How these entrepreneurs built an online cosmetics brand in a market dominated by SUGAR, Lakme, Colorbar

Giving up the security of a salaried job and taking the entrepreneurial plunge is never an easy decision. For Ananya Ukil (35) and Mudra Mukesh (35), the move was backed by their belief in building an online cosmetics brand and capitalising on the growing cosmetics market in India.

With established players, including L'Oreal India, Lakme, Colorbar, Lotus, etc., and younger ones such as SUGAR building online stores and expanding their product portfolios — Ananya and Mudra felt there was a problem of plenty.

“A 10-step skincare routine using multiple products can be hard to get behind. We felt that whatever your skincare needs, maybe two or three multifunctional products should be able to deliver the results you are looking for,” says Ananya.

With this in mind, the duo started Zilch Cosmetics in Delhi in 2019 and launched their range of makeup, skincare, haircare, and body care products.

The Made-in-India products were retailed on Amazon, Flipkart, Nykaa, and Zilch’s own website.

The founders say the bootstrapped brand came to life on the back of their experience in the FMCG industry and consumer research and was borne of their personal challenges in finding “no-nonsense products that were easy to use.”

Mudra says, “I have 11 years of experience in consumer research across five countries, while Ananya has over a decade of experience in building consumer brands for Unilever and ITC. All our products are co-designed with experts and come without parabens, toxins, or harmful alcohol. Of course, no animal testing either.”

A growing online market for cosmetics

The founders say Zilch’s Afterglow Vitamin C Serum is a bestseller among serum enthusiasts, and claim its Zilch On Cloud 9 is “perhaps one of India’s first jelly face washes that combines the formats of gel and cream to deliver mild yet effective facial cleansing.”

With these multifunctional products, the brand is playing in a domestic cosmetics market valued at $13.19 billion in FY20, which is forecast to grow at a CAGR of 16.39 percent through FY26 to reach $28.98 billion, according to ResearchAndMarkets data.

This growth is directly related to rising disposable incomes, the emergence of online retail, and the increasing inclination of youth towards skincare and other grooming products.

“As online cosmetic brands are looking to make headway in the competitive Indian beauty market, we are positioning Zilch to appeal to the discerning online shopper. The typical Zilch skincare or makeup product is priced between Rs 450 and Rs 1200,” says Ananya.

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Impact of the COVID-19 pandemic

The agile, digital-first approach to retailing cosmetics products is well-documented in the way SUGAR saw success online. While several cosmetic brands in India were struggling during the pandemic, SUGAR saw 70-80 percent of sales coming from online channels. 

For Ananya and Mudra, the pandemic slowed their initial momentum as lockdowns across states resulted in increased delivery timelines, disrupted supply chains, depleting inventories, etc.

“At first, just as we got in our groove and commenced sales on Amazon, things came to a halt with the national lockdown. And now, we contend with the fallout of the second wave. We hit the brakes in terms of marketing during the second wave, but we hope to pick up where we left off and engage with our consumers and grow,” says Mudra optimistically.

Despite posing challenges, the pandemic saw success stories of the likes of SUGAR, proving that the online-first approach to retailing cosmetics is here to stay, and newer cosmetics brands like Zilch can capture a slice of the pie if they are agile enough.

The road ahead for Zilch

Zilch’s founders maintain faith that the market will bounce back due to changing consumer behaviour towards skincare and wellness products. 

“Although people are working from home, there has indeed been a focus on cosmetics — perhaps a little pop of colour with a lip tint just before your Zoom meeting or your online date. Makeup has not been as badly hit as we earlier thought it would be. That’s why we felt comfortable launching two lip and cheek tints in April 2021,” says Ananya.

Unlike large brands that boast deep pockets, Ananya and Mudra are not looking to outspend the competition or splurge on customer acquisition. Instead, they are looking to grow sustainably and believe there is space in the market for their brand.

“There are many fantastic businesses out there, but we are attempting to develop organically. We want to amaze our current set of thousands of customers and turn them into devoted consumers before moving on to new ones,” says Mudra.

Going forward, the brand intends to continue launching multifunctional products, but without compromise on colour or nourishment.

Zilch is also looking to dive deeper into the makeup category and develop innovative skincare and wellness products that it can take to international markets in the coming year.