Are You Disrupting The Next Decade Of Shopping?
Entrepreneur magazine|May 2021
The internet ecosystem and evolving consumer have made new business models viable and have led to the emergence of the direct-to-consumer (D2C) distribution channel. Today, India is witnessing the rise of D2C brands across categories and is estimated to become a USD 100 Bn addressable market by 2025. We expect high levels of funding activity in this space, increasing with passage of time, as more successful D2C outcomes will validate the hypothesis for newer capital deployment. It’s the David v/s Goliath play in the consumer space as challenger brands try to dethrone the legacy brands taking the digital first approach. In the ensuing pages, meet The Makers Co. at Entrepreneur as we take a deep dive into the world of consumer brands.
Punita Sabharwal

The Dream Catcher

The idea of the venture was generated when Ankit a co-founder of the venture went for mattress hunting and was baffled by the prices. The research and finding answers led to the conclusion that the mattress companies weren’t making much profit even though the prices were high as the margins were distributed between different middlemen and hence, Wakefit.co was formed. According to the co-founder of Wakefit.co Chaitanya Ramalingegowda, the best thing about being a D2C brand is the transparency it provides. The company is held responsible for any faulty product or a product that is not up to the standard of the consumer but the same cannot be said for offline brands as they can afford to neglect 10 consumers and still make adequate profit since the blame is distributed amongst the middlemen as well. Learnings that were realised overtime by the co-founders were to make simple promises but those open in public domain which kept the policies of the brand transparent and made it stick to the promises.

Chaitanya says, “Failed ventures teach you a lot of humility”. He started Wakefit.co with Ankit Garg at the back of two failed entrepreneurial ventures. Wakefit.co was Chaitanya’s third startup whereas it was Ankit’s second. From being a management consultant to an entrepreneur, the journey was not easy. He explains that being a management consultant requires one to have a point-of-view whereas being an entrepreneur is completely the opposite. The thought behind his venture was that they wanted to be lead by the customers.

Established in 2016, there were no competitors nor was there a go-to-market strategy. In 2015-2016, Wakefit.co was the only mattress company to be listed on Amazon. The co-founders invested 3 lakh each and sold the mattresses on Amazon. With the profits six months later, they opted for a website, a team and a small way of marketing which in turn led to building traffic on their website. The website according to Chaitanya is important because people tend to forget the brand’s name when they buy a product from Amazon. The website keeps the brand in the consumer’s head which doesn’t allow them to forget the name of the brand. Chaitanya advises, “With no company to compete against until a year, they learnt the not-to-do’s earlier than anyone who stepped in this field which kept them five steps ahead of everyone else.

Wakefit.co started off with outsourcing but then got a basic manufacturing facility with the savings and little bit of investment from the co-founders. This manufacturing facility was completely manual but today, it has state-of-the-art, cutting edge technology which are sensor driven, IoT driven. Wakefit.co was also the first company to import the Mattress-in-a-box machinery in-house. Another USP of being a D2C brand is that the negative feedback and the positive feedback reaches the company on a regular basis. Hence, the revisions of the product are more frequent. The manufacturing units are set up in Rajasthan, Bangalore and Delhi and also there are five experience stores, in Bangalore, Hyderabad, Coimbatore, Lucknow and Gurgram each. People can go to the stores and get the experience of what the mattresses feel like but since the company is a digital native, the orders are placed online. Going forward Wakefit.co has forayed into home furniture etc. and the company is now positioning themselves as a sleep and home solutions company.

Failed ventures teach you a lot of humility.” Chaitanya Ramalingegowda, Co-founder and Director, Wakefit.co

FACTSHEET

Established in: 2016

Revenue for FY 2020-21: INR 420 crore

No. of employees: 1000

BOMBAY SHAVING COMPANY

The King of Grooming

Astray conversation with a friend who was then interning at Hipster New York shaving brand Harry’s regarding blades, shaving creams and men’s grooming solutions got Shantanu Deshpandey thinking if there could be an opportunity in India? “I spoke to family, friends and general consumers about their shaving habits and one thing became clear – nobody really wanted to shave. In fact, many men hated the daily ritual and, if given the option, would not shave. I realised that an opportunity existed in India – and that men grooming as a category was a large, underserved and monopolised market that needed a brand disruptor,” shares the Founder & CEO of Bombay Shaving Company. Bombay Shaving Company (BSC) is among the first of the ‘D2C brands’ and built incredible D2C skills across content, technology stacks, data analytics and performance marketing. These skills have attracted global giants like Colgate and Reckitt to invest in the brand. BSC is now the #2 shaving consumables company online in India and there are early signs of it being a serious challenger offline too. For e.g., they have 15% share in Metro Cash and Carry in the shaving category. “We are taking on large organisations in deep consumer categories and reinventing the way the category has operated till now. We have started to create an independent category of solutions for women’s hair removal, which till date has been relegated to a subsection with products copied from men’s solutions,” shares Deshpandey.

