How to Import from China | In the Den with Perfora | Sarthak Ahuja | Episode 3

If you want to start importing from China to build a business in India, this episode is going to be a master class where I'm going to sit with Jatan Baba who is the founder of Perfora to

understand exactly how they went about designing their product, finding the right factories in China, later on assembling the product in India, listing it on marketplaces and building a

business that today does about 100 crores of annual revenues. Stick around.

[Music] How did you go about sourcing your toothbrushes?

Because it's an electronic product. I'm

just assuming a lot of electronics essentially originate from China.

Yeah.

Yeah. Shenzhen. 90% of the world's electronics come from come from Shenzhen.

So did you go look at designs which already existed in China or somewhere else in the world? How did you find the factories and what is the process of sourcing like?

To give you a sense like you mentioned uh most electronic products are being manufactured in China. Shenzhen which is a city in China is a hub of electronics

manufacturing. Uh now what happens right

manufacturing. Uh now what happens right when you have to get a electronic product manufactured typically there are two parts. I'll just explain the

two parts. I'll just explain the process. One is the plastic part and

process. One is the plastic part and second is the technology part. Right?

For any audio product or a hygiene product like electric toothbrush or a personal grooming product which is you know hair styling or you know for that matter a home cleaning appliance etc. So

there's a plastic part and there's a uh technology part the motor part of it.

Right.

Correct.

Now the plastic part is usually there's something called as injection molding.

Right. Correct. Uh which is what gives the plastic the shape and that has to be customd designed. So people will sort of

customd designed. So people will sort of you know engage an industrial designer.

He'll create the design. Then you'll do some 3D prototyping. You'll see okay this is fit for manufacturing. You'll

sort of embed the motor, integrate the motor. You'll see if the product is

motor. You'll see if the product is working fine or not. And if you like the design you'll sort of go ahead and place the order for mold. Now this mold creation process is a very expensive process and that is why a lot of people

end up just white labeling and sourcing what is already out in the market, what already a manufacturer has created in China. Uh so if you're typically in a

China. Uh so if you're typically in a trading business, you'll pick something which is already out there, white label it, white label it, put your brand if in case you're putting your brand out there and you'll start selling it, right?

That's how all the, you know, smart watches, you know, audio products, earphones, you know, etc. All the electronic products which we end up

using and consuming day in and day out are being manufactured. Now in this case I we figured out that to you know launch electric toothbrush and invest in a mold

and create a unique design it's a tentative cost of you know anywhere between 20 to 35 lakhs depends completely on the uh technicalities and

the intricacies of the mold and the design. We we knew that we can't sort of

design. We we knew that we can't sort of undergo this process. So we have to figure out a way. Now we figured out a design again which was very unique which was not being sold in the Indian market

which is actually not being sold globally anywhere and we spoke to the manufacturer and told him that we need this design we'll take the exclusive rights we'll sort of sign on a piece of paper and give you an x number of volume

every year for the next 3 years so that this can continue to remain proprietary to us. We just don't want to invest in

to us. We just don't want to invest in the uh in the design making process because one it's time consuming second it's expensive and third we don't have the confidence if we can even sell if we

make that you know buy like ballpark 30 lakh investment on day zero uh so yeah I think uh that's the route that we took we signed the document and in some way or form the manufacturer is also

charging and he disclosed it to us it's not that this was not disclosed some sort of a design fee with the every product being manufactured So it's kind of just a portion to those many number

of units. He's investing on it up front.

of units. He's investing on it up front.

He's added like a variable cost to each unit so that he can recover that cost.

But okay I'll step back a little. How

did you find the supplier like today if anyone sitting in India wants to start a business in electronics and realizes that okay I will have to source from China as of now I don't have an option.

Got it.

What do you think should be the first step for anyone who wants to do this?

Got it. So I'm going to sort of reverse this question a bit. Sure.

Let's consider you can't travel to China because that was the case with us and traveling to China to some extent requires some capital right on tickets on stay on visiting vendors etc. because they're going like you're nobody for

them right so you have to make each and every expense on your own. So let's

consider that you can't travel to China if you were to do this what all what I'm trying to understand what all avenues exist for someone who's willing to start because I'm going to talk about something that most people don't know.

So I just want to understand from you how would you do it if you can't travel to China?

