Aditya Birla will expand into segments and businesses that are inherently more digital and in sync with the consumer trends in fashion
The new house-of-brands venture will receive an initial fund through Aditya Birla’s internal accruals and plans to bring in external capital at a later stage
In 2021, Indian D2C startups raised $1.81 Bn across 174 deals, and the segment is likely to reach a $100 Bn market size by 2026
Aditya Birla Fashion and Retail Limited (ABFRL) is set to join the likes of Globalbees, Mensa Brands, among others, in the Thrasio-style ‘house of brands’. The retail giant’s board of directors have approved the setting up of a new subsidiary to build a portfolio of new-age, digital brands (D2C) across fashion, beauty and allied lifestyle segments.
It will incubate as well as acquire new-age, digital brands — akin to building a house of direct-to-consumer brands, the company said in a statement. In its regulatory filing, as seen by Inc42, Aditya Birla added that it will expand into segments and businesses that are inherently more digital in nature, in sync with the consumer trends in fashion.
The D2C portfolio will be built through organic and inorganic means. ABFRL — the owner of brands such as Masaba Gupta, Reebok India, Tasva, Sabyasachi — will leverage capabilities around design, product creation, sourcing and brand building in the offline space, while creating a fashion and lifestyle products-led portfolio in the digital space as well, the company said.
While the new house-of-brands venture will receive an initial fund through ABFRL’s internal accruals, it plans to bring in external capital at a later stage.
On Friday (January 4, 2022), Aditya Birla’s Fashion arm reported a 44% jump in Q3 FY22 revenue at INR 2,987 Cr. Profit after tax was up 237% year-on-year to INR 197 Cr. The company launched more than 200 new stores across businesses and formats in the three months ended December 31, 2021.
The Changing Face Of D2C India
D2C brands, business models and platforms, are arguably the biggest game-changer in retail since ecommerce, with an expected market size of $100 Mn by 2026, as per an Inc42 Plus report.
In 2021, Indian D2C startups raised $1.81 Bn across 174 deals. The influx of capital has not only resulted in thousands of new brands but also introduced disruptive models such as ecommerce roll-ups, houses of brands and more while giving enablers and digital sellers new opportunities to grow.
Just like Thrasio, the US-based company that pioneered the concept of offering complete household health by acquiring and scaling digital-first FBA (Fulfilled By Amazon) brands, has become immensely popular in India. Hence the moniker—‘Thrasio-style’.
For D2C startups, looking to enter the global market and venture beyond India, becoming a part of a bigger house of brands or an ecommerce roll-up offers a faster scale-up. The feeling is that D2C brands that have the slightest bit of momentum can become a target for acquisitions by such platforms.
Brands Propelling The Thrasio-Style Wave
Some companies with a similar business model in the country include UpScalio, Globalbees, Mensa Brands (India’s fastest Unicorn), Evenflow, Powerhouse91, CureFoods, 10Club among others.
In 2021, Walmart-owned ecommerce giant Flipkart also launched ‘Flipkart Boost’, an integrated, service-fee based programme for D2C brands. The etailer will provide end-to-end support covering planning, advertising, cataloguing, logistics, quality control and mentoring to homegrown brands.
Amazon India has also launched the Amazon Global Selling Propel (AGSP) Accelerator in January 2021, to provide mentorship to online brands keen to expand globally, where it has undertaken a cohort of 10 D2C startups.
Right before its IPO, fashion and beauty marketplace Nykaa, too, announced plans to spread its footprint in the lifestyle and beauty segment and transform into a ‘house of brands’ from its current form of a multi-brand retailer.
