Thomas Scott : Tech & Data Analytics Based D2C Retail Fashion Brand

Nabendu · December 21, 2024, 12:53pm

History

Thomas Scott 1.0

Thomas Scott (India) Ltd. was incorporated on October 22, 2010. Company has been engaged in apparel, textile and retail market . The company was incorporated after the demerger from Bang Overseas Limited which focusses on Trading & Exports into Thomas Scott (India) Limited .

The brand name Thomas Scott was created after the LVMH acquired Thomas Pink business which was being licensed in India by Bang Overseas.

Before CY 2022 - The company was engaged in the men’s apparel business especially in the formal shirts and semi formal shirts business .The major brands under which they used to sell their formal & semi formal shirts were as below

Thomas Scott
Hammersmith
Bang & Scott
Italian Gold

The company had struggled over the years to increase its revenues with the sales being stagnant between FY 13 to FY 21 with no revenue growth through the years. The company had only one manufacturing plant in Solapur (Forever Clothing Company ) and was fully a B2B manufacturer

Thomas Scott 2.0

The transition of the business started from FY 2022 onwards with the introduction of the 2nd generation Mr. Vendant Bang Linkedin Profile in the business .The business has been transitioned from the traditional men’s formal / semi formal shirts business into an tech-enabled online Fashion retailer focusing on the following verticals for growth

Sales from Own Brands ( Thomas Scott )
License from Brands to be sold on the E-Commerce portal
B2B Business and Private Label Manufacturing for Market Places

Source : Investor Presentation

Thomas Scott has not only diversified horizontally across sub segments , but has also strategically expanded across markets with the launch in UAE Markets of their own brands and selling Namshi Brands ( Namshi is the largest e-commerce marketplace in UAE )

Thomas Scott on Namshi

Industry Overiew

E-Commerce Industry Growth

Ecommerce Industry in India is projected to grow at 20% from FY 24 to FY29 .
Source : E-Com Express DRHP

Within the E-Commerce space D2C brands are meant to grow exponentially at 40 to 45 %
Source : E-Com Express DRHP

Within the Organized Apparel Market, the E-Commerce as a segment is estimated to grow by 23% till FY27 . The TAM of E-Commerce in FY27 would be over Rs. 261507 crores

Source : Style Bazaar DRHP

The rising per capita income , the growth of internet / smartphone and social media influence on fashion , the increasing share of youth and working population preferring organized brands and ecommerce over traditional retail act as strong tailwinds to the growth of ecommerce and fashion retail as a whole

Moats of Thomas Scott

2nd Generation Promoter propelling the stagnant business

Mr Vedant Bang joined the business in FY 22-23 .

Qualifications of Mr Vedant Bang

Fellow Actuary ( Institute and Faculty of Actuaries , London )
Chartered Financial Analyst ( CFA Institute )
Chartered Accountant ( ICAI )

Actuarial Science is comparatively one of the most coveted and comparatively difficult degree to obtain ( Institute and Faculty of Actuaries , London has less than 33000 actuaries across the world & Institute of Actuaries of India has less than 1000 members as on date ) .

Actuarial Science members excel in assessing and managing financial risks, particularly those related to uncertain future events . They excel at statistical and probabilistic models to real world problems. They excel at creating models to manage financial risk and have similarities to the data analytics & data science background

Past Experience

2018 to 2021 Deloitte : Worked as a Management Consultant with Deloitte ( primarily investment banks in Europe and UK doing consumer behavior modelling ) . He has worked for global investment banks like Nomura, Credit Suisse, JP Morgan, SBI, and HDFC Bank as a management consultant designing models for forecasting, risk management, and pricing. Source

The key moat here is how the qualifications and past experience of the new gen promoter is being leveraged to grow the business from a B2B manufacturer to a ecommerce first fast fashion brand leveraging data and tech as the cornerstone of their business for growth

This can also be seen by a shift in how the company has gone from a B2B to B2C .

Before joining the family business : B2B 100% B2C 0%
Current TTM ( as of Dec 2023 ) : B2B 28% B2C 78%

Data & Tech As Pillars of the Business

Thomas Scott has transitioned from B2B business and has focused on data analytics & technology stack as the key pillars for their success.

