Decoding the Phenomenal Rise of D2C Beauty and Personal Care Brands

Decoding the Phenomenal Rise of D2C Beauty and Personal Care Brands
A makeover revolution of sorts is unfolding in India's D2C beauty and personal care space. A cohort of clean, culturally rooted, and ethical brands are making their presence felt with beauty recipes out of kitchens, forests, and the wonders of Ayurveda.

By Avlokita , Author

03 Aug 2022 | 18 min read

A makeover revolution of sorts is unfolding in India’s D2C beauty and personal care space. A cohort of clean, culturally rooted, and ethical brands are making their presence felt with beauty recipes out of kitchens, forests, and the wonders of Ayurveda. 

With a diverse, growing, and conscious market for skincare and cosmetics - most of it taking the green and clean route, we mingle with a stellar panel of founders who have been in the beauty business and scaled it as firsts for India and the world at D2C India 2022.

The Growing Prominence of ‘Clean Beauty’ among Millennials and Gen Z 

Clean beauty as a concept is not new to India. It has been a very core part of our Indian culture and Ayurveda is a great example in front of all of us. Amrutam is bringing that core to the table for everyone - by merging Vedic science with a modern lifestyle. 

Stuti Ashok Gupta, the Co-founder, and CEO of Amrutam says, “Gen Z and Millennials are looking at brands that are firstly using clean ingredients instead of simply following their favorite celebrities who endorse a brand and secondly they are looking at brands that are ethical and environmentally conscious in running a business. These consumers are value driven and these two are key elements that come up under the umbrella of clean beauty.”  

Mayur Mahajan, Co-Founder, Prolixr shares, “For us, everything is about awareness, Gen Z and Millennials are very aware of the content they are consuming, what they want and why they want it. We call them skintellectuals. Something that started as a trend is very much a responsibility for them now.”

Building Credibility for D2C Brands 

We’ve all been those consumers who would look for that first word-of-mouth or in-person recommendation when it came to skincare and beauty - including the panelists - however, now the tables have turned where they are not only selling these products but as D2C first brands, they’re selling it virtually - thanks to the explosion of e-commerce and it’s proven efficacy and resilience through the dreadful lockdown months. 

Pritesh Asher, Co-Founder, Juicy Chemistry while talking about how they got the concept of clean beauty cleaned for themselves, says, “We were asked this question over and over and over again: how do we as consumers who are shopping online or interacting with your brand for the first time know that this product is safe? This product is usable; it gives a particular amount of result that you're claiming. With credibility, I think Juicy Chemistry's journey started at this point when we wanted to answer this question for ourselves first. Everybody was in the same space to actually give a similar experience and also by asking ourselves how we are different from another brand that's also claiming to be a similar version of us.”

“We looked at ourselves first at an internal level to understand if the product that we are actually creating for the consumer has credibility and how we establish that credibility for ourselves. We looked at our production line and supply chain and thought, "How do we know at the DNA level that our product or ingredients are clean, organic, and free of things that we don’t want to sell? And one way to do that was to have an external/third-party agency who could verify for us. So we answered this question by getting verified by EcoCert - a certification body that actually cleaned up our process internally - changed them all from the ground up at every step of the process to place guard rails that defined how a product needs to be formulated and developed to match the efficacy we claim. After getting the approvals at every step of the process we could tell our consumers that the due diligence is being done on their behalf, that it’s by an authorized and credible third-party agency, and that we are actually going consumer to consumer for their benefit and satisfaction,” he further adds.

Tarun Sharma, Co-Founder & CEO, MCaffeine while sharing about how they’ve remained rooted to the basics and focused on consumers and the value around it., says, “At MCaffeine we define our brand as the promise of the value you want to give to your consumer. It has nothing to do with the price but value. At m caffeine how we define that credibility architecture by way of value is we have these four e's if you look at any product or any brand right. 

-    Efficacy - Everything to make a product to achieve the highest levels of efficacy. 
-    Ethos - Natural ingredients, no plastic usage, no artificial materials, etc. This one is also for the marketing and communications of your brand.
-    Experience - Experience and indulgence is paramount for the new age beauty brand as we are dealing with a no-saving economy - the millennials. The packaging, the texture, the feel, etc. 
-    Emotions - As a brand, your currency is not the balance sheet and P&L but the emotions of your consumer for your brand. The emotional connection you build with your consumer - which is an invisible space for all of us to acquire also makes it an easy space that can get toppled because it’s invisible. 

By way of these four E’s we try to create a strong pillar of credibility for MCaffeine.” 

Driving Performance from Digital and Social Ecosystem

The sheer ease of digital businesses also makes it a fertile ground for cutting-edge competition. While e-commerce continues to re-emphasize its importance, D2C as an emerging category is largely self-reliant to scale. Our panelists spoke about how they drive performance.

Prateek Ruhail, Co-Founder & CEO, Vanity Wagon says, “The best channels as of today for new age beauty brands to build their credibility would be to create and strike a balance in the content and community building - a balance in what the brands want to create and the material that the users want to see. Content has to be the central piece - which cannot be in silos - be it on social channels, websites, OTT platforms, TV, or anywhere else - it needs to be what they perceive the consumers want to consume. Second is community building via live commerce or social commerce or by doing exactly like what Meesho has built. It’s a great example of building a community - which goes a long way in scaling and building a D2C brand or a D2C marketplace like ours.”

Does High Repeat Purchase Justify the High Customer Acquisition Costs?

It is said that if a startup raises funds, the first guys to celebrate it are the Facebooks and Googles of the world - because brands spend maximum marketing money on these channels. 

