Brands of India: 140 SKUs, 5M consumers, and ARR of Rs 700 Cr in 4 years - how Mamaearth is riding the D2C wave
In 2015, when Varun and Ghazal Alagh became parents, they started researching different products for their child and found that no Indian brand offered a 100 percent toxin-free baby care product.
They had to order products from the UK and US, which proved expensive. Continuous interaction with other parents led to one conclusion: there was a demand for a made-in-India “safe and secure” baby care brand.
Ghazal and Varun Alagh - Co-founders, Mamaearth
This was the pain point that in 2016 led to the launch of Honasa Consumer Pvt Ltd and its popular brand Mamaearth. Today, it’s one of India’s fastest growing companies.
Started with six products in the baby care range, Mamaearth has grown to 140-odd SKUs in baby care, skincare, and haircare segments, and has served more than five million consumers across 500 cities.
Mamearth products are available on its own D2C platform, ecommerce marketplaces like Amazon, Flipkart, and Nykaa, and offline channels.
In FY21, the Gurugram-based startup crossed an annual revenue run rate of Rs 700 crore ($100 million), and is now on course to become a Rs 2,000-crore brand in the next three years, according to an analyst report by Jefferies.
Mamaearth started with baby care, but the vertical contributes only 20 percent to its revenues today while the rest comes from skincare and haircare. The startup is pegged by investors to become India’s first D2C unicorn.
What is Mamearth’s growth genie? How has the pandemic changed the D2C landscape in India? And, why is consumer feedback so important in the larger scheme of things?
On the sidelines of YourStory’s Brands of India launch event, Varun Alagh, Co-founder and CEO, Mamaearth, spoke to Senior Editor Ramarko Sengupta about what the future augurs for his brand with the D2C industry in the spotlight. Brands of India is an initiative to bring together brand builders, D2C startups, investors, corporates, and policymakers to discover, build, and enable the growth of India’s D2C ecosystem.
Varun says it’s been quite a ride for Mamaearth – going from a brand focused on baby care to one that offers skincare products for men and women, and seeing phenomenal growth in just four years.
“When we started building Mamaearth, we were very clear that it’s going to be a why-based brand and not a what-based brand. It was bigger than just the functionality. It’s about telling the consumer our stories - the goodness of our products, the processes, the PETA certification, and about recycling twice the amount of plastic we use, planting a tree for every order and then sending customers the photographs and the geolocation. This is the difference we have made,” he says.
Varun believes when the customer buys into this philosophy, it “becomes easier to have multiple conversations across different categories and grow as a brand”.
He also emphasises on the paranoia bout product quality at Mamaearth.
“We want to ensure that whatever we are making, creating, and delivering is better than what is available out there. Innovation is at the heart of our business. We work closely with consumers and listen to them through multiple media and employ tools that tell us what’s going to be an important trend from an Indian perspective.”
This, according to Varun, is Mamaearth’s growth genie.
Every product manufactured by Mamaearth is tested by the family before it rolls out in the market. This comes from the couple’s experience and passion of being parents.
“We are a company that respects the long tail. For a large period, CPG companies have developed products, which serve the denominator, and hence made everything for everyone. Our model provides the edge to us also in terms of our relationship with consumers, because they know that this company will listen right, and they will come up even the small products,” he says.
Varun says they ensure they are the first consumers and after that deploy multiple mechanisms, including CRM or customer service teams.
“We also have this exercise called ‘Know your Consumers’, whereby every employee in the company calls 20-25 consumers every quarter, to get feedback and learn what we could do better. We then have a company-wide townhall to absorb the learnings and put systems in place,” he adds.
Tier II and beyond
Varun says ecommerce has been the biggest distribution equaliser in India, adding that most of Mamaearth’s business comes from Tier II cities and beyond.
“Through ecommerce, you have the ability to service 24,000 pin codes. And because of this, you can actually meet the aspirations of a lot of consumers who want these products but had to probably travel 50-100 km to the nearest city to access them in a showroom or a modern trade store,” he says.
“A combination of ecommerce and the ability to specifically target these consumers through digital media allows you to capture that aspiration, because of which we have seen phenomenal response from these towns,” he adds.
A soonicorn story?
With a valuation of $730 million, unicorn status for Mamaearth doesn’t seem far away.
Varun says they have always been ready as a company – with systems in place and getting the technology and scale to a level they had envisioned to go public.
“It feels good to create value for your investors and employees. The feeling is ephemeral; it lasts for about 24 hours and then we are back to doing what we need to do. These milestones will keep coming and it’s far more important to chase the right business milestones. Evaluations are outputs that will happen as we go on. If we keep our eye on the consumer and the right brand-building metrics, it’s a long journey,” he says.
Facing the competition on the front foot
Things have been heating up in the D2C segment with a large number of consumer brands making their entry. Using a cricketing analogy, does Varun like to tackle them with the front foot and play the hook shot?
“From our perspective, the competition is definitely heating up with multinational giants realising the power of ecommerce and D2c, and getting aggressive and active both on innovation and in marketing,” he says.
With a number of brands chasing the same 70 million beauty transaction consumers online, media promotion is becoming expensive.
“Again the ecosystem is attracting funds to support young brands that can become large in the long run. Going further, how do you get more consumers into the category? From a brand’s perspective, I think there will be some level of consolidation that will provide a great opportunity for some young brands to be a part of, and that’ll lead to some normalisation and sanity.
“From our approach perspective, we are playing on the front foot and hook and duck will depend on the bowler as well as the delivery. We will have to get more opportunities out of the boundary and also be smart to know which ones to duck,” Varun says.
Brands of India is a YourStory initiative to catalyse the growth of India's D2C economy. It will bring together D2C ecosystem stakeholders, including brand builders, D2C startups, investors, corporates, and policymakers, to discover, build and help daring entrepreneurs create an additional 500 Brands of India in the next three years.
To know more about this initiative and the D2C ecosystem, visit brandsofindia.yourstory.com.