If I can't travel to China, I I mean I I come with a bias that I've been to China multiple times and I do know a bunch of people there but if I had no context

um there are certain online sources where I can really get in touch with people. One is as I mentioned made

people. One is as I mentioned made inchina.com there's that's a website that's a website where made I am I'm awareina.com similar to the audience correct similar to Alibaba which is not banned in India

so you can access it there is hkt.com then um the canton fair actually lists all its vendors on its own website where you can kind of

look at a portfolio and stuff like that I would go on these places select the category where I want the vendor Um, I would look at all the vendors who

are listed. I would start shooting them

are listed. I would start shooting them emails with a brief on what kind ofQ product am I looking at and are you someone who will be able to supply. I

could also go to importi.com um where a lot of the US-based D2C brands essentially um their entire

sourcing infrastructure in terms of the vendors who supply to US companies are are listed and you can see what kind of shipments are they sending you know how large a supplier they really are there

are contact details so I would pull out all of this information I would realize that as a no-name brand or someone wanting to start today If I shoot emails

to 100, maybe 15 will reply and maybe four or five will be relevant leads for me to kind of explore further. So, first

I would do this. Second, I would found find someone in my founder network um who could send me like a VChat invite, download a VPN, get in touch with them

and through that VChat try and then get in touch with all these founders on WeChat and then all these suppliers in China on WeChat and figure out whether they'll entertain myQS and stuff. That

would be the starting point. But I

understand if I've never had any interaction with China, that would also be very intimidating for me because I'm like, okay, do I even trust this guy?

How do I send payments to him? How do I get to test the product? How do I get the shipment in? And my lead time is going to be like really large. And the

investment to go to China, I know for for two people would be anywhere between 2 to three lakhs. It can be done for about say a week or so. And I would say

it may make if I have that kind of capital two to three lakhs, I might as well just go down to a Shenzhen or a Guangzo.

Shenzhen in the case of electronics.

Yeah.

And just uh go to the retailers, go ask to be seeing around, visiting their factories and taking it from there.

That's my broad answer, but I'd love to know how you did it.

Got it. No, I think you've covered pretty much all cons and considering the fact that we can't travel to China and that was the case with us. Correct. So

there are a lot of sourcing companies out there, right? You get in touch with them, you give them your requirement and they'll sort of do the ground work for you and they're really well connected with the uh ecosystem, manufacturing

ecosystem in China and they'll help you source the products etc. What we did was what to some extent you mentioned instead of using an import Yeti we used something called as Volza

which is again correct but it's a paid database.

It's a paid database and we had access to that it's not too expensive. Uh but

what happens as far as I know import Yeti is mostly about US correct right WZA covers pretty much the entire world right and WZA is based out of India as so it's more relevant to the Indian

yeah no but they also have access to a lot of US import data uh what we wanted to do was we were very clear and I was very clear that we do we want to work with a manufacturer that's not currently supplying to India that we

can test because if they're not sending any shipments here in India second what this helps do when we're looking at the import data for let's say a US country

who's like who is the manufacturer supplying to XYZ brands you're able to establish some sense of trust and some sense of quality right so like for

example if Walmart is sourcing from a factory in China which they are you know the Walmart will have a very strong QC process quality control process right so you're very assured that this

manufacturer one knows the QC process of a Walmart and can deliver the same quality to you because their system has been built to correct comply with it.

Correct. So quality is taken care of you know. Second thing that also

know. Second thing that also comes into picture when you're when you're working with a Walmart uh you will know the factory will have a bunch of people who can speak in English. So

that gets sort of uh you know taken care of that language is taken care of quality is taken care of and then you know uh that this this this manufacturer

is doing business in certain uh certain volume because Walmart will also not work with a very very small factory out there right so they can handle volume and scale so that's how we figured out a short list of

but then that's also something that goes against someone who's a young brand is because if they're already supplying to a Walmart they would also have much

largerQs and these kind of factories are not always interested in like working with smaller brands right yeah no perfect I think you've picked up on the right point but one thing that I mentioned we were very clear that this

company should not have any business in India this manufacturer right the pitch that we had that India is one of the fastest growing economies in the world it's a market waiting to be disrupted

if you want a entry into this market we are going to be the people, right?

And that is why, you know, typically the MOQs at least for electric toothbrush when you're looking at some proprietary design, unique design, a bunch of different customizations because we had

also made certain changes in the product in terms of the modes that we wanted, the bristles quality that we wanted, etc. U is usually anywhere between, you know, 6 to 10,000 units, but we got it

down to about 1500 units, right? Because

of the India pitch that uh so they were willing to kind of invest in getting access to one more market.

