Vineeta Singh noticed how most beauty brands in the Indian market did not cater to local consumers’ needs. The heat, humidity, and monsoon season all challenged the wearability of established brands and their shades and colours were mostly formulated with lighter skin tones in mind. Vineeta dreamed of a sweeter solution for fellow consumers and launched SUGAR Cosmetics in 2015 with cofounder Kaushik Mukherjee. In this episode of Shopify Masters, Vineeta shares with us how she grew the brand from online only to having over 10,000 retail touch-points, and becoming an industry disruptor that raised $21 Million in Series C funding.
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Filling a gap in makeup for Indian skin tones
Vineeta: The premise on which SUGAR started was to offer a makeup brand that has products that can really last you from the morning, nine am, to night because India is generally quite hot. We have a tropical climate and anything that you wear can really melt when you’re traveling in local transport, et cetera. So, while we were running our ecommerce business between 2012 and 2015 we realized that there were a lot of millennial women who couldn’t find that perfect nude lipstick or a perfect red lipstick. There were a lot of colors that were perfect for, say, Caucasian skin, but wouldn’t work on the deeper Indian skin tones.
Shuang: How did you start contacting manufacturers and talk to chemists to start this creation process?
Vineeta: I think the biggest challenge was to figure out, like, there are these minimum order quantities when you start. If you’re trying to manufacture one of the larger manufacturing units, then you’re saying that, okay, I have to start with say, 10,000 units per color. And be confident that you would be able to really sell all of those out.
So we reached out to one of the largest manufacturers in the world who actually creates for L’Oreal and Estee Lauder. So we knew there wouldn’t be any concern with regards to quality. And we had to convince them to actually tweak their formulations and tweak their colors based on our consumers requirement. And many times they would tell us that this would not work in India because they have all these customers in India who are actually buying the current formulations. And we would assure them that we know our consumers. Our consumer really likes products that are extremely long-lasting and want these colors, which could be very different from the colors that they are actually currently offering to Indian customers. So, the creation process is actually a partnership between the manufacturer and the brand.
In that process I think most of our manufacturers realized that we are one of those companies that is going to be very anal about every step. So we just wouldn’t take a product, which we didn’t think 100% met our consumers’ requirement, and which meant there was a lot of back and forth in terms of constant exchanging samples and not being able to agree on a color, which was one percent off from the perfect red or the perfect fuchsia we had in mind.
So, in this process, we realized that there was some manufacturer that we just wouldn’t work with because they wouldn’t be as flexible. And they didn’t think that a small company like us would eventually be able to give them the kind of business that actually monitored the kind of, the amount of back and forths that we were doing.
So, by elimination, we were left with only those manufacturers who were really willing to go the extra mile for us. And luckily we had a couple of them. And then they figured that this company has a very different way of working. And they put us through a lot of grind to get their products out. But they were curious. And they also realized that there is a huge market for brands like ours that are driven by the need to serve a very specific consumer. And that’s ours it’s a 20 to 27-year-old, metro millennial who’s probably consuming a lot of digital content. She’s inspired by global trends but she wants to still look beautiful. So she wants a global trend to be Indianized for her. And that’s what I think we’ve been pretty good at doing.
Shuang: I think it’s very bold and brave for you to stick to what you believe in. Was it ever intimidating when you had those feedback from manufacturers asking you to change? Did you ever question your instincts?
Vineeta: Many times, yes. So for instance, our best selling product is this liquid lipstick that’s like really matte and extremely long-lasting. So you put it on and it doesn’t come off. When we first started working on liquid lipsticks, this was in 2015 at the time of launching SUGAR, and we knew that this would be the perfect product for India because we realized that in India women wanted an intense color, which would stay all day. And which was very different from the requirements in other Southeast Asian markets or western countries. And a lot of manufacturers, as well as other brands we had spoken to at the time of running our subscription company said that in India if you want to put lipstick in a liquid format, people expect it to be a gloss. And if you are actually going to put such a matte product, which is like so extremely matte and would also be drying, it would be a shock to a lot of consumers who will end up buying it assuming it’s a gloss.
