Mubarakdeals.com sees opportunity in online-to-offline modest fashion business model in India

Naeem Akhtar of India's Mubarakdeals.com, a modest fashion and halal e-commerce platform. Courtesy Mubarakdeals.com

Despite traditional challenges such as awareness, supply chain logistics and financing, entrepreneur Naeem Akhtar sees a hybrid market model for modest clothing succeeding in India

A substantial proportion of India’s fast-growing Muslim population of 172 million continues to rely on traditional methods when it goes shopping for clothes, especially those of the modest fashion variety. This includes visiting specific neighbourhood markets known for selling ethnic clothing or travelling to nearby cities or even out of the country to satisfy specific fashion needs.

India is still an unorganised market for modest fashion, which also poses challenges for suppliers and brands – including international ones – seeking to reach out to customers.

Disrupting this by offering modest fashion online may sound like an easy proposition. But, as modest fashion e-commerce start-up Mubarakdeals.com is discovering, changing a population’s buying patterns is no simple matter.

Bengaluru-based entrepreneur Naeem Akhtar, who is in his early thirties, said he and his family have faced similar challenges in buying fashion. This prompted him to set up Mubarakdeals.com with the vision of aggregating modest fashion and halal products on a single platform.

Screenshot of Mubarakdeals.com. Courtesy Mubarakdeals.com

GROWING ONLINE, EXTENDING OFFLINE

Akhtar quit his corporate job to launch the company along with two friends – Padmakar Pratapure and Somshekhar Kanna – bootstrapping with a capital of one million rupees ($ 15,495) in February 2016.

Just over a year later, Mubarakdeals.com has more than 50 manufacturers and retailers selling their products through the website, said Akhtar.

The site has clocked 50 percent revenue growth quarter on quarter so far, and the target is to double annual revenue as well as the number of sellers.

Traffic has grown by more than 70 percent each month, resulting in a current rate of between 100 and 150 orders fulfilled every month, said Akhtar.

The company plans to open physical stores in Bengaluru and Hyderabad “on a company-owned and company-operated basis”, in order to capture the large chunk of shoppers who prefer the offline experience.

A franchise model is also in the planning phase to be launched later, and Akhtar and his team are also considering the launch of their own modest fashion brand.

FAST-GROWTH MARKET

Although traction in terms of acquiring online shoppers appears to be a challenge, Akhtar seems to have entered the market at the right time. India’s e-commerce sector is growing at a fast clip as broadband penetration, access and speeds increase throughout the country.

India has more than 330 million internet users and that number is projected to reach around 700 million by 2021, according to Boston Consulting Group and the Retailers Association of India. They forecast the size of India’s e-commerce market will be $50 to $55 billion by 2021 from $12 to $14 billion last year, with the apparel segment growing from the current 7 percent of the total to about 15 percent in five years.

India’s Muslims spent an estimated $10.12 billion on clothing in 2015 and this is expected to reach $20 billion by 2020, according to Thomson Reuters.

The market is lucrative but the unorganised nature of India’s modest fashion market, however, continues to throw up challenges, including those related to logistics and supply chain issues. 

Akhtar, who is a first-generation entrepreneur, said there are numerous outlets offering ‘Muslim wear’ in the country. “But the quality and variety have always been a concern. We at Mubarakdeals.com not only want to offer the Indian Muslim stylish and quality products, but also a platform for local vendors and manufacturers to increase their penetration into this market,” he told Salaam Gateway.

Mubarakdeals.com has therefore been structured as an open platform where any entity licensed to sell clothing can register and offer its products for sale. There is no contract or compulsion of association, and sellers are free to move in or out of the platform at will.

CARVING OUT A NICHE

One of the primary challenges to being one of the e-commerce pioneers in India’s modest fashion universe was to create mass awareness about modest fashion itself, said Akhtar. “We have had to carve out a whole new niche in the fashion industry by making buyers and sellers aware of the many options available,” he said.

The other challenge was to convince sellers that e-commerce was a viable opportunity that could improve profitability. “This was not easy in India as people are still afraid of making online transactions, especially as a seller collaborating with a start-up,” Akhtar said. 

Mubarakdeals.com has had to invest substantially in “educating” buyers and sellers “in what is still a very traditional sphere of doing business”, he said. The company used offline and online advertising, distributed pamphlets, went around the country on road shows and much more – “but people were still sceptical about doing business” with them.

“However, a few sellers came forward and flourished on our platform, which provided encouragement to others,” Akhtar said.

Other challenges the start-up faces, according to Akhtar, relate to India’s creaking supply-chain infrastructure – which makes on-time inventory control and delivery difficult – as well as those related to cyber security and payment protection.

Raising finance for a niche platform like Mubarakdeals.com is also likely to be an uphill battle, Akhtar said. “Since the initial funding was through bootstrapping, we didn’t have to make too much effort to approach external sources of finance. However, for further expansion, we will definitely need funding, for which we are approaching investors,” he said.

COMPETING AT A GLOBAL LEVEL

While being one of the pioneers, Mubarakdeals.com now faces competition from MyBatua.com, Abaaya.in, Islamicshop.in and Islamic-attire.com, all claiming to cater to the burgeoning demand for modest fashion in India.

“We stand out from the crowd as we have incorporated local vendors as well as some big names of the industry under one roof,” Akhtar said. “The buyers who visit our store get an array of choices.”

The company is targeting the new generation of Muslims who are fashion-oriented. “We wish to serve them with the latest fashion statements from national and international brands as well as local vendors and manufacturers.”

The portal’s niche status may even be an advantage, Akhtar said, when it comes to battling competition from global corporations. Large Indian multi-product online retailers such as Flipkart and Snapdeal are already feeling the pressure due to the entry of e-commerce giants like Amazon.

“We are focussed on expanding our customer base without any concern for competitors. We don’t want to make our customers compare our services with others,” Akhtar said.

Being from an Islamic background, he said he understands the needs of the modest fashion market on a personal rather than a commercial level. “Hence, we serve them more appropriate products. We also have a young and enthusiastic team with fresh ideas for market expansion. This will enable us to face competition.”

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