Currently, BSC generates most of its revenue from the online channels, as compared to the offline channels. Within the online channel, the company generates a significant percentage of revenue from marketplaces such as Amazon, Flipkart Nykaa Big Basket, Myntra and others. The remaining revenue is generated from the company’s own D2C website. When questioned about the retail strategy, Deshpandey says, “We are striving to strengthen the company’s offline presence and retail expansion. As of February 2021, Bombay Shaving Company is present across 15,000 retail touch points. Also, BSC has diversified geographically, and is now available in 4 countries in Southeast Asia.”

FACTSHEET

• Established in: 2015

• Team size: 150

• Current turnover: gross ARR of 100 cr

We are taking on large organisations in deep consumer categories and reinventing the way the category has operated till now.” Shantanu Deshpandey, Founder & CEO, Bombay Shaving Company.

BOAT

The Soundmaker

There is a lot of learning that has gone in from last year for everyone. Same goes for boat founder, Aman gupta. Amidst accelerating e-retail partnerships with Amazon, Flipkart etc, the brand also developed a strong D2C (Direct-to-consumer) strategy. Talking about the same, Gupta says, “With D2C we are now able to own the customer relationship and directly engage with them in relevant ways. And of course, this unlocks the ability to capture rich first-party data which can help us to create sought-after product launches, events, content, and loyalty or subscription models.” Currently, boAt covers 90% of India pin codes via a mix of offline and online retail. “In terms of sales, online contributes to 80% of our sales, and the remaining 20% is achieved through our offline channel,” informs Gupta.

Another major learning for Gupta in the time of pandemic was to look manufacturing in India. Before covid, a major part of the manufacturing was commissioned outside India (Singapore, China amongst others) but being agile, they are now slowly moving towards “Make in India”. “Top sellers like Bassheads (Wired Earphones & Headphones) and Rockerz series (Wireless Headphones) are now ‘Made in India. We will surely add more products to this list in the coming months,” shares Gupta.

BoAt has been profitable since day one but external investment helped them in making the fundamentals even stronger and in further bringing structure to the processes. The equity investment from Warburg Pincus and Qualcomm Ventures will help the company build momentum in the coming year as it builds up its R&D and manufacturing capabilities. boAt continues to achieve rapid revenue growth - 100%+ over the past several years. In the past year, it has doubled its employee strength and has built up a local R&D in Bangalore. The company has also expanded into newer categories like smartwatches, besides launching over 20 new products in the audio category in FY21.

Talking about expansion, Gupta says, “We hope to achieve our FY 23-24 target of Rs 1000 sooner than expected. We are boosting our D2C channel and also exploring social commerce strongly. Besides this offline will be key to our growth.”

FACTSHEET

• Bestsellers: AirDopes TWS earphones and Rockers Wireless Headphones

• No. of employees: 150 Across Delhi, Mumbai, and Bangalore

• Revenue: grossed Rs 704 crore mark during FY20

• Repeat customer ratio: 30%

• Units sold per day: 14000-16000

With D2C we are now able to own the customer relationship and directly engage with them in relevant ways.” Aman Gupta, Co-founder, boAt

CLOVIA

The Lingerie Maker

Lingerie has always been talked about in hushed voices in our country. It has always been an uncomfortable experience for women to shop from physical stores as they were mostly run by men. Both Neha and Pankaj Vermani felt that the evolution of this category in India had not kept pace with the fast-changing outerwear fashion. Talking about the idea behind launching Clovia, Pankaj Vermani, its Founder and CEO says, “We realized that there exists a major gap in intimate wear for women in India. Upon deeper research, we found that the prevailed distribution channel restricts the flow of customer feedback back to the brand and therefore, there was a lack of innovation and variety. To bridge the existing gap in the lingerie business, we decided to take the plunge into this business. The same time we were joined by our co-founder Suman, a lingerie expert and Clovia happened!” Clovia has further combined fashion with tech where they use smart technology to monitor the sales trends and patterns on the website, app, offline stores, marketplaces and then manage the inventory basis the consumption patterns and decisions of the customers. Their proprietary Clovia Curve Fit Test has helped almost 600k women so far to understand the right size for them. The brand recently started retailing through offline channels but 85% of Clovia sales still come from online channels.

