Customisation is the new buzzword in the D2C (direct-to-consumer) space and venture capitalists are betting on it as the next growth driver for these startups.
Online-first brands such as Traya, Ravel, Bombay Shirt Company, CloudTailor, Make Your Own Perfume, Flo, The Pant Project, K-KIX and WomanLikeU are addressing the specific needs of a customer.
Simply put, brands take a quick online survey on the consumer’s skin or hair type, for instance, and curate ingredients and suggest suitable products — all within minutes. The products are delivered within two to 10 days, depending on the category.
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Customisation is no longer limited to gifting and occasional use. Consumers are demanding personalised items over one-size-fits-all products across categories like haircare, apparel, furniture, furnishings, cosmetics, footwear and jewellery.
According to a report by Deloitte, millennial and Gen Z consumers prefer customisation 60% more than Gen X. Additionally, one in five consumers are willing to pay 20% more for exclusive custom products.
According to Tracxn, India has around 248 active D2C startups that offer customised products. Some investors who have infused capital into these startups include WestBridge Capital, Indian Angel Network Fund, Titan Capital, PeakXV Partners, Singularity Ventures, 100XVC, Fireside Ventures, Lightbox, Alteria Capital, Unilever Ventures, Huddle Ventures, Anthill Ventures, Anicut Capital and Info Edge Ventures.
Many leading D2C and e-commerce firms such as Nykaa, Giva, Mokobara and Purplle are also joining the bandwagon. However, they offer customisation as an additional service at a cost and not across all their SKUs (stock-taking units). For instance, PeakXV Partners-backed Mokobara offers a simple and popular customisation, where it engraves names or words on a metal logo plate.
VCs believe that as the D2C and e-commerce sectors evolve, customisation will play a huge role in driving growth. “A few years ago, customisation was limited to t-shirts and mugs. However, today consumers expect everything, including the shopping experience, personalised to their specific interests,” Yagnesh Sanghrajka, founder and CFO, 100X.VC told FE.
The firm has invested in WomanLikeU, a women’s wear brand that customises products online in a few easy steps. Launched in May 2022, the startup has sold products to over 25,000 women. In the last year, it has seen monthly sales frow from Rs 15-20 lakh to around Rs 70 lakh.
Customised brands have seen the most uptick in the furniture and apparel category, followed by haircare, footwear and accessories. Custom furniture platform WoodenStreet’s revenue from operations grew 48.1% to Rs 194 crore in FY23 from Rs 131 crore in FY22. In February, clothing brand Bombay Shirt Company raised Rs 54 crore in a Series B funding round led by Singularity. Last week, The Pant Project raised $4.25 million in a Series A funding round led by Sorin Investments.
Perfume is also a category that is picking up fast. Launched in 2017, Kerala-based Make Your Own Perfume today has 23 outlets across Kerala and in Bengaluru.
Fireside Ventures, one of the earliest backers of many D2C companies such as Mamaearth, boAt and Bombay Shaving Company, believes that many more online-only brands will scale faster with the right customisation. The firm has invested in Traya, which is a holistic hair care platform offering personalised solutions. The Rs 300 crore (approx) online-only brand recently raised a Rs 75 crore equity funding round from private equity firm Xponentia Capital.
“When we invested in Traya two-and-a-half years ago, it was a `7 crore a-year business. The brand has scaled so much because of its unique model, which focuses on the efficacy of the solution and not just on selling products,” VS Kannan Sitaram, co-founder and partner, Fireside Ventures told FE during an earlier interaction.
“There is a market that is big enough to pay for products that solve their specific problems,” Zoheib Jilani, founder, WomanLikeU said. The brand offers products in the price range of Rs 1,500 – Rs 8,000.
Additionally, customisation solves one of the biggest pain points of e-commerce today, which is ‘returns’. According to Unicommerce’s India ecommerce Index Report 2023, return orders comprised 10.4% of total orders in FY23 and clothing stood out as the most returned online purchase category, with return rates ranging between 25 -40%.
“When you customise, you are acquiring customer information. There is a cost attached to it, but you are also reusing that information for future purchases. That way, you are ensuring there are repeat purchases, lesser returns and improved brand loyalty,” Praveen Govindu, partner, Deloitte India told FE.
From: financialexpress
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