Beauty on-demand: Ironing out the wrinkles

admin

July 24, 2022

Written By Akanksha Nagar

Urban Company aims to bring quality, innovation and affordability to the unorganised beauty services market

As the pandemic started hammering the business, a sizeable number of beauty professionals who worked at salons jumped onto the up and coming tech-enabled home services marketplaces.

The bulk of the Indian beauty services industry remains unorganised and fragmented, dominated by expensive salon brands or small players that offer dubious products, inconsistent service and unsolicited advice. With a push from the pandemic-led restrictions, there has been a sudden rise of a clutch of organised, on-demand players that offer professional beauty care services in situ. Urban Company, for one, has witnessed a big rise in service calls in recent months, driven by rising aspiration levels and disposable income, and the growing demand for standardised and safe in-home services. The segment contributes over 40% of the total revenue for the company already. As per published documents, the firm posted a 13.8% increase in revenue from operations to `239 crore in FY21 compared to `210 crore in FY20.

According to Expert Market Research report, the Indian beauty and personal care industry attained a value of `54,558 crore in 2020, and is set to grow at a CAGR of 11% in the 2022-27 period. Of this, the Indian salon market, which stood at `55,000 crore in FY20, is expected to touch a whopping `2 trillion in FY25, at a CAGR of 28%.

Numbers aside, the spread of the Covid pandemic forced the industry to switch to reverse gear as many salons shut down permanently or closed down unviable outlets just to stay afloat. Enrich Beauty which had salons in cities like Mumbai, Delhi, Bangalore and Ahmedabad, for instance, shut down five salons since 2020, bringing the total count down to 83.

As the pandemic started hammering the business, a sizeable number of beauty professionals who worked at salons jumped onto the up and coming tech-enabled home services marketplaces. Says Anand Ramanathan, partner, Deloitte India, “Service aggregator marketplaces have helped increase organisation and bring standardisation in delivery.” It was a win-win for both the customer and the brand. Brands could directly engage with the end consumers and the customer was assured quality—of both the products used and the services rendered.

Mukund Kulashekaran, chief business officer, Urban Company, says the fundamental shift in the beauty service market has been in terms of improved quality. As long as the market remained fragmented, there was zero investment in training or upgradation of services, or in product innovation. None of the small regional players really had the wherewithal to take that leap.

Focus on quality

Urban Company devoted a lot of time and attention to training the service providers while also pursuing innovations to raise the standard of the products on offer. While it uses a number of high-end brands, it has also begun to develop its own to make its services more accessible and compete on a larger scale. It operates three levels of salons: the luxury (average ticket size `2,500), the mid-mass premium (`1,200), and the classic, which is at the economy end of the spectrum (`750) and uses proprietary products for the classic and mid-mass premium segments.

Quality is assured by continuous testing and keeping a sharp eye on customer feedback. There is also significant investment in training and automation. It currently has an in-house team of over 200 full-time trainers across 50 cities. It is stepping up investments in technology to both improve product quality and to act promptly on feedback.

The firm had introduced in-home hair and nail services for women amid the pandemic, which, Kulashekaran says, has scaled quite well. Demand for men’s salon services, launched right before the pandemic, has increased from 20,000 transactions pre-pandemic to as high as 150,000 transactions per month. It launched a Skin Clinic for laser and advanced facials in seven cities and has signed on more than two million clients already.

In terms of geographical spread, while the top ten cities account for more than 80% of its revenue, non-metros are rising fast in terms of revenue share.

Long haul

The company prioritises brand-related communication rather than performance-related. The focus is more on the video medium than the click-through media. So the focus area is TV, but YouTube in case of a targeted campaign.

In the next stage of expansion its communication strategy will be key. Jagdeep Kapoor, founder, chairman and MD, Samsika Marketing Consultants, says that while expanding beyond metros the brand has to be less urban in terms of perception and imagery and take into account the culture and taboos, and the differing definition of beauty.