So they would tell us that this is a very, very counter intuitive thing to do. And you’re taking a big risk because while there might be a set of women who are inspired by digital trends, who know what’s happening globally, who may get it. But what about those who were currently buying products based on the traditional idea of beauty, they wouldn’t be able to relate to this product. So, there was a lot of resistance for this product. Until the day we went live with it, I also had a lot of doubts. But, luckily, for us we had our employees who are also women in that same target group that we were addressing as customers.
So internally they all had the conviction that they’d never used something like this before but they were very confident that for other women like them this would definitely be a super hit even though it was very off-market standard. And though it’s a very small set to actually base your entire launch on, given the kind of conviction that they had I was pretty confident that our consumer would really love it. And it turned out to be one of our biggest sellers.
Shuang: Did it ever feel scary because you’re helping all these other brands build out a subscription business but now you are competing with them now. What was that process like?
Vineeta: While we were running the subscription business it was always very tough to get cosmetics brands to come on board because another challenge in subscription is that you have to really subsidize the cost, which is possible for a skin care because you just dramatically reduce the size of the product. For instance a product that would cost $40, you would say that I will give 1/10th of this, and this would be equivalent to a $4 product, which can be put in a subscription. So the economics of it will work.
Whereas, in the case of cosmetics, a very large part of the manufacturing cost is actually the components, which is you need a minimum size of the bullet for the lipstick, for instance. If you have mascara or liquid lipstick there is a wand involved. So the size of the component, the packaging material, is a very significant part of the size of cost of the product. It’s very difficult for a $40 product. I cannot create a $4 equivalent of it. It’s almost impossible. Which is why cosmetics brands would mostly have to partner with these subscription boxes with almost a full-size product. Which meant that the possibility of the subsidy was very low. The brands in India didn’t have the kind of marketing budgets to really subsidize these costs. Which is why for us the challenge was that we had very few cosmetics brands that really saw this opportunity as a good way to reach their customers, which was one of the reasons we actually ended up doing this transition.
We realized that very few cosmetics brands in India care about this digital consumer, yet. They still don’t think that this consumer, who’s on Instagram, is going to become a big part of their pie in like five years from now. Second is that India is also a market where you do not, cannot bill a card on a recurring basis every month. So for a subscription company of any kind you have to actually charge the customer for the whole year in advance. And which becomes like a very large commitment. It’s not that you can charge somebody $10 every month on their card because that will require them to do a two PIN authorization every single time.
We have one business, which is for a decent scale. But it’s not going to become like a $100 million company, which is our aspiration. And then there is this other idea, which is nothing right now. But it has the potential of becoming really big because every millennial consumer could be our potential customer. And everybody buys makeup and that’s going to increase in the years to come. So, from a business which we knew was not going to scale beyond a point, to a business which we knew was definitely scalable, part a big risk we just thought it was worth a shot to actually do the pivot and try it out.
Seizing a larger market by pivoting business focus
Shuang: How long was that period of deciding to pivot and convincing your team to take this direction?
Vineeta: I think the biggest challenge was to ourselves because every single time we would have this discussion in our board meetings in that, hey, there is an opportunity to create a cosmetics brand. Should we do it? And we’d been thinking about it for almost two years now. And every single time there would be this number that would get thrown around saying that to build a cosmetics brand in India you need to put in at least $10 million into it because that’s the minimum required for a cosmetics brand to scale.
And we hadn’t raised much. We raised a very, very small amount of money. So we don’t have $10 million and that’s the minimum that you need to actually run a beauty brand in India. And then we sort of started reaching a point where we knew that this is not scaling, so this is our only option. So with far, far less than the $10 million we actually ended up launching this saying that, okay, let’s just see how it goes. Like I mentioned it was like a small pilot where a couple of people just started working on it. And I would invest some time along with these two people to just get it off the ground. And suddenly it started gaining traction. And when it started gaining traction as we put it up, we launched our Shopify store, and then there’s an E-commerce company, which is the largest in the beauty category, Nykaa approached us and they said that do you want to list your products over here because we’ve had heard good reviews about it?
And we put it on there and suddenly we started seeing that the numbers were on there without investing anything in marketing, and started growing. And that’s when we realized that this actually seems like a very, very scalable business. At that time we had just about seven, eight, SKUs, but with that itself we were doing like a decent size of revenue. And then, of course, fundraising wasn’t as tough. Eventually, we did raise a lot more than $10 million, which actually helped the brand scale very fast in the last two, three years. I told our COO, we currently are at a revenue of about $20 million. Even at this rate, we’re doubling year on year.