Yeah, they're willing to invest and they're willing to open up the new market and this was like an inbound uh inquiry for them, right? They didn't

have to do any business development effort for this, right? And of course, you know, India is a big market. People

know about it globally and and like we were also looking at larger uh larger companies in the US who were sourcing from different manufacturers. But we

were also looking at I would say not really small D2C brands but midscale brands who like who their manufacturers were in China for similar set of products. Right? So that's how we

products. Right? So that's how we identified a very high quality manufacturer for our first product. They

also are based out of Hong Kong. They

have a global team. So you're very professionalized in the way they would communicate. Uh their agility and their

communicate. Uh their agility and their willingness to work with a young brand and especially open up a new market. So,

so I think a lot of things came together and we uh we decided that you know uh and we would do video calls, we would sort of evaluate uh you know what kind of factory setup do they have, what kind

of people do they have in R&D, what does the production line look like. So we did all of those virtual tours on Zoom calls etc. For example, if you typically try and work, if you send out 100 emails and

15 people end up replying out of 15, I'm pretty sure 12 people are going to the first thing they will say X amount is required to get ship any samples. Right.

Correct. Uh which is the standard procedure that we can't give any samples for free. Right. Correct. But in this

for free. Right. Correct. But in this case, in our case, the manufacturer is more than willing to okay, hey, I'll send you my products because we we're not even spoken about samples till first three meetings or so, right? We're just

purely doing the storytelling. We're

selling our background. We're selling

the India story. We're selling the vision that we had and they were like convinced and they're like okay we'll send you like a bunch of different samples take a look at it and we were very clear in the kind of brief that we wanted the kind of product that we

wanted. So that's how we ended up you

wanted. So that's how we ended up you know finalizing the manufacturer and then uh eventually launching the product.

Wow. Wonderful. So you've you've also touched upon two points that I wanted to get on next which is you've you've touched upon sampling.

Yeah. which is going to be a big part because if you're not going there, you would need samples to come in and test it out. And then

it out. And then the second is, you know, the third is quality control.

Yeah.

So, let's talk about sampling.

When this vendor sent you samples, was there only one vendor that you kind of you it was serendipity you got lucky that the vendor you spoke to, you identified it worked out or did you

evaluate like multiple vendors? And then

we evaluated multiple vendors. I

remember how many would you have spoken to? We

would have spoken to about 20 25 and we would have received samples from 8 n or probably 10 people. So yeah.

And was there like a clear differentiator to say out of these 89 one or two are clearly standing out or do you think most of those factories were pretty much the same in quality and and

No, they were like we were able to visually identify the differentiation in the product of what we wanted. Right. So

for example, uh unless we get the samples, we'll not really get to know what the product actually looks like, right? Like I mentioned, we were very

right? Like I mentioned, we were very clear, we wanted to do a a lot more like an ergonomic, sleek design which is travel friendly, etc. Uh like out of the

um you know samples that we would have received from 10 odd manufacturers in the early days, five, six, seven were not even there in terms of what we were looking at, right? So they were sort of

eliminated because the the product criteria didn't meet right. So we only had two three left and then we had to do more conversations to understand about their quality control about their R&D

about their willingness to work about their willingness to reduce theQs about their willingness to make changes on the product. Right? We wanted to launch ASAP. We wanted to launch an MVP

launch ASAP. We wanted to launch an MVP test it out and then come back to the go back to the manufacturer and say what are the things that we need to improve.

Got it. So you said that the MOQ initially is close to about 10,000 and you could bring it down to 1,500. Is

that correct?

So 6,000 to 10,000 that's the range.

Again depends on you know a lot of things. What is the product price?

things. What is the product price?

Because everybody's also looking at the entire PO value correct in dollars right they're not looking at number of units they're looking at whether it is worth the effort or not. Right.

So tell me for you the brush and average brush uh today what is the selling price and then how much does it cost the manufacturer to make? I would assume it

would be like a cogs of 25% on the I'm I'm taking a wild guess.

Yeah. Yeah. Yeah. But uh No, that's fine. But uh for us back then when we

fine. But uh for us back then when we started the brush costed about $4 Xactory, right? Back then you know uh

Xactory, right? Back then you know uh the exchange rate was also 75. So that

means about 300 X factory. Another 200

we'll add on uh uh on the shipping, custom fees, logistics, GST. another 200 250 odd

logistics, GST. another 200 250 odd rupees. So landed that brush would cost

rupees. So landed that brush would cost us about 550 odd rupees.

Oh, so that's but is that economic still true like in the sense when you're bringing in electronics from China?

Yeah. uh I my my working with certain other industries and not worked on importing electronics has been that typically if it costs say

100 x factory in China for you to bring it to India would cost about 170 like to your factory is that true for your product as well

but that also depends uh on the volume on the on the custom on the mode mode of shipping I'm assuming to you ordered it through ship and not by air.

