DealShare, the e-commerce platform, will invest Rs 1,000 crore over the next five years to strengthen its private label play and also increase focus on local brands, Sourjyendu Medda, Founder and Co-CEO told Moneycontrol in an interview.
Asked how the company will finance the amount, especially at a time when access to capital has been difficult for most startups due to the funding winter, Medda said that about 50 percent of the total corpus will come from the $165 million that DealShare raised from Tiger Global and others in January 2022.
The remaining half will be financed from the company’s balance sheet, as the company’s mature markets turn operationally profitable, he added.
The fresh announcement of Rs 1,000 crore is over and above Rs 500 crore that DealShare committed to investing in November 2022 to grow its private labels, including staples, home cleaning solutions and the like over the coming two to three years.
Of the Rs 500 crore, DealShare has already invested Rs 100 crore so far, Medda claimed.
The heavy investments and increased focus on private labels come at a time when startups have been looking to better their margins on products.
“When we sell products from Hindustan Unilever Limited (HUL), Procter and Gamble (P&G) and other large companies, we are left with a margin of just around 10 percent. But the same products, if sold under our own brands, will give us a margin of 20 percent – at least double of what the bigger companies can give,” Medda said while explaining the importance of private labels.
Private labels, which account for about 10 percent of DealShare’s revenues currently, will be responsible for around 30 percent of the company’s top line over the next 2-3 years as it reduces its reliance on products from larger companies.
The Tiger Global-backed company currently outsources the manufacturing of products under its private label. “Over the next 6-7 years, we’ll shift to manufacturing the products in-house which will further increase our margins,” Medda said.
The company also aims to increase its current portfolio of eight brands in 16 different categories to widen its range of products.
DealShare's private label business is led by Hemant Sood, who joined the startup after over five years at Raymond Consumer Care, where he met Medda.
Medda co-founded DealShare with Rajat Shikhar, Vineet Rao and Sankar Bora in 2018. The company was last valued at $1.7 billion after having raised over $390 million from ADIA, WestBridge Capital and others.
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