Shuang: How did you even begin to convince people through screens to say you should give our products a try?
Vineeta: A lot of this convincing actually happened thanks to Facebook and Instagram. We realized that it’s almost impossible, when people are choosing makeup they want the comfort of being able to test it in the store and being able to swatch it. And when we launched it we weren’t available in any stores. But, there was this growing number of influencers as well as regular consumers who were posting on Instagram, on Facebook pictures of themselves wearing a certain color of SUGAR lipsticks. So we have these customers really go through this dilemma saying that, “Oh my god. I love this color. I don’t have anything like this. There’s nothing like this available in the market. But I don’t want to shop online.”They would really come to the website two or three times and not buy it because they weren’t really convinced that they could try a new brand just on the basis of some influencer telling them that this is a good lipstick. So we would see that on average, like a customer would probably spend about 65 minutes, which is more than an hour, in two, three different visits before she actually made the decision to buy it.
So India is a country where people are risk averse, and they’re very scared of ecommerce. To start we had to offer cash on delivery so they could really pay for the product once they got it. And even then there was a lot of resistance. They would spend a lot of time over many days making their decision to buy one lipstick. And it was very interesting to see this kind of consumer behavior. Now that we are there in retail we have realized that it’s easier and quicker to scale retail because of the fact that there is at least the whole process of purchase is very natural to the customer. It really comes naturally to her.
So, yes, we eventually did realize we had to get into retail. But, the first two, three years were completely ecommerce for us. And that gave us the opportunity to really figure out how to reach the customer at a very minimal cost, how to really convert her in spite of the fact that you couldn’t really get her to swatch the product. So now, of course, we have an option on our Shopify store where you can really try the lipstick on. You can see your own face with that color of lipstick, which makes it easier. We didn’t have that until last year. But, we would still have hundreds of images of different women with different skin tones wearing their lipstick so that you knew how it would look on somebody who was similar to you.
We still see that a lot of the conversion came from Instagram and Facebook where we would have an influencer wearing that product. Then the customer would just come in and type the name of the color and just blindly buy it based on the fact that the influencer said that this color looked very good on her. So we’ve been iterating. We also realize that this customer is very scared of being duped, and very scared of getting the wrong color.
So every month we actually offer exchanges to almost 200 women, who come and say that, “Hey, I bought this color. This shade of red. But it’s actually slightly different. And I’m not very convinced. I wanted this other one.” And we just give them a free replacement.No other company does that. But we know that we’re trying to sell her makeup online. So it’s not her fault if she doesn’t get which exact color it is. It is our responsibility to ensure that she understands that this is this color. And if because of our inability to show her the exact color and demonstrate it properly, we’re not able to satisfy her, we want to replace. We want to make it up to her.
I think that really helps us build loyalty because they keep coming back and taking more and more risk. And honestly, like most customers just are very happy to get that perfect lipstick. And then once we’re able to get a customer to experience that joy, we have her for life. Now, all of this is harder to do in store when you’re literally fighting with everybody else for that attention of the customer, and so much easier to do this on our own platform where she’s yours for that time that she’s over there.
Leveraging social media to grow on a shoestring marketing budget
Shuang: Initially when you started what kind of marketing strategies did you deploy?
Vineeta: We didn’t have much money. We had to be very efficient with every single dollar that we spent. So it was completely like performance marketing. It was measuring every single dollar spent in terms of, what is my GAG, what is my average order value, what’s my conversion rate? So if I started with $10,000 per month, if I’m going to take it from $10,000 to $15,000 a month first I have to optimize my campaign at $10,000. Only when it becomes efficient I know that I am investing X to acquire the customer. And she’s spending a total of Y on me over a 12 month period. And then economics makes sense. So a lot of the investments that we did in the first two, three years were just that. Just like performance marketing primarily on Facebook, a bit on Google. And a very small amount on Instagram. So we started with a very small amount of money. I think it was probably maybe $10,000 or something a month and we scale it by very small amount every month. After we heard, we were confident, we would optimize it.
