Purplle's path to a GMV of $250M by FY23

Beauty and personal care unicorn Purplle is eyeing a 40% growth in GMV (Gross Merchandise Value) and expects to hit $230 million-$250 million in FY23. It clocked a GMV of $180 million in FY22.

For Purplle, the next leg of growth will come from scaling up the reach and penetration of its private brands in offline markets, according to its CEO and Founder Manish Taneja. “August onwards both online and offline businesses are on fire. In September, we billed our highest ever (in terms of GMV). Our current growth rate over last year is closer to 45-50%,” said Manish.

It appears the company is well-poised to make it happen. India’s beauty and personal care market is projected to grow at a CAGR (compound annual growth rate) of 12% to reach Rs 1,98,100 crore in 2025. With demand for beauty and cosmetics seeing a good rebound during the pre-festive period, it is hoping to capture a larger slice of this market.

Interestingly, a large portion of Purplle’s customers come from non-metro cities and the focus of the company continues to be on the “woman on a budget” customer.

This woman on a budget play also seems to hit the right notes. About 70% of Purplle’s revenue comes from Tier II and III cities, with its Average Order Value (AOV) typically growing by 2-4% year-on-year.

Additionally, the AOV of repeat customers is higher than that of new customers. On Purplle, typically, repeat customers are those who have tried and tested out the service right from product ordering to delivery and therefore are likely to buy more on the website, it found.

While its online business accounts for about 65% of its overall sales, a significant portion of its revenues (or about 35%) comes from its offline sales. Within the offline pie, sales from in-house brands like Faces Canada and Good Vibes account for a lion-share of the revenue. Purplle has only five company-owned offline stores at present.

“As a group we are growing at 45-50% this year and our private brands will grow about 65-70% this year…Two of these brands (Faces Canada and Good Vibes) are operating at decent scale, the idea is to grow these brands much more,” said Manish.

It has come a long way since 2012. Today, it has nearly 7 million monthly active users, over 1,000 brands, 60,000 products and 4-5 private labels.

Purplle’s footprint in private labels

At the moment, private brands in Purplle’s portfolio include Good Vibes, Faces Canada, Carmesi, in makeup and skincare.

Sales from private labels have become a key strategy for beauty and personal care platforms. This is true for some of its competitors too, like Nykaa, run by Falguni Nayar, which gets about 11.2% of its revenue from in-house brands.

Of course, this strategy is not new in the space. For instance, Nykaa and Good Glamm have been riding high on such Direct to Consumer (D2C) acquisitions.

Good Glamm Group has picked up brands like The Moms Co., Organic Harvest, Organic Harvest & others in the past, while Nykaa bought clean beauty brand Earth Rhythm, Nudge wellness, and skincare brand Dot & Key.

While Purplle has no plans to grow any more brands, for now, it is not averse to making acquisitions. Its most recent purchase, Faces Canada, has been a significant contributor to its offline revenue pie.

“When we were doing the (Faces Canada) acquisition it was a hard decision. It had been around for around 15-16 years and had gone through multiple ownership changes. It had about 1300 people and we had never imagined integrating such a large organisation into ours,” said Manish, who now feels more confident about making larger acquisitions after the Faces Canada deal.

This inclination towards having a house of brands model is not unfounded. It is done to increase chances of having better engagement with consumers and helps them target the same audience with different brands and SKUs or stock keeping units.

“Having a private label or house of brands concept adds a lot of exclusivity to the umbrella company. Growing a brand in-house takes a longer time as it has a slower go-to-market. However, with an acquisition it is a win-win as it brings more customers to the company and also adds a lot of might to the valuation,” said Sanjay Kothari, Associate Partner, RedSeer Consulting.

No shortcoming of funds

Funds are not a barrier when it comes to potential acquisitions for Purplle. After having raised $33 million in June this year, Purplle is perhaps “the most capatilised it has ever been”, says Manish.

“We have a lot of capital in the bank so we don’t need to raise any primary capital today or even next year. We have over $100 million in the bank,” said Manish, who has prominent investors like Kedaara Capital, Blume Ventures, Verlinvest and JSW Ventures on its captable.

After Nykaa, Purplle is laying the foundation to go public in the near future. “We have some bridges to cross before we get there… In 2-3 years we will start working towards an IPO,” said Manish.

The focus for the company is to get profitable on the net level. With margins improving, logistics costs coming down and marketing costs reducing owing to repeat customers, Purplle should be profitable in the next two years, believes Manish.

(This copy has been updated to reflect a correction in a name)