The mystery of Good Glamm’s global gambit

Amid all this, the group has also been working on a restructuring plan, which was triggered by the need to cut costs. With the funding taps running dry, the group’s investors, who include Prosus, Accel Partners, Warburg Pincus and Bessemer Venture Partners, put in around $42.5 million in March and April to tide the company over till it became profitable.

In a move to cut costs, the group has let go of over 120 employees in the last 12 months. Separately, co-founder Priyanka Gill and Good Glamm Brands CEO Sukhleen Aneja have quit in recent months. Gill, however, continues to remain a co-founder.

Listing aspirations

The Good Glamm group, which is looking to go public, has posited that to achieve its target of profitability and grow into its revenue targets, it needs to go overseas and crack the competitive US market. It aims to turn profitable over the next two quarters and continue scaling up revenue. Expanding overseas, the company believes, will help it hit its revenue, growth and profit milestones. “It will increase our total addressable market,” Sanghvi told Mint.

Industry watchers, however, feel the group needs to execute a big winning strategy or have a big pull brand to become successful and eventually list. The company is aiming to hit three times its last reported numbers by Diwali 2025. Good Glamm has not yet filed its 2022-23 financials—the company has revealed that it generated ₹640 crore in revenue in 2022-23, but did not disclose losses.

“We will look to have around ₹1,500 crore to ₹1,700 crore in revenue leading into the IPO, with international contributing around 30-35% of that,” said Sanghvi. Crucially, it wants to go public while maintaining four-six quarters of profitability. For that to happen, Good Glamm needs to scale up its domestic business, and get its newly launched international business to fire.

Overseas ambitions

International expansion is “very, very tough,” said the former CEO of a beauty and skincare brand who didn’t want to be identified. Indeed, Indian brands have struggled to crack the international market. Companies such as Godrej Consumer Products, Dabur and Marico took decades to build their international business, and even this was mostly in emerging markets. Marico first expanded overseas via an international subsidiary in 1999. However, these companies also expanded through foreign acquisitions.

“Venturing into an overseas market requires a fresh approach towards product formulation, local marketing execution, local nuances, and bandwidth both from a management and resource point of view,” said Rohan Agarwal, director, Redseer Strategy Consultants, an advisory firm.

Sanghvi argues that the move overseas will help Good Glamm tap into a wider target market. “Launching in the US has allowed us to create a global distribution platform, which allows us to take our Indian brands globally on the same cost base. This expansion doesn’t just increase revenue but also gives us significant operating leverage, thereby magnifying operational efficiency over time and increasing the bottom line also significantly,” he claimed.

Good Glamm has invested around ₹250 crore over the past three years on its international expansion, including its partnership with Williams. “All the investments were made last year, prior to the fundraise we did this year,” said Sanghvi. He added that the group does not need to pour more money into marketing or advertising for its US expansion. The venture has already yielded returns, he insisted, without providing any specifics.

The market, however, is sceptical. Most brands that have gone international have done so with a war chest. Good Glamm doesn’t have one. “The deal with Serena is super smart for Good Glamm. It gives them credibility and with Ulta they get good distribution,” said Zia Patel, who has worked with several large Indian brands and is the brand strategy director at Ochre Brands in the UK. But Ulta also has more than 25,000 products from over 6,000 brands, including its own label. Retailing is also a hard way to earn money, said Patel.

“They (Good Glamm) have good distribution, packaging, a story, name and product range. The thing I am less sure about is how they are going to build awareness and brand consumer loyalty given that Wyn is not a niche brand. What’s the experience going to be like? How is Wyn going to stand out in this crowded market apart from Serena and the story about performance? This will require investment in marketing and smart social influencer strategies,” said Patel.

Good Glamm’s plans for its international business also include giving its domestic brands a boost. But it has not fully laid out how it intends to do this, or why US consumers will be interested in its Indian brands. The company also needs to conserve as much cash as it can amid the funding drought.

Content to commerce play

To understand Sanghvi’s intentions, one has to zoom out and look at the company’s claim to fame—its content to commerce play. MyGlamm, a direct-to-customer (D2C) beauty products brand, was founded by Sanghvi in 2017. It acquired POPxo, a digital media platform, in 2020, and BabyChakra, an online parenting startup founded by Naiyya Saggi, in August 2021. The two acquisitions were a key part of its plans to build a content-to-commerce play. Other brands would also be acquired along the way. The various businesses were consolidated under the Good Glamm Group, with Gill and Saggi coming on board as co-founders.

A year later, the Good Glamm Group reorganized its business by creating three divisions—Good Brands Co. (for consumer goods), Good Media Co. (digital media properties), and Good Creator Co. (influencer engagement)—following a string of acquisitions. It added a fourth vertical, Good Community (an omnichannel network of consumers), in 2023.

The plan was to use the media platforms to engage consumers, drive traffic to the websites of its brands, and ultimately sell these D2C brands, including those of the flagship cosmetics brand, MyGlamm.

Online brands derive a lot of sales from influencers on Instagram, Facebook and other social platforms. Good Glamm, however, believes that it is better to have your own ecosystem of content and influencers. This saves the fees paid to other e-commerce platforms and gives the group more control over consumers.

Crucially, this model, Sanghvi felt, would build loyalty and bring down customer acquisition costs in the long run. Good Glamm’s India business revenues have grown from ₹50 crore in 2020-21 to ₹640 crore in 2022-23 by relying on this content-to-commerce strategy, he told Mint.

Our acquired brands have grown at an aggregate of 200% since acquisition.
—Darpan Sanghvi

That growth was driven by an aggressive acquisition strategy. Between 2020 and 2022, Good Glamm bought 11 companies; half of these acquisitions were around content and the creator economy, including Twinkle Khanna’s Tweak India and viral media website ScoopWhoop, to get access to their customer base.