Samit Sinha, managing partner, Alchemist Brand Consulting, says to keep up the pace of growth the brand has to invest in its service providers, and not just its customers. This is a business model that will not be difficult to replicate. The trick will be to incentivise the beauty care technicians so that they are able to offer high-quality services to the customer and have little reason to join a rival brand. The thing to remember: Like most other service businesses, beauticians too can bypass the company and establish direct relationships with customers — a phenomenon that has plagued the ride hailing and ride share services in India.

BOX: Staying on track (Insights from Devangshu Dutta, CEO, Third Eyesight)

Three factors that will determine success

• The customer sees the aggregation platform as the “provider” of service, rather than a listing agency. So the company needs to totally own the customer experience, end-to-end.

• Ensuring quality of service consistently is the biggest enabler for growth.

• Over time, UC has moved to this “ownership” of the experience, which does mean additional investment, but also pays off in the end.

Three factors that might undo the good work:

• If it doesn’t keep working on customer experience ownership, it could slip

• Margins/commissions need to be reasonable, otherwise, service professionals may abandon the platform

• Given the high customer acquisition costs, it has to drive repeats rather than one-time or low-frequency purchases.

Source: financialexpress

Explained: How is direct selling different from pyramid scheme and why has ED attached Amway India’s assets

admin

April 24, 2022

Written By Devika Singh

The Enforcement Directorate (ED) on April 19 accused Amway India of running a “multi-level marketing (MLM) scam” and attached its assets worth Rs 757.77 crore. This is not the first time that Amway India has been accused of running a ‘pyramid scheme’. Read on to understand how direct selling is different from pyramid schemes and why has the ED attached Amway India’s assets?

The direct selling industry is again under the regulatory scanner in India with the Enforcement Directorate’s (ED) move to attach the assets of the Indian unit of US-based direct selling company, Amway. The ED has accused the company of running a “multi-level marketing (MLM) scam” and attached its assets worth Rs 757.77 crore.

According to an ED statement, the attached property includes Amway India’s land and factory building at Dindigul district in Tamil Nadu, plant and machinery vehicles, bank accounts and fixed deposits.

“Immovable and movable properties worth Rs 411.83 crore and bank balances of Rs 345.94 crore from 36 different accounts belonging to Amway attached,” the ED said. The seizures, the ED said, have been made under the Prevention of Money Laundering Act (PMLA).

This is not the first time that Amway India has been accused of running a ‘pyramid scheme’. The company faced accusations on similar lines in the US in the 1970s and has been under government scrutiny in Karnataka and Kerala in the past. In fact, in 2013, Kerala police arrested then Amway India chief William Scott Pinckney and its directors, accusing them of running a pyramid scheme.

Direct selling has come under scrutiny time and again, as over the years, consumers have been duped by fake sellers hawking defective products and services in the garb of direct selling. To discourage such schemes, the government had proposed a draft policy last year, which aims at regulating the direct selling market segment.

Read on to understand what is direct selling, why the ED attached Amway India’s assets, what is Amway’s stand on the issue, how is direct selling different from pyramid schemes, and what are government regulations around direct selling in India?

What is direct selling?

Direct selling firms deploy agents who buy products from the company and then directly reach out and sell to consumers at their homes or other places instead of through a retail format like a store. The direct selling entity and the agent share the profits made through the sale of products. According to industry estimates, there are about 60 lakh agents in the country, who pursue direct selling as a means of earning additional income.

The direct selling industry, as per estimates, is pegged at Rs 10,000 crore in India, and has been growing at 12-13 percent per annum over the last five years. Experts say multi-vitamins, and home care and personal care products are the top-selling categories through this channel.

Beside Amway, companies such as Avon, Oriflame, Modicare and Tupperware operate in the direct selling segment. Some of these companies have been in India for decades now.

What is pyramid scheme and how is it different from direct selling?

Pyramid schemes are defined as a form of investment in which a paying participant recruits further participants and gets rewarded for it. Over the years, consumers have been duped by fake sellers hawking defective products and services in the garb of direct selling, often bringing the direct selling industry too, under scrutiny.

“Pyramid scheme is a scam to make money for a few people and it is based on selling an empty promise, multiplying it through recruiting people,” said Devangshu Dutta, CEO of retail consultancy Third Eyesight.

However, he added, it has to collapse somewhere because you are selling a product or service that does not exist.

