When it comes to the beauty products in the Indian market, the landscape had been dominated by cosmetics majors for decades till the arrival of ecommerce and direct-to-consumer (D2C) selling. Nowadays, it’s impossible to ignore the power of D2C brands in the beauty space — the likes of Mamaearth, Nykaa, WOW Skin, Plum, and SUGAR Cosmetics are fast becoming the go-to options for consumers in metros and Tier 1 and 2 cities.
Founded in 2015, with just two products — a black kajal or kohl and a black matte eyeliner — SUGAR has expanded its product portfolio to 450 stock keeping units (SKUs) today. So how did SUGAR grow into one of the most recognizable brands in the country in just five years?
The SUGAR Journey From FabBag
Speaking at the Inc42 Plus The D2C Summit last week, SUGAR Cosmetics founders Vineeta Singh and Kaushik Mukherjee delved into how the startup leveraged social media influencers to build a formidable brand. In a conversation with Deepak Shahdadpuri, founder and managing director of DSG Consumer Partners, a prominent investor in the D2C space, the husband-wife founder duo talked about how they began their journey with FabBag in 2012, a beauty subscription box, where SUGAR was just one of their in-house brands.
One great thing about FabBag was that customers expected newer brands in the subscription box every month — as a result, SUGAR was not seen as an in-house brand, but just another brand in the box. As a result, customers would review SUGAR as just another brand, and did not look at the homegrown products from an overtly-critical lens. This lowered the pressure around promoting SUGAR’s first homegrown products.
The great reception for SUGAR products kickstarted the transition from the subscription box model to a full-fledged cosmetics company.
Going Big On Influencers
One of the keys to SUGAR’s success has been its use of influencer marketing and social media hype generation. The use of social media marketing and viral content has netted SUGAR revenue of INR 100 Cr for FY2020 with more than 1.5 Mn followers on Instagram, 300 Mn impressions across all social media channels and 2 Mn monthly visits to its website.
Mukherjee said that when SUGAR Cosmetics started working with influencers in 2015-2016, these influencers didn’t have much presence on short video platforms and were largely beauty and fashion bloggers. This was before Instagram took off as an influencer marketing platform in India, he added. Nykaa, one of the early brands to identify the potential of influencers in marketing, served as an inspiration for SUGAR, Mukherjee recalled.
The company studied the market and understood the need for a complete programme involving scores of influencers that would review SUGAR products and promote them sustainably and organically.
Cofounder Singh said that brands should not mistake influencers and the brand’s community (social media presence) as performance marketing channels. She added that SUGAR Cosmetics primarily uses social media to educate women on makeup instead of flooding the online community with offers or promos. This resulted in slower growth for sales and the community, but meant that SUGAR had built a loyal customer base. “If you want to get 300 Mn views quickly within a year then you end up spending a lot of money and you compromise on your engagement,” she added.
Why Influencer Marketing Strategy Matters
The D2C startup raised a $21 Mn Series C round in March this year, when its valuation had touched $100 Mn. Besides its native ecommerce platform, it has presence in retail chains such as Shoppers’ Stop, Lifestyle, Central, NewU, Health&Glow among others.
According to Singh, D2C brands need to have patience, remain consistent, and focus on the long term while building an online community. While offline retail presence is no doubt important in this space, the focus should be on building an influencer network that would hold the brand in good stead even when selling offline.
For instance, during the pre-launch phase of a product, SUGAR hands over sample products to 50 women influencers along with 50 other women in the company for in-depth feedback. This allowed SUGAR’s team to tweak the product, its messaging or its packaging before launch, and it also serves as a proof of concept that the product will be received well by influencers.
Mukherjee added that when Instagram and YouTube took over, brands would approach influencers to review products in a ‘barter’ arrangement and not as commercials. But this approach does not work for all influences. Bifurcating influencers into two types, he said the ones with fewer followers will create content for the brand, while influencers with higher reach need to act as a ‘media’ for the brand. As a result, there is no need for commercials or advertising.
“We do big influencers sparingly when we get big announcements but if you look at our Instagram page you will see a lot of our posts are outstanding content from growing influencers who will hit 100,000 following count soon,” cofounder Mukherjee added.
Of course, influencers can also grow and gather millions of followers, in which case SUGAR might not continue working with them. Mukherjee called it a treadmill and said that the brand has a designated influencer scouting team to bring more faces. Online audiences are more accessible than a TV audience and they respond to influencers authentically, so there’s always a need for fresh influencers that can create these meaningful interactions from the brands’ point of view.
One thing that both Singh and Mukherjee advised younger D2C brands is to have an influencer marketing strategy from day one. It’s not only critical for the beauty segment, but also for healthcare and fashion.