Vedix, a customised ayurvedic brand, says 50 per cent of its customers are in Tier 1 cities and the rest equally distributed between Tier 2 and Tier 3 centres.
“We have been an online-only brand
Vedix, a customised ayurvedic brand, says 50 per cent of its customers are in Tier 1 cities and the rest equally distributed between Tier 2 and Tier 3 centres.
“We have been an online-only brand
Serums, scrubs, ointments and an arsenal of other skincare products command an ever-expanding market globally. In India, legacy brands now face competition from a surfeit of start-up labels, with Plum, Vedix, Nat Habit, Minimalist, The Ayurveda Experience, and Sugar among the more prominent ones.
Some of these create bespoke products for skin and hair — a trend that gained rapid momentum after the pandemic outbreak. So you have facial serums, moisturisers “amped with hyaluronic acid and niacinamide acid, and vitamin C-infused night creams, among a host of concoctions that promise everything from treating acne and reducing fine lines to controlling hair damage and promoting volume.
The makers also claim that these permutations are AI-backed, while the formulations are supported by dermatology.
This direct-to-consumer (D2C) beauty and skincare space is as flush with exotic formulations as it is with funds. In 2023, D2C beauty and skincare brands raised $160.1 million across 41 funding rounds, while a year earlier the mop-up was a whopping $439.3 million across 73 rounds, according to data research and analysis firm Tracxn.
Business of grooming
Several factors have contributed to the explosion of D2C beauty and skincare brands, including a shift towards clean and environment friendly products, a rising focus on personal grooming, and the convenience of online shopping, including discreet and informed buying options.
D2C natural beauty and personal care brand Nat Habit says about 55 per cent of its revenue comes from its website and the rest from e-commerce marketplaces. It has crossed the ₹100-crore mark in annualised revenue in FY23-24. The brand is also finalising its offline retail strategy.
The start-up, which raised $10.2 million in December, is expanding its portfolio of haircare and skincare products.
“We are looking to touch ₹300 crore in annualised revenue in FY25 and ₹550 crore in the following financial year; we are looking to be EBITDA profitable over the next 17-18 months,” says Swagatika Das, co-founder of Nat Habit.
A big chunk of its sales are in the top cities and metros.
Vegan beauty and body products maker Plum raised $35 million, targeting growth in all its business verticals.
“The growth in the skincare vertical is close to 14 per cent, while the body-care vertical is growing at about 40 per cent,” says Shankar Prasad, co-founder, Plum.
Boasting half a million customers a month, the brand sells its range of skincare, haircare, personal care, and makeup products on its website as well as through platforms like Nykaa, Amazon, Flipkart and Purplle.
Offline its products are available across 250 towns and cities in India, at about 1,000 assisted outlets such as Shoppers Stop, and over 10,000 unassisted outlets (such as grocery stores).
Sixty per cent of the sales is online and the rest offline. Over the last two years, Plum has added a men’s grooming brand, Phy, and a bath and body products brand, Plum BodyLovin’.
Mix-and-match brands
Observing that the average customer typically likes to explore newer brands in personal care products, Prasad says, “I am yet to come across a dressing shelf that does not have five or six brands. It always has a mix of brands. There are a lot of opportunities for newer brands. In the long term, it will be a healthy mix of large brands and meaningful, younger, smaller brands.”
Vedix, a customised ayurvedic brand, says 50 per cent of its customers are in Tier 1 cities and the rest equally distributed between Tier 2 and Tier 3 centres.
“We have been an online-only brand and sell primarily through our website. Even for our international foray, we continued to sell through our website to 10-plus countries. In the last six months, we have ventured offline with our first couple of locations in Hyderabad and plan to add more,” says Jatin Gujrati, Business Head, Vedix.
“We are in the range of ₹100-150 crore annual revenue with profitability. The biggest shift has been the increase in focus on profitability across the industry,” he adds.
Investor interest
Investor interest has been piqued in the beauty and personal care sector, since it largely caters to the 18-24 age group, which is typically open to trying newer products even at a premium.
On venture capital fund Bertelsmann India Investments’ interest in Nat Habit, Managing Director Pankaj Makkar says, “Nat Habit has redefined the D2C personal care landscape by fully embracing the ‘100% natural’ promise, sourcing proprietary ingredients directly for their ayurvedic kitchens. This category-defining approach is their strongest competitive advantage and a key reason for our investment.
“Most of their manufacturing is done in-house, backed by extensive R&D. Furthermore, Swagatika and Gaurav’s [co-founder Gaurav Agarwal] keen focus on consumer feedback drives their demand planning. These elements are the hallmarks of future sectoral leaders.”
The challenges facing the D2C beauty and personal care start-ups include retaining customer loyalty in an increasingly crowded marketplace, maintaining quality standards, keeping up with ever-changing consumer preferences, and the growing pressure to achieve unit economics as the funding ecosystem increasingly insists on a path to profitability.