We are close to doubling revenue in FY22: Mamaearth CEO Varun Alagh | Business Standard News

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On Saturday, Mamaearth became the first start-up to enter the unicorn club in 2022 with a $52 million fundraise

Varun AlaghVarun Alagh

Mamaearth started as an online baby care brand in 2016 and has scaled up to categories like skin care, hair care, and others over the past couple of years. On Saturday, it became the first start-up to enter the unicorn club in 2022 with a $52 million fundraise. The company is now valued at $1.2 billion. VARUN ALAGH, Co-founder and CEO of Mamearth’s parent company Honasa Consumer, spoke to Deepsekhar Choudhury about the journey till now and what lies ahead. Edited excerpts:

Babycare was a very niche segment when you began in 2016. What was the aha moment when you thought the brand could scale up?

It has been a fabulous journey to get from nowhere to here in five years and there is so much more to do. The aha moment was a year after starting the brand when buyers – typically the mother or the father – said they wanted products for themselves as well and not only the kids. We understood then that we can expand beyond just babycare to cater to an entire family.

Your peers in the digital house of brands space like Mensa, Globalbees, or The Good Glamm Group are on an acquisition spree. With this funding round, will we see a similar approach from Mamaearth?

The first priority is going to building rather than buying. We would like to build product mixes in categories in which we are strong – and then consider making acquisitions to get capabilities that we lack or categories where we are not present. Although a lot of acquisitions are happening, nobody has yet showcased integrations and resulting growth yet.

Is that why you are not raising as much capital as the others?

We are very mindful of our capital allocation. Yes, there is a lot of capital available in the market right now but it should be raised in line with your allocation strategy. We don’t think there is going to be a dearth of capital in the future also – so, we will raise more when we need more.

How are gross merchandise value (GMV), revenue, and profitability shaping up and what is the goal for this year?

Our revenue in FY21 was Rs 500 crore and we are close to doubling that figure in FY22. We don’t specifically share gross merchandise value numbers but that would generally be 1.5 times the net sales value. We are largely in the green now from a PAT (profit after tax) standpoint.

We have been a very capital efficient and frugal company from the beginning with a focus on gross margins and unit economics. And what has really helped is the high repeat purchases from our customers which is integral to profitability in the D2C segment. More than 70 per cent of our customers buy more than once from us within six months.

Digital brands are investing a lot of money in building an offline presence too. What has been your strategy?

Offline in India will continue to be a very important channel for building large companies. While e-commerce and D2C (direct to consumer) are great starting points for a brand, still up to 90 per cent of a category’s sales happen offline. That is why offline presence is critical for any brand or company of a certain size. From a share of sales perspective, we would like it to be 50-50 (per cent) offline and online in the next two or three years. At present, 70 per cent is from online and 30 per cent online.

Are you planning an offline foray with exclusive Mamaearth stores like Nykaa and Sugar?

We are experimenting in that direction and currently, we have got about seven or eight stores. Depending on the traction, we might choose to double down on exclusive stores and scale it up.

However, this year our aim is to reach 40,000 general trade and modern trade stores in the top 100 cities.

What has been your strongest category and where are you expecting to drive growth this year?

In almost all categories, there is so much headroom that I don’t think there is a specific one that will be the driving force. Skin care was the number one driver for us last year and will hopefully continue to be a very strong driver this year as well. That was followed by hair care, baby care and body care. I think we expect all categories to fire given the headroom for growth.

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