Startup

Is Mamaearth Losing Its Natural Charm? What’s Really Happening?

Published

2 days ago

November 19, 2024

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Mamaearth, once a trailblazer in India’s beauty and personal care sector, has recently faced significant challenges, culminating in a ₹19 crore loss in the September 2024 quarter—a stark contrast to the ₹40 crore profit reported in the previous quarter.

This downturn has been attributed to the company’s transition to a direct-to-consumer distribution model as part of its Project ‘Neev’, which has necessitated inventory corrections.

The Digital Dawn and Subsequent Expansion

Founded with a digital-first approach, Mamaearth capitalised on e-commerce platforms like Amazon and Flipkart, catering to the growing online consumer base in India. This direct-to-consumer (D2C) strategy allowed the brand to build a strong online presence without the overheads associated with traditional retail. However, as the online beauty market became increasingly saturated, Mamaearth sought growth by venturing into offline retail.

By 2024, approximately 35% of Mamaearth’s sales were generated through physical stores. While this expansion broadened their market reach, it introduced complexities inherent to offline retail, such as logistics, inventory management, and distributor relationships.

Distribution Dilemmas and Inventory Woes

Initially, Mamaearth partnered with super-stockists—large distributors responsible for supplying products to smaller retailers nationwide. This model facilitated rapid market penetration but limited the company’s visibility into real-time sales data, leading to overstocking and unsold inventory. Reports from the All India Consumer Products Distributors Federation highlighted that over 2,000 distributors were burdened with substantial unsold stock, including products nearing expiration.

In response, Mamaearth launched “Project Neev,” aiming to replace super-stockists with direct distributors in major cities to gain better control over inventory and sales data. However, the transition faced hurdles, resulting in further inventory accumulation and a significant write-off of ₹63 crore worth of expired products. This substantial write-off not only impacted finances but also underscored issues in demand forecasting and inventory management.

Product Proliferation and Marketing Expenditure

In 2022, Mamaearth introduced 122 new products, doubling the industry average. While innovation is vital, such rapid expansion can strain resources and complicate inventory management. The company’s CEO, Varun Alagh, acknowledged the need to focus on core “hero” products to streamline operations and meet consumer demand more effectively.

Marketing expenses have also been a point of contention. Allocating between 35% to 42% of revenue to marketing—higher than the industry average—has raised sustainability concerns. While digital campaigns and influencer partnerships have bolstered online sales, their effectiveness in driving offline sales remains questionable, as in-store purchasing decisions are often influenced by shelf visibility and staff recommendations rather than online promotions.

Shifting Consumer Sentiments and Market Dynamics

The beauty industry is experiencing a paradigm shift, with consumers gravitating toward brands that emphasise sustainability, transparency, and ethical practices. Emerging competitors are leveraging these trends, offering products that resonate with the evolving preferences of the modern consumer. Mamaearth’s recent challenges, including inventory issues and financial setbacks, may have affected its brand perception, prompting consumers to explore alternative options.

The Path Forward

To navigate these turbulent waters, Mamaearth must recalibrate its strategy by:

Focusing on Core Products: Prioritising best-selling items can streamline operations and improve inventory management.
Enhancing Inventory Systems: Implementing advanced demand forecasting tools and real-time inventory tracking can reduce overstocking and minimise write-offs.
Adapting Marketing Strategies: Aligning marketing efforts with both online and offline consumer behaviours will ensure a cohesive brand message across all channels.
Embracing Sustainability: Aligning with consumer values by adopting sustainable practices can rebuild trust and loyalty.

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Startup

‘We are just at the very beginning of what AI is capable of’: AMD CEO Lisa Su

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49 minutes ago

November 21, 2024

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Artificial intelligence holds the power to enhance productivity and drive innovation, says Lisa Su, CEO of Advanced Micro Devices (AMD).

Reflecting on her three-decade career in the semiconductor industry, Su described AI as the “most impactful and high-potential technology” she has encountered.

“AI is this technology that can make all of us more productive, all of our companies more productive, make all of our discoveries more capable. It’s an opportunity for us to take computing to the next level,” Su stated.

“I think we are just at the very beginning of what AI is capable of. It allows us to solve some of the most important problems in the world, and help us find the next discoveries, whether you’re talking about medicine, climate, or science. AI is the next logical step,” she added.

Su, who was recognised in TIME’s ‘Most Influential People in AI 2024’, was speaking at a closed event at the Indian Institute of Science (IISc), Bengaluru on Thursday.

She disclosed that roughly 8,000 of the chipmaker’s 27,000 global employees are engineers based in India, making up 25% of its total workforce.

