen had to be intact.

commerce,, Suta had to continue standing for all that entrepreneurs Su and Ta believed in. It was their dream, their vision. Suta had to grow, but how?

Questions

Q1. What aspects of the following models are illustrated by this case (a) Marketing Strategy and Consumer Behaviour (fig 1-1) (b) Overall model of consumer Behaviour (fig 1-3) ?

Q2. Identify the description of the target market and comment on it. Is the target market of Suta a strength? Or aconstraint ?

Q3.What assumptions of consumer behaviourunderlie the decisions/ actions taken by Sujata and Taniya which were responsible for the origin and rapidgrowth of Suta?

Q4

a )Should Suta grow ? What are the concerns of Sujata and Taniya regarding growth?

b) How should Suta grow ? Discuss each alternative before you make a recommendation.

Exhibit 2. Instagram posts Figure E2 617 likes 482 likes suta_bombay Perhaps the first and the only time suta_bombay Treats from nature are plenty and we're sharing so many pictures received from one mankind is lucky to have the opportunity to devour Sutaqueen. But we weren't left with much of a choice! these delicacies. We may cook and make our own Each and every picture speaks of the love and versions of the fruits and vegetables. But, isn't the belonging you felt on being part of an event as natural form the most beautiful? I mean, is orange beautiful as this. @smile_somemore writes, Dear juice even half as good as the juicy orange fruit with Suta, Singapore is celebrating it's 200th year. I was aExhibit 3. Quality check parameters in a Suta saree Table EI Checks Details Length and breadth check Of the length of the saree Colour check Smell (not very strong) check A typical smell that the Suta sarees had because of the dyes used, would have to be just right. The drying had to be proper, especially in rains Inch-by-inch check A human eye check was manually done by two people - one moved the saree and the other one did an expert eye scan Tassels check Block print check Hand painted tiny mistakes were accepted, but major ones were rejected Packing check Ironing and folding Service quality check Consumer complaints raised and addressed. If there were greater than two returns of the same saree then they would get it investigated for further details to solve the issue. Customers were asked reasons for each and every return. This was done through a non-delivery receipt (NDR) call/return call. Reasons for the returns were monitored