Behind the glimmer and shimmer of the most polished brands that we see every day are often the stories whose chapters were once written with sweating blood. And it is not every day that we tend to learn about the struggles of the founders in forging such brands, especially in the era of easy access to capital.
We believe that such stories should come to the fore to fuel the spirits of founders and aspiring entrepreneurs during the direst of times.
Similar is the narrative of Manish Chowdhary, now the cofounder of WOW Skin Science, whose retail electronics business incurred a loss of $1 Mn due to unsold inventory. Much to his chagrin, he had to call it quits, but only to start afresh.
Some may see it as a failure, however, had it not been for the lost $1 Mn, the country would have been short of a soonicorn today.
Well, after having traded his electronics business for key learnings in the school of hard knocks, Chowdhary, along with his brother Karan and two friends Arvind Sokke and Ashwin Sokke, decided to wade into uncharted territories — the Indian beauty and personal care (BPC) segment.
After a year of research and pilots, the team, spearheaded by Chowdhary, incorporated Fit&Glow in 2014 and launched its first brand WOW.
The founders made the foray into the segment at a time when it was dominated by deep-pocketed big players like HUL, Patanjali, Himalaya, Lotus, VLCC, and Biotique, just to count a few names.
So, what chances of survival did a bunch of Davids (the founding team) have in front of the Goliaths in command of the industry?
“We realised that despite the presence of giants, the Indian beauty and personal care space was highly under-penetrated, leaving plenty of opportunity for young companies like us to enter the market and provide consumers with outstanding products and a compelling story,” Chowdhary reminisced during a fireside discussion at Inc42’s recently held D2C Summit.
Not sure if the founders deeply studied the market data back then, but they ended up tapping into the Indian beauty and personal care market at the right time.
For context, the Indian beauty and personal care segment was a $26.3 Bn market opportunity in 2022 and is expected to reach $38 Bn by 2028. On a global scale, the segment is expected to touch $783.49 Bn by 2028.
Nine years on, the company, which is now registered as Body Cupid Private Limited, fosters four brands — WOW Skin Science (its flagship brand), WOW Life Science, Body Cupid, and Nature Derma — and has a portfolio of over 500 products.
Today, the BPC brand has a presence in more than 200 Indian cities and has expanded itself to 22 countries, with a focus on the US and South Asia as anchor markets. In 2022, it also expanded to the UAE market and in 2023 to Saudi Arabia.
“We are also seeing robust growth in the UAE. Saudi is a big opportunity and we are focussing our efforts to build our presence there,” Chowdhary said in an exclusive conversation with Inc42.
The new-age D2C brand today has its eyes fixed on achieving INR 1,000 Cr in revenue, and according to Chowdhary, the company is well on track for this.
Notably, the INR 1,000 Cr revenue journey seems to be a long one from where the company is standing right now. According to the company’s MCA filings, it reported a total income of INR 273.01 Cr in FY23 against INR 343. 94 Cr a fiscal year ago.
The slump in revenues could largely be attributed to the relatively tougher 2022 which was headlined by adverse market conditions, rising inflation and curbing of discretionary spending by users.
On top of that, renewed competition from incumbents as well as new entrants, which also included deep-pocketed conglomerates, could have also weighed heavily on WOW Skin Science.
Additionally, despite offering frequent discounts, the beauty brand also faced headwinds in FY23 as demand for premium products saw an uptick over the course of last year – a segment which offers higher margins.
However, according to Chowdhary, this is the part that many fail to understand as, after a point, the trajectory of business changes and challenges increase for founders.
“In a startup’s journey, whether it’s going from 1 to 10, 10 to 100, or 100 to 500, founders are bound to encounter obstacles at every milestone. However, it’s precisely at these times that they mustn’t give up. They need to maintain patience, recalibrate, and continue innovating to stay competitive,” the cofounder said.
WOW Skin Science’s Scaling Strategies
Currently, there are over 5,500 skincare companies in India, and more brands are realising the untapped potential in this sector, which is keeping founders on their toes.
According to Chowdhary, most founders can successfully launch a brand from zero to one, but it’s when they attempt to go beyond that point that they encounter challenges and hit mental barriers.
This is probably why 45% of new business startups don’t survive the fifth year, and 65% of new startups fail during the first 10 years.
For a business model like Body Cupid, where minimum order quantities (MOQs) are small, it’s relatively easier to experiment with products based on anticipated customer needs. In this context, it is extremely crucial to tap on the market beats and consumer interests and pivot whenever it feels necessary.
During his journey, Chowdhary asserted, he embraced aggressive pivoting, not just quarterly but as frequently as every 15 days to a month. For instance, WOW initially started as a dietary supplement brand in 2014 but within a year, it quickly recognised a shift in consumer preferences toward skin and haircare needs.
Before 2016 hit, not only did the company meet the new demands of consumers for herbal, paraben and sulfate-free products, but it also made these products accessible at an affordable price range.
Speaking with Inc42, Chowdhary gave deep insights into his building and scaling strategies, which are as follows:
Brand Building Is Paramount
For Chowdhary, the core value proposition for WOW Skin Science and other brands is online – everything, including innovations, starts with ecommerce or digital platforms. However, unlike a few years ago, the competition has intensified, which has made it challenging for D2C brands to retain customers, thereby spiking their customer acquisition costs.
“In the last 18 months, we have been recalibrating our story, with a significant focus on brand marketing rather than performance marketing. After all, a brand’s products are manufactured in a factory, but brands are built in the minds of consumers,” he added.
