Digital-first brands must diversify sales channels to ensure scale: Mensa Brands CEO

Ananth Narayanan, founder and CEO of Mensa Brands, believes that it is impossible to build a digital-first brand in India.

“Until people can touch and feel your product, it won’t become real,” he noted, emphasizing the importance of diversifying sales channels for direct selling (D2C) companies.

While talking by the fireplace with Your story Founder and CEO Shradha Sharma at TechSparks Bengaluru 2024 Narayanan explained that in an ideal scenario, at least 40% of total sales should come from multiple e-commerce platforms. Moreover, approximately 10% of sales should come from fast trading, 20% from the D2C channel, and 30% from offline channels.

“The cost of traffic for an individual D2C brand will always be higher, so you need to be able to use the e-commerce channel,” Narayanan said, explaining that brands should not swing the pendulum the other way by focusing solely on the e-commerce channel because it will had an impact on the number of repetitions.

The serial entrepreneur, who co-founded the medical startup Medlife, emphasized that effective brand building requires a strong focus on product differentiation. He noted that in today’s landscape, digital branding is highly democratized, which makes it challenging for early-stage D2C brands to maintain a competitive advantage as barriers to entry are low, leading to an influx of new entrants.

He further noted that a large market to reach attracts larger players and competitive analysis, adding that companies should look at niches rather than crowded markets.

“Being a 30-50% market share player in a small space… you can make profits and if you take it globally, you actually have a large market and you can build a Rs 200-1,000 crore business,” he said. explained.

Referring to the changing fast-commerce ecosystem and changing consumer behavior, he noted that all planned purchases are turning into unplanned purchases. It expects the unit economics of the fast trade channel to stabilize as density increases.

Grocery, general merchandise and consumer electronics are larger categories that are ideally suited to rely on fast trade, but Narayanan shared his doubts about growing fashion as a category in fast trade channels.

Mensa Brands, operating based on the house of brands model, currently boasts a portfolio of 25 brands from the cosmetics and FMCG, fashion, home and garden and content industries. Mensa Brands, founded in 2021 by Narayanan, who was previously CEO of Myntra’s fashion vertical Flipkart Group, has secured $201 million in equity capital, according to market research platform Tracxn.

The company last raised $40 million in debt from EvolutionX in October 2023.