Quick commerce growing 4-5X faster than traditional e-comm channels: Mamaearth CEO

Varun Alagh, co-founder and CEO of Mamaearth

Quick commerce is growing 4-5 times faster compared to other e-traditional e-commerce channels, skincare brand Mamaearth's co-founder and CEO Varun Alagh told Moneycontrol.

"Quick commerce had started growing last year and made its impact felt. However, it has really picked up and is now growing faster than mainstream platforms and is more profitable. It is growing 4-5 times faster compared to other e-commerce channels and hence its contribution to sales is also up," the CEO said.

He further said, "Last year, it was not even in the top ten in terms of contribution to sales. Today, it has entered the top five in online domain and is growing the fastest."

Alagh comment draws significance around the industry trend wherein major D2C brands, including beauty and personal care segment and FMCG, are looking to ride the fast-growing wave of same-day delivery trend and list their products on platforms like Zepto, Blinkit, Swiggy Instamart and so on.

Honasa Consumer, the parent company of Mamaearth, saw its revenue rise 21 percent to Rs 471 crore in the March quarter (Q4), compared to the year-ago period, amid weak demand in the retail sector.

It reported a second consecutive profitable quarter at Rs 30 crore in Q4, compared to a loss of Rs 162 crore in the year-ago period. It closed its FY24 with an revenue of  Rs 1,920 crore, a 28.6 percent year-on-year (YoY) rise, and a net profit of Rs 110.5 crore.

"We plan to grow at about a 20 percent compound annual growth rate (CAGR) over the next three years and aim to improve margins by 100-150 bps," the CEO told analysts on May 23.

Further, the company plans to make a transition from super-stockists to direct distributors in top 50 cities, and hopes to achieve cost efficiencies via the same. Quoting NielsenIQ report, the firm said to have reached to 1,88,377 FMCG retail outlets in India as of March 24, claiming to have increased distribution by 34 percent YoY.

Currently, one-third of Honasa’s business comes from offline channels while the remaining comes from online. In terms of category spilt in revenue share, about 60 percent is contributed by Skin, followed by hair, colour, and baby products.

To boost its R&D capabilities, Honasa has acquired the formulations expertise, research & development lab and a small manufacturing facility of a Thane-based company called Cosmogenesis Cosmetics for Rs 4 crore, according to regulatory filings.

The deal is likely to be closed in next 4-6 weeks.