- Aditya Birla Fashion & Retail (ABFRL) recently bought Reebok’s India operations and brands like the House of Masaba.
- Now, the company says that it will set up a new subsidiary that will directly sell to the consumer (D2C) the way Thrasio, Mensa and 10Club do.
- Shares of ABFRL have surged 76% in the last one year.
- The story has been corrected to reflect that the new D2C unit will not be a marketplace like Ajio or Tata Cliq, as mentioned earlier.
The company has said that the new entity will build “a portfolio of distinct, new-age, digital brands across categories in fashion, beauty and other allied lifestyle segments”
Kumar Mangalam Birla, one of India’s top billionaires with a net worth of $90 billion, is ready to take the next big stride into online retail. The board of ABFRL has approved the setting up of a new D2C subsidiary. The retailer has had a bunch of brands for a while but in the last two years, it’s been busy stacking up outfits from some of the top designers of wedding attire.
Birla’s recent pacts with designers of ethnic wear
Direct to consumer is when a brand sells their products directly to consumers without selling through any third party retailers, wholesalers etc. Some of the popular D2C brands in the market are MyGlamm, Mamaearth, Wow Skin Science, BoAT, and Go Noise and the number of these brands in India has more than doubled in the last two years, according to consulting firm Bain and Company.
Platforms selling D2C brands include Meesho, Tata Cliq, Myntra, Nykaa and Ajio.
However, ABFRL’s business model will be similar to the New York-based e-commerce player Thrasio, which acquires small merchants and brands listed on Amazon marketplace. Thrasio has acquired more than 100 third party sellers or fulfilled by Amazon (FBA) businesses and is valued at $6 billion.
Indian players like 10Club, Mensa Brands (founded by Myntra's former CEO Ananth Narayanan) and GlobalBees (founded by FirstCry founder Supam Maheshwari and Edelweiss' former executive Nitin Agarwal) have garnered the interest of investors. Notably, Mensa Brands is the youngest Indian startup to be valued over a billion dollars and 10Club raised the largest seed round in Asia, last year.
Even Thrasio is not willing to let go off this opportunity. The company will be looking to invest half a billion dollars in the Indian market over the next few years.
The combined revenue of all D2C retailers in India was $3 billion in 2020, and is likely to be $35 billion by 2025, according to a recent report by O3 Capital. However, ABFRL’s statement pegged the D2C opportunity at a whopping $100 billion by 2025.
Now, ABFRL has been selling fashion brands like Louis Philippe, Van Heusen, Allen Solly, Peter England and many others through over 3,000 stores, for a while now. More recently — aside from the a series of pacts with makers of top dollar designer outfits — the company has also bought a 51% stake in House of Masaba (a clothing and cosmetics brand), and sportswear brand Reebok’s India operations.
Ambani’s Reliance Retail has also been making big investments in e-tail including Ajio, a six-year old online marketplace that makes a bulk of its revenue from sale of fashion clothing. Tata’s product is called Tata Cliq, which sells products from Westside, Shoppersstop and other brands.
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