From B2C to D2C - A $100 Bn opportunity
Startup
Direct-to-Consumer businesses have taken the world by storm and therefore have seen significant interest from investors and entrepreneurs alike. It is likely to become a USD 100 billion opportunity by 2025.
Traditional methodology: Every business model needs a moat
To deter new entrants, B2C companies had built these three moats around their business models as entry barriers:
Shelf space
If the consumers can’t find you in the stores they buy from, you can bid farewell to your product idea. Moreover, getting shelf space was never easy!
Manufacturing
The science of deciding what to manufacture, how to manufacture and then building those manufacturing units required huge investments.
Traditional Marketing
Largely, traditional marketing had a spray-and-pray approach, and thus successful MNCs like HUL, Colgate, P&G, L’Oréal etc. would spend huge amounts of money on advertising their products on TV - an important medium, but one that made sense only at scale.
Traditional moats have been shaken: Democratisation of consumer
Moats of the past have been shaken, and this has allowed new brands the much-desired access to consumers. Broad themes that accelerated this were:
E-Commerce
It gave small brands an unlimited shelf space and minimised investments in inventory, distribution and logistics.
Contract Manufacturing
As brands started identifying white spaces, suppliers started to see an opportunity to sell white-labelled goods*, therefore, saving brands the huge investments required in R&D and/or manufacturing.
*White-label products are products produced by one company that other companies rebrands and sells.
Digital Marketing
This enabled targeting and required lesser upfront investment. In fact, it enabled authentic storytelling because of which many brands have gone viral, saving them precious marketing dollars.
Everyone wants a D2C play
The route to a consumer’s home and the distance to their wallet are getting shorter and shorter, and at the same time, the number of shopping occasions has exponentially increased.
All incumbents want a pie of this D2C fairytale, and this is evident in the choices they make around organic and inorganic growth. One can credit the boAts, Mamaearths and Lenskarts of the world.
New buzz in D2C - Mensa Brands!
Mensa Brands, founded by Ananth Narayan (ex-CEO Myntra) and boasting angels like Kunal Shah and Mukesh Bansal, is set to change the space of D2C. Let us see what it is, and how it plans to change this space.
What?
It aims to invest in other new age digital-first consumer brands under its ‘House of Brands’ initiative and help them thrust into the e-commerce segment.
How?
By acquiring majority stakes of around 60% in other profitable D2C brands that generate a turnover of at least INR 10-70 crore. By providing them with growth marketing, operational improvement and working capital.
The future is Mensa!
Over the next 3 years, Mensa plans to acquire more than 50 brands across categories including home, garden, apparel, personal care and beauty. This basically makes them an innovative VC with an intent to actively run their portfolio companies, and not just play the valuation game and wait for an exit.
Victoria’s Secret redefining their ‘sexy’: Better late than never?
Business
Carefully assess the image that came to your mind when you read ‘Victoria’s Secret’ here. That, right there, has been their positioning and value proposition for four decades now, something that they have reinforced through visual campaigns, annual fashion shows, themed stores and a whole class of revered supermodels called ‘Angels’.
In a sharp U-turn, on Wednesday, Victoria’s Secret announced the introduction of VS Collective, a group of seven inspirational women who will help redefine the brand’s proposition.
Role of the VS Collective
VS Collective will include LGBTQIA+ activists, a women sports advocate, a mental wellness advocate, an entrepreneur and a body positive advocate.
The role of the VS Collective will be to advise the brand, appear in ads and promote it on Instagram. On a larger level, it will be to provide a more inclusive ‘women-centric’ outlook and help the brand to achieve the monumental and unprecedented task of making such a revolutionary shift in its positioning.
For decades, Victoria’s Secret has been synonymous with lingerie-clad women of a body type that represented the widely accepted stereotype of femininity. With a change in that stereotype as a broad culture and having faced tremendous criticism, the iconic brand wants to now switch its narrative to female empowerment.
Martin Waters, CEO of the brand, said - “When the world was changing, we were too slow to respond. We needed to stop being about what men wanted and to be about what women want.”
Background for the criticism and change
Founded in 1977 as a store where men feel comfortable shopping for lingerie, for years, it had catered largely to the male fantasy and a very narrow description of ‘sexy’. It had also come under the radar during the #MeToo movement. An investigation also revealed that the owner, Leslie Wexner and the former Chief Marketing Officer, Ed Razek, reportedly promoted a culture of harassment, misogyny and bullying.
Author’s opinion
Too late or better late than never? As someone who has followed the brand and the ‘Angels’ for years, I’d say it is a courageous change at the very core of the brand.
Late, maybe yes, but not unwelcome, this change has finally come, with a new company leadership and values. Only a brand that is committed to finally accepting its mistakes and paying heed to the changing society would invest in such a major switch in its positioning.
Even with a dropping market share, Victoria’s Secret has had considerable influence as a powerhouse. That definitely makes this a step in the right direction to influence many other brands and the society at large.
What do you think? Is VS too late to make amends? Or are we ready to give them a chance to make a change?
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