MamaEarth stole the spotlight of the cosmetic & skincare industry by creating natural, vegan, organic, and toxin-free beauty products. Launched in 2016 by Ghazal Alagh, it acquired over 1.5 million consumers within 7 years with revenues touching Rs.952.4 crores. How did it achieve the heights of success within a stipulated time? Because of its unique and strategically effective business model. So, in this article, we will shed light on the “MamaEarth Business Model.”
A Brief Overview of MamaEarth
Before diving into the MamaEarth business model, let’s have a quick look at the company.
|Type of Industrial Segment||Cosmetics & Skin-care industry|
|Founders||Ghazal Alagh Varun Alagh|
|Headquarters||Gurugram (Haryana, India)|
|Type of Brand||D2C (Direct-to-Consumer)|
|Market Valuation (FY22)||INR 9,840 crore|
|Revenue (FY22)||INR 952.4 crore|
|Net Profit/Loss (FY22)||Profit of INR 19.8 crore|
MamaEarth is an Indian personal care brand registered under Honasa Consumer Pvt Ltd. Its prime objective is to provide toxin-free cosmetics and skin-care products made from natural ingredients. MamaEarth business model is primarily based on its-
- Working Strategy
- Revenue Sources
- Marketing Strategies
Working Strategy: How Does it Work?
Beginning with the first part of the MamaEarth Business Model. The working strategy! MamaEarth is one of the most promising D2C brands in India. This means, it not only sells beauty products but also manufactures them. Its working strategies involve the following key points-
Formulation & Production of high-quality products
This is the first step for the successful MamaEarth Business Model. MamaEarth conducts extensive research and development to create formulations that are free from harmful chemicals and toxins, ensuring the safety of their customers.
The founders believe that the quality of the products is the chief factor that can do miracles for their brand. Do you know it is the first company in Asia that was certified by Made Safe? It puts heavy efforts into innovation, experimentation, trials & testing, and feedback.
As per the founders, it is a mum-powered company that works with many mothers and other individuals. These individuals are part of clinical trials. Only after getting positive feedback and results, it finally launches the products in the market. It regularly launches new products to keep its product offering fresh and relevant. Also, all of its products are approved by the FDA.
Lean Innovation Cycle for Customer-Centric Approach
MamaEarth prioritizes customer satisfaction and loyalty. This leads to a lean innovation cycle. In lean innovation, you follow the principle of increasing the efficiency of products based on your consumer’s feedback. Here, you continuously experiment to improve the quality of products to satisfy the customer. Thus, MamaEarth actively seeks and incorporates customer feedback to improve its products and services.
Apart from that, it provides the following features to connect with the target audience and gain customer loyalty-
- Provide a seamless online shopping experience
- Offer detailed information about the product
- Provide responsive customer service
- Free shipping
- Easy returns
MamaEarth utilizes data and analytics to drive decision-making across its operations. It thoroughly analyzes customer feedback, sales data, and market trends to gain insights and make informed business decisions.
D2C Sales (Distribution Channels)
MamaEarth formulates its beauty products that are later produced by contract manufacturers. Thereafter, it sells the products through D2C distribution channels. Do you know what is the best thing about the D2C (Direct-to-Consumer) distribution channel? You won’t have to depend on the middlemen!
Therefore, MamaEarth primarily sells its products directly to consumers through its e-commerce website and mobile app, as well as through online marketplaces such as Amazon, Flipkart, and Nykaa. This eliminates the need for middlemen and allows them to have a direct relationship with their customers.
Range of Products
As you know, MamaEarth focuses on developing and selling personal and baby care products that are formulated with natural ingredients. As per their claim, the products are free from harmful chemicals such as sulfates, parabens, and artificial fragrances. It includes a wide variety of products such as shampoos, body washes, lotions, oils, diapers, and more, catering to the needs of both babies and adults. Also, it includes baby-related clothing, accessories, toys, pregnancy care products, etc.
Initially, it produced products only for babies and mothers. Later on, it expanded its customer base by targeting the millennial generation. It included both men and women. Apart from serums and creams, it also offers aftershave lotions and beard oils.
Sustainability and Social Responsibility
MamaEarth’s business model also includes a focus on sustainability and social responsibility. It uses environmentally friendly packaging, promotes recycling and waste reduction, and is actively involved in various social causes such as child welfare, environmental conservation, and women empowerment. We will discuss it later in the section on campaigns of marketing strategies.
Partnerships & Collaborations
Do you remember when you saw or heard the name of MamaEarth for the first time? Probably in some vlogging channel, right? Because partnerships and collaborations are one of the chief working strategies of this company. MamaEarth collaborates with influencers, mommy bloggers, pediatricians, and dermatologists to endorse and promote their products. It also establishes strategic partnerships with online marketplaces, retail stores, and other brands to expand its reach and customer base.
