After Myntra and Medlife, Ananth Narayanan turns to D2C, wants to help Indian brands sell globally
Ananth Narayanan needs no introduction.
He was the CEO of Myntra, arguably one of the most well-known ecommerce brands in India. Then, he joined Medlife as Co-founder and CEO, which was acquired by PharmEasy in what was the largest consolidation deal in the country's online pharmacy sector.
Now, he wants to acquire 50 digital-first brands over the next three years, across multiple categories, through his new venture Mensa Brands.
In an interaction with YourStory, Ananth says, "We want to partner with them and turbocharge their growth."
Launched in May 2021, Mensa Brands has already closed its Series A funding round, raising approximately $50 million.
The round was led by Accel Partners, Falcon Edge Capital, Norwest Venture Partners, as well as prominent angel investors such as Kunal Shah, Mukesh Bansal, Rahul Mehta of DST Global, and Scott Shleifer of Tiger Global.
Why should D2C brands work with Mensa?
According to Ananth, Mensa Brands has a unique opportunity to scale Indian D2C brands by helping them grow on marketplaces, scale their B2C offering on their sites, and then taking them global.
"Mensa aims to partner with the best founders and brands, invest in a majority stake of these brands, and create an operating system for them to scale, which will be a combination of product, technology, and ecommerce expertise," says the founder.
To begin with, Mensa wants to work with homegrown D2C brands, which generate over 70 percent of their sales online, have an annual revenue range of Rs 10-70 crore, and are profit-generating.
"What we're looking for are high-quality founders, who can work with us and scale a brand over the next two to three years. These founders will continue to profit from their brands, get financial returns for all the hard work they have done over the last six to seven years. We will help their brands grow and scale into a household name by leveraging our sourcing, design, technology, digital marketing and inventory management capabilities," he adds.
Every founder who has built a brand, says Ananth, genuinely believes that it will become a household name, adding that it is not just about financial returns. "As an entrepreneur myself, I understand the value of brands."
[ALSO WATCH] Ananth Narayanan in conversation with Shradha Sharma
The changing consumer trends
In the last one year, amid the COVID-19 pandemic, consumer behaviour in India has changed drastically. As social distancing norms forced people to buy through online channels, several D2C brands saw increased demand.
And, this trend is only set to grow, says Ananth. The influence of digital on decision making for shoppers has grown tremendously.
"Consumers are consuming online for the sake of convenience as opposed to only for subsidies. In the early days of ecommerce, it was primarily the subsidies that got consumers excited; buying the same thing for cheaper prices. COVID-19 changed that," he adds.
Secondly, there has been a shift in the demographics of these consumers. The first 150 million ecommerce customers were from metros and Tier-I cities, and were more men than women; the next 100 million are from Tier II and III areas, and comprise more women than men.
These changing consumer behaviours also led many traditional retailers to go online. So, how does this change the omnichannel strategy for India’s digital-first brands?
At this time, Mensa isn’t really focusing on omnichannel, says Ananth. “Over time, we will look to partner up and create brand experiences that make it more omnichannel. But the initial focus is more online.”
But, what about building digital-first brands in a country like India, which has traditionally been a "see online buy offline" market? According to Ananth, a brand's online image and social engagement still matter. While ecommerce may still be very small compared to the larger retail market, online is increasingly impacting the offline.
"You may still buy offline but your brand perceptions are influenced online. And amid COVID-19, many digital brands in India are coming of age," he says.
The time for D2C is now
While reports indicate that India has over 600 D2C brands, Ananth believes that there is space for more.
“I believe India has too few brands,” he says. “Over the next 10 years, I actually think more brands will get created. But what it takes to create a brand will become different. In the last 10 years, it was harder to create brands because of the high cost of brand building.”
Brands no longer have to rely on TV ads — which are expensive and time-consuming — to reach customers. Now, there are multiple digital channels that can be used to market products.
Marketplaces like Flipkart, Amazon, Nykaa, and others, have also solved the complications of physical reach for digital-first brands. D2C brands can reach any part of India by leveraging the distribution network of these companies.
“You can build a very different kind of company, a technology-led house of brands, which is what we are trying to do at Mensa,” says Ananth.
With evolving technology and consumer needs, digital-first brands can not only scale their business but also "mean something to the customer" — with loyalty and not just subsidy.
And without subsidy, the chance for profitability is also higher.
That's why, Ananth says, the time is right for Mensa Brands.