“As opposed to that, in direct selling, the companies are selling products and at the end of it there is a tangible exchange of goods or services. So, even if you have downline distributors, as long as at the end of it the customer is getting something of value, then it’s not really a pyramid scheme,” he added.

Why has ED attached Amway India’s assets?

According to the ED’s press statement, Amway India runs a multi-level-marketing scheme or pyramid scheme, which “induces the common gullible public to join as members of the company and purchase products at exorbitant prices.”

The ED said the prices of most Amway products are “exorbitant as compared to the alternative popular products of reputed manufacturers available in the open market”. The new members, who are asked by the company to join it, are not buying the products to be used by themselves, but to become rich by becoming members as showcased by the upline members, said ED.

“The reality is that the commissions received by the upline members contribute enormously to the hike in prices of the products,” the ED said.

And this, indicated the ED, makes Amway’s operations similar to a pyramid scheme, where new members are recruited by existing members with claims of amassing wealth and becoming rich.

The agency claimed that between FY2003 and FY2022, Amway collected Rs 27,562 crore, of which it paid commissions worth Rs 7,588 crore to affiliate members and distributors in the United States and India.

What is Amway’s stand on the issue?

Amway, however, claims that it does not offer any incentives to new members to join the company and the members are only paid once they make a transaction or sell the product, and hence they are not operating a pyramid scheme.

The company has released a statement saying that the action of the authorities is with regard to the investigation dating back to 2011 and since then Amway has been co-operating with the department and has shared all information as sought from Amway from time to time. Amway said it will continue to cooperate with the government authorities for a fair, legal, and logical conclusion of the outstanding issues.

“As the matter is sub judice, we do not wish to comment further. We request you to exercise caution, considering a misleading impression about our business also affects the livelihood of over 5.5 lakh direct sellers in the country,” it said in a statement to media.

In an conversation last year with Moneycontrol, Amway India CEO Anshu Budhraja had said that Amway India does not charge any registration fee to its agents.

“There are no charges for joining Amway business. Further, to ensure that the customers have a satisfying experience with Amway, our products are backed by a money-back guarantee for 100 percent satisfaction of use,” Budhraja had said.

What are the regulations around direct selling?

The government last year included Direct Selling under the Consumer Protection Act (Direct Selling) Rules, 2021. These new rules prohibit direct selling companies from charging registration fees from their agents, and bars them from charging their agents for the cost of demonstration to prospective buyers.

The rules also forbid direct sellers from engaging in pyramid and money circulation schemes. The rules mandate that the companies operating in the segment would have to appoint a Chief Compliance Officer, a Grievance Redressal Officer, and a Nodal Contact Person. The companies would also need to be registered with the Department for Promotion of Industry and Internal Trade and must have an office in India.

They would also be mandated to maintain a website with all relevant information.

“Every direct selling entity shall establish a mechanism for filing of complaints by consumers through its offices, branches and direct sellers through a person, post, telephone, e-mail, and website,” as per the regulation.

“Every direct selling entity shall establish a mechanism for filing of complaints by consumers through its offices, branches and direct sellers through a person, post, telephone, e-mail, and website,” as per the regulation.

It adds: “Every direct selling entity shall ensure that such registration number is displayed prominently to its users in a clear and accessible manner on its website and each invoice issued for each transaction.”

In addition, such companies would have to maintain a record of direct sellers working with them, including their ID proof, address proof, email ID, and other contact information.

Source: moneycontrol

Emami-backed The Man Company plans offline expansion; eyes new categories

admin

December 23, 2021

Devika Singh, Moneycontrol

December 23, 2021

Male grooming products startup The Man Company, known for its online-first strategy, is looking at offline expansion for its next leg of growth. The company, which operates 28 exclusive brand outlets in the country, plans to launch 60-70 more stores by the end of this fiscal to gain presence across at least 100 locations.

“A lot of growth will come from the offline channel for the next one year at least, especially in Tier II and III cities where launching exclusive stores is a good way to introduce the brand to the consumer as shopping malls are weekend destinations there,” co-founder Hitesh Dhingra told Moneycontrol.