His past experience in Consumer Behavior Modelling can also been seen from the article written on IndianRetailer regarding Consumer Behavior in Fashion Retail Industry

The company launches 200 to 300 unique products monthly, leveraging data analytics to identify micro-markets with supply-demand gaps. This data-driven approach allows them to avoid highly competitive markets and focus on emerging trends with less competition. Data Analytics also play a crucial role, informing decisions on inventory levels, location, and timing based on factors like delivery times and seasonal events. Data analytics also determines optimal product sizing and production quantities .

Automation and continuous monitoring of processes and workflows are implemented, using tools whereby notifications are sent to WhatsApp to track order dispatch, identify breaches, and address warehouse issues ensuring efficient e-commerce operations.

This technology stack has also been vetted by Shankar Sharma in the following video to a Business News Channel . Shankar Sharma holds 6.2% of Thomas Scott as per September 2024 holdings

Scaling Up Operations and Faster Delivery Options

From being a B2B brand at start of FY 2022 with a single manufacturing facility in Solapur , Thomas Scott has quickly expanded the reach throughout the country with manufacturing spread across Maharashtra , Bangalore & NCR area and fulfillment center across all corners of India with a capability of supplying 9000 orders per day.

Another unique moat due to their own manufacturing facilities and being integrated is that they start of with small lot sizes ( 120 MOQ ) of any style for manufacturing which is 1/4th of MOQ if you want do not have your own manufacturing , and then based on the demand for the style they can decide whether to create more styles or not .

They are targeting a 2 day delivery to over 30% of their customers based on their pan india fulfillment center , which is essential as customers preference is leveraged more towards products with faster delivery options . This can be vetted by checking their delivery times across various platforms ( Myntra / Amazon / Flipkart / Ajio )

In fact in Bangalore , they are also doing Hyperlocal deliveries partnering with Bigbasket ( delivery within 10 to 15 minutes )

Thomas Scott has become an Alpha Seller on the ecommerce platforms. Thomas Scott was leveraging its related party Bang Overseas for selling on ecommerce platforms as Thomas Scott was not granted the Alpha Seller status due to financial entry
barriers imposed by certain channels . Source Annual Report FY 2024

Now that Thomas Scott has been granted the Alpha Seller status the related party transactions between Thomas Scott and Bang Overseas should reduce in the coming years. This is a key monitorable in my opinion .

Financials

From FY23 onwards we can see an exponential increase in the revenues of the company

This along with the Industry Growth rates and the TAM , if the execution continues in the coming years could ensure that at least 30 to 40% revenue CAGR can be continued over the next 3 to 5 years .

ScuttleButt

As a part of their future plans Thomas Scott ( India ) has launched 5 stores in Bangalore on CoCo & Franchisee Options. The CoCo stores are over 2000 sq ft and the only franchise store currently is around 600 to 800 sq. ft.

I have visited the Franchise Store at Marathahalli and below are my observations

Wide range of products majorly in Shirts & T-Shirts . Quality was good
Pricing is good . Shirts & TShirts in the range of 799 , Trousers & Jean in range of 999 , Blazers starting from 3000 and handbags
The fresh stocks are first displayed in the stores , every 15 days fresh collections ( 100 to 150 SKUs ) are provided to the stores and they can send the non-selling SKUs back which are then supplied on the ecommerce marketplace. This was also validated by the manufacturing date of a few shirts I tried and all of them were either Sept / Oct / Nov manufacturing by Forever Clothing Company. The store manager was mentioning there is no problem of stocks supplied by the company
They are actively looking for Franchise options . 2 more franchises are about to be signed in Bangalore .

5.The store I visited was the smallest store around 600 Sq. Ft and during my visit I was the only customer in the store.

POS System in place and the store godown was full with inventory

Couple of photos from my visit.

