Beauty e-commerce in India set for next level of growth, say experts

With magnificence market Nykaa on a path to the general public markets, the business flush with funds, and more and more savvy shoppers, the time is correct for the subsequent degree of progress, a number of traders advised ET. In simply the previous three months alone, the D2C magnificence area in India has seen extra funding than in all of 2020, in accordance with information from Traxcn. On March 22, ET reported that magnificence market Purplle had raised $45 million, giving early investor IvyCap 22x positive factors.

The worldwide magnificence and private care market is predicted to the touch $725 billion by 2025, in accordance with a report by Avendus. The fledgling Indian market is predicted to develop to $28 billion by then, the report mentioned.

Cosmetics big L’Oreal, which owns Garnier, Maybelline, NYX, and L’Oréal Skilled, has at all times used acquisitions to fill the white areas in its portfolio. In 2013, it acquired Mumbai-based skincare model Cheryl’s Cosmeceuticals. Globally, it has acquired manufacturers similar to The Physique Store, Vichy, Kiehl’s, Shu Uemura, IT cosmetics, and City Decay.

“For us, each alternatives exist. We’ll convey manufacturers that meet the wants of the patron both by way of our personal innovation or by way of acquisition,” Kavita Angre, director of client & market insights and media at L’Oreal India, mentioned on The Rundown by ETtech, our weekly present on Clubhouse.

Sakshi Chopra, Principal at Sequoia India, mentioned, “For those who have a look at the US market, nearly 80% of magnificence manufacturers that get to $80 million to $100 million in income are lapped up by 4 or 5 pure acquirers. So if these indie-brands are rising at a pleasant clip, a few of the bigger acquirers are keen to offer them a two-year ahead a number of and purchase them out. As manufacturers begin to hit this scale the mergers and acquisitions market will develop into extra fertile in India.”

In 2016, US-based Greenback Shave Membership, a razor blades subscription service, was offered to Unilever in an all-cash deal of $1 billion. One other US-based D2C skincare model,
Drunk Elephant, was acquired by Shiseido for a reported $845 million in October 2019.

Now, Indian FMCG giants are testing the D2C magnificence e-commerce waters by snapping up stakes in startups. Marico acquired males’s grooming startup Beardo in 2020. Different Indian FMCG majors similar to ITC and Emami have backed Fireplace Ventures, an early-stage fund focussed on client manufacturers that has skincare model Mamaearth in its portfolio.

Wanting forward, Chopra mentioned the wonder e-commerce area in India will adapt to a number of fashions. Some manufacturers shall be acquired by large gamers and others will go on to construct a home of manufacturers, like a digital model of Unilever or Procter & Gamble.

“I feel the winner would be the client as a result of she shall be spoilt for selection. That is nice as a result of I feel as extra provide is available in, a few of the main manufacturers shall be compelled to proceed the cycle of innovation to remain forward of the pack, and likewise outperform them on execution and considering,” mentioned Chopra, who’s on Purplle’s board.

The natural market in India is nascent, and new-age, online-first manufacturers similar to Juicy Chemistry, which just lately raised upward of $6 million, see loads of room for progress. “Manufacturers want to chop the noise and produce out a narrative by way of which they’ll join with the patron,” mentioned its cofounder Pritesh Asher. “They’re at all times searching for the subsequent greatest ingredient… to distinguish themselves from the market.”

Angre mentioned that the frenzy of smaller gamers has acted as a catalyst for educating shoppers and making the class extra modern and thrilling. “You possibly can hear folks speaking about [things like] hyaluronic acid and retinol. All that has occurred as a result of a number of the smaller gamers have are available in with very particular propositions,” she added.