It also acquired video analytics business Vidooly and influencer platform Winkl as well as video commerce business Bulbul, which would go on to form the core of its Good Creator Co. influencer marketing business. And then it acquired core consumer brands such as personal care brand St. Botanica and home and hygiene business Sirona Hygiene.

“Our acquired brands have grown at an aggregate of 200% since acquisition on the back of our unlocking direct-to-consumer (DTC) as a channel. Pre-acquisition, the acquired brands cumulatively did less than 10,000 monthly orders on DTC and today they do over 750,000 orders a month,” Sanghvi said.

To an extent, the strategy appears to have worked. The group says it has achieved over 18 million transactions and is aiming to hit 40 million over the next three-four years through this strategy. Good Glamm is also among the few online-first beauty and personal care companies in India to have scaled the ₹500 crore milestone. Others that have done so include Mamaearth and Sugar Cosmetics, as well as retailer Nykaa. But the challenges for Good Glamm are unique.

“If you need to grow in India using the content-to-commerce strategy, you need the right product-to-market fit, and a sizable enough community/target audience to have any material impact on your sales,” said Agarwal. Others are also sceptical about whether the content-to-commerce strategy will work on a larger scale.

Good Glamm has also seen a shift in its customer base. In the first two years, the bulk of the company’s revenue came from the metros. Currently, 70% of its revenue come from tier 2, 3 and 4 markets. Of this, 40% is generated by flagship MyGlamm. Sanghvi noted that the content-to-commerce strategy, which had allowed the company to drastically reduce marketing spends, had led to the shift from tier 1 to lower-tier markets.

“70% of our top-of-the-funnel comes through content platforms. We acquire between 400,000 to 500,000 new customers a month. We have grown nearly 3X in terms of orders in these last two years, while keeping our customer acquisition at six million new annual customers,” Sanghvi said.

Poor brand recall

India’s beauty and personal care market has become increasingly competitive in the last couple of years. If Good Glamm wants to scale up, it needs to spend more on brand building, especially on relatively new brands, multiple executives familiar with the business said, asking to remain anonymous.

Despite the big marketing push in the early years, the company’s brand recall is still weak, industry executives noted. Of its own brands, MyGlamm has seen better success, generating organic demand, according to those in the broader consumer goods industry.

“While some brands have benefited via their own D2C channels, overall, it’s been a challenge. Even though there are a lot of positives around the group’s strategy, one thing they haven’t been able to do is invest behind brands in the right manner. They are not at a stage where consumers are asking for their brands; they are still in a push model,” said a third executive, who is within the company’s ecosystem.

The company said its acquired brands have benefited from its strategy. Over the last 12 months, however, it has had to slash costs. Specifically, Good Glamm has reduced its marketing spends to 30% of its revenue from 75% three years ago. “Over the next year, we want to bring it down to 20-25%,” Sanghvi said.

Sanghvi said the company’s rate of new customer acquisition has remained the same, despite cost cuts.

“Most definitely it (cost cutting) would have had a significant impact on their growth prospects. There is a correlation between the drop in marketing spends and revenue, especially for new-age brands. You have to also understand that online brands are not trial driven and depend heavily on discounts,” said Red Seer Consulting’s Agarwal.

Thorny integration

Amid the push for profitability, Good Glamm is also in litigation with some of its shareholders over unpaid dues, something it needs to resolve ahead of its public listing.

Good Glamm had paid around ₹100 crore to acquire a stake of 60-70% in Sirona Hygiene, with the remainder to be acquired in tranches over the next two years.

Last month, it entered into an arbitration with the Indian Angel Network (IAN), one of the shareholders in Sirona Hygiene, in which Good Glamm had acquired a majority stake in 2021. Weeks earlier, three shareholders—IAN, the founders of Sirona Hygiene and NB Ventures—served a default notice on Good Glamm for unpaid dues related to the 2021 Sirona acquisition.

At the time, Good Glamm had paid around ₹100 crore to acquire a stake of 60-70% in Sirona Hygiene, with the remainder to be acquired in tranches over the next two years. Initially, the tranche due to be paid out in 2022 was deferred to 2023. In the early months of 2024, three shareholders of Sirona Hygiene triggered the ‘put’ clause, which allowed them the right to sell the rest of their stake to Good Glamm. However, both Good Glamm and the shareholders are now claiming a default.

“There has been legal back and forth…they are digging up old contracts and making farcical allegations so that they don’t have to pay us,” said one of the shareholders, asking to remain anonymous.

Good Glamm, however, said in a statement that it was contractually compliant.

The founders of Moms Co. and the company are also in litigation over the remaining 10% stake that Good Glamm needs to acquire. Separately, Good Glamm has negotiated a later payment deadline with the founders of Organic Harvest to acquire the 49% stake in that company that it does not own (Good Glamm had acquired 51% in 2022).

A Good Glamm spokesperson said that the company has not defaulted on any of its obligations to Organic Harvest.

One founder also acknowledged unpaid dues related to the acquisition but declined to be identified. “The company has taken a call that it needs to focus more on the business as opposed to paying off dues,” the founder said.

Several founders Mint spoke to are of the view that Good Glamm has scaled the acquired businesses and benefited from the acquisitions, so it is only fair that the dues are fully paid.

With all these problems simmering in the background, the company is gunning for a public listing next year. Clearly, if it is to get there, Good Glamm will need to stabilize its domestic business, scale international revenue, resolve all outstanding issues, and soothe its shareholders.