Despite the on-going dip in businesses across sectors, Clovia witnessed great inclination in casual and comfortable clothing in the last few months due to the prevailing Work from home scenario. “We have noticed a 100% growth in FY’20 over FY’19 with our own online store now almost 15% month on month. We grew our sleep & loungewear line multifold, doubled down on innerwear in the last three quarters. We observed a 9X scale in sleepwear and loungewear, a 6X scale in Maternity lingerie and feeding nightwear, and a 2X scale in Clovia’s customer partnership program,” shares Vermani. With improved margins and repeat business from existing customers, the brand achieved profitability post lockdown with a double-digit EBITDA.

Sharing the current revenue run rate, Vermani says, “Clovia is currently at a run rate of 250 crore selling 1 piece every 3-4 seconds.” Clovia recently forayed into the personal care category – Botaniqa – an entire range dedicated to the needs of new moms and has come with 18 new products. Talking further about the expansion plans Vermani says, “We are planning to see Clovia’s presence in at least two more international geographies. Meanwhile we plan to triple our offline store count in the coming year.”

We have noticed a 100% growth in FY’20 over FY’19 with our own online store now almost 15% month on month.” - Pankaj Vermani, Founder and CEO, Clovia

FACTSHEET

• Team size: 200 people in the corporate head quarters, and another 400 women staff on ground and warehouse team members.

• Present across 250+ stores in 50 locations with a wide physical presence in metros, tier II and tier III cities

• Clovia raised $4 Mn in the Pre-Series round from multiple investors.

This beauty disruptor is changing the cosmetic industry

“The visual image of your product is the first contact your consumers have, so it’s always important to create a great first impression.” Vineeta Singh, Co-founder & CEO, SUGAR Cosmetics

Retail space is super precious and expensive in India and the only way for SUGAR Cosmetics to prove product market fit and demand was to ace this in the first two years of the brand. So D2C was not only the chosen way – it was the only way for them. Reminiscing the same, Today Vineeta Singh, Co-founder & CEO, SUGAR Cosmetics says, “When I look back, I know that it helps us control the brand narrative and be closer to the consumer for feedback during the initial phases - both priceless.”

SUGAR was founded on three pillars: Listening to consumers, staying away from discounting and focusing on content for the consumers. SUGAR has always been the anti-establishment, more creator-than-celebrity-led voice in a cluttered market.

Its products are more value for the price tag it command-highly pigmented, longer-lasting and well suited to the Indian skin tone. SUGAR was actually launched with just two products due to working capital constraints- 1 black kajal and 1 black matte eyeliner. It's a different thing that the eyeliner went on to become a bestseller and paved the way for future launches.

The products are manufactured in state-of-the-art facilities across many countries like Germany, Italy, India, USA, Korea, etc. As for SUGAR’s supply chain, they have presence across retail store including standalone and online marketplaces along with D2C channel shipping directly to customers in 18000+ pin codes all over India. While FY 19-20 saw a split of about 60% offline and 40% online sales, as SUGAR Cosmetics rapidly expanded its retail channels, FY 2021 saw getting back to almost 50% of its sales from online channels. Pointing out few major learnings from my journey of building SUGAR Cosmetics as a D2C Singh mentions, “The visual image of your product is the first contact your consumers have, so it’s always important to create a great first impression. Another learning would be – build content that’s educative, engaging and relatable rather than just hard pushing your product.” Going forward, the brand aims to expand to 40,000+ retail outlets over the next 12-18 months compared to the 10,000+ currently. Even during the pandemic, they have launched approximately 10 exclusive retail outlets and kiosks and are even looking at international presence beyond US & Russia where they are currently present. In the past one year, SUGAR has doubled down on content and expanded to high quality and longer-format video/ text content, keeping it very educational. This paid off as they were able to reach 6M+ following across all the digital platforms. They also saw increased traction on the brand owned app which crossed 1M+ downloads with a 4.6+ rating on iOS & Android.