I think in the last two years what has really changed for us is that we’ve gone from the position that we have to make every dollar count to wanting to build a brand. And that transition has happened in the last 18 months or so. And that’s been a very important transition as far as our marketing team is concerned because now we’re not necessarily thinking about every single dollar leading to a sale.
What we’re saying is that we will divide our marketing budget into parts. There’ll be parts that are long-term initiatives. So for instance one of them is content marketing. So now we’ve started investing in a lot of high-quality content that goes up on YouTube, on Instagram. We have a blog now on our own SUGARCosmetics.com. And all of these are not initiatives that are easily measurable in the short term, but they help us stay more relevant in the long term. So when I get a YouTube video, which has like 800,000 views, it’s not really impacting sales. But it’s something that helps us get reach, get the brand to those seven, 800,000 women who wouldn’t otherwise be shopping us. And we assume that we keep reaching them over a period of time, and then we’re getting more mind share and over a period of time, they would consider SUGAR. Similarly, we’ve just started doing a lot of brand marketing investment, which is beyond digital. For instance, we did massive, out-of-home campaigns including in malls, on the Western express highway, in strategic locations in the city.
We started doing some collaborations with celebrities where we have specific ranges that we are doing along with them. So these are initiatives, which are very different from what we were doing one and a half years back. But I think as we grow we realize that just by purely optimizing your Facebook and Google Ad spend, you cannot really build the brand because at the end of the day the number of people that you are reaching is just those who are shopping online. And now where we see ourselves as a brand that can potentially really talk about having a significant market share. In India, we have to get more and more of the mind share of a larger base of consumers and not just those who are shopping online already.
Shuang: I feel like it’s very hard for someone to switch gears that way. Being a digital brand first, you used to be able to basically be very intimate with how everything you’ve invested would pay off. How did you become comfortable to say I’m going to let go and actually invest in the brand where I don’t see the performance right away?
Vineeta: It has been a challenge. For instance, right now is the time we are making next year’s plan. And every time you work on your annual plan you carve out budgets for each kind of marketing. And then you have proportionately what is the revenue that’s coming from your own website? What’s the revenue coming from other ecommerce? What’s the revenue coming from retail? And it’s just so much easier to say that, “Okay, let me just increase this performance spend a bit by X. And I will get X more.” Whereas, you can’t do that with your ATL spend for instance. You’re like, okay, I can increase my ATL spend by $10 million. But you can’t say what’s the impact on the revenue.
For a brand that really cares about scaling up revenue and doesn’t have unlimited budgets, it is quite hard, honestly. And we are always battling with that. I think we came to a point where we decided to make the switch when we realized that there is a cap to how much you can continue spending on performance marketing and still continue being efficient.
We came to a point where we decided to make the switch when we realized that there is a cap to how much you can continue spending on performance marketing and still continue being efficient.
As you scale it’s like when you first start spending $10,000 to $20,000, $30,000. There’s a journey that you go through. And up to every brand has a certain number beyond which every additional spend actually gets you only that much in revenue. So you reach a point where you’re saying that, okay, I will spend, hypothetically, my cost of customer acquisition per order is, for instance, say $20. Right? And that average order value is also $20. So brands very quickly reach that stage when you realize that your cap is equal to AOV, which is your average order value. And when you have that moment of an epiphany of sorts because then you realize that beyond this it’s just not going to make sense, you know?
Why would I spend $20 to acquire a customer who’s spending $20 on the website because next time when she’s going to shop, also, she’s going to come she’s likely to come in and buy on her own. But there’s also a chance that she may forget about us so we may have to spend again to get her to make that repeat purchase. So the economics of it starts looking very challenging. We just didn’t want to go down that road where we said that for every additional dollar that I spend on performance, I will make only $1. We always wanted it to be $2. If my spend is $20, my average order value should be $40.The moment it sort of starts the equation is not working, it’s a channel where we need to think about something else. So that actually led us to the drawing board where we said that, okay, blind performance marketing doesn’t make sense. So then what else do we do?
The first thing we did was content marketing because that actually made a huge difference in net conversion rates. And then I think over a period of time, just our revenue share of our entire business that came from pure ecommerce and our own website also started reducing because of the fact that we finally were building distribution. So, if you see today we probably only 25% of our total business on our own ecommerce website.