Risk :

Related Party Transactions with Bang Overseas must be done at arms length price. It was mentioned that due to financial backing , they were not able to obtain Alpha Seller license which has now be granted to Thomas Scott. The related party transactions must reduce gradually for Thomas Scott

Other Info

Niveshaay Hedgehogs has recently taken a position on the script from the Open Markets at approx Rs. 356

Some other articles about the company

Summarized

Thomas Scott has successfully pivoted its business model from a B2B led brand to B2C brand focusing on the data analytics , technology , faster delivery , quality and premiumization as the pillars for its growth . The sectoral tailwinds and the promoters past work experience and qualifications could ensure that the brand can comfortably grow over the next 3 to 5 years .

Disclosure : Invested and biased … forming 2% of my existing portfolio .

Update : 23/12/2024 . Adding a detailed research done by @CA_Swapnil_Kabra on X

Main Report.pdf (1.5 MB)
Thank you for the PDF @Souresh_Pal

Nabendu · December 21, 2024, 4:51pm

Thomas Scott had a board meeting today for preferential allotment . The outcome of the board meeting is out

https://nsearchives.nseindia.com/corporate/THOMASCOTT_21122024203521_Outcome.pdf

The marquee investors who have participated in the preferential allotment are

Ashish Kacholia & RBA Finance would now own 4% of the post issue holding
Niveshaay Hedgehogs has also participated and will own 1% of the post issue holding

Souresh_Pal · December 22, 2024, 5:07pm

Thomas Scott has raw data access of Myntra. With that data they do data analytics and only produce things that are selling good. It’s like front running in mutual fund industries. No other vendor of Myntra does this. Though all the vendors of Myntra has access to this. They are one of the top 5 vendors of Myntra. In coming future Myntra will consolidate the vendors. In twitter there were two excellent threads written on Thomas Scott which were deleted later due to sensitive information. I bought it around 240 with 5% allocation after reading the thred back in August. Then after some days those threads were deleted. Somebody who has access to Myntras management can do scuttlebutt and find the information regarding this and find growth projection of Myntra. Thomas Scott can be thought of as a proxy to Myntra.

Attaching pdf version of a twitter thread that’s still exists but doesn’t have that much information but still will be helpful. This thread is other than the two I’m talking about. I should have downloaded those threads when they were not deleted. Those 2 threads were goldmines of information regarding the company that we retail investors can not access but investors like Ashis Kacholia or Niveshaay can easily access
Report.pdf (6.1 MB)

I attended it’s latest AGM sharing the recording of it. One can listen from 8:45 for Q&A
https://www.mediafire.com/file/hmrwcy5jrt4agi1/AUD-20240927-WA0021.mp3/file

Nabendu · December 23, 2024, 4:44am

Hi Souresh_Pal

Wow this was a goldmine of an information and this got be interested in searching the X universe last night to find the details .

I could find the the reference to the deleted thread on X on Thomas Scott

A quick search on google whetherthe original thread can be accessed still on thread reader app and viola the answer is yes it is still accessible

This thread contains a treasure trove of information and must say @CA_Swapnil_Kabra and @nikhil_chowdhary ( I hope the tagged accounts are right ) have got some great scuttlebutts from the management.

It explains in detail their business model , their data analytics part and this while merely focusing on myntra licensed brand model but the same could be scaled to other platforms and across segments …

Can I validate the claims made in the x thread : I was informed by the Store Manager and Area Manager that Thomas Scott used to operate 70 odd retail stores pre covid but I did not find any such information online and dismissed it . However, this article even mentions the same fact the company used to have around 100 stores which had to be closed down .

Also , Nikhil Chowdhary mentioned in the last for the research on the thread also appears to be one of the names mentioned in the preferential allotment
https://nsearchives.nseindia.com/corporate/THOMASCOTT_21122024203521_Outcome.pdf

@CA_Swapnil_Kabra and @nikhil_chowdhary It would be great if you could share your viewpoints as well

Disclosure : Invested and Biased. Bought more today and now forming roughly 7% to 8% of my Portfolio as of date

Souresh_Pal · December 23, 2024, 4:52am

Thank you very much. I’d save the thread in the form of PDF.
If the thread is deleted from threadreader one can access it here
Main Report.pdf (1.5 MB)

Nabendu · December 25, 2024, 2:43pm

Thomas Scott Preferential Allotment done at 330 per share . Niveshaay bought additionally from the open markets at Rs. 356 per share .

https://nsearchives.nseindia.com/corporate/THOMASCOTT_24122024220555_Notice.pdf

Nabendu · December 29, 2024, 8:51am

Did some more scuttlebutt to get a better understanding of their offline store expansion strategy by discussing franchisee model with the HO manager in charge of offline stores across India

Currently Thomas Scott has 6 stores live across Bangalore out of which at least 3 stores ( Marathahalli / Yelahanka & Hesargatta ) are based on the franchisee model .

