Over the past 15 years, Pakistan experienced a growing cattle population, an abundance of leather manufacturing facilities and the creation of over half a million direct & indirect jobs in craftsmanship. Today Pakistan's leather industry competes in the top ten globally and contributes towards 6.15% of the GDP and 6.56% for FOREX earnings.
But in the last year, leather exports have declined by over 20% despite positive growth from countries like India and China. Industry sources confirm that unlike India and China, local government negligence has a big role to play in countering global forces like fluctuating currencies.
According to Sheikh Mohammad Arshad, the president of the Lahore Chamber of Commerce and Industry, a robust domestic market must be developed to counter this problem.
So earlier this month, Zia Ghafoor set out to raise USD 18,000 to start Mont5, his own leather apparel brand and solve these problems, one day at a time. As of today, he has surpassed target funding by 160% on Kickstarter and we reached out to understand the game plan.
What are your origins in the leather industry?
Our great nation is among one of the finest producers of leather. My love for leather jackets led me to the city of Sialkot. I got the chance to visit the tanneries and meet the leather craftsmen. It was a great learning experience to be among the people who were actually creating the things I loved.
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I moved to England for my studies and saw the price tags on jackets made from my country and I was surprised to see the difference between how much it actually costed to make one and the retail price. More importantly how less the craftsmen got out of it and I wanted to do something about it.
When I came back to Pakistan I went straight to Sialkot and was surprised to learn that skilled craftsmen struggled to get work. The one’s that did earned low wages and the overall conditions weren’t all that great.
So I teamed up with my friends in tech, joined my new craftsmen friends and set-up stitching unit in Sialkot. We collaborated with designers and starting working on our first line of jackets and after 2 years of hard work we are presenting Mont5!
Jafferjees and HUB are two local consumer brands with a legacy, two of many domestic players that assert craftsmanship at their core. How will you differentiate against them?
We're working by cutting the middle man out and providing goods from the craftsmen directly to our customers.
Our core value is being made-to-measure, so you get the same leather as a luxury brand, created by the same craftsmen but you get a perfect fit. This is great for the customers because the highest ratio of returns in clothing is because of wrong sizes. ASOS has a return rate of 30% but our return rate is projected to be under 5% which will be great for online sales. So not only will we allow our customers to get their jackets customized but we also remove the concern about whether it will fit, a major barrier & concern for eCommerce.
The other main value we get from our business model is affordable prices. Top tier leather jackets are retailed for $1000 or above, leather is expensive but what's more expensive are the additional costs of the dozen middle parties involved, we've cut that all out. So our customers enjoy the same quality, at quarter of the price.
High quality, tailor made leather jackets at competitive price are not available to the online shoppers. The global leather market is worth USD 82 billion of which is the apparel market is 10.5% and its growing steadily at 3.4% while its online sales as its medium for customer acquisition has grown by 13.5% each year.
What's the sales strategy & distribution model?
In the first phase, all sales are going to be generated online. Kickstarter not only helped us reach out initial customers, but also validated the idea. We're going to be using Paid Acquisition channels and affiliate programs to get direct sales. We use a third party partner for our deliveries and we deliver straight to the customer. 68% of our customers are from U.S and the other two markets we are targeting are Europe and Australia.
When do you expect to break even?
We are launching the new brand MONT5 but we've been in e-commerce leather for the last 4 years and have been profitable from the first year. We don't want to be another e-commerce website anymore so strategically moved towards creating a high quality brand. The goal here is to capture 5% of the market by 2018.