The Attraction That is D2C: Family-Run Health & Wellness Firms Going for D2C Transformation

There have been quite a few such companies/ brands that rebranded itself to become D2C since the business model has been attracting both consumers and investors alike.
The Attraction That is D2C: Family-Run Health & Wellness Firms Going for D2C Transformation

India has always been about families and definitely family-run businesses. For centuries together, there have been thriving family businesses across segments. While some had started a century ago and are still thriving as multinational conglomerates, some turned towards professionally run business structure and certain others got lost amidst the competition that entered India during the whole globalization process. 60 percent of the 500 largest companies in India are family-owned. These constitute a significant percentage in terms of contribution to the economy.

According to Family Business Network International, globally, as well as in India, family businesses contribute to over 70 percent of the GDP (size of the economy) and this could be even more in the case of India with so many businesses being run by a family.

Even as this is true and makes sense given the number of family-owned businesses in India, the current times are not normal and everything that once made sense is changing, either due to the pandemic or due to the changing consumer behavior and market trends. The years of the pandemic especially proved to be the time of innovation, of continuously pivoting, of technological transformation, of putting consumer experience at the top, for the overall retail industry. One of these pivot strategies included the conversion of a number of family-run legacies in order to stay relevant to the current changes.

There have been quite a few such companies/ brands that rebranded themselves to become D2C since the business model has been attracting both consumers and investors alike. Lightbox Ventures and DSG Consumer Partners were the most active investors in D2C brands post Covid-19. India is currently seeing a D2C wave across categories and it's easier than ever before for brands to go D2C right now. Data analytics tools are helping brands sell more by leveraging consumer buying patterns and preferences, collect feedback to iterate on products and create a customer experience strategy. Besides, there have come a number of e-commerce software providers such as Shopify, Wix, Woocommerce, and others that have erased the entry barriers for new online stores.

While the D2C wave is being witnessed across categories, the health and wellness industry, especially Ayurveda-based, has been growing at a phenomenal rate since consumers are today more aware and cautious about their health and immunity.

According to a report by Research And Markets, the market for Ayurvedic and herbal wellness products in India is expected to grow from around US$ 4 billion in 2018 to over US$ 9.5 billion by 2024 and this has led to a number of brands in the segment to go the D2C way in order to connect with the consumers directly, eliminating the middlemen and ride on this growing market potential.

Agnim Gupta, Principal - Tech & Growth, Amrutam, maintains, “The healthcare and nutrition Industry in India is at its peak currently, and in my understanding, it is going to see an upward trend in the years to come. In recent times, preventive care has taken a front seat with more focus being placed on building immunity. Ayurveda has always been a way of living in an Indian household with 'Nani/ Dadi ke Nushke' helping, preventing, and treating minor disorders like loose motion, constipation, headache, etc. before allopathy took over. But with the adoption of yoga and Ayurveda by the west, and the rebranded version of it gaining popularity in India, the younger generation has started turning their attention to Ayurveda. With more people moving towards organic products, not shying away from paying a little more for quality goods, and having a better understanding of health, Ayurveda may end up as the first choice for not just beauty or personal care but preventive health (health care) as well for a large percent of the population.”

In fact, these D2C brands are now giving competition to the giants like Dabur, Himalaya, etc.

Family-run businesses taking D2C route

The Guiding Light

Covid-19 has been teaching lessons to varied kinds of businesses about preparedness, agility, and adaptation, and building resilience. Family enterprises are being challenged on a number of parameters right now and it's more than important for them to adapt and adopt the newer and more relevant business models currently. Family-run companies like Amrutam, Wiz, Naturevibe Botanicals, and others in the health and nutrition segment, were quick to pivot and adopt the D2C business model.

Reetesh Dhingra, Co-founder, Wiz, narrates, “We are a primary manufacturing company going back 4 generations, and have been manufacturing personal care products since the 1980s. Our focus has always been on manufacturing and we have tended to be more inclined towards OEM and private label manufacturing and less on our own brand Wiz, but since 2014 we saw a demand shift from expensive products to value for money brands. Also, the branding environment has changed considerably – a few years back you could only reach the consumer through mass media which was affordable to only a few big players, but now we can get in touch with the consumer directly. What really helped me in the transition was years of experience and learning from my family business and the involvement of the family in the strategy building and functioning of the brand.”  

