For about INR 28 crore (about $3.5 million USD), Reliance Consumer Products, a division of Reliance Retail, purchased the direct-to-consumer (D2C) snack company TagZ Foods. This purchase, which some have referred to as a distress sale, is another example of a big company purchasing a smaller direct-to-consumer brand.
Founded in 2019 by Anish Basu Roy and Sagar Bhalotia, TagZ Foods sells a variety of foods, including cookies, gourmet dips, and popped potato chips. The business demonstrated a multi-channel strategy to sales by operating through its website, multiple e-commerce platforms, and physical retail locations. Following their appearance on the well-liked Indian television programme Shark Tank India, their items saw some increase in visibility.
Overall Funds Raised by TagZ Foods
According to the company’s financial history, a total of roughly $3.2 million USD was raised across multiple funding rounds. This comprised a $1.2 million USD seed investment round from angel investors in 2020 and a $2 million USD pre-Series A round headed by 9 Unicorns. An undisclosed sum from former Indian cricket player Shikhar Dhawan, who also served as the company’s brand ambassador, was contributed in later investment rounds. Additionally, Dexter Angels, Agility Ventures, Venture Catalysts, and Klub are investors in TagZ Foods.
But in the last few months, TagZ Foods has encountered many difficulties. According to media citations, the company stopped production a few months ago because it was having trouble growing. As a result, TagZ items were conspicuously absent from both online and physical retail locations. Many workers also left the company as a result of the production standstill.
According to regulatory documents, the ultimate acquisition price of INR 28 crore could alter after a due diligence procedure. Before publication, neither Reliance Consumer nor TagZ Foods responded to any media enquiries, despite many attempts to reach them for comment on this deal.
Financial Dynamics of TagZ Foods
In the fiscal year 2023 (FY23), TagZ Foods reported a net loss of INR 10.7 crore compared to INR 9.6 crore in operating revenue. This highlights the financial strain the business was under prior to the takeover. In a saturated market with well-known brands like Uncle Chips, Lays, Too Yumm, and BRB, the company faces competition.
This purchase fits with a broader pattern in the D2C industry in India. Due to difficulties faced by numerous smaller direct-to-consumer (D2C) brands, larger, more established Fast-Moving Consumer Goods (FMCG) companies have acquired them. For example, Hindustan Unilever purchased Oziva and Wellbeing Nutrition in 2022, while ITC purchased Yoga Bar in January 2023. These purchases demonstrate the consolidation taking place in India’s quickly changing D2C market.
The continuous dynamic changes in the Indian D2C food industry are highlighted by Reliance Consumer Products’ acquisition of TagZ Foods. The deal highlights the difficulties encountered by smaller D2C firms and the strategic prospects for larger corporations looking to diversify their product portfolios, even though the final terms are still up for approval. How Reliance incorporates TagZ Foods into its current business operations and if it can effectively turn around the brand’s fortunes will be revealed in the future.
A recent poll by MMA India and Publicis Commerce found that 63 percent of direct-to-consumer (D2C) enterprises are not profitable at all, and 80 percent have not yet achieved profitability. Twelve percent of Direct-to-Consumer businesses have declared profitability, according to the survey on March 6, 2024. Twenty-five percent of those same enterprises claimed they don’t track profits since they’re part of bigger ecosystems. Businesses and customers alike have taken notice of the Direct-to-Consumer (D2C) model in recent years due to the improved convenience and individualization it promises in online purchasing. As conventional retail outlets were forced to close or experience significant interruptions due to the COVID-19 pandemic, Direct-to-Consumer brands unexpectedly benefited. New data, however, cast doubt on the viability of the once-booming Direct-to-Consumer market.
People began spending more time online to purchase and have their customized goods delivered to their doorstep after the COVID-19 pandemic hit. This marked the beginning of the rise of the D2C market. During that time, Direct-to-Consumer enterprises seemed to be having a blast. They provided user-friendly digital platforms and encouraged direct communication with customers. There was a spike in demand for D2C products as a result of consumers going online to fulfill all of their purchasing needs during the nationwide lockdown.