While digital marketing can drive consumer reach faster, the ultimate goal is to build a brand with lasting impact and a high repeat-customer ratio. Over the last three years, market dynamics have changed significantly, compelling brands like WOW Skin Science to adjust their strategies, with supply chain and distribution being the primary challenges.
Chowdhary also acknowledges that despite their focus over the past two years, they have yet to streamline their branding fully. However, over the next 12-18 months, the team has planned substantial brand-building activities, although he didn’t share the specifics.
Celebrities Don’t Guarantee Success
One trend, which has emerged in the last few years, is the growing collaboration between celebrities and D2C brands. According to the WOW cofounder, it’s a common belief that onboarding celebrities increases brand adoption, but the reality is that one can not be too sure about it.
After experimenting with celebrity-based endorsements and campaigns for 24 months, he realised that modern consumers prioritise influencers and relatability over traditional celebrity endorsements.
He advises brands to incorporate a few campaigns without celebrities and then reintroduce celebrity endorsements based on consumer responses. However, the timing should be flexible and based on consumer feedback.
Moreover, the longevity of celebrity endorsements can be uncertain, as celebrities have a limited shelf life. The strategy should be to organically acquire customers based on the brand’s products, story, and roots.
“Returning to basic strategies, we will soon launch three new campaigns without celebrities, focussing on showcasing the true essence of our brand. However, the approach varies depending on the category,” he added.
Pricing Is Crucial
Finding the right pricing balance is paramount for a D2C brand. High competition demands startups to keep a competitive yet affordable pricing.
According to Chowdhary, overpricing can deter consumers, while underpricing can increase the time and cost required to achieve desired results. Access to analytics and data science enables startups to determine the best times to adjust pricing based on market dynamics.
“We’ve witnessed this in action. In today’s era, if you sell on Amazon, you can experiment with pricing by gradually increasing or decreasing it until you find the right match,” he added.
He also emphasised the importance of data collection, highlighting that startups now have access to robust analytics and data science to determine the ideal times to adjust pricing based on market intensity.
“Less Is More” In Critical Situations
Regardless of the category, innovation is crucial, whether for a new-age company or an established organisation. However, there are limits to how much innovation can be introduced in sectors like beauty and skincare.
Customers who have found a product that serves their skincare regime may be hesitant to switch to another. Differentiation is crucial and striking the right balance between innovation and product stability is essential.
“In our case, we focussed on a core set of ingredients, ensuring that even as we expanded our product range, it wouldn’t confuse consumers. Remember, it’s better to be highly focussed on innovation, support those innovations for three to four years, and then reinvent along the way. Ultimately, ‘less is more’ often proves more effective,” he added.
Packaging Will Set You Apart
For any D2C brand, packaging plays a huge role in creating the first positive impression and the initial excitement for the product. Many brands are choosing different ways to offer products in a more personalised and customised packaging. Chowdhary also experimented with different strategies to differentiate themselves in a saturated market, including opting for unique packaging.
For example, the founders discovered that gold, in particular, captured consumers’ attention for a few extra seconds. So, while most products in India are packaged in white, WOW chose amber and gold packaging to stand out.
Don’t Rush Into Offline Expansion
Although D2C brands are increasingly considering omnichannel strategies, Chowdhary advises caution when expanding offline. He suggests that a brand should wait until it achieves INR 100 Cr in revenue within two to three years of online operations before contemplating offline expansion.
While online offers flexibility in growth strategy, offline requires a substantial commitment. Brands should view offline as just another channel to gain repeat customers, allowing founders to track “top of mind” metrics quarter by quarter. Only when the brand is well-established digitally should offline expansion be considered.
“It may seem appealing in the short term due to initial sales, but unsold stock can negatively impact profitability. This is a story that needs to be added at the right time and revenue,” he added.
What’s Next For WOW Skin
According to an Inc42 report, the beauty and personal care segment is projected to be a $28 Bn market opportunity by 2030. In 2022, the segment was a $4 Bn market only.
This market opportunity has kept many players on their toes. While some well-funded entities have managed to pour substantial resources into marketing and branding efforts, leading to increased revenues and eventual profitability, many others are saddled with losses.
Mamaearth reported profitability in FY22, boasting a net profit of INR 19.8 Cr on a standalone basis, compared to a net loss of INR 1,332.2 Cr in FY21.
Meanwhile, companies like The Ayurveda Company, Purplle, and mCaffeine, among others, have continued to grapple with mounting losses. Interestingly, WOW Skin Science last saw profits in FY20.
Given the current landscape, it’s imperative for startups to maintain a steady flow of backup funding while concurrently trimming expenses. WOW Skin Science recently secured $48 Mn from Singapore’s GIC in June 2022, adding to a total funding of $125 Mn across multiple rounds to date.
In light of FY23 financials, Chowdhary has continued to remain optimistic. He places his faith in innovation and anticipates that growth will be propelled by both national and international sales in the near future.
As he shared with Inc42, apart from focussing on growing the top line and profitability of the India business, the company will restart its US business. Also, the cofounder is looking at investing heavily in digital capabilities, using AI in marketing, data analytics, and implementing SAP for future readiness.
Lastly, from Chowdhary’s spectacle, the company is on track for double-digit growth and has eyes on achieving INR 1,000 Cr revenue in the short term.
The post The WOW Factor: WOW Skin Science’s Blueprint For Breaking Through In The $783 Bn BPC Segment appeared first on Inc42 Media.
