Beauty and personal care scores better than food in direct-to-consumer segment: JP Morgan

Beauty and personal care brands, as compared to food brands, score better in the direct-to-consumer segment, said Latika Chopra, executive director, consumer research, JP Morgan.

"Beauty and personal care brands have better gross margin and are able to cover the cost of delivery better," she said.

According to JP Morgan, beauty and personal care segments are growing their market share and fragmentation can be witnessed in select categories as well. The leading D2C players include Mamaearth, WOW, Sugar, Plum, Good Glamm, Bombay Shaving, Beardo, Just Herbs, Mother Sparsh, among others, as per JP Morgan.

Chopra also said that D2C brands are challenging the status quo. "They are challenging the way incumbents have typically thought about the beauty and personal care category. They have actually come out with figuring out consumer niches and basically following a lot of data-backed decisions on marketing, how to reach a consumer base in a very targeted manner. So I think some of the new trends, practices and approaches they have started towards consumers are not going to go away," she said, adding that incumbents have got the wake up call and they too are approaching the new target consumer segments in a similar manner.

Chopra said she doesn't think the D2C team is going away, However, the challenges they face include expanding to the offline market, consistent media investments, ensuring scalable consistent supply chain.

She also added that D2C brands are following consumer niches. However, they would have to go offline to scale further.

"The D2C brands have to scale themselves beyond the whole online space into the offline one. They also have to learn a little bit from the traditional channels, how to adapt their product base to that. They also have to be more watchful about the profitability aspect of it and we are seeing D2C brands incrementally do so," she added.