In addition, Direct-to-Consumer businesses fostered client engagement and loyalty via individualized service, tailored products, and focused marketing. New evidence reveals that Direct-to-Consumer businesses may not have been as successful as expected, even though the pandemic presented a fantastic opportunity for them to solidify their position in the market.
A growing number of D2C brands have emerged in the past few years. The result is a saturated market where new players are finding it tough to carve out a niche for themselves. The proliferation of products and services available to consumers has made it more challenging for upstart businesses to win their trust and business. A pricing war has ensued as a result, making it more difficult for upstart brands to compete with more established ones that can take advantage of economies of scale.
Total Addressable Direct-To-Consumer (D2C) Market in India From 2015 to 2025
Cost Plays a Crucial Factor
The rising cost of acquiring new customers has made it more challenging for D2C firms to do so affordably in recent years. Brands have to spend more money on ads to stand out from the crowd when the competition heats up. This can be particularly challenging for up-and-coming firms without the resources to compete with more well-known names in the industry.
Brands now pour a lot of money into marketing and advertising to attract new customers. Many Direct-to-Consumer firms are new and have little marketing budgets, so they have a hard time getting their names out there and reaching people through paid advertising. To combat the high cost of acquiring customers, Direct-to-Consumer firms should prioritize increasing brand recognition through organic marketing channels, influencer marketing, and content marketing. To reach their target market, brands need to establish a distinct visual identity, craft a compelling brand story, and use social media to communicate with consumers. A great way to increase exposure and fuel expansion is to cultivate a group of dedicated consumers who will go out of their way to promote your business.
Due to their smaller product catalogs, Direct-to-Consumer firms can increase their exposure and attract more customers by teaming up with similar brands. To further broaden their consumer base, businesses can investigate other distribution methods like online marketplaces or pop-up stores. If they could be more adaptable, they could better respond to shifting market conditions and discover unanticipated opportunities for growth.
Minimal Means of Distribution
Brands that sell directly to consumers may have a smaller audience since they distribute their products through their channels. Many brands have a hard time growing their consumer base, in contrast to the few that have become industry leaders. Particularly for firms dependent on niche markets, which could be tough to expand into, this might be a significant obstacle.
When it comes to general trade in India, distribution is not as straightforward as simply putting a product out there and hoping for the best. Many years have been spent by businesses on the development of their distribution systems, which have become sources of competitive advantage for the major players in the industry.
The Way to Renovate and Recreate
Despite the difficulties, the direct-to-consumer approach is not even close to being extinct. To overcome the challenges that direct-to-consumer firms are currently facing, they need to innovate and adapt. Putting money into a process that is completely seamless in functioning is one possible technique. There is a lack of clear strategies among brands, which may be the reason why they are unable to effectively control their costs at present.
D2C brands ought to place more emphasis on product quality. It is also possible that a major cause of a brand’s collapse is the poor quality of the product, which does not meet the buyer’s expectations.
Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations. The content in this post has been approved byARATA.
People around the globe are switching to chemical-free & non-toxic personal care products. The new trends in personal care brands show that over 40% of consumers are inclined to the products and brands that fit into their healthy lifestyle and contain wellness benefits without any chemicals.
ARATA is an honest personal care brand that offers chemical-free, plant-based skincare products for healthy skin and hair. Read to know about its founder, products, and the startup story of ARATA.
ARATA is a personal care startup that offers trustworthy and credible skin care and hair care products. The vision and mission of the Company are to make clean labels, high-performing, safe, and effective hair care solutions. Arata is an environment-friendly startup that uses not only non-toxic ingredients, for their products but its packaging is also 100% recyclable.
ARATA – Industry
The market and industry size is about INR 25,000 crores, which is a total addressable opportunity for hair care.
ARATA – Founders
The founders of Arata are Dhruv Madhok & Dhruv Bhasin.
