Why digitally native vertical brands in the men’s grooming space are rising

Published: February 22, 2019 12:04:27 AM

With an estimated CAGR of 45% in the next three years, the men’s grooming market is all set to take the beauty and grooming industry by storm. This prospective market size is already lucrative for brands to scale up to `600-700 crore in a seven- to eight-year horizon.

Blogger’s Park: Growing handsomelyBlogger’s Park: Growing handsomely

By Hitesh Dhingra

With an estimated CAGR of 45% in the next three years, the men’s grooming market is all set to take the beauty and grooming industry by storm. This prospective market size is already lucrative for brands to scale up to `600-700 crore in a seven- to eight-year horizon.

Presently, the men’s grooming market is dominated by large FMCG players who rely on mass general trade distribution to drive sales. In terms of offerings, these players have a limited range of products. For new-age digital brands, this limitation is a thing of the past. The digital space serves as an opportunity for them to disrupt the incumbents by directly selling to their customers and, thus, deriving valuable insights on customer buying behaviour. They can use these insights to capture the trend and launch disruptive products much before the incumbents.

Riding the digital wave
The men’s grooming space has been riding the DNVB (digitally native vertical brands) wave globally in the last three-four years as this category is consumed daily, leading to higher frequency and high repeat rates. Moreover, high gross margins, the sub-`1,000 basket size (making it easier to acquire customers as commitment to try out a new brand is low) and the lower cost of logistics (weight/average order value ratio) make this category very exciting. All these benefits enable companies to build a favourable unit economics business with higher lifetime value.

The most important measure of success for these DNVBs is how effectively they are able to build an authentic brand using digital as the medium. In an industry where mass players spend millions on getting celebrities to endorse their brand and deploying marketing campaigns through traditional media, DNVBs focus on converting their consumers into brand evangelists by offering them a superior experience and building an emotional connect through an authentic brand story.

Digitally native brands invest in content and community building early on. They take the help of social media influencers to reach out to their potential audience, and then work closely with their customers-turned-brand-loyalists to get feedback and insights. These brands are meeting changing consumer needs faster than the big FMCG companies because of their direct access to customers and two-way communication. Their ability to capture trends and launch innovative products quickly gives them an edge over big brands.

Even though DNVBs rely heavily on their own e-commerce channel to get initial traction, once they are confident of the product-market fit, they get into selective offline channels, either through their own retail foray or by partnering with modern trade players in a way that they can control the last mile experience and interact with consumers directly without diluting the brand.

A close shave
The biggest challenge that most DNVBs face is the rising customer acquisition costs. Most of these brands rely heavily on Facebook marketing, the cost of which goes up with scale as the audience reach gets capped out. It is imperative for DNVBs to build their own marketing channel by producing relevant and engaging content. These brands should focus a lot on customer retention, rather than blindly working on customer acquisition through tactical marketing.
Unlike the West, where new-age brands are disrupting the price point, the opportunity in India lies in premiumisation across categories, as consumers are now willing to spend more on clean labels (no harmful chemicals), natural and effective products. Like South Korea, India, too, will see an eruption of many homegrown niche grooming brands catering to different consumer segments — quite a few of them on the digital platform.

The author is founder and MD, The Man Company

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