Direct-to-consumer beauty brands are going offline to expand reach
The first online mCaffeine brand began physical sales in August this year after offline retailers and distributors started asking for its products, Tarun Sharma, co-founder and CEO of the company, said in an interview. The company plans to ship its products to 1,000 stores and eventually expand them to more than 10,000 points of sale.
âThis is when our offline activations will begin to give us the return on the investment we are currently making,â said Sharma.
Beauty brand D2C MyGlamm, part of the Good Glamm Group, opened an experience center in Mumbai last year. The company’s beauty products currently reach 30,000 points of sale.
These numbers, however, are tiny compared to India’s vast network of 8-10 million retail outlets used by traditional, fast-growing consumer goods (FMCG) companies to sell their beauty and personal care products. mCaffeine hopes that offline revenue will contribute 20% of its business over the next 12 months.
Why this sudden leap towards physical commerce? According to VS Kannan Sitaram, corporate partner at Fireside Ventures, consumers in these categories want to touch and smell the product and check the packaging. âSo D2C brands want to create the brand experience for their consumers,â he said.
Darpan Sanghvi, CEO of Good Glamm Group, said: âConsumers’ perception of a brand available in physical stores is high and significantly disproportionate to the revenue generated offline. Also, when you want to advertise on TV, which remains an important medium for building a brand, it has a direct impact on sales in the physical stores where you need to be present, âhe said.
Obviously, the offline presence drives scale. In a previous interview, Sumit Keshan, Managing Partner, Wipro Consumer Care Ventures, explained that companies get ??100 crore to ??300 crore or even touched ??500 crore across the D2C road.
“Can they take it ??2,000 crore â I think this issue hasn’t really been dealt with yet. So, ecommerce can definitely help you build a very solid business up to a certain size, and after that you want to go offline as an additional strategy. I don’t see any problem because it is an opportunity for you to grow. and on a larger scale, âhe said. Wipro Consumer Care Ventures has invested in men’s care companies Ustraa and LetsShave.
Online-first has helped to understand the customer well, adapt to the product market and grow the brand online using social media, said Hitesh Dhingra, director and founder of The Man Company. âBut now to scale you have to start exploring offline,â he said. The brand, backed by FMCG Emami Ltd, plans to transition “actively” to general trading in the next fiscal year, Dhingra said.
Sharma of mCaffeine said brands need to be present where the consumer is. âIf our consumers are buying in some modern commercial format, beauty salon or medical store, brands like us should be available there,â he said.
True, Indian retailing is still largely offline, and online sales of consumer goods over the Internet represent less than 5% of overall commerce. Unorganized stores, on the other hand, account for almost 87% of the FMCG sales share.
âWhen 90% of sales are offline, you need to be in that channel,â said Aditya Goel, co-founder of Love in Store, an activation and trade fulfillment company that works with FMCG companies and retailers in 300 cities.
In-store availability also helps brands better discover their products, he added.
Beauty and personal care brand Plum has announced plans to open 50 exclusive branded outlets by 2023. Plum, which started as a first internet brand in 2014, has a physical presence in more than 225 Indian cities.
Shankar Prasad, CEO and founder of Plum Goodness, said the stand-alone store economy has been performing well given the price at which Plum operates. âWe are able to draw the crowds and get decent conversions and do enough to do good on rentals,â he added.
Over 60% of Plum’s sales come from e-commerce, while the rest comes from its offline channels, including more than 10,000 third-party outlets.
Himanshu Gandhi, CEO and co-founder of Mother Sparsh, a personal care brand for babies, mothers and children, said an âomnichannelâ approach is best if brands plan to increase sales. âIn addition, relying on a single channel does not make sense in the ever-changing market space,â he added.
However, the task will be difficult as companies try to navigate a retail environment dominated by heavyweights such as Hindustan Unilever Ltd, P&G, Dabur India and LO’real, which sell their products in millions of mom stores. -and-pop.
Goel said most internet-focused brands will want to operate the best modern commerce and general trade stores across India, but will need to acquire talent, make significant investments in the channel and have visibility in The stores.
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