😎EyePO Prep😎
Smaller refrigerators, Shopify bans KPIs, D2C is dead, Udaan's got issues
Hi Surgies 👋
Consumer brands have a different trajectory compared to the SaaS or platform arcs. DSG Consumer Partners have created a brand list that looks beyond unicorns. Healthy growth with solid business fundamentals is a good predictor of long-term success. The InsurgeX list is a short list of brands that fulfil 3 criteria: Revenues > INR 75 cr, 30% CAGR in the past 3 years, and Capital Efficiency of > 1.5x.
Check out the report, on “insurgent consumer brands” that operate with a sense of insurgency and are on track to capture an outsized share of growth in consumption. The TLDR (for the one’s browsing between meetings on a busy Monday):
M&A with strategics is the most common exit route in consumer brands, significant increase in activity in the last 5 years
Consumer brands’ exits take time and are not unicorn outcomes (90%+ of consumer brand exits in the last 15 years have happened at less than $1B valuation)
High founder stake drives meaty founder value
5.1 : Revenue multiple for brands with capital efficiency ≥ 1.5x and Revenue CAGR ≥ 30% (versus 2.7 overall)
9.0 : Revenue multiple for brands with RoCE ≥ 25% and Revenue CAGR ≥ 30% (versus 4.0 overall)
🗞️Marketplace Buzz
B2B e-commerce platform Udaan has encountered challenges in scaling, with revenue remaining flat in FY24. Udaan’s gross revenue (GMV) barely grew 1.7% to Rs 5,706.6 crore in the fiscal year ending March 2024 in contrast to Rs 5,609.3 crore booked in FY23. The company has not regained its 2022 peak, when revenues touched Rs 9,900 crore. Last week, Udaan secured Rs 300 crore (over $35 million) in debt funding.
Store Rush: A bulk of the fresh capital proceeds from the IPO – Rs 982 crore – is expected to be deployed towards the expansion of Instamart’s dark store footprint. As of September 10, the company had 605 active dark stores in the country, up from 557 such micro warehouses as of June 30.
Quick Pad: Blinkit is outselling Amazon in Sanitary Pads category as per 1DigitalStack. Whisper is the clear market leader with 47% market share; similar to trends on Amazon and offline. Western India is an outlier where Stayfree leads Whisper marginally. Branded searches are 64% of overall searches - the consumer heavily tilts towards known brands. New age brands like Nua, Plush have garnered a strong market share, esp in West India.
Flipkart's logistics arm Ekart sees 5-fold surge in net loss at Rs 1,718 crore in FY24. Instakart Services, which operates Ekart Logistics, also clocked a 5% revenue decline at Rs 12,115.3 crore in FY24, compared to Rs 12,787.4 crore in the year-ago period. Meanwhile, Amazon India's logistics arm Amazon Transportation Services (ATS) clocked a 7.6 per cent growth in its operating revenue to Rs 4,889 crore in FY24 from Rs 4,543 crore in FY23.
Amazon’s Karigar initiative sees a lacklustre response. The program solicited Indian artisans to sell their wares through Amazon’s e-commerce platform by offering nine weeks of training, professional product photos, and marketing. It launched in 2017 with 55,000 products on the site, including hand-loomed sarees, blue pottery from Jaipur, and other “Made in India” handicrafts. Makers say Amazon Karigar failed to distinguish their crafts from mass-produced items. India’s handicraft industry is one of the biggest in the world. Last year, the country’s handicraft exports amounted to $3.6 billion, according to the India Brand Equity Foundation, a trust established by the Ministry of Commerce and Industry.
🍕D2C Snippets
Not so Wow: Beauty and personal care brand Wow Skin Science has continued to experience a decline in scale. After a revenue drop of over 23% in FY23, the company’s operating revenue declined by 9.6% to Rs 233.49 crore in FY24 from Rs 258.11 crore in FY23. Despite the drop in revenue, the company managed to cut its net loss by approximately 24%, reducing it to Rs 130.2 crore from Rs 213.5 crore in the prior year.
EyePO Prep: Eyewear retailer Lenskart made major strides towards profitability with its net loss narrowing to Rs 10 crore in fiscal 2024. Operating revenue for the year ended March 31 rose 43% from the prior year to Rs 5,428 crore. Earnings before interest, tax, depreciation and amortisation rose to Rs 856 crore from Rs 403 crore in FY23.
Men’s sexual wellness brand, Bold Care’s revenue from operations increased 6.67% to Rs 32.9 crore in the last fiscal year compared to Rs 30.90 crore in FY23, its consolidated financial statements with the Registrar of Companies (RoC) show. Bollywood actor Ranveer Singh had invested an undisclosed amount in the company to become a co-owner in December 2023. Last month, Bold Care forayed into the women’s segment with the launch of its new brand Bloom. It competes with D2C sexual and wellness brands including Man Matters and Beardo.
Boldfit, a direct-to-consumer brand of fitness products, raised Rs 110 crore. Founded in 2018 by Pallav Bihani, the brand sells fitness accessories, core sports equipment and workout apparel. The startup backed by cricketer KL Rahul will use the funds to enhance product innovation and expand its brand presence. The company clocked rs 140 in FY24.
Better Turn: D2C beauty startups like Plum, Wow Skin Science, and Mamaearth are shifting to quick commerce and offline channels as revenue growth slows. Industry experts point to the mushrooming of direct-to-consumer beauty brands and saturation on traditional ecommerce channels as triggers for slowing growth in the segment during the previous fiscal.
📚Reads and Recommendations
Amazon Ads and Lexus got together to promote the latest GX model. They end up creating a music video, with the campaign racking up 164 million impressions. Watch here.
A case for smaller refrigerators by Shiv. Essentially, as Q commerce picks up, refrigerator size at home will come down.
Growing Organically on Instagram: An Anti-Playbook for D2C Brands courtesy Subko and NEWME
Why Shopify bans KPIs, optimizes for churn, prioritizes intuition, and builds toward a 100-year vision
DTC is dead. Long live DTC. As a channel, it remains key to growth for many retailers. But the era of the DTC brand as we know it is over.
That’s all for this week! Bye!
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Wow, amazing. I wonder why such newsletters are not getting equal recognition compared to podcasts and stuff....maybe substack has not yet penetrated the indian market enough yet.