What a startup in the BPC category can learn from Mamaearth

• Adarsh Gangwal
• What a startup in the BPC category can learn from Mamaearth
• Published: January 6, 2023

Contributors: Adarsh Gangwal
Published: January 6, 2023

Executive Summary

What a startup in BPC can learn from Mamaearth

Mamaearth started in 2016, and in 2022 they are going for an IPO. Parent Company – Honasa Consumer Limited

mamaearth is an award-winning online retailer that uses cutting-edge mamaearth marketing strategy to reach their target customers. With personalized content, social media campaigns, and creative digital tactics, mamaearth has become the go-to destination for natural and organic

Mamaearth’s marketing strategy often showcases the benefits of its products, such as nourishing and improving the health of the skin and hair. Their customer service is also essential to mamaearth’s marketing strategy, as they prioritize quick and practical solutions to any customer queries or issues.

The business operates in the personal care and beauty sector. They have the backing of numerous VCs and unicorn status to their credit.

Mamaearth is a famous personal care brand that has gained popularity with its innovative mamaearth marketing strategy and is among the leaders regarding online first brands. The brand has leveraged social media, influencer marketing, and eco-friendliness to create a loyal customer base. The mamaearth marketing strategy is distinctive and compelling.

The complete below-mentioned details are from Mamaearth’s DHRP, which was submitted to SEBI for IPO proceedings on 29th December 2022

Product <> Customer pain mapping tool will help us get traction; this is what Derma also does (a subsidiary of Mamaearth).   

The BPC market (Beauty and Personal Care) is a lucrative industry for startups looking to make their mark. With increasing consumer demand for natural and sustainable products, startups can differentiate themselves with unique formulations and packaging. Building a robust online presence and partnering with influencers can help startups establish their brand and grow their customer base in the competitive BPC market.

Mamaearth’s growth strategies 

• Launching and acquiring brands for different customer pain categories
• Dominating acquisition despite heavy losses
• Focusing on content and influencer marketing
• Using tech as a growth enabler to improve business efficiency
• By providing natural and secure products, Mamaearth has successfully carved out a position in the very competitive BPCmarket, satisfying the rising demand for conscious consumption.

Brands 

Below are the brands owned by the parent company Honasa. With innovative products like onion hair oil and vitamin C serum, Mamaearth has cemented its position as a leader in the natural beauty and personal care market  in India. 

Mamaearth

1. Established in 2016.
2. Value Proposition: Toxin-free beauty products made with natural ingredients.
3. Focuses on developing toxin-free beauty products made with natural ingredients.

The Derma Co 

1. Established in 2020.
2. Value proposition: Science-backed products powered with active ingredients.
3. The focus is to provide solutions for skin and hair conditions through a range of active ingredient-based products.

Aqualogica

1. Established in November 2021.
2. Value proposition: Hydrating skincare designed for Indian skin types.
3. Focuses on the purity of fruits with the science of actives to develop hydrating products for face and body care.

Ayuga

1. Established in December 2021.
2. Value proposition: Ayurvedic beauty products in easy-to-use, modern formats for Indian millennials.
3. Ayuga products span the face, body and hair care product categories.

BBlunt

1. Acquired in March 2022.
2. Value proposition: Professional hair care and styling products enabling salon-like experience at home.
3. Focus to replicate a salon-like experience for consumers at home by offering a wide range of products including shampoos, conditioners, hair serums, hair colour, heat protection mist, and hair sprays.

Dr. Sheths

• Acquired in April 2022
• Value proposition: Bio-actives based skincare developed by three generations of skin specialists.

With innovative products like onion hair oil and vitamin C serum, Mamaearth has cemented its position as a leader in the natural beauty and personal care segment in India.

Price comparison of various products from different brands

Price per ml	Mamaearth	The Derma Co	Aqualogica	Dr. Sheth’s	Ayuga	BBlunt
Shampoo	1.40	1.75	–	–	2.5	1.33
Facewash	2.59	2.99	2.99	2.99	2.99	–
Face serum	23.27	34.9	20	20	20	–
Body Lotion	1.12	1.6	1.33	1.5	–	–

*Prices are in per ml as each brand sold different quantities at different prices so we took the unit price.