Su highlighted how AI has evolved from an expert-only field to a technology accessible to all, due to the advent of GenAI and large language models like ChatGPT in the last two years.

“We have taken what was now expert technology, and we’ve moved AI to something where everybody can touch and feel it..because when you’re able to use natural language to unlock computing capability, that all of a sudden changes who can use it,” she explained.

A direct competitor to NVIDIA, AMD is a semiconductor giant known for its high-performance computer processors and graphics technologies.

Addressing AMD’s strategy, Su further underscored the importance of versatility in computing solutions.

“There’s no one-size-fits-all when it comes to the future of compute. You’re going to need to use the right compute for the right application. For example, a lot of conversation is around sorting the largest GPUs and accelerators for the cloud, along with running the training and inferencing on the largest language model. But we do expect that they’re going to be models of all sizes,” she said.

AMD is focusing on an end-to-end AI strategy that spans cloud, edge, and client devices, she added. “We believe everyone should have their own AI PC that allows you to run your models locally and operate on your data.”

Su also spoke about how the chipmaker is focusing heavily on collaboration through open-source initiatives. “Our strategy is that the world needs an open-source software environment. It shouldn’t matter whether it’s AMD or NVIDIA as the hardware layer—you want to build on top of that with software and underneath abstraction. We’re investing significantly in all of the tools, compilers, and abstraction layers that will allow us to build an open-source ecosystem,” she noted.

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Startup

Growth Sense Venture Fund receives SEBI approval as Category 1 AIF

Published

2 hours ago

November 21, 2024

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Growth Sense Venture Fund on Thursday said it has got approval from the Securities and Exchange Board of India (SEBI) as a Category-1 Angel Fund for investments into early stage startups.

A Category-1 AIF means that the fund primarily invests in sectors that are considered to be socially or economically beneficial by the government such as social ventures, small and medium enterprises.

The fund has a corpus of Rs 100 crore and is sector agnostic, which helps the company broaden its scope of its investment.

Growth Sense, the investment manager for the fund, has made over 88 investments to date with six startups showing over 100% IRR (internal rate of return). IRR is a metric that is used to calculate the profitability of an investment.

“Receiving SEBI approval marks an exciting milestone for Growth Sense Venture Fund. This fund allows us to channel investor capital into startups that are not only poised for growth but are delivering real value to the Indian economy. Our team is dedicated to supporting India’s most promising startups with capital, mentorship, and strategic resources,” said Sanjay Sarda, Co-founder of Growth Sense.

The fund aims to provide startups with access to partnerships, guidance, and operational support and focuses on high-potential ventures.

The firm’s current portfolio includes, edtech startup Klassroom, hostel booking platform Homversity, and pet service aggregator platform Petmojo, among others.

Additionally, the Growth Sense ecosystem includes associate companies such as founder-investor marketplace Growth91, technology solution provider Growth Metaverse, branding and digital marketing service provider Growth Alpha, legal and regulatory service provider Growth Compliances and cybersecurity product INVIdata.

The firm’s fund is open for investment and allows individuals with a certain level of net worth and corporations to contribute.

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Startup

Mamaearth parent Honasa loses its unicorn status as shares plunge

Published

3 hours ago

November 21, 2024

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Honasa Consumer, the parent company behind Mamaearth has lost its unicorn status as shares fell about 29% across sessions since its close last week.

Shares closed at Rs 237.70 apiece tanking the company’s total market cap to Rs 7,721 crore or roughly $902 million. It had filed for IPO at a valuation of Rs 10,500 crore in November 2023.

The company which listed on domestic bourses on November 7, 2023 is now trading about 27% below its IPO issue price of Rs 324.

In an exchange filing today, the company clarified the scope of its leftover inventory with distributors amid media reports of credit backlogs and unsold stock with distributors.

Honasa clarified that its distribution value chain carried a total inventory of Rs 40.69 crore, against the quoted figure of Rs 300 crore of near-expiry inventory by the All India Consumer Products Distributors Federation.

The dominos effect started a week ago when the beauty and personal care retailer announced its second-quarter earnings.

Shares closed at Rs 371.55 apiece on Thursday, November 14 just before the company released the earnings report.

The Varun Alagh-led company clocked a loss-making quarter after its previous green P&Ls. It posted a loss of loss of Rs 18.71 crore in the July-September 2024 quarter from a profit of Rs 29.78 crore in the corresponding quarter in the previous year.

It has been clocking slower revenue growth across quarters. The company reported a 19% rise in its operating revenue in Q1FY25 and 21% YoY growth in Q4 FY24. Its latest quarter witnessed a de-growth of 7% to Rs 461.82 crore.

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