India’s beauty D2C space is booming, but SEA’s may be even bigger

Putra Muskita co-reported this story.

India’s direct-to-consumer beauty market is turning into a beast, and not even the Covid-19 pandemic can stop it.

In the past four years, beauty D2C startups in the country have raised over a billion dollars, with nearly US$900 million picked up in just the last two years, according to Tracxn data. VC firm Lightbox calls it the most crowded space for VC money to flow into, with over 80 brands coming up in the past four to five years.

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There has been a similar increase in D2C beauty brands across Southeast Asia. However, while beauty marketplaces such as Sociolla are backed by investors such as East Ventures, only a handful D2c brands have raised VC money so far.

But that might change soon, especially considering that the opportunity in Southeast Asia may be even bigger than in India. According to Euromonitor estimates, the South Asian country had a US$14 billion beauty market in 2020, while the beauty industry in Indonesia – Southeast Asia’s largest market – was already valued at US$7 billion, points out Alda Wardhana, vice president of investments at East Ventures, which has also invested in D2C beauty brands.

“If you look at spend per capita, [Indonesia’s] is still quite low compared to other developed markets, so we do see there’s room to grow especially with the growing middle class,” she explains.

The beauty market: India vs SEA

Perhaps the most notable growth story in India’s beauty D2C market has been that of Mamaearth. The beauty and babycare brand is looking to go public in 2023, targeting a US$3 billion valuation.

Another beauty player, The Good Glamm Group, raised US$150 million late last year to become a unicorn valued at US$1.2 billion. The company, which is backed by the likes of Amazon, Warburg Pincus, and French cosmetics retailer L’Occitane, is the parent of D2C brand MyGlamm and has also branched out to become a content-to-commerce company.

The Good Glamm Group had also acquired The Moms Co, a D2C brand focused on mothers and babycare, for US$67 million, which the company said was India’s largest D2C buyout in the beauty and personal care segment.

By contrast, Indonesia’s D2C beauty brands are still in their infancy. AC Ventures, for instance, invested a US$5 million seed round in Nama Beauty, a cosmetics brand co-founded by Indonesian celebrity Luna Maya.

Leaving aside Sociolla, much of the funding in the archipelago has been focused on social commerce firms like beauty-focused Raena, which raised US$10 million earlier this year, and Kitabeli, a general social commerce player that announced its entry into beauty and personal care after a US$20 million round just this week.

But things appear to be changing. Base, an Indonesian D2C vegan beauty brand co-founded by a Gojek alumnus, which first raised funds in 2019 from East Ventures, raised an undisclosed pre-series A round late last year. It also said that revenue had grown 24x over the previous 12 months.

“Extremely high” margins