From a Facebook ad to a giant billboard - Suraj Chaudhari, Co-Founder, Co-CEO, Zlade talks about how true that is. “The only way to recoup those heavy marketing costs is retention as it takes care of high CAC problems. If not retention, then a brand needs to have margins of around 80-90 percent which is very difficult.”

Anurag Kedia, Co-Founder, Pilgrim has been a big supporter of technology being an enabler for amplifying customer experience. He doesn’t use any heavy AI or ML models in their technology framework but acknowledges that technology certainly has democratized a lot of information, market research, and insights that were earlier only available to larger brands, were expensive, and also time-consuming. 

He says, “For e.g. if we are to do a poll today on Facebook, one can pay Facebook to say a Rs 500 and to get 1000 responses - which can give a brand enough clarity of what the consumer is preferring or about their behaviors. These polls can be anything - from the claims that you make to the ingredients that a brand uses or to test a new product in line or choosing a product name. Now, if a brand does this within its own community it’s no money at all. If not your brand handle, you can even use a proxy handle to get responses in less than 48 hours.”

“Brands can even test their packaging before a product launch by running a marketing campaign to test out a set of designs with split tests to understand which one is converting better on your D2C side. A brand can run a poll on the ‘thank you’ page and can tell you which celeb you should choose for your brand. Basically, the consumer knows everything and we don’t. So ask them - they can be pointed, quantitative, or qualitative questions. At every stage of the consumer journey, you can measure NPS scores by running A/B tests of various types. The website purchase experience, delivery experience, 15 days or a month later - how was the product efficacy experience are a few. The brand can then drill down on whichever parameter is not functioning,“ he further adds.

How are Brands Embedding Technology in their Business?

Kedia talks about how as an early stage of the business using the technology for the right reasons by all that is already existing is more important and lucrative than heavenly investing in the latest ones - to understand the consumer and the initial 4 P’s - Product, Pricing, Promotion and packaging. 

“In our journey, we’ve realized that we are better off if we go with the standard offerings I’d say and there’s no need to heavily invest in experimentative technologies,” he states.

Betting on Sustainability in D2C Beauty 

Akash Bhatte, Vice President and Founding Team Member, The Man Company shares how it impacts the revenue. “The Gen Z and millennials more gravitate towards green brands and the obvious choice is clean brands even if they have to pay a premium for it. As brands, we need to be aware of this consumer evolution. The information travels at light speed between these new age consumers.”

At The Man Company, they’ve made some very conscious choices by eradicating cellophane from their packaging and replacing bubble plastic wraps with honeycomb wraps, polybags with corrugated boxes, and sending paper boxes with OR codes to access ideas on repurposing ideas on these boxes. TMC produced 15,000 kgs of plastic in 2021 and recycled 15,045 kgs in the same year. As a responsible brand, its way forward is focused on becoming a plastic-neutral brand and eventually a plastic-negative brand. 

Manish Chowdhary, Co-Founder, WOW Skin Science which is the first Indian brand to launch a paper tube says that at the core they are very conscious about staying true to their claims. He observes that the Indian consumer in 2022 is still at the center of conscious buying where they still continue to believe that how can a product benefits us first and then consider or think about its impact on the environment. The Indian consumer is in the transitional stage and getting there.

“We are a B-funded company so we have ESG which is our compliance as a start and we follow that intensely. We promise the consumers a lot of innovation that’s on its way and something we’ve been working towards for the last few years and along with it a lot of first mover advantage in the coming quarter. We are certainly not in the greenwashing game but we assure to be true to our choice and claims,” he asserts.

How are ‘Made in India’ Brands Going Global?

“India is poised to really accelerate its beauty consumption,” says Anchit Nayar, CEO of beauty e-commerce for Nykaa and son of the founder of Nykaa, Falguni Nayar.

According to Euromonitor International, the Indian beauty and personal care market is valued at $15 billion and is estimated to surge by 9.6 percent this year. While it’s small by comparison with the US, which is worth $102 billion, or China at $88 billion, India is poised for rapid growth, expansion, and an array of firsts in the beauty and personal care space in the years ahead. 

The founders on the panel spoke about how diligently they’ve been driven to innovate, to position India as a leading market for beauty and personal care, and all that the land of Ayurved has to offer. 

Chowdhary says, “When we started off in 2014-15, we wanted to break the clutter and so something different. This is a very interesting sector to be in and it has high gross margins. Our packaging has Amber and Gold which is a ripped-off but beautified version of a pharmaceutical bottle. We were lucky enough to do a lot of data reading and screen tests to understand what consumers are searching for and we built something beautiful to start with. Along the way, as the D2C brand that we are today, I continue to believe there are two eras of a brand.”

One is the Doordarshan era of brands and another is the Youtube era of brands that are meant to/expected to or rather forced to go global. We are one of those who took that route. Through LinkedIn, I get inquiries from countries I’ve never even heard of. That's the power of the internet today and I want to give this inspiration to everyone out there to start at the right time. India continues to be a large market for us. We as Indians love to discount ourselves as cheap but we went and did the opposite there. Korea is known as the K beauty, Japan is known for its J beauty and India is the land of Ayurveda and we should be able to missionize the I or A beauty of this country.”

While India remains a priority market for most D2C brands, they are clearly building themselves to establish, compete and scale in a global market. These brands also make an apparent attempt to cater to the Indian consumer and their sensibilities and preferences as opposed to taking a generalized route in positioning themselves. 

A makeover revolution of sorts is unfolding in India’s D2C beauty and personal care space. A cohort of clean, culturally rooted, and ethical brands are making their presence felt with beauty recipes out of kitchens, forests, and the wonders of Ayurveda. 

With a diverse, growing, and conscious market for skincare and cosmetics - most of it taking the green and clean route, we mingle with a stellar panel of founders who have been in the beauty business and scaled it as firsts for India and the world at D2C India 2022.

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