And so when that remaining 75% is happening beyond SUGARcosmetics.com, then you start saying that, “Okay, now what is the performance marketing for retail?” So then we started first thinking that “If I put up a makeover counter at the entrance of a mall, does that help me drive sales in my shopper’s top counter or my own store?” And we saw, yes. It’s probably not as efficient as that Facebook ad, but it does help. And it’s a different channel. It’s a different consumer completely.
So, these sorts of interventions, which were more like performance marketing in retail, are what we started with. We started doing these makeovers. We started doing a banner very close to our store. So we were still not generally investing in the brand, not doing ATL, above the line marketing. But just doing some BTL promotions that could drive sales in our stores. So we started doing performance marketing for retail. And that’s how we looked at it. And that didn’t feel as scary. You know, that transition didn’t feel because it was still slightly measurable. It’s been a long journey.
Shuang: It seems like you’re constantly almost moving the goal-Post for yourself. Does it ever get daunting?
Vineeta: There was this moment when we decided that from thinking about SUGAR being a niche digital brand, we could actually imagine a situation where it would really give the top three brands a run for its money. So one of our first retail partners was this department store called Lifestyle. It’s a chain that has about 70 stores in India, an equivalent of a Nordstrom or a Macy’s, where you have a whole counter where you have your own promoter.
They gave us a pilot saying that we’ll put you in five stores. We’ll see how you do. And then we will decide what’s going to happen. The moment we went live in those five stores we realized that within a few months of launching, we started moving from rank nine in the store to rank eight, to rank seven. If we just extrapolated and every store we are present in if we’re able to become rank four. And then build distribution. And then every year we are just trying to increase by one rank, it started the journey from us, which is a small brand to the market leader, which is a very large brand, doesn’t seem as far. There are these steps in between. We just have to keep making some progress.
Luckily, the market is also growing so fast that you’re not always trying to take away from others’ pie. But the whole pie is also growing. The whole macroeconomic factors combined with the results that we were seeing in a smaller set actually gave us that conviction that what we’ve been thinking about SUGAR being a digital brand, a DTC company that could actually scale to a certain scale is probably a goal post which is not as aspirational as it could be. We really created something that has the potential to actually compete with the largest of brands. I think it was a good change in our mindset because of the fact that in due course I’ve seen that a lot of DTC companies that have tried to stay as a DTC in India have struggled to scale beyond the point. Because although digital is a huge opportunity like I keep saying I think 90% of Indians are still shopping in stores.
And that’s going to take really long. So, if you’re anybody who’s trying to say that, okay, I’m going to build at least a $100 million business, they’re not going to be able to do it purely online. It’s just very hard to do it as a pure DTC. If the aspiration is to say that, yes, this is a niche brand and my aspiration is to build a $20 million business, then DTC is best because you don’t have to go through the very long and tough process of converting retailers and distributors. And it’s better to just do it like companies like Shopify make it very easy to go from zero to $20 million. And just by investing heavily on digital and giving great customer service. I think just these two can help you scale to that.
Companies like Shopify make it very easy to go from zero to $20 million.
But that 20 to 100 is something that you’ll be able to think about, saying that do I want to do that? And if I want to do that then it’s… There is no option but to also go offline. And that’s a different journey that you embark on. So for us, that pilot at Lifestyle made us realize that this is way bigger than we thought it would be. And we decided that, okay, let’s not settle for $20 million. Let’s settle for a much, much larger number. And now we think of it as a company that can potentially do an IPO. And that’s our potential, our dream with SUGAR.
Shuang: So when you decided to go to retail what was that process like?
Vineeta: The start was very tough for retail. Because at the end of the day you do have a product that is differentiated. It does well. Whereas in retail everything is like, there is a big limitation on shelf space. So it’s all about getting somebody else’s shelf space. So it was quite hard. Luckily it happened at a point when Revlon was struggling in India and they were moving out of some stores. And that’s how our partnership actually with Lifestyle worked out. Because they decided that in five of these counters where Revlon was moving out they could give this small brand a chance. And that was a very, it was a coincidental situation where otherwise it would have been much harder. We would have to wait much longer.