The company, backed by fast-moving consumer goods (FMCG) major Emami which holds a 48.49 percent stake in it, is also looking at introducing its products in more multi-brand outlets. The Man Company is present in 1,200 multi-brand outlets which include lifestyle stores such as Shoppers Stop, Central and Lifestyle as well as hypermarkets, supermarkets and pharmacies. The company plans to be in 2,500 multi-brand outlets by the end of financial year 2022-23.

It currently draws about 70 percent of its sales from online channels including its own direct-to-consumer (D2C) platform and online marketplaces and 30 percent from offline channels. The startup’s strategy is focused on expanding its base in Tier II cities and beyond, which account for 50-55 percent of its sales even on online marketplaces.

“Out of our 28 exclusive brand outlets, only five to six are in top 10 cities and the rest in Tier II and smaller towns. For the new store openings also, we are going to adopt a similar strategy and only 10 percent of the new outlets will be in large cities,” said Dhingra.

The offline way

Several D2C brands have been eyeing the physical retail channel as they try to scale up and tap a wider set of consumers. Brands in the women’s beauty and personal care segment such as Mamaearth, Sugar Cosmetics and Plum Goodness are expanding their presence in the offline retail format. Plum, for instance, is looking to launch 50 exclusive brand outlets in the next two years.

Male grooming startups, too, are following a similar trajectory. For instance, Bombay Shaving Company and Baeardo are launching their products in more and more offline stores.

Devangshu Dutta, chief executive of retail consultancy Third Eyesight, said it makes sense for digitally-native companies that have achieved some brand recognition to launch in offline format for the next phase of growth. Brands in the 1990s for example, he said, who wanted to establish an identity, entered new formats or channels besides the existing ones. Similarly, digitally-native brands need not restrict themselves to online platforms alone, he added.

But he pointed out that these brands will have to address challenges such as ensuring availability of their products in offline channels. “In the online segment, companies can cater to customers with limited stocks. However, in the offline channel, they need to ensure availability of products across stores,” he said.

New categories

Apart from new retail categories, The Man Company has plans to enter categories such as sexual wellness and personal appliances. It has tied up with a marketplace for the launch of personal appliances such as beard trimmers and shavers and the category will be launched exclusively on the platform. The sexual wellness products, too, will be introduced on its D2C platform and later to other marketplaces and offline stores.

“We always launch a product on our platform to test it and get consumer feedback and, based on the response, we introduce the product to the wider market,” said Dhingra.

Launched in 2015, The Man Company caters to the men’s grooming segment and claims to have developed more than 65 stock keeping units. According to Dhingra, the company which competes with Beardo, Bombay Shaving Company and Ustraa will double its sales to Rs 100 crore by the end of this financial year.

Male grooming startups have of late attracted attention from FMCG companies. Marico last year completed the acquisition of Ahmedabad-based Beardo by buying an additional 55 percent stake in the company. It had acquired an initial 45 percent stake in 2019. British consumer goods giant Reckitt Benckiser Group invested Rs 45 crore in Bombay Shaving in February 2021. LetsShave and Ustraa are backed by Wipro Consumer Care.

According to industry estimates, the male grooming market in India was valued at Rs 15,806 crore in 2019 and is expected to cross Rs 36,402 crore by 2025, growing at a compound annual rate of 15-14 percent. Though growth was hit by the pandemic, experts are still bullish about the segment.

(Published in Moneycontrol)

Wellness: From Lifestyle to an Industry

Devangshu Dutta

September 28, 2017

Ayurved

In recent decades, the dependence on established medical disciplines has begun to be challenged. There is the oft-quoted dictum that healthcare sector tends to illness rather than health. Another saying goes that some of the food you eat keeps you in good health, but most of what you eat keeps your doctor in good health. With a gap emerging between wellness-seekers and the healthcare sector, so-called “alternative” options are stepping in.

Some of these alternatives actually existed as well-structured and well-documented traditional medical practices for thousands of years before the introduction of more recent Western medical disciplines. This includes India’s Siddha system and Ayurved (literally, “science of life”), which certainly don’t deserve being relegated to an “alternative” footnote. Ayurved is also said to have influenced medicine in China over a millennium ago, through the translation of Indian medical texts into Chinese.

