D2C channels enable deeper conversations, stronger relationships with customers: Honasa’s Zairus Master

Selling over 1 crore units last fiscal, Honasa Consumer's active ingredient-backed skincare brand, The Derma Co, reached an annual revenue run rate (ARR) of Rs 500 crore in April. It became the second brand in Honasa Consumer's portfolio to achieve this milestone, following Mamaearth.

Speaking at the sidelines of Goafest, Zairus Master, chief business officer at Honasa Consumer, mentioned that each brand in their portfolio is at a different stage of development. The company assesses and supports each brand based on its specific needs at any given time.

Honasa Consumer operates seven brands: Mamaearth, The Derma Co, Bblunt, Ayuga, Aqualogica, Dr. Sheth’s, and the recently launched colour cosmetics brand, Staze.

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When you have a house of brands, how do you focus your marketing efforts for each of these brands?

In managing our portfolio of brands, we recognise that each brand is at a different stage of development and requires unique inputs. Our approach isn't to prioritise one brand over another but to assess and support each brand based on its specific needs at any given time. Despite operating in similar or even the same categories, our brands have distinct propositions. Take our sunscreen products, for instance: Mamaearth focuses on natural, made-safe products; The Derma Co emphasises active ingredients, which are increasingly important in skincare; Aqualogica caters to the Indian climate with water-infused products suitable for tropical conditions, leveraging advanced water science; and Dr. Sheth combines actives and naturals, offering a blend of both worlds. Each brand maintains a clear and differentiated proposition within the same category, ensuring they complement rather than compete with each other.

Regarding distribution, for example, Mamaearth has a robust offline presence. The Derma Co is expanding offline but focuses on premium beauty, modern trade, and segmented general trade channels with restricted coverage. Meanwhile, our newer brands are primarily online at this stage.

How has quick commerce changed things for Honasa?

Quick commerce has been significant for us. We were early adopters, partnering with quick commerce platforms as they transitioned from essential groceries to beauty products. This journey has taught us valuable lessons about what sells on these platforms. Initially, we believed smaller SKUs would be more popular, but we found that customers buy the same products they normally would, just with the convenience of 15-minute delivery. Our goal now is to leverage this insight to increase our market share in quick commerce.

Currently, quick commerce represents a small portion of our overall sales, especially compared to traditional and online channels. However, it is one of the fastest-growing platforms, indicating significant potential for future growth.

Legacy brands are learning from challenger brands today. For example, Mamaearth was among the first brands to launch ubtan and now we see traditional brands also launching it. How do you deal with this?

Our strategy is clear: for Mamaearth, we focus on building products around specific ingredients. As these ingredients gain popularity, we anticipate 'me too' products entering the market. This is a common trend in the history of marketing in India. However, once we establish a strong proposition, it becomes difficult for competitors to break into that space. Our primary focus is on understanding consumer insights and trends, launching products that meet those needs. As these spaces grow, fragmentation is inevitable, but we aim to stay ahead by continuously innovating based on consumer preferences.

What is the distribution strategy?

Direct-to-consumer (D2C) means the brand has a direct relationship with the consumer, not necessarily limited to online channels. Our EBOs (exclusive brand outlets) are also part of our D2C strategy, and we currently have over 110 EBOs. Our approach involves both direct and multi-brand channels, across online and offline platforms- Direct Online- D2C through our website, Direct Offline- EBOs, Multi-Brand Online-Marketplaces like Amazon and Nykaa, Multi-Brand Offline-General trade and modern trade. Each segment serves a specific purpose. In D2C channels, we can have deeper conversations and build stronger relationships with our customers, understanding their preferences and suggesting tailored solutions. Multi-brand outlets, with their larger scale, offer lower customer acquisition costs. This comprehensive strategy allows us to leverage the strengths of each channel effectively.

Which mediums are you betting on?

As an organisation, we recognise the significant impact of digital media, especially influencers, on our growth. This medium has consistently proven beneficial, and we continue to focus on leveraging influencer marketing to enhance our reach and engagement.

What are the plans for Honasa this year?

Our focus is on achieving profitable growth and continuing to delight our consumers. We've reached a significant level with our brand and organisation, and the key is to maintain our growth trajectory. Innovation is central to our strategy, driving much of our growth. Personally, I measure success by our ability to consistently innovate. Our consumers expect and seek innovation, looking for better products that meet their needs more effectively. Our passion lies in identifying trends, understanding consumer needs, and launching new products that address those needs.