So I think the starting point is very tough in retail because at the end of the day you are substituting another brand. And though there’s always a churn of brands happening, there’s a very large waiting list of new brands that want to get in there. And it’s not just new brands.
For a market like India where a lot of international brands hadn’t yet made their foray, you were competing with new brands as well as international brands. And our retailer would any day prefer an international brand because it’s so much easier to sell. In a market like India, people have their aspiration that oh, “this is an American brand or a European brand.” So, it’s tougher to get the shelf space when you’re fighting against a potential international brand. But once you’ve broken in, the good thing is that cosmetics is like the ground floor prime space in every store. So the kind of visibility that you get once you’re able to crack your first few accounts, is incredible.
For a market like India where a lot of international brands hadn’t yet made their foray you were competing with new brands as well as international brands. And our retailer would any day prefer an international brand because it’s so much easier to sell.
It’s just the most prime space in every single mall. And that gets you noticed by a lot of others who then start these general trade stores, which then say that “Oh this brand is then in Modern Trade format in a mall, and I saw it and it was like the counter had lots of consumers.” And then they start saying, okay, maybe I want to take a distribution of this brand in this particular city. And then you start. So, the way we have seen it is that modern trade, which is basically malls, is very expensive and it’s really hard to get into. But once you get into that it helps you with your General Trade distribution. The General Trade is your traditional, you know those smaller stores, those local stores that you reach to a distributor. That’s where, which is a very, very scalable and profitable business.
And really this pilot, which was expensive, and it’s still barely profitable like our Modern Trade channel has helped us get through to general trade. Now while we didn’t think about our own stores as a potential channel, somebody had just come up with this opportunity and we just decided to do a pilot. We realize that our ability to control the experience was so high in our store. It’s like basically saying what you can do on SUGARcosmetics.com by 200x. Right? Because you can do all of that, like, you can offer free exchanges. You can offer the best kind of customer service, your largest mix of products. But you can also have a makeup artist doing a makeover there. You can also have somebody coming in and trying out and just sitting in your store for the longest time learning about products and stuff.
So we launched our first store just as an experiment. But, we realize that it’s a great brand-building opportunity where you’re able to get customers to come and stay, be in your store for a long time. You’re able to actually get them to try multiple SUGAR products. Often we would just do a makeover and say, you know, you just don’t need to buy anything. You can just get a free makeover done. And then they will, later on, come back and say, oh, my god. I got so many compliments for this lipstick. I want to buy it. So that sort of experience was very exciting for us. And we started using these as opportunities to also create a lot of content. So, we would call influencers to our own store. Do this mini activity with them. We would shoot those videos, put them on our Instagram channel.
So our own store turned out to be a good place for us to really learn more about the customer, and also have a better experience. And as it turns out, the economics of this was actually quite good. It was better than some of the traditional channels that we had. So, we currently have about 35 of our own stores. And the idea is that in the next 12 months to a 100. So it’s all a very aggressive expansion plan there because that’s a channel where you’re saying I get a mix of both. I do great customer service, brand building; plus, the economics are good.
So our mix in retail as of now about 50% comes from General Trade, about 30% from Modern Trade, and 20% from our own stores. But we’re expecting that our own stores, the mix would actually increase. And general trade would also probably reduce the share from Modern Trade because we’ve got the benefit, but the economics of it are still very challenging. Next year we want to have a very massive budget for ATL brand building, which means that every channel has to be very profitable. So we’re focusing more on the more profitable channels and less on the less profitable ones.
Why pricing is crucial for scaling in emerging markets
Shuang: What were some major lessons that you learned that prove to be actually very valuable today?
Vineeta: One of my biggest learnings has been that market size is important. How big the market is off the category that you’re building, which was to start earning from the whole subscription business. That’s always going to be really important. There is no way to bypass that, to say that I’m a small company and I’m going to create a market, which is going to become from zero to X million dollars is a very big challenge. It’s better off when you’re saying that, “Okay, let me leave the market size creation with the larger players. And let me just ride the wave with them and just sell better products.” That I think, is a much easier approach.