By air.

By air. Oh, so which is why it turned out to be costly.

Yeah. And uh like sea time is about 45 odd days. Uh we were like we were in a

odd days. Uh we were like we were in a hurry to launch. Uh we wanted to launch fast. We wanted to test the market fast.

fast. We wanted to test the market fast.

Uh I didn't want to wait 45 odd days or maybe 50 days to just you know for the product to be in transit and the volume was very small. Right. Like I said, 1500 2,000 units.

It made sense to just get it by.

Yeah. And toothbrush is a relatively lightweight product, right? like a a box is generally the volume is low and the weight is low and it'll come. So, so that's why it was

slightly expensive for us but to give you if the product is costing about 100 uh 170 one is a function of custom duty correct

right for us in our case the custom duty so a lot of cases it comes at 150 is it 100 is the price in China that you negotiate 150 at scale you should be

able to have it delivered at at your warehouse and you're selling at about 300 so then accounting for all your uh shipping and your packaging and your uh taxes and everything, you should be able

to save about say 10 to 15% in terms of CM2 is is my estimate. But prove me right or wrong and I'd love to know from your experience what is it coming out to be right now.

So right now it's very different but back then when we started out a brush landed would cost us about 550 or rupees.

Okay. So 300 would be the X factory cost.

Yeah.

And 550 would be the landed cost at your warehouse with GST. Right. And we were selling the

with GST. Right. And we were selling the product for about 1 1200 1250 rupees.

Okay.

Uh so we had a gross margin of about 55%.

So essentially the X factory cost in China you're selling at 4x the price in India.

Yeah.

Got it.

Uh so that's what the gross margin profile look like. Over a period of time with increasing volumes and a lot of optimization and also changing the mode of shipment from A to C for for our bulk

orders. The cost has come down from 550

orders. The cost has come down from 550 to almost like 350 rupees now. Uh so

significant reduction.

Oh wow. I would have thought 300 to 450 would be the the benchmark of 100 to 150 right like but wow that's amazing. Yeah

and this has happened with the dollar increasing by 20%.

Correct.

Uh so yeah there's a lot of cost optimization that we've done and our ASP also because we also want to pass on the benefits of the price to our customers.

So from 1200 we've also come down on the pricing to about 1,000 odd rupees. M

uh so yeah I think uh that's where we are at in terms of see CM1 expenses logistics shipping warehousing those are standard 15 to 20% right pretty much

across the board correct the biggest diff variable is the performance marketing cost right and that varies when we started out our AOE was about 1 1600 rupees but our CAC was also about 1 1200 rupees

right now that CAC for us has come down to about 400 rupees and AOE is about 1,000 odd rupees Uh so so yeah that's how the unit economics have changed.

Okay but how I also see is that your category essentially you're selling an electric toothbrush. Are there any other

electric toothbrush. Are there any other electronics that you're seeing not necessarily from your category or or any other thing that you in your visits to China or even otherwise you felt this is

a white space if someone could just trade white label the product and launch it on like an Amazon or Flipkart or Quickcommerce. This is a short-term

Quickcommerce. This is a short-term opportunity. I don't see too many

opportunity. I don't see too many players here and someone can come in.

I I do think there are bunch of categories.

One is um at home coffee machine.

I feel there's scope for a lot of innovation, a lot of design play.

And at what price point do you think would be the sweet spot for for it to penetrate across India?

For a good coffee machine which is uh great design, good functionality, I feel anywhere between 5,000 to 7,500 is really really good sweet price point.

can also go up to about 10,000. So if

I'm looking at, you know, launching something in the 5 to 10,000 category.

I'm also talking about features that are not really available in this below 5,000 category and a design that, you know, really speaks of premiumness, you know,

sort of, you know, will catch the attention of someone who walks into your kitchen for for example, right? So

got it. Okay. So a coffee machine is great.

What what next? health monitoring

devices but I think that as a category is picking up% that category is very interesting I'm sure China is doing a lot of work uh on the back end in terms of manufacturing in terms of technology

there is I'm sure there is an opportunity in doing something in home appliances as a category I think there are like as you know

millennials sort of buy homes or you know start building their life when they get married uh people are reading up more on you know what kind of appliances do they want? How is that particular appliance going to add value in their

life etc. So there might be opportunities in the home appliances category. When I was visiting Canton

category. When I was visiting Canton last year, I realized there's a lot of innovations happening in the kitchen and home appliance category because the quantum of you know manufacturers

talking about innovation, showcasing their products uh was a lot more than any other category that I could you know visibly see.

