Beauty and skincare startup Pilgrim, which was launched during the pandemic in May 2020, rode the online consumption boom in its early days. It is now looking to capitalise on the initial surge by optimising its distribution channels, especially the uptick provided by quick commerce.
Co-founder Anurag Kedia told FE that the way forward is to remain asset light and agile in planning its product portfolio, and supply chain with an eye on turning Ebitda (earnings before interest, taxation, depreciation and amortisation) positive by FY26.
The direct-to-consumer brand, co-founded by Kedia and Gagandeep Makker, clocked a revenue of Rs 198 crore at FY24 end, more than doubling its topline from a year ago (Rs 77 crore in FY23). Ebitda losses came in at around Rs 26 crore, wider than the Rs 23 crore in FY23, Kedia said.
The revenue growth, Kedia said, has been fuelled by the multi-channel approach, with significant contribution by the offline stores as well. “Over the past 18 months, the contribution of offline has grown from nil to nearly 25%,” he said.
Apart from being available at various multi-brand stores, Pilgrim has exclusive brand outlets in Thane, Chennai, Hyderabad, Mohali and Nashik, with plans to expand this to 10 in the coming months.
Channel impact on growth
The growth in revenue, he added, is a culmination of channel growth, especially in the non-metro markets, and the emergence of quick commerce. “Quick commerce has grown 4x in the last six months. However, it is not possible to have all SKUs (stock keeping units) on quick commerce platforms, so we keep the bestsellers available across channels,” Kedia said.
He added that q-comm has brought in dynamism, and as the sales data from these platforms matures, the strategy will need to be finetuned. For now, Pilgrim is keeping an eye on its 30 bestsellers on q-comm platforms, and looking to grow the sales for these SKUs through them.
The emergence of q-comm platforms like Blinkit and Zepto in the beauty and personal care space has opened a new sales avenue for D2C brands, though it has also given rise to the challenge of managing supply chain and inventory to cater to the 10-15-minute delivery platforms.
For Pilgrim, this has meant ensuring its own warehouses and delivery facilities are well connected to the q-comm dark stores. Apart from managing inventory, the brand is also aligning its warehouse placement to better service dark stores in addition to marketplace warehouses. Inventory automation will play a key role in this strategy, Kedia said.
Pilgrim currently has four warehouses — one each to service the east, west, north and south markets. Apart from warehouses, the company also owns and operates its research and development centre. Manufacturing, however, is outsourced, and will remain so in the near future with the intention of remaining asset light.
For the marketplaces, Kedia and team have a channel specific strategy, churning data across their own platform, and the likes of Nykaa, Amazon and Flipkart. Inventory management is done basis the data they have on the different platforms. For example, Kedia said, Flipkart sees more traction in the non-metros, while Amazon has better reach in the metros. Given the scale of the marketplaces, all SKUs of the brand are available on them.
Product portfolio
In terms of product portfolio, there will be a sharp focus on growing coloured cosmetics, while skincare will continue to see some tinkering around existing formulas.
“Our skincare range is pretty much in place. We have a few gaps to fill, which we shall. And we’ll keep enhancing the formulas based on feedback. The colour cosmetics (segment) is where we see scope to scale – in variety and volume. There are different colours and textures to play with, and we will grow the portfolio basis our research,” Kedia said.
He added that the strategy is unlikely to impact its Ebitda projections since the procurement cost of ingredients both product categories have similar impact on margins. However, with more variations to offer in the coloured cosmetics segment, the category is likely to drive revenue growth in the coming years.
Marketing as a digital native
Being a digital native brand has helped Pilgrim not only to capitalise on the spurt in e-comm adoption, but also to hone its marketing strategy to target digital-savvy consumers.
Having an eye across multiple platforms and channels, including social media, the brand has managed to cast a wider net to attract consumers by utilising not only beauty influencers, but also stand-up comics, lifestyle influencers and TV personalities as part of its digital outreach.
“The consumer journey is significantly different on digital (as compared to traditional retail) and we can now identify the various points at which we can enter this journey to get better engagement and conversion,” Kedia said.
The brand’s journey on digital began with the name and packaging. The word “pilgrim” was chosen to reflect the idea that the products have been created using beauty secrets collected by traveling from place to place, he added. The imagery too, a caricature of a figure clad in robes with a round hat and holding a stick, harks back to the image of a pilgrim or traveller. “It was also a way to standout in the clutter,” Kedia added.
As a result, the packaging is chosen basis the collection theme. For example, the brand has a Red Vine collection of skincare and cosmetic products inspired by French ingredients, and the packaging is dominated by a maroonish red colour. For its Korean beauty inspired range, the brand uses a shade of teal which is often associated with the island of Jeju, off the coast of South Korea.