| Tuesday, 03 January 2023 |
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Good morning [%first_name |Dear Reader%],
When someone mentions D2C, or direct-to-consumer, you immediately think of e-commerce. At least in the Indian context.
Take boAt, the popular D2C wearables brand that filed to go public last year, although it hasn’t listed yet. About 88% of boAt’s revenue in the year ended March 2021 came from marketplaces such as Amazon and Flipkart, and its own website. Just over one-tenth of its sales could be attributed to physical retail stores.
Most D2C brands, cutting across categories like foods, electronics, and cosmetics, are bound to have a similar bias towards selling online. So D2C’s immediate association with e-commerce isn’t all that surprising.
And personal-care brand Mamaearth was no different until 2020.
But that has since changed, quite drastically.
And Mamaearth has reason to both cheer this shift and be wary of it.
IPO-bound Mamaearth’s necessary yet costly love affair with retail stores
Last week, Mamaearth’s parent, Honasa Consumer Ltd, filed a draft red herring prospectus (DRHP) ahead of its planned initial public offering (IPO) to raise Rs 400 crore (US$48.3 million)—a flotation that will also see its founders and investors selling shares.
Even a quick glance at the 378-page document will make this one fact pretty apparent: brick-and-mortar stores are no longer a nice little thing to have for the brand, but an absolute must.
In the year ended March 2020, Mamaearth’s offline sales were just Rs 10 crore (US$1.2 million), or 9% of its total revenue. And for the six months ended September 2022, revenue from physical outlets came in at Rs 256 crore (US$31 million). More crucially, physical stores accounted for 35% of the company’s total revenue during that period. That’s a significant spike for a digital-first brand.
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