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Thursday, April 1, 2021

Internet-first brands are fast gaining traction (Livemint)

Shuchi Bansal

March witnessed frenetic action from internet-first brands. Bewakoof.com, a direct-to-consumer (D2C) brand of multi-category fashion products, such as apparel, footwear, bags and accessories for men and women, raised ₹30 crore from IvyCap Ventures. The money, the company said, will be used to improve technology, consumer interface and newer product categories. A few days ago, homegrown organic skin and hair care products firm Juicy Chemistry raised $6.3 million in a Series A funding round led by Belgium-based investment firm Verlinvest. This was its first institutional fundraising for building brand and expanding business.


Beauty brand MyGlamm closed a ₹175-crore Series C round led by Ascent Capital, Amazon and Wipro Consumer Care Ventures, at a valuation of over $100 million. Although an online-first brand, four-year-old MyGlamm plans to increase its offline presence to 25,000 points of sales by the end of 2021 with a targeted run rate of ₹600 crore. It plans to use the funds for product development, tech research and offline expansion.


It’s not difficult to see why action is heating up in digital-first brands. In a February interview to Mint, Sumit Keshan, managing partner, Wipro Consumer Care, had said its investment theme is built around e-commerce companies, especially D2C (direct-to-consumer) brands, since e-commerce is an emerging sector that is likely to hit $100 billion in the next four to five years.

Earlier in March, a report by EY and IVCA (Indian Private Equity and Venture Capital Association) highlighted key e-commerce trends in India, including accelerated digitization, super-apps, IPOs and consolidation.


Ankur Pahwa, partner and national leader, e-commerce and consumer internet, EY India, said India is at an inflection point in digital transformation on the back of mass adoption by first-time consumers, technology innovations in digital payments, on-demand service and analytics-driven customer engagement.


Among emerging trends, the report mentioned the rise of the direct-to-consumer (D2C) model and omni-channel approach by large retailers and the evolution of the investor ecosystem with a new class of investors participating in the segment. It also said that in the next phase, tier 2 and tier 3 cities will bring hundreds of millions of consumers online. Another report by Praxis Global Alliance, a management consulting and advisory firm, in collaboration with Brands Decoded, an initiative of Knowledge Capital (a volunteer-driven community of founders and investors), said that e-commerce will add more than 200 million online shoppers over the next five years.

The boom in internet-first brands follows the ~25% compounded annual growth rate (CAGR) in India’s e-commerce market, it added. Several internet-first brands across categories such as food, jewellery, beauty care and fitness have crossed the ₹100-crore revenue mark. Unlike traditional brands that follow a multi-tier distribution structure, D2C brands bypass multiple supply chain partners, ensuring greater control over customer experience and direct connect with their target group, enabling engagement and repeat purchase, the report said. Their distribution costs are lower as direct delivery to customer cuts out middlemen, ensuring higher margins and better price to consumers.


Internet-first brands usually fill in the white space left open by traditional players as they are not averse to experimenting with niche products and ingredients. Yet, increasing competition and clutter, low customer retention and limited scale are some of the challenges online-first brands face, the Praxis report said.

On scale, Wipro’s Keshan said companies can get ₹100-300 crore, or even ₹500 crore, through the D2C route. “Can they take it up to ₹2,000 crore, that question we have not really dealt with, yet. So, e-commerce can definitely help you create a very strong business to a certain size, and it’s up to you if you want to go offline as an additional strategy—I don’t see any problem in that because it is an opportunity for you to grow and scale further."


Little surprise then that WOW Skin Science and WOW Life Science are looking to expand their beauty and wellness products via brick-and-mortar stores. So far, it sold on online marketplaces like Amazon, Flipkart and Nykaa. The brand said physical stores will be more relevant than ever as consumers want to try and test products before making a purchase decision.



Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.


Courtesy - Livemint.

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इस वेबसाइट को जारी रखने में यथायोग्य मदद करें -

-Rajeev Kumar (Editor-in-chief, Sampadkiya.com)

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