Other than these, there are also more recent inventions riding the “wellness” buzzword. These may draw from the traditional systems and texts, or be built upon new pharmaceutical or nutraceutical formulations. Broader wellness regimens – much like Ayurved and Siddha – blend two or more elements from the following basket: food choices and restrictions, minerals, extracts and supplements, physical exercise and perhaps some form of meditative practices. Wellness, thus, is often characterised by a mix-and-match based on individual choices and conveniences, spiked with celebrity influences.

A key premise driving the wellness sector is that modern medicine depends too heavily on attacking specific issues with single chemicals (drugs) or combinations of single chemicals that are either isolated or synthesised in laboratories, and that it ignores the diversity and complexity of factors contributing to health and well-being. The second major premise for many wellness practitioners (though not all!) is that, provided the right conditions, the body can heal itself. For the consumer the reasons for the surge in demand for traditional wellness solutions include escalating costs of conventional health care, the adverse effects of allopathic drugs, and increasing lifestyle disorders.

After food, wellness has turned into possibly one of the largest consumer industries on the planet. Global pharmaceutical sales are estimated at over US$ 1.1 trillion. In contrast, according to the Global Wellness Institute, the wellness market dwarfs this, estimated at US$ 3.7 trillion (2015). This figure includes a vast range of services such as beauty and anti-ageing, nutrition and weight loss, wellness tourism, fitness and mind-body, preventative and personalized medicine, wellness lifestyle real estate, spa industry, thermal/mineral springs, and workplace wellness. Within this, the so-called “Complementary and Alternative Medicine” is estimated to be about US$200 billion.

There are several reasons why “complementary and alternative medicine” sales are not yet larger. Rooted in economically backward countries such as India, these have been seen as outdated, less effective and even unscientific. In India, the home of Siddha and Ayurved, apart from individual practitioners, several companies such as Baidyanath, Dabur, Himalaya and others were active in the market for decades, but were usually seen as stodgy and products of need, and usually limited to people of the older generations and rural populations. In the West they typically attracted a fringe customer base, or were a last resort for patients who did not find a solution for their specific problem in modern allopathy and hospitals.

However, through the 1970s Ayurved gained in prominence in the West, riding on the New Age movement. Gradually, in recent decades proponents turned to modern production techniques, slick packaging and up-to-date marketing, and even local cultivation in the West of medicinal plants taken from India.

As wellness demonstrated an increasingly profitable vector in the West, Indian entrepreneurs, too, have taken note of this opportunity. Perhaps Shahnaz Husain was one of the earliest movers in the beauty segment, followed by Biotique in the early-1990s that developed a brand driven not just by a specific need but by desire and an approach that was distinctly anti-commodity, the characteristics of any successful brand. Others followed, including FMCG companies such as the multinational giant Unilever. The last decade-and-a-half has also brought the phenomenon called Patanjali, a brand that began with Ayurvedic products and grew into an FMCG and packaged food-empire faster than any other brand before! While a few giants have emerged, the market is still evolving, allowing other brands to develop, whether as standalone names or as extensions of spiritual and holistic healing foundations, such as Sri Sri Tattva, Isha Arogya and others.

An absolutely critical driver of this growth in the Indian market now is the generation that has grown up during the last 25-30 years. It is a class that is driven by choice and modern consumerism, but that also wishes to reconnect with its spiritual and cultural roots. This group is aware of global trends but takes pride in home-grown successes. It is comfortable blending global branded sportswear with yoga or using an Indian ayurvedic treatment alongside an international beauty product.

Of course, there is a faddish dimension to the wellness phenomenon, and it is open to exploitation by poor or ineffective products, non-standard and unscientific treatments, entirely outrageous efficacy claims, and price-gouging.

To remain on course and strengthen, the wellness movement will need structured scientific assessment and development at a larger scale, a move that will need both industry and government to work closely together. Traditional texts would need to be recast in modern scientific frameworks, supported by robust testing and validation. Education needs to be strengthened, as does the use of technology.

However the industry and the government move, from the consumer’s point-of-view the juggernaut is now rolling.

(An edited version of this piece was published in Brand Wagon, Financial Express.)