Since going digital in 2015, tea brand Tearaja claims that it has been consistently growing 1.5 to 2x every year, despite covid challenges
The D2C brand claims to have more than 200 active SKUs and witnesses up to 1K average subscriptions per month
Considering the covid-accelerated ecommerce growth, it is now looking to tap the subscription model that is billed as the next winning strategy
Small businesses came under severe stress during the pandemic. For many of them sales plunged due to lockdowns and other restrictions. Revenues dwindled and businesses became unviable, forcing many to fold up. Many others, however, found a saviour in the D2C (direct to consumer) business model.
One such name that would vouch for the benefits of the model is the premium tea brand Tearaja, which not only beat Covid challenges but grew its business as well in that period.
“We are a digital-first premium tea brand, growing 1.5 to 2x every year. Covid helped us realise the importance of our website. Earlier we were dependent on a lot of other ecommerce websites but during the lockdown our own website saved us. We were bombarded with orders, calls & emails from our customers and we are focussed to grow it further,” said Manish Jain, founder and director at Tearaja.
The pandemic years have been a game-changer for Tearaja in terms of growing its D2C business as fears of contracting the infection pushed customers to buy more online. In FY21, Tearaja shipped approximately 18K units of premium tea and closed FY’22 with 30K units shipped, registering a whopping 66% increase. Jain said that the brand aspires to touch 60K units by the end of this financial year.
Considering the traction online retailing has gained in the aftermath of the pandemic, D2C brands such as Tearaja are now looking to increasingly tap the subscription model that is billed as the next winning strategy. Subscription model is actually not new to India but D2C subscription is seen as a novel approach. A rather rudimentary form of subscription plans was always there.
For example, vendors supplied a particular quantity of milk every day to households and collected money at certain regular intervals. Newspapers continue to rely on subscriptions. So is DTH. It got a professional remodelling in the retailing space with the emergence of ecommerce. Now, a whole new subscription economy is slowly progressing, with plans available in a cross-section of sectors, from furniture to automobiles.
Tearaja Plans Subscription Model
Tearaja, which recouped itself by going digital first in 2015, is now all set to launch its subscription plans with its unique pricing and duration plans. “The reason behind subscriptions is to have a fixed customer base, which helps in getting a steady revenue pipeline in the long run. Subscriptions are common in the West and it is picking up fast in India,” said Jain.
Subscription model has many takers in mature markets, particularly in the US, as it gives a loyal customer base and assured business. “The US is not price centric. It is about saving the time spent on searching products,” Jain said.
In online retailing, customers are often spoiled for choice. More often than not, consumers are not sure whether their purchase is the right choice or not. The best part about subscription is that once you do it, you don’t have to worry about the right buy.
Of late, there has been a lot of buzz around the subscription model, with customised grocery online retailers offering FMCG subscription plans with price discounts and rewards like free delivery. In India, people spend a lot of time checking out new products and keep changing their buying behaviour, and also look for a lot of discounts, said Jain, who is devising pricing and duration strategies for Tearaja’s subscription plans.
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“There are lots of thoughts which go behind creating a subscription programme. One of the ideas would be to get a customer to stick to your brand. Second would be to improve the life of the consumer with our products. If it does not add any value to the customer’s life, they won’t opt for it,” Jain said.
Affordable pricing is critical here. In India, customers always try to cut recurring costs and, therefore, it is tough to retain customers for premium products.
According to Jain, one can have a variation in terms of one month, three months or six months. The duration can also be seven days, 14 days or 28 days.
From Legacy To D2C, An Unusual Journey for Tearaja Brand
Tearaja has a legacy. Jain Tea Co was a traditional tea store in Kolkata. It was on the verge of bankruptcy when Jain and his wife Poonam, took it to digital in 2015 in a clear departure from brick-and-mortar retail chain model. The Jains joined the marketplaces only to realise soon that e-commerce commission may eat into the resources. Going direct (D2C) seemed the next logical step.
The deluge of sales enquiries and orders received by Tearaja is a testimony to its brand loyalty. The D2C brand has more than 200 active SKUs and witnesses up to 1K subscribers every month, it said.
Encouraged by the trust reposed by customers, Tearaja has also launched a loyalty programme, which it claims has helped in customer retention. The loyalty programme rewards regular customers with additional benefits.
“We offer same-day delivery in Kolkata and the next-day delivery in other metro cities. We have built a robust fulfilment team and network, which ensures that we deliver quality teas to our customers faster,” Jain said.
He believes that if customers love your product they don’t mind waiting for a day or two because once a particular flavour and taste is set, people prefer sticking to it. And to further the interest of its customers, the brand is planning to expand to wellness as well with new subscription boxes.
Jain further disclosed that Tearaja has plans to launch new subscription boxes in the wellness category that has recorded a huge demand. “We plan to raise some growth capital this year, as we see huge potential in this field. We have already been approached by investors. You could get the news in the next three months,” Jain said.
Have D2C Startups Cracked The Subscription Code?
Making merry of India’s new found love for D2C brands, many startups are increasingly joining the subscription bandwagon in order to build customer loyalty and brand stickiness. And a good customer retention strategy can go a long way in terms of fueling growth. In fact, research shows that a 5% increase in customer retention can increase revenue by 25-95%.
Experience-valuing customers are equally attracted to subscriptions as it gives them the flexibility to choose, pause, cancel and renew their plans at their whim, as well as enjoy exclusive deals and discounts.
This has propelled the growth of many startups such as coffee brand Sleepy Owl, dairy startup Country Delight and women wellness brand Nua — who are thriving on the subscription model. As more and more D2C brands such as Tearaja go the subscription way, it will be interesting to see how brands redefine customer retention in the age of cut throat competition.