2 more franchisees have been finalized in Bangalore ( Koramangala & Jayanagar ) & 1 franchisee BTM Layout is in the final stages of contract Signing

While currently Thomas Scott have physical stores only in Bangalore , the HO personnel mentioned that they are currently in planning stages for opening stores across the major cities in India

The franchise agreement is of FOCO model ( Franchise Owned Company Operated ) .

Franchisee : Gets only a Minimum Guarantee ( MG ) per month and at max 5% of the Net Sales Proceeds as Margin Share. ( Depends on the Franchisee Project Negotiation ) . Franchisee is responsible for the furniture and fixtures of the store as specified by Thomas Scott

Franchisor : The inventory / branding / POS / Staff ( on contractual basis ) / electricity / other operation costs are on the books of Thomas Scott.

My understanding of the Offline Franchise Model

Asset Light Model : Thomas Scott using FOCO franchise model and reducing the upfront new store acquisition and setup costs. If Thomas Scott was leasing stores on their own books , the initial deposit to landloard , the new store setup and fixtures / fittings would have to be borne by Thomas Scott .

Now since the entire capex cost of new store ( except branding / ACP Facade / POS and Cash system / AC / Mannequins / CCTV cameras ) are avoided , the Capex requirement for Thomas Scott is extremely low in FOCO franchisee model . For a model store of 1500 sq ft the initial capital investment for Thomas Scott could be around Rs. 5 to 7 lacs per store ( rough estimated capex cost excluding inventory as these would form the current assets for the company )

2.Complete Control over the Day to Day Operations

Franchisee does not have any control over the stores. The employees ( contractual labour) and day to day merchandising and branding / promotions are completely under control of Thomas Scott. This would ensure standardization , SOPs which can be in place across all the offline stores

Whether the Offline Expansion is justified ?

As described in the following article Vedant envisions Thomas Scott as the ultimate choice in every Indian man’s wardrobe over the next decade. His goal is to position the brand as an essential companion for daily wear and special occasions, leaving a lasting impact on the fashion landscape.

According to me , the offline expansion strategy can be seen as a long term brand building measure and a step towards making Thomas Scott a brand which can be recognized with and opens new avenues apart from their digital first expansion on the longer run .

Unlike traditional offline focused retailers , the inventory rollover is extremely quick like every 15 days and the stocks which are not selling in the offline stores are moved to their ecommerce channels so this reduces the liquidation / dead stock risks to a major extent.

I expect over the next couple of years , all the cities where Thomas Scott has warehouses and manufacturing plants to start having some kind of offline store presence.

The rapid expansion from around from 5 retail stores in Bangalore in March 24 to the proposed approx. 10 stores across Bangalore , seems that they have figured out the model is working and they are able to break even.

The key monitorable for the offline strategy . would be how these stores are gaining traction , the standardization across stores and whether the stores are breaking even and the EBIDTA Margins expected from their offline stores

Additional Info : Vedant Bang and Deepak Jethva are also hands on involved in the Franchise Model discussions

bindalpr007 · December 29, 2024, 6:43pm

Have you also checked their product reviews on Amazon? Majorly are rated below 4 with one common feedback from multiple customers that colour got fade after first wash and fabric is not of a great quality. Need to scuttlebutt a bit more on quality part which only can ensure the repeat customer and stickiness in the business going forward.

Aloysius_De_Sa · December 29, 2024, 7:12pm

Myntra tells a different story and they have way more reviews. I think they sell the most on Myntra anyways.

Nabendu · December 30, 2024, 1:30am

I have been to their store and for the major part of their SKUs , they have had decent to good fabric quality majorly across their product ranges especially across their Shirts and Trousers section.

