The model is part of a wider strategy of the FMCG company as it wants to foray into new segment
Marico has been on an acquisition spree in the D2C space
Currently, Marico’s digital brands run under a separate unit
Leading fast moving consumer goods (FMCG) company Marico is looking at building a Thrasio style model. Through this model, it wants to bring synergies, as well as scale up direct-to-consumer brands. For this, they plan using a common tech platform, supply chain and customer relation management.
The model is part of a wider strategy of the FMCG company as it wants to foray into new segments, with more focus on online space, ET reported. However, it wants to build overall operations with higher agility so it does not disrupt its traditional business.
Lately, Marico has been on an acquisition spree in the D2C space. It acquired several brands such as Just Herbs, Beardo and True Elements. Moreover, the FMCG brand also revealed its plans to enter into new categories by investing in more brands.
By the end of next financial year, Marico plans to build an INR 450-500 Cr portfolio of digital brands through a mix of organic and inorganic growth.
“We are a go to people for founders who want to scale up, who want to build to last rather than build to sell. We are the strategic investor of choice for them,” Saugata Gupta, managing director, Marico, said as quoted in the report.
Currently, Marico’s digital brands run under a separate unit, that posted annualised revenue of INR 180-200 Cr last fiscal year, while its online channel contributes 9% of its overall revenue.
Interestingly, its business team for the digital range is internally called Engine 2. In addition, Marico runs the digital range as a separate business entity.
Gupta is confident that the digital entity has a successful operating model to function with its full capacity in getting a fair share of the digital market, as well as be relevant and future-ready.
“As you go down the population strata, if there is food inflation, then people tend to titrate on FMCG buy and either down-trade or downgrade. Now, that food inflation is broadly getting under control. Also, the FMCG industry is entering a low base. We might see some uptick in rural consumption in the second half with the inflation going down,” Gupta said.
While it is rare among traditional FMCG brands to follow this business model, it is not very uncommon among new-age ventures. For example, Thrasio-style startup GlobalBees entered the unicorn club last year. It acquired several D2C brands including The Better Home, andME, Prolixr, Absorbia, among others.
On the other hand, Mensa brands, the D2C ecommerce rollup, is also building on this model which recently acquired MensXP, iDiva from Times Internet in a $100 Mn deal, adding to its wide portfolio of brands.