Dhruv Madhok
Dhruv Madhok – Co-founder of ARATA
He has completed his graduation from the University of Southern California – Marshall School of Business. Earlier he has worked with KPMG and PVR limited. He is the Director of ARATA.
Dhruv Bhasin
Dhruv Bhasin – Co-founder of ARATA
Dhruv Bhasin completed his Master’s in Management from the University of Surrey, and B.Sc in Business Studies from Lancaster University.
ARATA – The Idea and Startup Story
The idea for starting up came when (Dhruv) Bhasin’s mother was boiling flaxseeds to make a natural hair gel for him to use. He sent Dhruv Madhok a sample, and he loved it. And that’s how they realized there is an opportunity for safe styling products. They also discovered that the opportunity is significantly larger, not only limited to styling but in general hair care and other categories.
Arata products belong in the beauty, personal care or FMCG CPG, and consumer packaged categories.
ARATA – Name, Tagline, and Logo
ARATA Logo
ARATA means fresh and new in Japanese. The founders thought this was very apt for their brand personality.
ARATA – Products
ARATA Products
The innovation and USPs are that the products are plant-based, non-toxic, vegan, cruelty-free, naturally derived, sustainable and inclusive, with a premium choice of ingredients and fragrances, product packaging, branding and design.
ARATA – Business Model
The business model is essentially selling the products online to the customer, directly to the consumers, on its website, and through different marketplaces.
ARATA – Customer Acquisition
The first hundred customers were all acquired from Google, Facebook, Instagram, and through advertising. And then, they scaled up through different marketplaces and through multiple online and digital campaigns.
The most important thing that has worked for them to attract and retain customers is focusing on niches and having a set target audience and not being all over the place in terms of the product offering.
The biggest challenges they face can be divided into two parts.
One challenge was raising capital during the pandemic as it was very hard.
And two, essentially trying to break through the clutter of being a digital-only brand.
So the challenge was how to look beyond performance marketing?
And now, they are doing that by creating engaging content, having an engaging social channel, and focusing on customer retention, CRM, content creation and the likes.
ARATA – Most Successful Marketing Campaign
The most successful marketing campaign till now has been the launch of the Arata Advanced Curl Care range with Taapsee Pannu.
ARATA Marketing Campaign with Tapsee Pannu
ARATA – Growth
ARATA revenue exceeds INR 2.5 crores per month. Its estimated annual revenue is INR 30 crores.
And the repeats are looking strong, with more than 50% of customers coming back every year to buy for the second time and more.
ARATA – Funding
They have received multiple rounds of funding. They received funding of INR3.5 crores in December, 2018. They raised INR 7 crores in 2021.
The article is contributed by Ms. Stuti Kothari and Mr Ankit Kothari, Co- founders, WishCare.
In this digital age, one of the most important aspects of growing your business is your eCommerce and D2C strategy. As much as choosing the right business approach is important; crafting the appropriate marketing strategies is equally essential. Successful marketing is a constantly moving, shifting, and changing machine. It should evolve with the changing dynamics of the industry and ecosystem.
The personal care market occupies a fair share in the booming D2C segment in India. One of the notable names in the sector is WishCare, an environmental-friendly and vegan brand built on the core principle of a sustainable tomorrow. Conceptualized in 2018, the brand has grown exponentially ever since then. Successfully completing and dispatching over 2000 products every day, they have a customer base of over a million now. Behind this successful D2C personal care brand lies the strong and effective marketing strategy based on community building and creating a customer feedback loop.
Co-Creating with Community
Co-creating with the community is the first step of launching any new product for WishCare which is based on extensive market research and community feedback, while ensuring that it is a hit amongst its existing consumers.
Although collecting customer feedback is standard practice, WishCare has stepped it up by innovating its product based on the collected feedback. Based on community suggestions, WishCare identifies the gaps and needs in the market, then their internal research team develops the product. The community also helps with sampling which allows the brand to leverage its feedback loop for research and development purposes. In fact, WishCare developed its Vitamin C+ Pure Glow Serum in complete collaboration with its community.