There were a few styles in the casual t shirt category , which I do agree the fabric quality was not great or ones which I would not buy. Also , the color fading away is something which I cannot comment on and if that is the case Thomas Scott should work on it in the future.

The weakest section ( leaving aside bags which I did not pay much attention to ) from the quality perspective were the Blazer section where it felt the quality was not on par .
Good part is their Blazers are starting 2499 or 2999 which justified to an extent the quality not being the best . This also aligns with the customer reviews on Myntra for their blazers where except a few styles majority of them are 3 star rated Site Maintenance

Also , as they manufacture for myntra licensed brands as well as amazon brands on b2b basis they would have internal quality standards which have to be met else it would have been very difficult for the brand to reach the top 5 vendors category on ecommerce portal with consistent poor reviews.

The differentiation which Thomas Scott is currently playing is levearging data analytics to identify demand supply gaps → getting trending styles out at to the market at the earliest → based on customer feedback of the style decide if they need to continue manufacturing - > ensuring faster delivery times to majority of their customers.

REHAN_Sayyed · December 31, 2024, 5:42am

Yes the company was good although over the years company increase their margins, but what was the reason that share is going down by 2% everyday. Is it because of pump & dump scenario or either rerating is happening into the business because of increase in margin expansion?

Nabendu · December 31, 2024, 6:12am

@REHAN_Sayyed

it is because it now in ESM Stage 2 , and has ensured that there are no buyers into the script and short term people who had bought during the run up to do the profit booking .

We can only evaluate the business and consider whether it makes sense for investing based on the fundamentals and data points available. The market on a longer run will catch up to the fundamentals .

Based on the preferential allotment I will expect the stock price fall to be capped till max Rs. 330 to 350 .

Rest I feel even at the current levels the business is highly undervalued but do your own research and thesis . The PE according to me shown on Screener is not accurate as the company is increasing its authorized capital and issuing new shares every year (Weighted Average Shares - How to Calculate Weighted Average Shares?) . Refer the EPS published by the company in TTM to derive the current PE and evaluate . Google Finance is showing the accurate PE Ratio imo

Disclosure : I am invested and biased

Ali · December 31, 2024, 6:38pm

Can anyone suggest, why such kind of things (from links below) may not happen with this company? Currently i understand the USP of this company is the traction its getting in myntra by utilising data analytics . If tomorrow Myntra sees this as a competitor making huge margin, it may think of squeezing out more leaving it with very little option.
https://www.news18.com/viral/from-rs-20-lakh-a-day-to-zero-startup-founder-shares-how-amazon-ended-his-dream-aa-9169634.html?fbclid=IwZXh0bgNhZW0CMTEAAR0MYio5NoSULICxW5UQvCStpxkI4GBUzm6AVu_WVrGeoBv978Il-a2mA8s_aem_xhgJEDpjkU64ZksSMGQ_1w#goog_rewarded

Nabendu · January 1, 2025, 5:29am

@Ali

In the above case highlighted ,

Assume “X” was an Amazon Seller who identified market niche - > traded goods from China / ROW and sold on Amazon Marketplace - > Amazon offered collaboration / acquisition which was turned down - > Amazon launched it as a private label - > killed the growth

Now back to Thomas Scott . The business model is 3 fold as mentioned in the image