Similarly, for Naturevibe Botanicals, Rishabh Chokhani’s family’s legacy in the pharmaceutical industry helped him delve deeper into the segment, research more, and prepare the business idea and the experience from a business family helped him with relevant resources to establish the brand.

Amrutam, on the other hand, has been a family run-business revamped into a D2C brand to meet the modern needs of its customers. Amrutam was launched in 2006 by Ashok Gupta. The business suffered a huge setback in the year 2016 when his children Agnim Gupta and Stuti Gupta left their profession and joined the brand. The duo restarted in August 2017 by getting one order a month, has now grown to be receiving 4,000 orders per month, with a turnover of Rs 2.78 crore.

The D2C Pull

India, today, has more than 800 D2C brands and most of them are witnessing a spike in demand during the pandemic, as it enabled these brands to bypass the intermediaries to reach consumers faster and cater to them more efficiently. Its found that brands with their dedicated websites recorded an 88 percent rise in consumer demand in 2020 compared to the previous year.

According to Avendus, India is witnessing the rise of D2C brands across categories and is estimated to have a US$ 100 billion addressable market by 2025.

With such statistics showcasing continuous growth of the D2C segment, it's only imperative for family business owners to pivot, use the crisis to make transformative investments, accelerate change and rethink their future.

Rishabh Chokhani, Founder & CEO, Naturevibe Botanicals, maintains, “With a direct-to-customer (D2C) model, we get an opportunity to know the customer better. Hence, customer needs, buying patterns, and other valuable insights help us improve our products and launch products in demand. With the adoption of the D2C model, we have seen an increase in revenue as now, with valuable insights, we are improving our products and identifying our hero products. D2C business is a new age business, and as surprising it may sound, it is doing exceptionally well. D2C business is booming, and many new brands are establishing in the industry. Existing brands are also adapting the D2C business attribute to grow in the market. It doesn't require much capital and its direct sale without any third person involved.”

The pull is strong and brands not only in the health and wellness segment but across categories are giving in to the attraction that is D2C.

Amrutam, for one, has registered a 200 percent growth in terms of revenue generation.

“Besides going D2C, we have always been aware and adaptive of technological changes happening around us. We have invested in a variety of tools that help us in different ways – from shipping operations to warehouse management, customer support, and customer engagement, and beyond. We have also implemented ERP software for our manufacturing unit and keep experimenting and developing innovative solutions with APIs obtained from different providers to create unique in-house features/ tools,” asserts Agnim Gupta.

Wiz personal care, meanwhile, is leveraging the D2C route to reach directly to the consumers and pass on the benefits to its customer base rather than on the intermediaries, etc. Wiz is using technology to create 100 SKUs with minimum inventory and is launching multiple products every month.

The Way Ahead

Like all kinds of transition and transformation, family-run businesses too had few roadblocks on their way to D2C, but the thing with these brands are their quality products and their connection and continuous engagement with the consumers which help them keep a steady growth curve.

Furthermore, the pandemic which was a challenge/ bottleneck for most segments had proven to be a growth driver for Ayurveda and the health and wellness industry.

Agnim Gupta agrees, “The Ayurveda industry is among the few to have benefitted from the virus outbreak. The demand for Ayurvedic immunity-boosting products such as Chawanprash, Giloy tablets, Giloy churna, honey, and Ashwagandha tablets has skyrocketed, in the wake of the pandemic. During Covid, our healthcare industry saw a drastic rise in sales. For the first time in years, our top-5 had 3 Ayurveda malts in it. For the initial month of the lockdown in 2020, as the whole nation went under a strict curfew, we weren’t able to ship our products (though we did not stop digital ads).  However, around May '20, the restrictions were eased for brands that fell under the essentials category and we were amongst one of the essential brands which started delivering again gaining an advantage over other brands in the same space that only sold personal/ beauty products.”

Amrutam registered revenue of Rs 2.78 crore this fiscal year, Naturevibe Botanicals had a turnover of Rs 140 crore in FY 20-21, and Wiz closed the last fiscal with a turnover of Rs 12 crore.

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