The concept of channel boundaries doesn’t exist at SUGAR. Exactly why the topic of discussion was also tweaked by Vineeta Singh, CEO and Co-founder, SUGAR Cosmetics at D2C India 2022 to ‘Present’ and the ‘Future’ of D2C Retail is Omnichannel’. Omnichannel belongs to the older generation and Gen Z is creating it early - as early as 19 years. They don't understand the concept of channel boundaries because they are everywhere. 

SUGAR is primarily an omnichannel brand. 90 percent of its consumers discover the brand digitally and 60 percent of revenue is driven by offline retail channels. Digital is where the first point of contact and awareness happens for SUGAR which transcends into offline sales.  

When you speak to Gen Z consumers, you realize they do not have the concept of channel boundaries. One sees them in a store getting a makeover done while reading product reviews of a beauty product on their trusted influencer’s Instagram page. They’re shopping on various channels all the time. Hence, omnichannel now is a matter of hygiene and D2C brands have no option but to establish an omnichannel presence. Be it any category. 

In the cosmetics category, 60 percent of the products sold in India are unbranded materials. Fake beauty brands are doing 85 percent of the business.

How SUGAR go Omnichannel?

The vision for SUGAR was to build a brand of trust for two decades.

“SUGAR was started in 2015, at a time when Indians building and selling an Indian brand was still alien. At that time it was alien to see a founder of a cosmetic brand say, ‘I am building a brand from India, for India and the world’. Investors would be surprised at that because so far Indians would only buy international brands and identify them with better product quality, a premium price point, and trust. Nobody predicted that D2C would become the single largest VC fundable category after a once-in-a-hundred-year incident like the pandemic that led us to a new normal with 35,000+ D2C brands in existence. VCs were not wanting to invest in brands/cosmetic brands being built in India. And so, the one thing that a brand in cosmetics that was built before this whole thing picked up would not have is capital. What they’d instead have is the luxury of time to experiment and learn the tricks of the trade the hard way. So in the last 7 years at SUGAR, we’ve learned everything the hard way to do the best for our TAM (Target Addressable Market) - a way to win VCs' hearts,” she said. 

“Beyond the scale of Rs 10 crore net revenue for brands that are selling to a 100 million audience (in metros) and still not able to create products which work for the 500 million Indians as we spoke earlier. Not every brand (be it any category) with a premium price point crosses the Rs 100 crore mark in just a few years of the journey. In order to scale, especially in our category where a fake HUDA and MAC do way more business than the originals, we realized that the scale of 85 percent of online consumers still shopping offline was missing for us. That’s when we went offline the first time back in 2018. We realized that online and offline fueled each other. Our metrics on all channels and conversions dramatically grew as we had a presence in stores - where you keep getting free CPM and branding for years after you’ve invested thoroughly once - the first time,” she further added.

“FB and Google have the smartest algorithms in the world. Performance Marketing will soon tell you that when trying to sell using performance marketing, it kicks up your COA just like your average order value. We didn't have a lot of capital. We had to ensure from day one that every transaction is a profitable one. Even with gross margins of 70-80 percent in our category, we were tired of trying to beat the algorithms of Facebook and Google. E-Commerce back in 2015 had a bad reputation as a discounting dumping ground - where everything had to be bought at a minimum of 20-30 percent off the MRP. A consumer would just walk in and tell you that a 10-15 percent discount is no big deal. That’s when we had to take a call and remind ourselves that we are in this to build a brand for two decades and discounting would not work for us anywhere in our pricing strategy. It was killing our aspiration to build the number one make-up brand in India, for India, and the world. It didn’t matter whether the transaction was happening on e-commerce or offline,” she asserted.

Pricing Strategy 

Discounting doesn't work when you are trying to sell a premium brand with an average price of Rs 500. It needs some time, love, and trust for consumers to spend it on your brand. 

“Retail for Sugar has infinite operating leverage - how much for the same expense you can keep growing your revenue without paying an additional variable cost. The first one to two years of being offline is always a massive struggle as you are trying to break even at that store or POS. Once that happens, a D2C brand like us has infinite operating leverage,” she said.   

Why did Offline Work for SUGAR Cosmetics?

She shared some of her realizations about brand building and how she aligned it with the ground realities of entrepreneurship, D2C as a strategy, and the community of young Indian women. 

-    Brand = Trust - In India, the shortest route is to build it offline. They don't have to doubt a pre, during, and post-sales service. It’s instant trust-building for the brand with the consumer.

-    Brand = Belonging - By having a deeper purpose - like sustainability or a community. If you have none, then you are justifying nothing. There is practically no reason for existence. There are 4,000 Vitamin C Serums on Amazon that look identical. What’s your reason for existence? At Sugar, our reason for existence is to empower young women. That community is our purpose of existence and we have to be authentic about it because it’s through this community that we are fostering a sense of belongingness for our consumers. One can see that all our stores use educational content as that’s what young women resonate with. That’s what drives the cosmetic category because when you teach young women in fun ways how they can look beautiful - it works. Indian women are still largely scared to be bold about the transition from ‘wearing make-up only on the 'wedding day’ to ‘wearing make-up every day of their lives’. And so, we see each of our offline stores as a studio where we create content with real women who aren’t celebrities and put it up on our online channels. 

-    Brand Building = Consistency. Consistency is what you can always do as a young brand when you cannot do TV ad films, cannot do an awareness campaign, and can’t get celebrities. That’s what a young brand can always do through their zero - 100 cr. journey.  Being hundred percent consistent in your communications, packaging, experiences, and most importantly design and pricing. At Sugar, we have heavily invested in design. We feel design has infinite ROI. You spend little time and money on design but once you get a thumb-stopping design (for the online) that can also work in stores, it’s a uniform consumer experience that’s constantly building your brand image. The design leaves a contextual memory in your consumer’s mind and we strive to deliver that context through our design. As an internet-driven generation, yes we are buying anything and everything online but we are leading our lives offline. Where people would hesitate to pay Rs 500 to be a part of an online event, they would happily pay Rs 10,000 to attend an offline event simply because it has that level of trust associated with offline.

 “We think that when you do not leave your customer guessing about whether or not they will get a better price or make them wait for an End of Reason Sale Season to get some discount, there’s no fair pricing doubt in her mind. It’s almost suicidal for a cosmetic D2C brand like ours to not fall for the discounted brand framework but that has worked for us really well for all these years. That’s because we are thinking about what's good for our consumers for the next decade. One big change that we are banking on is young women having more purchasing power. That’s going to accelerate in the coming decade and faster than the whole of India buying a Rs 500 product. Young Indian women having the freedom to buy and invest in personal care products that make them feel and look confident through younger brands that they can connect with and understand is a trend we are betting on for the next two decades,” she further added.