CASE STUDY-SefaMerve a gamechanger in the modest fashion industry
SefaMerve | |
Chairman | Mehmet Metin Okur |
CEO | Oya Okur Erciye |
Headquarters | Istanbul, Turkey |
Annual revenue | $25 million |
Major products | Modest fashion sports sweatsuits, non-stitched bonnets, vitamin-E included hijabs |
Customer distribution | 85 percent domestic, 15 percent international |
Number of employees | 55 |
Key competitor | Modanisa |
COMPANY OVERVIEW
SefaMerve is a success story in the online modest fashion market, producing innovative products to address the varied needs of urban and active Muslim women. With 4.1 million followers on Facebook, the company has developed a strong brand position via social media within two to three years of opening and is now seeking to expand globally.
KEY ACCOMPLISHMENTS
- The second biggest player in online modest fashion industry in Turkey, after Mondanisa, achieving $25 million revenue in 2014 within 2.5 years of its launch
- Substantial social media presence, with 4.1 million Facebook followers
- Recognized as one of the fastest growing e-commerce companies by Red Herring and included in the list of Red Herring Global Winners 100 in 2013
- Accepted as a first non-EU member company to European Union’s E-commerce Committee, a regulatory advisory body of the EU Parliament
OPPORTUNITIES BEING ADDRESSED
Modest fashion in Turkey is growing at 30 percent per annum. There is significant market potential.
There are more than 20 million conservatively-dressed women in Turkey, spending $4 billion on clothing and apparel in 2014, according to the State of the Global Islamic Economy 2015-2016 report produced by Thomson Reuters in collaboration with DinarStandard.
There are nearly 150 known or lesser-known brands competing in this market, with global brands such as DKNY, Tommy Hilfiger and Uniqlo also keen to target the modest fashion industry.
Modest fashion growth accelerated after lifting of hijab ban.
The ban in Turkey applied to wearing hijab in government offices, universities, and high schools was lifted in 2013.
Following this, the market opportunity expanded significantly, with 5 million+ Muslim schoolgirls over age 13 and 1 million+ Muslim women working in government offices by 2014, according to Turkstat.
Prior to the ban being lifted, the modest fashion sector in Turkey was growing at 10 percent per annum, but growth accelerated to 30 percent per annum, according to the Wall Street Journal .
As the sector is gaining momentum, strategic partnerships, joint ventures and M&A activity should be expected.
KEY STRATEGY COMPONENTS
Social media driving customer engagement |
Introducing innovation in a traditionally conservative market: SefaMerve has introduced innovation in a market that was traditionally resistant to change, leading the way for other companies in the modest fashion industry. Building 4.1 million followers on Facebook and engaging customers directly has been key to this process. SefaMerve has invested in R&D and leverages business intelligence software to understand real needs of Muslim women who wear hijabs. The company receives over 500,000 comments a week and analyzes them carefully to drive product innovation. Oya Okur Erciyes, co-founder and CEO of SefaMerve says, “The biggest communication channel between us and our customers is Facebook. Our Research & Development team has an organic connection with customers one-on-one for both gathering feedback and seeing our shortfalls. Then, the innovation comes up.” (Source: Interview with DinarStandard, 2015) |
Continuous new product development |
As a result of its innovation, the company has developed a range of new products to address the varied needs of its target market -- Muslim women who choose to wear modest fashion/apparel.
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Innovating on services |
Offering consumer credit: In order to attract more offline customers online, SefaMerve started providing a “post-paid ordering system”, which is a relatively new concept in Turkey, whereby customers can receive the product and pay at a later date. |
Company opportunities |
Strategic partnerships in Europe and OIC markets: With the majority of international orders coming from Germany, Austria, Netherlands, Belgium and across the Middle East, SefaMerve has the opportunity to expand globally. It is planning distribution warehouses in Europe and the Middle East as well as partnering with international retailers that target Muslim consumers. |
Growing interest from Private Equity and Venture Capital firms: Following recent investments in Modanisa by Aslanoba Capital and Saudi Telecom Groups venture capital arm of over $5 million in aggregate between 2013 and 2015, there is growing interest by Private Equity and Venture Capital firms in modest fashion companies. SefaMerve has also been approached by local and international investors and can leverage this opportunity to accelerate international growth. |
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Company challenges |
Increasing competition from global players: Global players such as DKNY and Tommy Hilfiger are increasingly seeking to enter this market. There is a risk that SefaMerve may struggle to maintain its strong market position. However, with innovation at its core, it has differentiated itself significantly. “Global [fashion brands] don’t have enough experience and know-how which we already have. We are superior on understanding conservative Muslim wearers’ needs by addressing them on the ground,” says Co-founder and Chairman of SefaMerve, Mehmet Metin Okur. (Source: Interview with DinarStandard, 2015) |
Credit card rejections by European banks: European banks often reject credit purchases from e-commerce sites based in Turkey, which limits SefaMerve’s ability to serve the Muslim market in the EU. However, SefaMerve has recently joined E-commerce Europe, an industry Association of over 25,000+ companies selling online services and/or products to customers in Europe. Sefamerve is the first Turkish company to be part of the organization and hopes to improve trade between the EU and Turkey. ”We are delighted to take up a role in E-commerce Europe as the first company of Turkish origin and we aim to constitute a bridge between the Turkish and the European markets…” Mehmet Metin, SefaMerve CEO (E-commerce Europe website, 29th May 2015) |
KEY TAKEAWAYS |
Engage customers effectively via social media and constantly seek feedback. |
Give the customer exactly what they want – understand their needs and proactively develop new products. | |
Seek expansion abroad once the product is proven in the local market. |
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