Bengaluru: Beauty E-commerce is booming in India and is expected to reach unprecedented heights within the next several years. As more of the country moves online, there are going to be major opportunities in the beauty retail space. For that reason, investors are desperate to get a piece of the market share.
Outside of the beauty segment, India’s entire E-commerce market is currently an investment hotbed. In 2016, only 2% of India’s retail market was exclusively online. According to Morgan Stanley, E-commerce in India is expected to grow over an astonishing 1,200% to $200 billion by 2026, covering 12% of the overall retail sales. That’s up from $15 billion in 2016.
India is the second largest online market in the world, preceded only by China. “There is a huge opportunity for growth and the opportunity to incorporate new technology for customer engagement, real-time data feedback, social engagement, recommendations and 3-D fitting rooms,” explained a recent report titled, India’s Demographic Dividend Drives E-Commerce in the World’s Fastest Growing Economy.
As India’s population becomes more comfortable with online transactions, sales are expected to soar. A 2014 survey from AlphaWise found that Internet users with less than two years of online experience were far less likely to purchase items online. By 2020, over 50 percent of India’s online users will have five or more years of Internet experience, which will lead to an uptick in online shopping.
As of right now, fashion is already a popular segment in online shopping in India. But, by 2020, it is expected to grow four times its current size – to about $30 billion. With more than 500 million Indian consumers currently using phones, mobile use is going to be a driving force behind the increase. “Fashion is at the forefront on Facebook in India. It dominates the top 10 interest categories on Facebook and same is true for Instagram,” says. Umang Bedi, former head of Facebook in India & South Asia.
Moving ahead, beauty is expected to see sizeable growth, too. By, 2020, beauty, is expected to have ‘very high penetration of over 10 percent’ reads a report by Google and the Boston Consulting Group.
So, while apparel, along with electronics, are the largest E-commerce sectors in India, beauty is one of the sectors that shows the fastest growth rates. For this reason, Indian companies are jumping on the beauty E-commerce bandwagon, by making large monetary investments in their online presence.
Another Indian company, H&B Stores Ltd, is following suit, and just made a nearly $1.3 billion investment in the E-commerce beauty space with its chain, E-commerce site NewU. “We want to implement omni-channel strategy and integrate our online and offline businesses,” said Vijay Shanker, chief operating office of H&B Stores.
While most players are setting up a model closely resembling an E-commerce platform, Quantified Commerce has taken a unique view of the market and is building vertically integrated brands. Through its unique approach, Quantified Commerce controls all aspects of production, from manufacturing to marketing. The manufacturing is done in its own India-based factories, which operate at international GMP standards. Quantified Commerce is involved in building its brands at every step, completely involved in every aspect of of the brand across various platforms. Because of this, the company has been experiencing strong growth of 100-300% per year for the last four years.
We talked to Ryan Andreas, one of the founders of Quantified Commerce about why they took this unique approach. “The quality of manufacturing was very poor and not up to par with international standards,” he explained. “Also the quality of customer support was not something we were happy with; we wanted a superior user experience. So, that’s why we established the model we did.” Quantified Commerce also sees the potential in the online beauty market. “Investors are desperate to be part of the beauty business in India. But nobody has been able to execute it since India is a very tough market” says Andreas. “That’s why we are so dedicated to this space.”
Unlike horizontal brands, such as Amazon and Snapdeal, Quantified Commerce offers a unique and personalized multi-channel shopping experience. Quantified Commerce is investing in building DNVBs similar to success stories like Honest Company, Casper and Dollar Shave Club, which have all secured hundreds of millions of dollars, cut out the middleman, and created unmatched direct-to-consumer experiences. They anticipate the shifting market trends in the beauty sector, and create content and products catered towards consumer demand.