Online spending in India is expected to grow from $39 billion in 2019 to $200 billion over the next five years. 

Iba, an India-based halal cosmetic and personal care brand launched in 2014, is adapting its approach to capitalise on massive growth in the country’s online shopping segment while also eyeing export market expansion. 

“Today, Iba sells almost 80% to 85% of its products online and only 15% offline through retail outlets,” the company’s CEO and founder Mauli Teli told Salaam Gateway. But two years ago it was the complete opposite approach, she said. 

Forced by the effects of the COVID-19 pandemic, the company transformed its distribution channel mix to retain costs and cater to changing customer needs. Iba, which is owned and manufactured by the private limited company Ecotrail Personal Care, intensified its direct to consumer (D2C) sales and cut out third-party channel intervention.

The company closed its three retail outlets and shifted customers to buy online directly from the Iba website or D2C marketplaces such as Amazon, Nykaa and Flipkart. Iba covers a range of 130 stock-keeping units (SKUs) across the skincare, haircare, fragrances and make-up categories.

“We see a very healthy split of almost 50:50 between what we do on our own website and what all these other marketplaces contribute,” Teli said. 

The change in distribution also called for adjustments in customer service. The company implemented new technologies such as AI-supported chatbots. Additionally, it facilitates the order process through WhatsApp, including placement, status and delivery updates. Taking orders over WhatsApp mitigates against the fact that many women in India are still not comfortable using e-commerce, she said. 

Neeraj Shrimali, Executive Director of Digital & Technology Investment Banking at Avendus Capital, also expects high levels of funding activity in the D2C space. According to a report by the firm, 130 million online shoppers were projected in India by 2020. It also said that, since 2016, over 600 D2C brands launched in India across all industries, attracting funding of more than $1.6 billion.

Teli hopes to tap into this opportunity as she wants to close a new round of venture capital or private equity fundraising within the next couple of months. According to Crunchbase.com, Iba has raised 150 million Indian Rupees ($2 million) in a Series A round in 2018.

Export growth plans

The firm’s plan to grow fourfold requires a capital injection. With production currently not running at full capacity, fresh funds will finance the expansion by adding new products and developing export markets such as the UAE, Malaysia and Indonesia. “I think there's immense opportunity overall,” Teli said.

The wallet share of beauty and personal care products in India in 2020 was 1%. It is expected to grow to 1.2% by 2025, which equals today’s China wallet share level. The wallet share represents the category spending as a percentage of private consumption. A shift in consumer preferences has driven the increase in spending in India. Since the pandemic, Teli said that women had embraced the clean beauty trend even more.

A beauty survey conducted by Euromonitor in 2020 revealed that 65% of India’s consumers were concerned about skin health, compared to the global average of 44%. According to the PEW Research Center, India’s Muslim population is expected to reach over 330 million people by 2060, supplanting Indonesia as the country with the largest Muslim population.

India is one of the largest retail markets in the world. It’s projected to surpass $1.7 trillion by 2025, with the beauty and personal care market expected to reach $28 billion.  

© SalaamGateway.com 2021 All Rights Reserved