Do you know, an ample number of D2C brands are going offline? Why? You may wonder! Well, we have explained why D2C brands are going offline mode. That’s why, in addition to its online sales channels, MamaEarth has also established a presence in offline retail stores. For example- pharmacies, baby stores, and supermarkets. Here, the aim is to expand their reach and accessibility to customers.
Revenue Sources: How does it make money?
You may think that MamaEarth would have been earning by simply selling its products on e-commerce. Well, that’s true because that is their primary source of income. But the revenue sources are not confined to product sales. The various revenue sources of MamaEarth are-
Direct-to-consumer (D2C) sales
MamaEarth operates its own online store where customers can browse and purchase their products. D2C sales are a key revenue source for MamaEarth, as customers can buy products directly from their website or mobile app, and MamaEarth earns revenue from the sales of its products at a markup over production costs. However, baby products generate only 20% of brand revenue. Whereas, the majority of revenue is generated by personal care products (nearly 80%).
Since MamaEarth manufactures the products on its own, it enjoys a healthy gross margin profile i.e. about 65% in the personal care products category. This factor enables MamaEarth to make a healthy investment in marketing.
Have you heard about the subscription-based service called “MamaEarth Club”? Here, you can subscribe to receive regular deliveries of your favorite products at discounted prices. The subscription model generates recurring revenue for MamaEarth, as you need to pay a subscription fee for the convenience of receiving products on a regular basis. This acts as a revenue source for MamaEarth.
As you have read above, like other D2C brands, MamaEarth is also going offline. To sell its products through physical retail locations, it collaborates with various retail partners, such as supermarkets, pharmacies, and specialty stores. These partnerships provide MamaEarth with additional distribution channels and revenue streams, as they earn a percentage of the sales made through these partnerships.
MamaEarth has a strong offline footprint of over 40 cities in India. It has more than 2000 multi-brand brick & mortar stores.
MamaEarth collaborates with other brands or influencers for co-branded products or promotions. This allows MamaEarth to leverage the reach and influence of other brands or influencers, expand its customer base, and generate additional revenue through joint marketing efforts.
One such example is the collaboration of MamaEarth with Anita Hassandani for haircare, skincare, and baby care categories to tap millennials.
Marketing Strategies: Ability to connect with the target audience
Apart from the organic products, another chief reason that made MamaEarth a popular beauty brand is its attention-grabbing marketing strategies. The objective of MamaEarth’s marketing is to connect with the target audience. MamaEarth primarily employs digital marketing strategies to promote its brand and products. They create engaging content, share product updates, run promotional campaigns, and engage with customers through social media platforms like Facebook, Instagram, YouTube, and Twitter.
Some of the significant marketing strategies of MamaEarth are-
Influencers have the capability to execute a positive effect on their influencers belonging to a specific niche. So, the influencers especially those belonging to the beauty & skincare categories play a crucial role in MamaEarth’s product marketing. Therefore, it collaborates with influencers, bloggers, and content creators who align with its brand values and target audience. These influencers create content around MamaEarth products, share their experiences, and promote the brand to their followers. This helps MamaEarth to expand its reach and credibility among its target audience and to increase its customer base.
If you visit the official website of MamaEarth you will find numerous blogs related to beauty, skincare, and hair care. The prime objective of these blogs is to create informative and educational content on topics related to organic and natural products, sustainability, parenting, and health. For example- the best serum for Acne prone skin in India, Skincare tips for healthy & clear skin, etc.
This content helps to establish MamaEarth as a thought leader in their industry and provides value to their target audience.
Recognition through Product Packaging
If you carefully observe the packaging of MamaEarth’s products, you will notice how visually appealing they are! MamaEarth places a strong emphasis on attractive and eco-friendly product packaging that is informative, and environmentally conscious too. It helps to create brand recognition and generate word-of-mouth marketing.
MamaEarth encourages customers to leave reviews and testimonials on their website and social media platforms. Positive customer reviews and testimonials serve as social proof and help to build trust among potential customers, influencing their purchase decisions. Thus, it is a potential way for word-of-mouth marketing.
Loyalty and referral programs
MamaEarth has numerous loyalty programs like “MamaEarth Reward Points” and “Goodness Insider” that encourage repeat purchases and customer loyalty. They also have a referral program where customers can refer MamaEarth to their friends and family in exchange for discounts or other incentives, which helps to generate word-of-mouth marketing and increase customer acquisition.
Marketing through Brand Ambassadors
Brand endorsements are highly effective when it comes to marketing. As of now, MamaEarth’s brand ambassador is Shilpa Shetty Kundra. The popularity of celebrities has immensely benefitted MamaEarth in brand endorsement and marketing.
By now, you must have realized that MamaEarth is not just a brand that sells cosmetics. But an entire ecosystem around the manufacturing and selling of organic vegan personal care products. The mum-powered company is one of the fastest-growing beauty brands. It gives tough competition to well-established brands like Himalaya, Johnson & Johnson, Wow Skin Science, Plum, etc. The innovative approaches in MamaEarth business model are the underlying secret with which it achieved this incredible growth and success!