FACTSHEET

•Best performing online sales channel- Our own website

•Best social media app for marketing- Instagram

• Best Selling products- From our Lips Category – Smudge Me Not Liquid Lipstick, from Face category - Ace Of Face

• Foundation Stick and from Eyes Category - Stroke Of Genius Heavy-Duty Kajal

•No. of employees- 2000+

•Current Turnover- yet to be assessed however, it would be approx. 30 - 40% above last year's revenue that was INR 105+ CR

•No. of SKUs- 500+

VAHDAM

The Tea Freak

Tea is one of the healthiest beverages after water. India grows 25% of the world’s tea production and in addition, India is also a magical land of ingredients and superfoods like Turmeric, Moringa, Ashwagandha, Tulsi, Giloy and more. Turmeric is one of the most trending and high growth superfoods. India produces 80% of the world’s turmeric production. All of these products have strong wellness connotations which have been accepted by people globally. All of these originate from India, but no home-grown Indian brand has actually taken it global. That is where a 23-year-old Bala Sarda saw an opportunity. He founded Vahdam India in 2015 taking India’s finest teas and superfoods to the world under a sustainable, home-grown brand. His idea was to make available a much fresher, higher quality product to the customers direct from source, devoid of any middlemen. In these last six years Vahdam has shipped to 2 million customers closing this Financial Year with 159 crore in revenue while turning the venture profitable. Shipping to 130 countries with USA, Canada, UK, Germany and now India, being the key markets, Vahdam became one of the largest digitally native consumer brands in the country.

Talking about building a global brand from day one through Internet as the medium, Bala Sarda, Founder, Vahdam India says, “We shipped to 50 countries in the first year of operations which would not have been possible had it not been for the internet and the fact that it is a digitally native brand. And more importantly, this is a model which can be replicated in multiple markets.”

In the US, Vahdam is now omnichannel with its presence in 800 doors in premium retail chains including Nordstrom, Neiman Marcus, Bloomingdales, Saks Fifth Avenue, Bergdorf Goodman and also in Wegmans, Macy’s, Erewhon and Sprouts Market. In fact, the brand formally entered the Indian market only early last year.

The pandemic has accelerated Vahdam’s growth, given the shift towards wellness products, larger adoption of e-commerce globally and a more effective execution capability with a strong leadership team in place. Sharing the expansion plans, Sarda says, we plan to continue to grow by focusing on three key growth triggers i.e going deeper in our current markets (USA, Canada, UK & Germany) and grow our omni-channel distribution, strengthen our presence in new markets like India and diversify into other relevant product categories.” As of now, India contributes less than 10% in the overall revenue, while 90% of the revenue comes from international markets.

FACTSHEET

• Best seller Turmeric Range of Herbal Teas

• Team size - 400 (150 white-collar & 300 bluecollar)

• Repeat customer ratio - 35-40% of monthly revenue comes from repeat customers

RAGE COFFEE

The Coffee Man

The journey of Rage Coffee started with a simple thought to solve a personal problem - How to get a great tasting coffee at a reasonable cost, without shelling out too much money in cafes or spending much time brewing one. “I started conducting surveys and identified that the coffee market had huge potential and many unserved gaps. In fact, there was hardly any lifestyle aspirational brand built around such an emotional subject that is ‘coffee’. As the category remained largely underserved, was devoid of any real innovation, and underpenetrated online, it provided us with a unique opportunity to strike a balance between affordability, consumption, and quality that was missing,” shares Bharat Sethi, Founder, Rage Coffee. That is when he decided to focus on ingredients, formulations, manufacturing techniques, packaging, and direct-to-consumer distribution to bring a premium quality product with a unique coffee experience to everyone. He used feedback, data and engaged in extensive R&D to deliver a premium quality coffee for all.

Rage Coffee employs an omnichannel approach, selling 50% online, and the rest offline. For online, about 75% of sales are through its website and 25% through e-commerce platforms. Rage Coffee is available on all major online platforms in India. The products are available in more than 600 retail outlets.

Moreover, the company has recently entered the US market through Amazon. It also has a small amount of distribution to the UAE and Australia. During Covid, they experienced a 300% surge, registering a 4X increase in both offline and online sales during the lockdown.

Since its inception in 2018, Rage Coffee has been speedily scaling up to new geographies while expanding its offline network (from 5 to 20 distributors) pan-India. In fact, Delhi-NCR, Mumbai, Pune, Hyderabad, Bangalore, and Chennai are currently the main hubs for online sales of Rage Coffee.

Rage Coffee’s target is to clock 3X revenue growth from US$2million up to US$ 6million by the end of 2021.

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