Kaushik Mukherjee, Co-founder, and COO, SUGAR Cosmetics writes about the impact felt by the personal care & beauty sector due to COVID-19 and how the brand coped with it.
When I look back at the time when it all started about half-a-year ago, the first thing I recall is a tweet I’d shared that garnered quite a few eyeballs (and laughs) in the middle of the lockdown:
And why not – in a year as spectacularly unpredictable as 2020, even dark humor had a place.
Let’s get something straight. Most companies understand that business moves in cycles and one has to be prepared for windfalls as well as emergencies. It’s just that there is some reaction time where those in the industry can read the tea leaves and predict when things are going to go south and prepare.
It’s that word – “prepare” – if there’s anything I think we will all remember wistfully from March 2020, is that we never got time to prepare.
And moreover, we never got time to celebrate:
The last six months have taught us so many lessons in surviving, reprioritizing, and most important of all, communicating with all our stakeholders – be it customers, colleagues, or investors. With businesses left grasping at straws, beauty brands pulled out all stops to stay afloat and keep the wheels churning. I cover a few of them below under the four classic marketing heads:
The most immediate impact on the beauty industry was the brutal division of the universe into what was essential and what was non-essential. Overnight, a lot of brands changed their product portfolio to push existing essentials and manufacture new essential product ranges under existing brands. There were hand sanitizer, door handle sanitizers, vegetable sanitizer – anything was fair game. And masks – any and every brand started making them get some cash flows coming in. While for some brands, this was a matter of existence, there were quite a few others who took this as an opportunistic play to expand into new categories that would continue to augment the existing business post lockdown.
Here’s what we did: We were wary of shuffling our product portfolio without having a clear sense of how long-term the trading restrictions would last. Once we had a sense of non-essentials trading by May end, we decided to wait it out instead of diversifying or pivoting and giving up the positioning we had built with SUGAR in the color cosmetics category over the years.
With the loss of sales due to both trading restrictions and physical stores being shut – a lot of brands presumably ended up with excess inventory. This led to unnaturally high off-season discounting by a few brands who were possibly more cautious about losing too much shelf life on their products.
Regime-based skincare products also sported aggressive discounts on combos and kits since it made sense to push a one-time higher average-order- value sale in the face of uncertain availability of products for the end consumer
Here’s what we did: Fortunately, the color cosmetics category enjoys a 36-month shelf life and with the usual product velocity we see, a trading halt of two months – though painful, did not push us to even consider using discounting as a lever that we’ve avoided right since the inception of the launch. What we did was offer complimentary masks with all purchases and special combo prices on products that fit the narrative of the season, such as- our Aquaholic Moisturizing Stick hydrates the face without you having to touch the face and it started skyrocketing so abruptly that we had to give it more presence on our website & apps.
This was the game-changer. India is a market where near 95% (if some reports are to be believed) trade happens via offline retail. So when that is shut for an extended period of time, the supply crunch causes the demand to displace to the only available channel – eCommerce.
Across-the-board, we’ve seen customer acquisition costs come down by 30-40% of their pre-COVID numbers and a lot of direct-to-consumer or digitally-native brands like us have been flooring the accelerator to get as many new first-time customers at this artificially deflated cost as we can.
One innovation that we’ve seen lately, is some brands setting up mobile shops on buses or trailers to take their assortment to the customer. While innovative for sure, it was mostly led by brands that didn’t have a well-developed direct-to-customer eCommerce channel and on the contrary, had a large headcount in their retail teams, that had to be deployed to push on-ground sales by any means possible.
Here’s what we did: While several other eCommerce companies stopped taking Cash-on-Delivery orders during the lockdown period to stop customers from placing orders that may be canceled at a later stage, we did exactly the opposite. Not only did we keep COD open all through, we even dropped our shipping charges for orders under 500 to keep the orders coming in because every order gave us a chance to communicate with an established context with our customers once we were allowed to ship again. It was this that led to June being our highest sales month ever on our D2C online channel (website & apps).
During the first few months of the lockdown, there was such unpredictability of supply that most of the promotions were limited to online channels. The offers had a clear bias towards new shoppers and this incentivized first-time visitors to get over their inhibitions while giving eCommerce a try. We’ve also seen a lot of brands use the time to build communication with their core fan base by speaking of issues other than sales – work-from-home issues, safety- and-hygiene guidelines.
Here’s what we did: Our hypothesis was that with our customers being indoors, they would spend more time on their mobile devices. Fortunately, both our iOS and Android apps went live in January this year and their share of sales on our D2C channel increased from 10% in Jan to 60% at present because we’ve been able to mesh together a strong content play along with the existing commerce functionalities. Our decision to double-down on content promotions also skyrocketed our Instagram presence, where we scaled from 300K followers at the beginning of the year to almost 800K as I write this.
In a way, there’s a lot that has been lost this year in terms of time and sales. However, it’s also given beauty brands across the spectrum some time to understand and plan the essentials and non-essentials, the short-term and the long-term, and above all – build an even deeper and more authentic relationship with their users.
This piece has been authored by Kaushik Mukherjee, Co-founder, and COO, SUGAR Cosmetics.