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New-age, digital-first beauty brands turn investor favourites

Be it Myglamm, Vedix, Juicy Chemistry or Mamaearth, most of these new-age brands are not just digital-first, over 80 per cent of their revenue comes from their own website

twitter-logoAjita Shashidhar | April 13, 2021 | Updated 07:48 IST
New-age, digital-first beauty brands turn investor favourites

The beauty and personal care categories were among the first to bounce back post the coronavirus lockdown last year. By October-November 2020, most beauty and personal care companies claimed that they were well past their previous year's sales and were experiencing almost 130 per cent growth in volumes. With salons being closed and the DIY (do it yourself) beauty regimes becoming the new norm, consumers increasingly indulged in beauty and personal care products. In fact, many of the new-age beauty brands claimed an 80-90 per cent year-on-year growth in business.

Be it Myglamm, Vedix, Juicy Chemistry or Mamaearth, most of these new-age brands are not just digital-first, over 80 per cent of their revenue comes from their own website. This has made them an investor's delight. Myglamm for instance, raised Rs 175 crore in its Series C funding that was led by Ascent Capital, Amazon and Wipro Consumer. Similarly, Juicy Chemistry has recently raised $6.5 million from Verlinvest and IncNut (which owns Vedix and SkinKraft), has raised $4 million in Series A from RPSG Ventures.

"Almost one-third of sales of most of these new-age brands are coming from their own website, which means they are not dependent on retailers. It's outstanding, because the moment they open distribution they will grow astronomically. Most of these brands have scaled to Rs 30-40 crore just on their website. It's a massive wealth creation opportunity for investors, and that's why they are chasing them," explains Manish Taneja, CEO and Co-Founder of beauty and personal care marketplace, Purplle.com.

For the beauty brands, having bulk of their sale coming from their own website helps to connect with their customers at a deeper level. "We really understand better as we know what she is browsing, what she wants, she even co-creates her products with us. We are able to cross-sell to her much more because she is directly connected with us," explains Darpan Sanghvi, CEO and Co-Founder, Myglamm.

Pritesh Asher, Co-Founder, Juicy Chemistry, says that with over 85 per cent of his sales coming from his own website, he is able to deliver a better consumer experience. His brand promises natural organic beauty products with a relatively short shelf-life, therefore, lower dependence on third-party platforms makes more sense. "We are able to control consumer experience to a large extent and we are also able to control last mile delivery more effectively."

Customising Beauty

Since most of these brands are direct-to-consumer, there is also an increasing trend of customisation. For instance, a customer has to fill a detailed questionnaire on the Vedix website, based on which they will be recommended a skin or hair-care regime.

"Our oils, shampoos and serums are customised based on the problem you are facing. We keep iterating the product as per the customer's needs," explains Jatin Gujrati, Business Head, Vedix.

"If a consumer has oily skin or mature skin and is looking for a solution, we address that concern by offering a customised solution," adds Asher of Juicy Chemistry. But won't a business model that focuses on customisation and personalisation face scaling-up challenges? After all the growth recipe for legacy brands has always been standardised formulations. Both Asher and Gujrati say that the fact they are digital-first gives them the opportunity to customise as well as scale up.

"The biggest problem with offline inventory is the cost of inventory across locations. The more SKUs you have, you have to duplicate the SKUs across locations. In our model, we can have 1,000 units of a step-up serum as I don't have to send them to multiple stores across the country. Therefore, we are able to offer a lot more solutions to customers, as the store front is digital. All we have to do is add more warehouse space," explains Gujrati.

Though beauty industry experts like Taneja of Purplle feel that the time has come for these new-age brands to disrupt the legacy beauty brands, it is unlikely that they would pose a serious challenge. Almost all the new-age brands have a premium pricing and can't match the affordable price-points that the legacy brands offer.

"Not all consumers believe their skin or hair needs customised solutions. They are happy using legacy brands. The new age brands may eat away part of their business, but in a country like India there is so much more a brand can do," says Kannan Sitaram, Venture Partner, Fireside Ventures.

In fact, most of these digital-first beauty businesses have plans of going omni-channel to improve penetration. Myglamm has already done so by setting up shop-in-shops at large format stores in tier 2-3 towns. It has also set up a 3,000 square feet flagship store in Mumbai. Juicy Chemistry is also looking at setting up its own stores. Brands such as WOW Organics and Sugar are known to have close to 50 per cent of their revenue coming from offline.

ALSO READ: Rs 550 cr personal care marketplace Purplle to go omni-channel with private brand Good Vibes

ALSO READ: 4x growth in all companies! This venture fund doesn't chase unicorns

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