Own Brands Thomas Scott / Hammersmith → Online ( across all major ecommerce market places Myntra/Amazon/Fipkart/Ajio/TataCliq/Bigbasket) and gradually also Offline )
Myntra Brands in Marketplace Model - > whereby Myntra owns brand rights and sub contracts ideation to manufacturing to vendors like Thomas Scott . ( This is where they are collaborating directly with Myntra . Benefit is Myntra leaves majority of the work to Thomas Scott to identify new trends / designs and then collaborating with Myntras team to finalize the designs / SKUs to be manufactured and then manufacturing and delivering the goods to Myntras warehouse. This is kind of win win for both , 1st it is Asset Light as a platform company it makes no sense for them to invest as heavily as traditional retailers to maintain large design teams . Thomas Scott is collaborating identifying potential trends and shortlisting styles and then Myntra design team has to approve the shortlisted designs and then once Myntra decides the planned quantities give it back to Thomas Scott to Manufacture . This is infact a very big MOAT in my opinion , that Thomas Scott is working closely with Myntras Design teams and it is just no another Contract Manufacturer . We can consider this model as ODM instead of OEM with striking similarities to the EMS manufacturing business
Amazon Private Label as B2B → Can be considered as OEM model and it would be easier for Amazon to shift from Thomas Scott to others as they are merely a contractor. However , till the time Thomas Scott is manufacturing private label for Amazon , it is less likely that Amazon would consider them a threat as the Private Label profits are majorly kept by Amazon itself
Namshi ( Myntra of UAE ) - > The hunger for growth can be seen that Thomas Scott is also working with Namshi and this ensures they work on more premium brands and higher margins. The international expansion is another hedge strategy to derisk their business and ensure increasing the margins profile
Traditional B2B - > Seems to be negligible now , but they have relationships established with B2B brands over the years.

All in all , their offline growth strategy , growth of own brands in ecommerce space, diversification across various market places , working with major marketplaces with their private label and licensed brands and expansion to international international markets can be seen as steps which the company has taken to ensure derisking the business as much as possible .

All the above information is based on the 1st Post and the thread on X which is also attached in the first post . Thomas Scott does not appear to be a one trick pony

Ali · January 1, 2025, 6:43am

Own brands → obviously they are not in the premium segment, that leaves them in the low-to-mid segment fighting out their way in a price sensitive market like india . They have to go a long way to make themselves as a prominent player and will always have to fight with already formidable established players.
Myntra brand in market place → here they have scope for good margin but again Myntra is sub contracting to Thomas scott. I am a bit cynical as going by the amazon example i shared earlier, they will be reliant on the mercy of myntra. If tomorrow Myntra finds something which is offering it better E2E product at lesser margin they will be the first one to shift business.
Amazon private label as b2b → as you already mentioned, its pretty much dependent on Amazon
Namshi → not aware how much % sale they can grow from here !!
traditional b2b → its not the segment any business will like to grow due to the low margin and cut throat competition

Overall , its the Myntra brand in marketplace which is the golden egg for thomas scott. But how long they can ride that will decide how big they can grow. Eager to listen to others thought on this ???

vinay_chauhan · January 6, 2025, 1:00pm

Can the PDS’s of the word not replace Thomas Scot for Myntra and Amazon’s white label brands?
In my view PDS is a threat to the business model of Thomas Scott.

Souresh_Pal · January 6, 2025, 1:26pm

Why they haven’t then so far when they are struggling in Europe in the form of headwind,?

Nabendu · January 6, 2025, 2:25pm

Can you please elaborate on this .

PDS sales are over 10000 crores . Thomas Scott is not even 1% of PDS size. When a competitor 100 times bigger has not been able to capture the market , it means that either this vertical is currently insignificant for PDS or they do not have an offering as on date which matches that of Thomas Scott .

While I have not done a detailed research on PDS , I understand they are not data and analytics driven company which Thomas Scott is which makes it a key differentiator .

PDS to my limited knowledge acts as an outsourced consultant and has the following business model ( Feel free to correct me if I am wrong )

Lets assume a celebrity/sportsperson wants to launch his own fashion brand with 0 experience he would reach out to PDS

PDS would collaborate with the celeb and generate ideas based on celebs requirements ( Gen X / Y /Z / Alpha )
PDS would get their in house design team to design ideas and prototypes based on the celebs requirement .
PDS will either outsource these to some factories for manufacturing or manufacture in their facilities in Bangladesh / Sri lanka
PDS will take care of the logistics and other parts

Now back to Thomas Scott

Thomas Scott is leveraging consumer data ( example from keywords / items in cart / wish lists / orders details ) to understand the existing gaps in the market
Leverage their in house design teams capabilities to design products specific to met that micro market demand
Design the SKU’s in smaller lot sizes due to their own factories and using only the materials / fabrics in stock to reduce the lead time
See the traction of the product and if it succeeds create more of such designs and sell it off

