‘Scale up of D2C brands needs a shift of mindset’

Rishi: We started G.O.A.T in June 2021. Since then, we have acquired 14 companies. We focus solely on D2C brands. We look at brands that have done the hard work from zero to one, and then are ready to scale up. We look at criteria like customer love, loyalty, following on Instagram and product differentiation. Some of the prominent brands in our portfolio are Label Life, an ethnic wear brand called True Browns, Pepe Innerfashion and a couple in the home and kitchen category and beauty.

Rishi: Beauty has caught the attention early. But the biggest section is actually fashion. The estimate is that fashion will be a $40 billion business by 2025 – roughly 8x of beauty. Given some of our own background (Vasudev was former CEO of Lifestyle, Calvin Klein and SVP at Flipkart and Myntra Fashion), fashion is a key focus area. We don’t have any food brand per se, though we have a dog food brand (Doggie Dabbas). We are moving into new categories, but this is through a very data-based approach. We look at how different segments are doing on Amazon and Flipkart, look at the growth of those categories and take a decision. Sports and fitness is growing. Pets is another prominent category, as is home furnishing. We announced a brand last month in this space — Metro Living.

Rishi: We have both models. Especially when it is a D2C brand in fashion and beauty, we acquire a majority stake, not a full stake. We want founders to run it while we provide assistance in the backend where we bring in economies of scale. As well as expertise in marketing and digital marketing. Simpler categories like home and kitchen, where there are limited SKUS, we acquire 100 per cent and run it efficiently.

Rishi: We recently closed a round of $50 million fund raise. We are looking to acquire two to three every month and get to about 125 in next five years.

Shouvik: A lot of it is evolving. We are also learning. Our approach is mainly going to be customer-first. If you are a customer of a certain brand in one category, you could be a customer in another category. A lot will be defined by what customer preferences are and we will be led by that. The Our entire value we add to the brand is to go beyond transaction and build customer lifetime value and build strong emotional connect. We will look at adjacencies and different parts of the customer journey. That’s where the real multiplier is. We will articulate and push a very strong customer experience across all these categories and brands. We are starting now with 14, three to four months down, we may be 18 to 20. We look at how they will intersect. Part of the plan is also to bring some amount of conventional wisdom to the D2C space, which is all still relevant. The other part is that in certain brands there is a stronger e-commerce focus and weaker retail angle. We will bring in traditional ways of customer management and the modern way. But traditional brands are fighting back strongly.

Shouvik Obviously there will be a shakeout. It’s about understanding the game and playing it. D2C scale up needs a shift of mindset. What most brands need to do is not just make the product and sell on e-commerce, but also play the job of retailer himself. What the retailer is doing is a value-add to the customer’s life. Brands need to understand that. This is true particularly in higher involvement category, where there is risk involved. D2C takes away the time risk as products are launched faster. But financial and social risk are more pronounced in categories where there is variety-seeking behaviour or extended decision-making process. This calls for a shift of mindset.