Observations

1. Different brands for the different target audiences and products
2. Launching multiple brands and selling the same product categories eg. face care, hair care, skincare and body care.
3. Rapid growth in revenue based on brands launch. 
4. Dominating the category with multiple brands in the same category and differentiating themselves with positioning. 
5. Prices in shampoo vary and body lotion varies among brands
6. Prices for face wash and face serum remain the same, one exception is The Derma Co

Learnings

1. Launching different brands helps is what Mamaearth thinks. They are aiming to be a House of brands just like HUL, P&G.
2. A startup in the BPC segment can launch different brands based on a product category in the long run.
3. A startup in the BPC segment can enter into commercial space like salons and spas with different brands in the long run.

Innovation

“We introduced 159 and 225 new SKUs in the BPC market in India during Financial Year 2022 and during the six months period ended September 30, 2022, respectively, which contributed to a 42.17% and 44.12% absolute increase in revenue from operations during the period, respectively, as compared to the preceding corresponding period.” 

 Quote from DHRP Doc Page no – 155

Observations

1. New product launches help the company to boost revenue
2. Mamaearth has a separate department for innovation with 45 members

Learnings

1. New-age BPC startups need to constantly innovate and launch based on market demands.aunch based on market demands. 

Financials

Particulars	FH FY 2023	FY 2022	FY 2021	FY 2020
Sales	₹684	₹932	₹460	₹110
Marketing Spend	₹272	₹391	₹178	₹46
ROAS	₹2.5	₹2.4	₹2.6	₹2.4
P/L	₹9.21	₹22.4	₹(1324)	₹(428)

*Figure are in Crores

Observations 

• Mamaearth is spending ₹1 for every ₹2.5 of sale. 
  • 40% of revenue is going towards marketing and is constant, which should have been improved.
• Company had been focusing on growth and not on profitability.

Learnings 

• Low returning customers – If the returning customers are high the advertising spend goes down in the long run which is not the case with Mamaearth.
• Profitability – The company did not focus on profitability.

Key Performance Indicators

Observations

1. Launched multiple brands with different positioning and branding over the years.
2. Online is the biggest sales channel which is increasing rapidly YoY.
3. Revenue growth is fueled with funding which resulted in substantial losses.
4. Assets and liabilities have increased as they have launched new brands – Aqualogica, Ayuga and BBlunt in FY 2022.
5. Revenue from offline channels is also growing at 50% YoY and the revenue share is also increasing by 10% YoY.

Understand mamaearth marketing strategy to create a successful to reach the target audience. Get insights into their approach, tactics, and strategies to market their natural and toxin-free beauty products. Find out how you can use mama earth’s strategy to grow. Mamaearth’s emphasis on sustainability, packaging, and customer service has also contributed to its success in the highly competitive beauty and personal care market in India.

Learnings

1. Startups needs to focus on profitability. 
2. If the company burn cash to acquire users for 2 years that is manageable but the focus should be on profits as by then users will understand the value of the products and repeat sales will help us lower marketing expenses which in turn increases profitability.

mamaearth is an innovative, leading-edge company revolutionizing how businesses market their products. mamaearth marketing strategy is comprehensive and helps to increase your brand’s visibility, reach more customers and grow your business. Discover how mamaearth can help you.

Marketing

“During the Financial Year 2022 and six months period ended September 30, 2022, we worked with 2,915 and 3,958 influencers, respectively, which included beauty, fashion and lifestyle bloggers, makeup artists and celebrities to generate content for our Brands”

Quote from DHRP Doc Page no – 147

Observations

1. Marketing is led by Content and Influencers. 
2. Businesses need to go aggressive on content.
3. Growth Loops are more important than funnels for growth.

Learnings

1. BPC companies need to have a strong loyalty program to be coupled with great products in order to achieve growth.
2. Startups shall focus on Content and Influencer marketing.
3. Companies need to focus on growth loops.

Community – Momspresso

The company was founded in 2016 and was acquired by Mamaearth in 2021

It’s a UGC platform with a community of 3.05 million active users a month in the first half of FY 2023. The vertical works as a content factory for all the sub-brands, which makes blogs, videos and other forms of content for all the platforms for all the sub-brands. 

The community has a section called MyMoney where users can post content about the brand products and earn from their social media content. This helps the sub-brand develop awareness and consideration for all the products. The division acts as an in-house influencer marketing agency, keeping in mind influencer marketing is driving a major chunk of the revenue. 

Observations 

Mamaearth marketing strategy –  is noted to make good use of influencer marketing and social media to build a strong brand identity and connect with their target market.