Second, there have been a lot of lessons around pricing. I think India is a market where the success of every single product also depends a lot on the pricing. We’re always trying to tell our customers that you spend $2 more than what’s available in the market. And it will give you a product which is three times better in quality. And now while that has worked and people are okay with spending their $2, it’s very category-driven. So we’ve seen that there are certain categories, like for instance a mascara where consumers are like I use so much, say, a mascara or a kajal that whatever happens, I will not spend that $2 extra because I’m using this product so many times a month. And I’m running through bottles of mascara then kajal pencils every month and I’m not going to change my budget significantly. And I think a lot of brands end up going wrong with their pricing. And then they have to figure out very deep discounting, which then means that the customer gets used to buying you only at the time of a price promotion, which becomes a zero-sum game.
So then you are potentially not able to sell to the customer when you’re not discounting. So, we strongly believe that discounting should not be a lever. And at the time of pricing, it’s important to figure out for every single category what would be the most perfect price, which if you price less than that the customer thinks that it’s not good enough. If you price more than that she’s not going to buy it.
A lot of brands end up going wrong with their pricing and then they have to figure out very deep discounting, which then means that the customer gets used to buying you only at the time of a price promotion, which becomes a zero sum game.
That perfect price is something which is worth thinking a lot more about than we do. And once you do that then you don’t have to discount. Then you can do a lot more without falling into the trap of discounting, which I think a lot of ecommerce companies do. Which is for a brand, which becomes very challenging because once you start doing retail then the retail stores are like, hey, you’re always discounted online. And then the online stores are like, hey, you’re always discounting. So price parity becomes very important. So it’s just slightly lower and you become like a sale mass brand, and slightly higher then you become an unaffordable brand. So, yeah, just getting that positioning correctly is quite important.
The ups and downs of choosing entrepreneurship as a career path
Shuang: I wanted to ask what do you think made you decide to go into entrepreneurship?
Vineeta: I graduated from IIT. And then I went to IIM- Ahmedabad where I had an investment banking job, which was very well paying at that point in time. And at that time I was 23 when I was making this decision to not pick up a job and create a start-up.
I always knew that I was going to be an entrepreneur because I love the idea of building something from scratch. And I was especially excited about any business that serves women as a consumer because I had traveled from my internship, I was in London for a month and New York for a month. I would just go into stores and realize that the difference in the kind of shopping experience and the kind of brand and the kind of products that you have as a consumer. In Europe and the U.S. is very different from in India. In India, it was still like as a customer you just had limited options. And you had to settle for some optimal experience. So that was always an area which I was passionate about.
And for me, the question was always when not really what. So I always, I’m going to be an entrepreneur. But when should I do it? Should I, like, work for 10 years, have some savings, and then do it? Or should I start off right after college? The answer to this question, actually, came through like a lot of conversations with alumni and with people where I realized that the more you work for a company the harder it becomes to quit because you have a lot more at stake. And there’s always going to be the golden handcuffs. So, that’s when I thought that if right now I had parents who were fairly financially stable so I didn’t have any major liabilities. And I thought that I had a lot of passion for creating something. So if I do it now I would literally have nothing at stake. I would have not had to think about giving up on anything because I didn’t experience what it’s like to have a regular salary.
So the first few years it was very hard because you have your batch mates who are doing so well. They’re investing in a house, buying a car, and they can do more international vacations and stuff. So the first few years it was very challenging because you just feel like you were hand to mouth and always almost broke. I would really question whether I made the right decision. But I think in the last few years it’s finally all coming together. I have gone through so many years of not getting it right that when something comes together and your business is growing and you’re doing so well and your company is doing well, you don’t take anything for granted.
I don’t think any entrepreneur can have the pleasure of creating something which is massive and creating something valuable without having to go through those painful days of not knowing how they’re going to make the payroll, or how they’re going to make ends meet. I think entrepreneurship comes with a lot of struggles. And then there are some upsides. So it’s not something that anybody can think about taking. You have to really be prepared for it. You can’t go into it saying that I’m going to try for two years. I know a lot of people who say, I’ll try for two years. If it doesn’t work out I’ll pick up a job. If you have that deadline it’s not going to work out so might not as well put in those two years. It’s going to take longer. So if you’re not enjoying the journey, and if you’re not excited about the everyday process of building, then it’s never going through. Then you might as well take up a job and not waste your years trying to create that. You have to really love every day of what you do. And that whole ups and downs should be something that you enjoy if you want to become an entrepreneur.