3C Sustainable Approach
The brand’s 3C approach – Clean (using products that are safe and natural and not harmful either to the humans or to the environment), Conscious (the brand undertakes conscious packaging. It uses packaging material that has either been recycled or can be recycled) and Caring (the brand academically adopts and educates underprivileged girl children) is its core philosophy based on the sustainability vision and this model resonates well with its customer base as well. Hence, every strategy that the brand devises, whether business-oriented or marketing focused centers around this 3C practice.
The brand has banned a list of 100 + ingredients which are chemicals and toxic substances from using it in the production of their products. Furthermore, the brand also identifies itself as a vegan and cruelty-free brand due to its clean approach that promotes using natural ingredients. This is what the brand promises to its customers and it is this ideology that has helped WishCare earn the trust of its customers.
WishCare even boasts of a strong customer care team. Contrary to what anyone would believe, this customer service team is not restricted to customer care executives. In fact, skincare and haircare experts are present to connect with the customers and have one-on-one conversations. Every time, the brand launches a new product, these experts are right there to resolve the customers’ queries. This has helped the brand to create a feedback loop wherein they have been able to persuade the customers to continue their loyalty towards the brand by using the products.
Product development based on community feedback – This team also helps us in identifying gaps in the current market and then the brand transforms it into the next product that could be launched in the market. This approach has helped the brand foster well-knit connections with the customers and also build long-lasting relationships with them.
Conclusion
These three strategies of creating the community feedback loop, adopting the 3C approach, and building a customer-first team have been the brand’s main pillar of success over the past 3 years since it has forayed into the personal care market that is highly fragmented and largely unorganized!
The article is contributed by Mr. Charanjeev Singh, Co-Founder, Singh Styled.
Millennials have been witnesses to the times when the term men’s grooming was unheard of. It was limited to a haircut, sometimes a head massage at a nearby hajam ki dukan (neighbourhood salon). As far as the grooming goes, if anything at all the men did, was use grooming products meant for women, for eg. the famous fairness cream or the latest cleansing facewash. As we embark into a decade where the talk about equality is rife, a men’s grooming regime is considered equally important as a woman’s. With the rise of a metrosexual man, looking impeccable has become a non-negotiable.
From being completely unheard of to a multi-billion-dollar market, the male grooming sector has gained worldwide acceptance. The first exclusive product for men was launched in India in 2005 by an FMGC giant, which introduced the first fairness cream for men. This was the cue for other Indian players to wake up to the potential of the men’s grooming needs. What started as a monthly indulgence of a head massage at a neighbourhood barber shop is today a full-grown industry comprising categories of grooming and styling products, national and international upmarket chains of styling salons, innovations, and launches of the latest gadgets and tools that are used by men in their daily grooming regime.
Focusing on India, the men’s grooming industry is estimated to reach $1.2 billion by 2024. A report also states that there will be growth in e-commerce sales owing to the post-pandemic culture. Currently, the men’s grooming industry in India is led by some of the major FMCG players. However, the past few years have seen a few D2C start-ups slowly making their mark by creating offerings that are niche and address specific pain points as far as the men’s grooming needs go. Let’s put a spotlight on one such start-up that has marked its consumer territory like a lion – Singh Styled, a brand that’s focused on preserving the Sikh identity.
Birth of Singh Styled
Charanjeev Singh, a digital evangelist from Mumbai with over 15 years of entrepreneurial experience is the brain behind Singh Styled. As a Sikh himself, he realised that there is a dearth of quality grooming essentials exclusively for the Sikh gentlemen. Also, he noticed a decline in the new generation of Sikh men not very keen on following their tradition of wearing a turban and maintaining a beard. Upon research, Charanjeev found out that the absence of bespoke grooming products was the reason preventing the grooming-conscious Sikh men to embrace their identity.
In 2015, was born Singh Styled, a men’s grooming company exclusively for the Sikh by a Sikhs. Singh Styled is the first brand across the globe, to cater especially to the needs of Sikh men.
