Overview

Lycit is an athleisure brand specializing in high-quality women’s and men’s activewear, offering products such as leggings, sports bras, joggers, t-shirts, and hoodies. Operating primarily through an eCommerce platform using Shopify, the brand focuses on providing stylish and functional design with direct shipping services for customer orders. The business has been in operation for three years and has garnered a steady customer base, with a growing product range and direct shipping model.

Key highlights:

• Annual Revenue: $158,333

• Annual Profit: $49,740

• Monthly Revenue: $13,194

• Monthly Profit: $4,144

• Profit Margin: 31%

• Customer Base: 7,774 customers

• Email List: 7,581 subscribers

• Number of Orders: 585

• Average Order Value (AOV): $46

Despite the steady financial performance and a product range appealing to style-conscious customers, there are multiple challenges to consider, as well as opportunities for improvement.

Social Media Links

• Instagram: https://www.instagram.com/lycit/

• Facebook: https://web.facebook.com/lycitclothing/?_rdc=1&_rdr#

• Tiktok: https://www.tiktok.com/@lycitapparel?lang=en

• Pinterest: https://www.pinterest.com/LycitClothing/

Key Insights

Website and Platform Performance:

• Design and Usability: The website is hosted on Shopify and provides a fairly standard, user-friendly shopping experience. However, there is little differentiation in design or features compared to competitors in the athleisure market.

• Traffic and Engagement: The website is seeing minimal traffic (around 117 visits per month), which is low for a business that has been operating for three years. This suggests weak organic reach or customer acquisition channels that are underperforming.

• Conversion Rate: A clear conversion rate is unavailable, but given the low traffic, it’s reasonable to assume that the conversion rate might be suboptimal, which further exacerbates the site's underperformance.

Financials:

• Revenue and Profit: The business has a low revenue multiple (0.4x) and profit multiple (1.4x), which suggests the business is currently undervalued. However, these multiples reflect underlying risks that could indicate poor financial management or operational inefficiencies.

• No Detailed P&L: A significant concern is the lack of a profit-and-loss (P&L) statement for the business. This lack of transparency regarding operational costs, marketing spend, and margins makes it difficult to assess the business’s true financial health.

Customer Sentiment and Trust:

• Absence of Reviews: There are no customer reviews on Trustpilot or the website, which could signal a lack of engagement or customer satisfaction. Positive reviews and customer feedback are typically critical in building trust and increasing conversion rates, especially in the eCommerce space.

Product Offering and Market Positioning:

• Product Variety: The brand has a solid product offering with a focus on key athleisure staples, such as leggings, joggers, and hoodies. However, product diversity within this niche could be expanded further to attract new customer segments.

• Marketing Angle: The current marketing positioning focuses on "Design and Style," but this is quite broad and could benefit from a more defined niche or differentiation strategy. There's potential for repositioning toward more specific demographics or needs.

Challenges Identified

• Weak Marketing and Customer Acquisition Channels:
  The business struggles with weak marketing channels, as evidenced by low monthly traffic and the lack of customer reviews. This points to underperformance in acquiring new customers and retaining them. A stronger focus on both organic marketing (SEO, social media) and paid ads could help generate more traffic and engagement.

• Low Customer Engagement:
  With no reviews on Trustpilot and limited social proof, it's clear that the brand is missing out on opportunities to build customer trust and loyalty. Engaging existing customers and encouraging repeat purchases through loyalty programs or email marketing could help improve customer retention.

• Limited Scalability:
  The business's low website traffic, combined with minimal marketing and customer acquisition strategy, limits its scalability. The lack of investment in driving new traffic or expanding the brand's digital presence is a significant obstacle to growth.

• Financial Data Incomplete:
  The absence of a detailed P&L and other financial metrics makes it difficult to assess the full financial health of the business. For a business with steady operations for three years, the lack of detailed financial documentation raises serious concerns about the management’s transparency and organizational structure.

• Poor Website Conversion:
  With minimal site traffic and likely low conversion rates, the website's performance needs substantial optimization. There is an opportunity to rework the site’s user experience, product pages, and overall presentation to drive better results.

Recommendation

• Clarify Financials:
  The first step in proceeding with the acquisition would be to request more detailed financial data, including a complete profit-and-loss statement, and an understanding of monthly marketing spend and costs.

• Revamp Marketing Strategy:
  The business must invest in targeted marketing campaigns, leveraging SEO, paid social media ads, influencer partnerships, and email marketing. The AOV is decent at $46, but scaling the customer base will require better visibility and engagement.

• Increase Traffic and Conversion Rates:
  Immediate steps should focus on improving website conversion rates, which could be achieved by optimizing the checkout process, enhancing product pages, and offering incentives like free shipping or discounts for first-time customers.

• Customer Trust and Reviews:
  Start building customer reviews and testimonials on third-party platforms like Trustpilot and within the website. The inclusion of reviews will help build trust and credibility, which will likely result in increased sales.

• Expand Product Range:
  Consider expanding the product range within the athleisure market or adding complementary products (e.g., accessories or seasonal items) to increase customer retention and sales opportunities.

Conclusion

While Lycit offers potential, particularly with its focus on the athleisure market and its strong product offering, significant challenges must be addressed. The lack of transparency in financials, weak marketing strategy, and poor customer engagement are key risks to consider. If the buyer is willing to invest in optimizing marketing channels, increasing website conversions, and building customer trust, there is an opportunity to revitalize the brand. However, the business's current low multiples and lack of critical data suggest a cautious approach. More detailed discussions with the seller regarding the reasons for selling, current operational difficulties, and potential for future growth are essential before making any final decisions.