Mamaearth, Globalbees, Pristyn Care, Mensa, Spinny, Myglamm, and so on…..more than 42 D2C brands have entered the unicorn club very recently. Accordingly, in the D2C industry, owing to its tremendous growth, it is expected the year 2022 will see several D2C start-ups becoming unicorns. 

Just to give a perspective on how rapidly the sector is growing, as per data shared by KPMG India, D2C players have raised an excess of $2.5 billion since 2014, making the D2C sector worth $44.6 billion in India in 2021 and currently, it is expected to reach $100 billion by 2025.

There are several contributing factors that are adding to the growth in the sector. 

“With technology disruptions and digitizations in the supply chain management and multiple fulfillment models, it has also become significantly easier for companies to start D2C operations and fine-tune their offerings to satisfy the consumers," said Kapil Makhija, CEO, Unicommerce. The company has experience working with D2C brands like MamaEarth, boAt, MCaffeine, Sugar Cosmetics, Beardo, Go Mechanic, Jack&Jones, Emami, among others. 

"In addition, the plug and play technology solutions have helped companies streamline operations for their e-commerce business far more easily than before,” Makhija further added. 

However, these factors are available to every start-up in the ecosystem. What differently are these few start-ups are doing that is helping them to have an edge over others and enabling them to get the interest of the investors to become a Unicorn?

As the famous phrase goes, success always leaves clues. So, there are indeed commonalities in business strategies among the successful D2C brands that have become unicorns. 

1. Being a Disrupter in the Category: Given the increased competition in the sector, it is not just important to be more efficient or faster in the delivery of the products because it is always a moving target. Every day you get new technology, a process that gets imported to India that makes the processes more efficient. However, in order to distinguish oneself and get the attention of the investors, one needs to be a category disruptor. 
 
Take Licious for example – the first D2C brand to get into the Unicorn club has changed how people consume meat. 
 
“Since our inception in 2015, Licious has not just worked towards building India’s largest tech-first, full-stacked, D2C animal protein brand, but also revolutionizing the category itself. Licious is changing the way Indians experience meat,” says Abhay Hanjura and Vivek Gupta, Founders of Licious. 

2. Building a Loyal Consumer Base: One thing that is majorly common among all successful D2C companies is that they have a loyal consumer base. So, much so that they would rather buy directly from the company’s website/ app rather than relying on more convenient and used-to means like buying through an e-commerce marketplace like Amazon or going to a nearby retail store. 
 
"In fact, being able to successfully do that has tremendous ROI", as per the recent study by Harvard Business School, "it has been identified that going for a 5 percent increase in D2C customer retention will be able to boost your profits at least by 25 percent."
 
Keeping the above qualifiers in mind, two popular D2C brands that are close to becoming unicorns are beauty brand Purplle and meat delivery firm FreshToHome. Their current valuation is Purplle - $630 million and FreshToHome - $244 million.

Purplle with a strong focus on new customer acquisition grew its marketing investments by 2X to build its brand. Also, the brand has strong retention with 65-70 percent of revenue coming from returning users. This suggests strongly about the loyalty of its consumer base. 

Also, the company aims to deliver 6-8X growth in the next 5 years. 

“Purplle closed $140 million Series D funding in 2021 adding Kedaara and Premji invest to an existing strong cap table.  With these investments we plan to rapidly scale our private brands business and continue to build differentiated beauty brands with entrepreneurs,” says Nippun Aneja, Chief Business Officer, Purplle.com. 

FreshToHome, which is the closest competitor to Licious, has reportedly clocked a revenue surge of 3X in FY21, and unit economics improve by 50 percent. The company is said to be in talks to raise a new round and become a unicorn. 

FreshToHome has not yet commented on the matter. 

Makhija stated: “We are sure that we will see multiple D2C unicorns for the next couple of years. We expect a strong fund inflow in the D2C ecosystem in the current year along with acquisition by traditional brands which could potentially result in more brands becoming unicorns. Companies such as Mamaearth, Licious, MyGlamm, Pharmeasy are some of the successful D2C Unicorns that we have seen in the last year.” 

READ MORE: Why Old Playbook of Growing D2C Channel is Dead in the New Normal