‘Singh Styled’ is dedicated to two very basic aspects of grooming for Sikh gentlemen. One being the practical aspect and the other is spiritual. A Dastaar, which is considered to be the crown, and a neatly maintained beard; the first visual of a Sikh gentleman.
The Niche Offering
Singh Styled is the house of high-quality turbans, beard and hair care products, and accessories. The grooming products are designed to support keeping the Sikh hair, beard, and moustache in mind.
To keep their customers’ long hair and beard looking soft and manageable at all times, the Singh Styled team has developed its own formula for hair oil, beard oil, beard fixer, and other personal hygiene products that help Sikh men to be at their individualistic best.
The brand’s hair care products are the outcome of their in-house research and development wing. Considering the needs of men with long hair and beard, each of the brand’s products takes around 8-12 months in formulation, testing, sampling, and re-sampling, before they are launched. The brand boasts of its rigid testing process, as it believes the amount of time and resources spent in convincing a consumer to buy a product is not worth risking if the product isn’t 100% satisfactory. Hence, they test their products across skin and beard types, cities, countries for weather, and water conditions. Products developed on this data help them bring their products to market with confidence.
The company has invested in German cotton yarn machines to spin out premium Sikh turban fabrics that preserve colour, while being light and soft at the same time. Its aim is to t spoil its clients with choices. Recently the brand launched unique summer turban shades to bring out the cool quotient of every Singh this sunny season. The fresh new range of soothing shades included an array of pastel colours such as Flamingo, Coral Blue, Supreme Green, La Crème, Citron Green, Summer Yellow, Powdered Coffee, Grass is Greener, and Ice Grey. Additionally, the brand also boasts of launching a one-of-its-kind beard freshener – ‘Attraction’, an aqua-based unique product specifically curated for beardsmen to ensure they smell fresh and fragrant throughout the day.
Additionally, the brand also offers carefully curated grooming kits with scientifically tested products for each step of the grooming process. These products not only speed up the regime but also ensure that kesh, beard, and skin, are all, well looked after.
The founders believed that just having the right products wasn’t enough. To fulfil the brand purpose, building a community that shares the same value that the brand carries was of paramount importance. It sets itself apart from other D2C brands, as it does not worry about launching a new range every week to compete. Today the brand’s D2C platform offers products pre-filtered as per the focused needs of its target market, thus, making the shopping process quick and convenient.
Simultaneously, Singh Styled products are also available across all major e-commerce stores from Amazon, Nykaa, Flipkart, Bigbasket, Netmeds, and many more. This is in tandem with the founders’ policy of tapping the ever-growing online shopping market.
Global Presence
Singh Styled aims at being accessible to all 30 million Sikhs across the globe. It has already spread its wings across the globe and currently, it supplies to 133 worldwide destinations which include Canada, the United States of America, the United Kingdom, Australia, the Far & Middle East, and Africa.
The latest feather in their cap is their first international store in the ‘Lion City’ of the world- Singapore. Through the Singapore store, the brand caters to the Sikhs of Singapore, Malaysia, Thailand, and Australia.
Conclusion
The Sikh Gentlemen have been a part of the elite beardsmen club, thanks to the Guru-gifted identity. For beardsmen, their beards are a mark of honour and an important part of their identity, and not something that is just ‘in’ fashion. With Singh Styled, the mission is to build products and solutions that can help turbaned and bearded men maintain their identity with ease, and build their own style within the purview of the faith.
The article is contributed by Shashank Jain, Co-founder, Strawfit (Bourgeon Foods LLP)
Owing to a decade of technological advancement and the last few years of the pandemic, there has been a fundamental change in the way businesses and customers engage with each other. After the jolt that the traditional retail sector faced, there’s a rise in India’s currently growing direct-to-consumer phase, with D2C brands thriving as online channels have become the go-to destinations for almost every consumer. For those still struggling with the concept, Direct-to-Consumer, or D2C, is an emerging business model of a customised shopping experience where the product is provided directly to the customer by a business, bypassing any sort of middleman in between, hence being cost-efficient.