Key differentiators

PDS is trying to tailor make solutions for a brand . Thomas Scott is identifying trending product categories
PDS designers are designing products specifically for the brand which takes time from ideation to prototyping to manufacture. Thomas Scott is leaner as it already knows micro segments and trending colors / style . Their designers do not need to create a vastly different product . They need to identify which of the existing fabric in stock can be best leveraged to meet this demand and create a near replica of a trending product
PDS if outsourcing manufacturing would need to give a higher minimum order. Thomas Scott leveraging its own manufacturing size can limit the minimum lot size . As per vedant if the same SKU is outsourced it will be 4x the minimum lot size requirement
PDS is not as nimble as Thomas Scott . While PDS has control over the design / manufacuring and logistics it does not have access to the customer sales channel and inventory levels and their target markets . Thomas Scott courtesy ecommerce first and data available from marketplaces, precisely knows after supplying what is working out and what is not based on the responses for their products. They can reiterate faster due to consumer data / shorter lot sizes
PDS designing could be proprietary to the brand . In case of Thomas Scott the designs can be 99% similar to an existing design as they are leveraging the consumer patterns and behaviour to decide what to design. They can select another similar fabric , alternate colors and sell it under their own brand / myntra licensed brand . They are not bound to be exclusive to a brand .

Case in point : This is the exact Shirt I have purchased from my visit of the Thomas Scott store
( Source : Thomas Scott Instagram Stories )

A simple Google Lens / Circle to Search reveals these similar designs

https://www.flipkart.com/zois-boys-printed-ethnic-dress-kurta/p/itmf5ccd9cff8ca9

To me these points make the Thomas Scott business model drastically different than PDS .

Does the efforts make sense for PDS to currently enter into market being tapped by Thomas Scott ? Can they build a consumer data analytics tool which can better Thomas Scott existing offering ? Do they even get the access to high quality consumer data ? Can PDS be as nible with the lower volumes to manufacture / faster times to market like Thomas Scott ? We need to figure these answers .

Like Shankar Sharma mentioned the play is on Data not on Textile . This is the moat they possess .

The key answerable is whether they can continue to hold on to their MOAT over time … Whether they can continue scaling up YOY . The bet is on the promoter and the MOAT they have built currently . The ecommerce space is growing at around 25% and Thomas Scott with an efficient management and protecting their MOAT can easily grow their business at rates higher than the industry average

Disclosure : Invested and Biased

vinay_chauhan · January 6, 2025, 3:52pm

PDS works with brands that set the trends, Thomas Scott produces articles that are already trending using the data streams made available by Myntra and other platforms.
As per the information in the the thread, the raw data of trending article is not exclusive to Thomas Scott only, that means any other manufacturer can build the data analytics capacity in 2-3 quarters and complete with Thomas Scott. And as per the time line of evolution of Thomas Scott shared they themself have turned to brand license based manufacturing and trend based manufacturing in the past year your so.
Thus the data analytics based manufacturing is a weak moat and is waiting to be destroyed.

Doesn’t this mean that they are making copies of the trending design which are cheap for the customer under the own/white label brands. Thus implying that they are not innovators but only trend followers, they are into fast fashion where zudio is also into. Can they protect their margins?

Zudio and westside also have lot of their own brands who is manufacturing for them? PDS or someone else? Can Thomas Scott going forward manufacture for zudio? ( Well Thomas Scott does not want B2B they want to build their own brands, which can be a long drawn process)

To me business of Thomas Scott is inferior to PDS, the fast turn around time according to me is not an advantage, it is a restriction because of their small size, as they grow their own brands and offline stores sooner or later they are going to face the inventory issues.

PDS is a superset of all the services offered by Thomas Scott. Which makes Thomas Scott a candidate to be acquired by PDS in future as acquisition based growth is the business model of PDS.

Maybe Myntra chose to work with small scale player than PDS but going forward this can change. According to me PDS do not source for lot of Indian brands but that can also change.

Not invested.

vinay_chauhan · January 6, 2025, 4:02pm

This can change anytime, PDS at present does not do lot of work for indian brands, their clients are mostly European and American brands and American supermarket chains, my logical understanding here it that because European and American clients offer higher margins PDS does not serve indian brands, but as they struggle in Europe they can turn to India Even for lower margins.