Is India Ready For Thrasio-Like Clones?

There is a new category of start-ups surfacing in India. Their strong suit is to acquire rapidly-growing brands in the digital-first space, build a solid portfolio of these brands and scale their products. The parent company, the aggregator executes its technology, marketing efficiency, optimises costs and turbocharges sales of the brands they have acquired.

Over the last few years, companies like Thrasio, Branded, Elevate brands, Unibrands have thrived on two movements - brands scaling swiftly on Amazon and everything has to have a brand name.

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Assiduus Global Founder, CEO Dr Somdutta Singh says, "The way in which the Indian market functions is poles apart from the US, UK or even China! In the US, there are thousands of private label.

brands and even the smallest of the businesses generate millions in revenue. The US literally survives on a 'culture of brands'. This makes it the perfect playing field for a Thrasio or Perch to acquire them."

India has a handful of these brands and while their prospects do look promising, how many of these can actually make it big to become multi-million dollar conglomerates? Even, once an online-only model, Nykaa and Lenskart soon realised they had to go offline in order to endure. Having an omnichannel strategy is the only opportunity in India.

Offline retail brands in India still continue to rule. As compared to the US or UK, the overall size of E-commerce economy is still in its dawn. One of the most crucial points is how people transact online, the dynamics of the Indian consumers psyche.

India, China, US, UK's market sizes, spending capacity, product price points are worlds apart.

"The intense competition due to the gold rush for acquiring D2C brands will pose many challenges for Thrasio like models in the Indian landscape. Not only it's an immature ecosystem of TPS brands (~30% of total sales of e-commerce platforms v/s 60% in US market), but many brands are much smaller in scale in a fragmented and largely offline market. This will see a crowding effect at the top leading to higher payouts for few worthy brands in a bidding war fuelled by the pressure to deploy cheap capital. Brands with strong supply chain partners that are insights driven will surely rule the roost." says Anuj Jain, Board Advisor to Assiduus Global and CEO of Singapore based global venture platform Startup-O.

In India, it is very difficult for private label brands to make a mark, let alone achieving constant customer traction. US's Thrasio business model cannot merely be replicated in the Indian ecosystem because of varying consumer behaviours and the way the markets function in both countries.

Investors may get excited about investing in ideas like a Thrasio, but they do not take into cognizance the multiple layer factors involved in actually growing, scaling and being able to audit without losing control of brands.

When a business controls supply chain and distribution at multiple levels, the process becomes flawless. They are not looking at one platform, one type of business, a particular geography for growing brands and their businesses.

One of the biggest mistakes companies like Thrasio have done is that they say they are acquiring business but end up becoming an agency and fall flat on their proposition. Businesses need to know how to control supply chain, how to manage multiple global platforms and marketplaces, multiple geography distribution models. They need insights and intelligence that will help them carry-out reverse engineering to create something formidable.

One platform looking to acquire and scale private label brands on E-commerce is not a sustainable model.

(Disclaimer: Brand desk content)