With an estimated 700-800 D2C brands valued at over USD 100 billion by 2025, India is expected to be a hotspot for startups. A plethora of emerging service providers in India indicates the total addressable D2C market growth by over 15 times from 2015 to 2025. According to research by Statista, this total addressable market was valued at 33.1 billion U.S. dollars in 2020, which by 2025 was forecasted to grow almost threefold, making India a hotspot for startups. Currently, the segments that are growing at an ever-increasing speed in the Indian D2C market include consumer electronics and FMCG, with an expected worth of USD 43.2 billion and USD 30.8 billion, respectively, by 2025.
The popularity of the D2C industry is booming and will continue to expand. To increase buyer-seller interaction, making purchasing more engaging, pleasurable, and long-term, brands in this space leverage certain market trends.
Some of these trends that we recommend entrepreneurs in their operations are:
● Sustainable Manufacturing: Consumers are increasingly sceptical of brands that generate revenue through unethical business practices. Brands that are transparent about their business practices, from sourcing raw materials to manufacturing and supplying, generate more goodwill. Transparency creates trust, and people are more likely to buy from brands they trust. Brands that fail to build sustainability into their business models risk becoming less relevant to this new generation of consumers.
● Data Analytics: Until recently, brands had little access to customer data beyond surveys or third-party data. D2C enables brands to understand customers and their demands like never before, thanks to their continual personal connection with their customers through their experiences or surveys. Brands have realised that customer data is a powerful instrument that, when combined with analytics and technology, can be utilised to provide personalised experiences for customers.
● Leveraging Social Media: Social networking is a strong tool for new businesses. Platforms like Facebook, Instagram, and Twitter can assist you in reaching an untapped worldwide audience and assist in developing a brand image in the market with existing competitors. Influencers have a strong and tailored hold on specific audiences, making them one of the newest and most powerful marketing tools. A product like a milk flavouring straw for kids, for example, can’t be directly promoted to them and is instead marketed to mommy bloggers and health bloggers. More than just following these trends, it takes a lot of work to create a solid revenue model for your business. Running a business at any stage of development is not easy. For this, it is essential to have proper planning. Here are some of the key takeaways that we believe can help these entrepreneurs make more informed decisions and develop more refined products, especially in the early stages of a business.
● Bring forward a solution: Consumers are smart these days, searching for products that solve their current problems. The most common reason for a startup’s failure is a lack of market demand. You have a market need if your product solves an unpleasant, common, and repeatable problem for a large number of people. If not, then it can be easily overlooked by the customers.
● Focus on the product: The product you create is what makes up the face value of your brand and it’s a crucial task to make your product stand out in the market. Your main focus should be to at least give your product a competitive edge over the current competitors, so it seems like a convenient and better choice.
● Detailed Research: Before starting a business, thorough market research is essential. You have to research current trends, learn about the product, and understand its potential market and what your customers need. It also allows you to visualise your competition by telling you what other products and services like yours are available, customer reactions to them, their prices; etc.
● Financial Modelling: Managing monetary resources can be a tricky part that needs close attention. It is essential to have a well-developed financial model. From funding operations to having precise financial projections for the next few years, having a robust financial model is crucial for a business to grow. Don’t mind taking professional guidance to help you out with these things to avoid any major setback to your business.
● Keep trying and learning: Starting a business requires being inspired, motivated and willing to take risks. While every successful entrepreneur makes many mistakes, that doesn’t stop them from experimenting with their concepts and learning from their own and others’ mistakes. With that said, care also needs to be taken so that there is no undue waste of resources due to this experimenting.
Conclusion
With more people choosing to be independent buyers due to fading technological barriers, we believe that D2C is here to stay. It is an exciting time for entrepreneurs in the country to enter the market, especially with the boom in the startup culture. The times demand that entrepreneurs rethink how they interact with customers and their relationships with them. If played well, D2C can be the most powerful weapon a retail-based entrepreneur can hold.
Nitin Konde
