Smytten, a sampling and engagement platform for D2C is reversing its expansion beginning from tier-2 and tier-3 markets before moving into tier-1 cities. The brand plans to open over 50 stores in 12-18 months across Andhra Pradesh, Telangana, Kerala, West Bengal, Madhya Pradesh, Gujarat and Odisha.
Currently, Smytten operates stores in four cities—Indore, Surat, Noida, and Ahmedabad—and plans to open 50 to 100 new stores over the next 12 to 18 months. According to the company, these existing stores have seen impressive year-on-year (y-o-y) growth of 70 to 100 per cent. For the initial phase of its expansion, Smytten will focus on the central and eastern regions of India.
“There is a higher trust deficit and limited brand availability in tier-2 and tier-3 cities in comparison to tier-1 cities, who are more impulsive and experimental buyers,” said Swagata Sarangi, Co-founder, Smytten, and Smytten Pulse.
He added that consumers in tier-2 and tier-3 cities are not reluctant to spend. “The issue is more about having the conviction and access to products. They also want to try products before making a purchase,” he told businessline.
Shift in users
The brand now has 50 per cent of its users from these cities, reflecting a significant shift from the previous 80 per cent concentration in metro areas. “This change indicates a more balanced distribution between tier-1, tier-2 and tier-3 cities,” Sarangi explained.
Additionally, Sarangi believes that B2C brands take a significantly longer time to establish a retail presence in tier-2 and tier-3 cities. “While they might enter metro areas within the next four to five years, reaching these smaller towns could take seven to ten years,” he stated.
Smytten has collaborated with over 1,200 brands and crossed ₹100 crore revenue mark two years ago. “We have been highly profitable at the unit economics level, achieving profitability at the contribution margin level for almost a year to a year and a half. At the company level, profitability is very close,” mentioned Sarangi.
The brand raised ₹100 crore in May 2022 in its most recent funding round led by its existing investors Fireside Ventures and Roots Ventures.