Direct-to-consumer (D2C) fashion brand Bewakoof is diversifying its product portfolio in a bid to scale up. In the past year, the company has expanded to categories like ethnic wear, sleepwear, and beauty and personal care. In December, 2021, the brand launched a marketplace called Bazaar within its platform. With around 150 brands retailing on it, Bazaar aims to become a ‘one-stop-shop for creative merchandise’.
According to Rajat Wahi, partner, Deloitte India, the D2C market in India is valued at $35-45 billion, and is expected to reach $100 billion by 2025.
Growing the biz
Bazaar houses products under categories such as fashion, innerwear, audio devices, beauty, and accessories. Chumbak, Mad Over Print, Brown Mocha, Fugazee, Style Quotient, Clovia, and Campus Sutra are some of the brands present on the marketplace. Bewakoof plans to have over 500 such brands on Bazaar in the next 12 months. “Currently, the marketplace contributes 20% of our total sales. We expect this to increase to about 40% in the next three years,” says Prabhkiran Singh, founder and CEO, Bewakoof. The company will invest up to $15 million each year for the next three years in the marketplace business.
Apart from adding ethnic wear and sleepwear to its product mix, Bewakoof unveiled a beauty and personal care line last year, called Cosmos Beauty, which includes creams, oils, face wash, shaving cream, beard oil, shampoos, face masks, and serums, at a starting price of Rs 350.
Going ahead, the brand plans to foray into innerwear and activewear categories, as well as home décor. Targetted at the 16-35 age group, Singh says 70% of Bewakoof’s sales comes from the non-metros.
Bewakoof started retailing on marketplaces like Amazon, Flipkart, Myntra, Ajio, Tata CLiQ, and Nykaa in 2021. However, Singh says, its own website will remain the dominant sales channel, currently contributing almost 90% of the brand’s total sales. The company is working out its offline retail plan, and will soon launch in international markets like the Middle East and Southeast Asia through its D2C platform and other marketplaces.
Bewakoof clocked a sales revenue of Rs 250 crore in FY21; in FY23, it plans to garner Rs 500 crore. The company, Singh says, spends Rs 40-50 crore yearly on marketing. “We work with over 250 influencers on content creation and promotion. We also offer content in regional languages.”
Question of profits
A big limitation for D2C brands — which rely predominantly on online sales — is reaching the large consumer base in India that mostly shops offline. “E-commerce currently accounts for only 4-5% of total retail sales. While it continues to grow fast, it may reach only 12-15% of total retail by 2025,” says Wahi. Offline, hence, remains a crucial channel for growth.
The prevalence of discounts online has raised customer expectations when shopping offline, analysts say. “Keeping offline and online price parity and generating margins is difficult in the offline market,” says Angshuman Bhattacharya, partner and sector leader (consumer products & retail), EY India. Brands may need to create different merchandise for their offline business, so that there is no comparison between the two channels.
In order to build an offline presence, analysts say, D2C brands could benefit from launching small-format stores like kiosks and shop-in-shops initially, as they are cost-efficient and help build brand recognition. They could also look at partnerships with offline players who cater to a similar consumer cohort to expand their footprint. “These brands should look beyond metros and tier I cities; smaller cities and towns are underserved by other brands, and there’s a lot of unmet demand,” Bhattacharya notes.
Analysts say, even as these brands offer discounts on e-commerce marketplaces and their own websites, they need to ensure profitability in around three years of starting their operations. This would entail having the right costing and margins to support growth. “For instance, brands selling products below Rs 500 face a problem in terms of absorbing the delivery cost. It’s important to have a certain price point that works in terms of unit economics,” Bhattacharya adds.
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