I think if I have to do it all over again, I would not enter retail till the time I have at least INR 150-200 Cr of revenue: Viraj Bahl at The D2C Summit 3.0
Bahl noted that online retail accounted for only 5-6% of Veeba’s total revenue when the startup was at INR 500 Cr revenue
India currently has over 180 funded D2C startups which have raised $4.2 Bn to date, as per Inc42 data
The direct-to-consumer (D2C) brands should enter the food retail category only if they have deep pockets or are significantly matured in their journey, Viraj Bahl, founder & MD of food brand Veeba, said at Inc42’s ‘The D2C Summit 3.0’.
“I think if I have to do it all over again, I would not enter retail till the time I have at least INR 150-200 Cr of revenue. I’d say wait till you have deep pockets, or an investor with deep pockets, whichever comes first,” said Bahl during a panel discussion titled ‘Going Omnichannel: Decoding Indian D2C Brands’ Playbook To Success’.
The Veeba cofounder also said that founders need to get to INR 150 Cr ‘by hook or by crook’ and warned that it is difficult to earn revenue during the first 12 months. “Once the revenue comes, it is the most beautiful place to be,” he added.
Talking about the difference between online and offline retail, Bahl remarked that offline is ‘a totally different animal’.
“In food, the gross margin is 40%. If your gross margin itself is 40%, you cannot make money online. You cannot keep discounting your product. So you have to come offline,” he conceded, adding that categories such as personal care can succeed online.
Explaining Veeba’s channel breakdown, Bahl said, “When we were at INR 500 Cr (revenue), our revenue split was roughly 92% from distribution, 8% came from our B2B clients.”
Of the 92% revenue from distribution, roughly 71-72% was coming from general trade, about 23-24% from modern trade and the rest 5-6% online, he added.
Veeba’s online revenue included sales from its website as well as other marketplaces.
It is prudent to mention that D2C is fast emerging as a big market opportunity. As per Inc42’s latest report, ‘The State of Indian Ecommerce Q3 2022. Infocus: D2C’, D2C is set to become a $302 Bn market opportunity by the end of the decade, fueled by emerging categories and brands and an increasing number of online shoppers in India.
While ecommerce funding plunged 80% between Q3 2021 and Q2 2022, D2C has grown strongly. In fact, D2C startups accounted for 52% of all ecommerce funding in Q2 2022, reflecting investor sentiment in favour of the business model.
In all, India has over 180 funded D2C startups, which have raised $4.2 Bn to date, as per Inc42 data. D2C brands working in the fast-moving consumer goods (FMCG) category account for $2.1 Bn of the total D2C funding.
