The Nykaa-backed skincare brand plans to open over 70 kiosks across India and international markets and expects these to generate 10 per cent of its FY 2022–2023 total revenue via omnichannel business.
Direct-to-consumer (D2C) start-up Earth Rhythm is taking the omnichannel route to compete with traditional players and achieve sustainable growth. The indigenous skincare brand has forayed into the offline retail market by opening 12 kiosks in tier 1 and 2 cities as part of its offline expansion plans. These will display nearly 90 products across the brand's four categories, face, hair, makeup, bath and body.
Elaborating its online-to-offline approach Earth Rhythm's chief executive officer and founder, Harini Sivakumar, said, "It is crucial to establish our presence offline after making a lot of noise online on major e-commerce sites. Modern technology allows businesses to interact with clients online, including chatbots, social media and virtual appointments. However, nothing fully matches a consumer relationship that is built in person. Many customers still enjoy making in-person purchases from brick-and-mortar establishments. Going hybrid, therefore, gives us a competitive advantage and aids in growing our clientele."
Post the initial launch phase, the company wants to expand to open more than over 70 kiosks spread across India and international markets, like the Middle East and the US. It hopes to generate 10 per cent of its total revenue for FY 2022–2023 via
India has witnessed the emergence of many brands tapping the D2C market, which was estimated to be worth $33 billion in 2020. It is anticipated to grow to $100 billion by 2025, according to Statista research.
Avendus Capital predicted that the country's D2C beauty and personal care market, in particular, will reach $4.4 billion by 2025, registering a 29 per cent CAGR. The success and even survival of these D2C brands will depend on their ability to pivot to an omnichannel model.
While the genesis of these companies is often digital platforms and marketplaces, restricting themselves to an online presence can limit their scope for growth. They can achieve scale by expanding into the offline channel, which explains why companies like Earth Rhythm want to have their products showcased in physical stores.
Many others D2C companies have managed the online-to-offline pivot successfully. Skincare and wellness brand Wow Skin Science, which raised Rs 375 crore from Singapore's GIC this May, is present across 30,000 stores in the modern trade channel.
Similarly, Sugar Cosmetics owns over 160 stores, and its products are available in more than 45,000 retail outlets.
While announcing the company's quarterly results in May this year, Nykaa's founder and CEO Falguni Nayar said that the brand has 105 stores across 49 cities and the GMV from the physical stores was 7.5 per cent for the March quarter. In an official statement, she added, "The plan is to grow this slightly more, and we will be looking to launch 300 stores in 100 cities and expand that further."
Interestingly, in April 2022, Earth Rhythm raised $8 million in a Series A round led by fashion and lifestyle unicorn, Nykaa, offering the latter 18.51 per cent stake in the company. When asked whether she plans to go for another round of funding to keep pace with the brand's expansion plans, Sivakumar said this was not on her agenda immediately.
"I think the market is not right at this moment. The coming months will see more acquisitions than venture capital funding. I think we are well-planned for the next year, so maybe now is not the time for us," she opined.
Currently concentrating on its omnichannel foray, Earth Rhythm has already started several offline activities for customer acquisition by leaning back towards traditional marketing. Sivakumar maintained that going offline will give the brand access to walk-in customers who are more likely to make impulsive purchases.
She also believes now is the time to focus on profitability than try to plough through with fancy-looking numbers. The D2C brand was hoping to mop up Rs 150 crore in accounting rate of revenue (ARR) in the current fiscal. "Post the Softbank crisis (when its Vision Fund recorded a $26 billion loss for 2021, prompting the Japanese conglomerate to announce that it would invest less this year than half of what it did in 2021), we realised that it is better to conserve cash than be bullish about the growth. Hence, we have slightly modified our plan, and currently, we are targeting Rs 90 to 100 crore accounting rate of revenue while focusing on profitability."
Launched in 2019, Earth Rhythm claims to have grown by over 500 per cent between FY 2020-21and FY 2021-22. "This year, the focus has been on many marketing activities focusing on lead generation. Hence, the growth in customer base has doubled for us since FY 21-22," Sivakumar claimed, though she chose not to disclose average monthly sales and order value, respectively.