1. As marketing is content and influencer lead, Mamaearth has bought a platform which specializes in both aspects
2. UGC has a big impact in generating awareness and establishing credibility, which in turn helps drive revenue. This is the reason Mamaearth have bought the complete platform
3. Mamaearth has given a huge emphasis on content and this is reflected in its strategy.
   • This means people make decisions based on digital content.

Learnings

1. UGC will be a great marketing and content initiative.
2. Content –  Companies shall focus on content created by the brand.

Resources Split 

Observations 

1. Innovation – The company focuses on the innovation of new products as they have dedicated 4.2% of the total workforce in innovation
2. Marketing – Mamaearth focus on marketing aggressively, this is evident based on their marketing budget and team size of 14.09% 
3. Technology – Mamaearth gives importance to technology for all brands under their umbrella. This helps them in integrating and streamlining products, brands, supply chains, marketing, inventory, personalisation, data and many more aspects required for growth. They have 12.95% of the workforce dedicated to the technology department
4. Brand Factory – Brand is a critical part of Mamaearth’s growth, to maintain and grow the brand influence we can see they have 19 people in the brand team. 
5. Strategy – Mamaearth has dedicated 13 people for strategy, 
   • Having a dedicated team for strategy helps in company’s growth

Learnings

1. Innovation – Companies shall prioritize Innovation and dedicate a separate department to it in the long run. 
2. Marketing – New-age startups will require strong marketing 
   • They will be responsible for the company’s growth
3. Technology – Technology will help company grow and get streamlined.
4. Brand and Strategy – Brand and strategy will require separate teams in the long run. This will help the company to achieve scalability where they can focus on Pan India’s offline presence and a lot more 

Technology

DRHP Page No. 158-159

Shopping Stack

1. Customer facing -Website is a must-have for BPC starts

Developing a mobile app is a good long-term goal

2. Backend -Companies need to focus on a loyalty program, promotion optimisation, website search optimisation and customer service in phases 2nd-3rd of their launch

3. Third-Party Integrations –  Supply chain management will be a major challenge for the company which will be solved by advanced technology

Organizational Product suite

Innovation – This is what a startup should focus on and we also need to align ourselves with Innovative products based on demand

Company also need to learn and understand about business efficiency through process management and technology which will help them reduce cost and thus increase profitability

Data

Observations 

1. Recommendations based on user profiles, city, and combinations to increase average order value.
2. Tech is helping Mamaearth provide an experience which will ensure user stickiness and create a differentiator.
3. Personalisation is driving retention for Mamaearth.

Learnings 

1. Startups should recommend products based on user profiles.
2. Futuristic tech will help BPC startups scale and create a differentiator, this can be implemented and used as a growth lever when the startup unlocks its future stages of growth.
3. Tech for personalisation can be implemented in 2nd phase of the launch, this will help companies in retaining users.

Strategic Learning 

Sustainability 

“Through our ‘Plant Goodness’ initiative, we plant trees for all orders placed on our direct-to-consumer channel and as on October 31, 2022, we had planted over 300,000 trees since inception. This initiative aims to reduce carbon footprint and improve air quality, soil quality and groundwater levels. 

We are a plastic-positive organization, and have helped recycle 3,421 metric tonnes of plastic in Financial Years 2021 and 2022, which is more than the plastic used in products procured by us from contract manufacturers during the same period.”

Page 160

Learnings

1. The sustainability goal should be plastic-positive and carbon-neutral for being environmentally friendly. 

Inhouse 

Mamaearth is focusing on developing in-house capabilities in every segment except manufacturing. 

Mamaearth has a sizable tech, marketing, finance, supply chain, innovation, brand, strategy, and human resource team.  

Startup’s long-term goal shall be to build a strong independent department which works in sync with each other. BPC should also explore options for owning manufacturing. 

Conclusion

Mamaearth gives us learnings on how to scale a BPC market, goals can be different for different companies some may focus on profitability and others on growth. 

Overall, Mamaearth has disrupted the traditional beauty and personal care market in India by providing consumers with natural and safe alternatives, and has become a trusted brand for those who prioritize conscious and sustainable living.

About the Author

Adarsh Gangwal

Growth Marketer

Focused on providing measurable results with minimal effort, Adarsh is a growth expert, constantly next-levelling his expertise. He is an experienced and trusted asset with extreme analytics skills.

Analysis for strategizing to hit an all-time high and keeping track of the growth. Targeting long-term growth jo returns rukne na de.