Yeah. Interesting you mentioned that. I

remember seeing this little uh refrigerator looking product and I was like, "Okay, this looks like a mini fridge. Is it something that people keep

fridge. Is it something that people keep in their office cabins or maybe in their bedrooms?" And when I opened the door

bedrooms?" And when I opened the door for that mini fridge, it had a mixer grinder thing inside of it. And it said it's silent because the big problem is

your mom to wake you up in the morning is going to start running the mixie in the kitchen and you'll just you'll just wake up by all the jarring noise that it it kind of makes. And this is a silent thing. So you put the mixer inside and

thing. So you put the mixer inside and you shut it. So it's kind of like a soundproof machine. And I was like,

soundproof machine. And I was like, "Wow, this is fabulous." And if this starts selling in India, I mean, why wouldn't people take it? Another thing I noticed is how um you know in home

appliances they said depending on the color theme that you've selected for your kitchen.

Yeah.

So they will give you the entire set of appliances right from a hand blender to a mixer grinder to a microwave and air whatever air fryer whatever you

need. But if you have a color in mind,

need. But if you have a color in mind, so they have an entire color catalog almost like an Asian paints that you pick from and they'll make all your appliances um in that color. So

it's like custom color and they don't do the entire appliance from scratch. They

almost have like detachable handle kind of things.

So the same color would just be a very easy add-on to the primary machine that they've built. Uh which I thought was

they've built. Uh which I thought was amazing and we don't see in India yet.

Um I also noticed you mentioned something else I think right before this. Oh yes in home appliances I I

this. Oh yes in home appliances I I saw there is um glass cleaning machines.

Yeah.

And you know it's such a big problem that for you to clean like glasses in your office and stuff you'll have like an office or someone from housekeeping and that's that's going to increase the

problem of glass cleaning because most of the houses are being built right they have these huge glasses right people are using less of the cement and walls right like most living rooms drawing rooms

even bedrooms for that matter right you have you put like big glass panels right correct so so I think this is also going to be a very interesting interesting device and quite inexpensive like starting at

3,000 4,000 where you plug it in it just gets attached to the glass and it just cleans that entire thing and you can just shift it to another glass panel and it just does it and I thought that was amazing why don't we see it in India but

anyway so these are great opportunities now comes the next point which is because India wants to now do a lot of manufacturing in-house and they want to reduce dependency on

importing technology and such products from China.

Yeah.

Which is why BIS specifications and requirements are coming in across several categories.

Yeah. where um for for public knowledge uh the government would say okay we've made a set of quality standards and if you're selling an electronic product or some product in India you need to get

the same SKU and the same design approved under BIS from a lab and once that is done you can import it and sell it provided it's coming from the same

manufacturer and as per the same design and the same SKU and the more SKUs you continue to you have to get BIS approvals for all of them and it's a very costly process

process as much as I've understood and I've also seen that you know if you as an early entrant go about getting a BIS approval for one product and you are a

small-time trader once that product is BIS approved from one factory tomorrow any of your competitors can go and just buy the same product and flood the market so essentially you've gotten the

BIS approval for the broader market and not just for yourself and for you to sign like an exclusive contract with that manufacturer is going to be you committing a very large or taking on

like a very large order size which may not be feasible for a lot of people entering in. So for your category is BIS

entering in. So for your category is BIS applicable and how have you gone about doing it or it's still not coming?

No no uh for us for our category BIS was implemented earlier this year. We've set

up u you know localized manufacturers here in India who are now starting to manufacture electric toothbrushes for us. So we've actually launched our first

us. So we've actually launched our first India assembled India made electric toothbrush uh in the month of August. Uh

we've not made a lot of noise around it because is the design the same or is it different?

It's the same now we have invested in the mold because we've sort of scaled the business to some extent. So it's uh it's a smaller cost at the overall P&L and we know what we can sell and how

much we can sell in the next year or so.

So it's a similar design but we've also made certain improvements in the product made it you know uh type-C rechargeable which is more universal not battery operated.

Uh similar design added a couple of more modes added a tongue cleaner at the back of the brush head. Um so you know bunch of product uh upgradation uh and yes

we've set up a manufacturer who's now manufacturing electric toothbrush here in India. So we're getting ready for the

in India. So we're getting ready for the BIS imp B implemented in our category.

The way it works for everyone who's watching this there three models. uh one

your factory has to be BIS certified BIS approved but unfortunately Indian government is not giving BIS certification to any factory any manufacturer in China because the their

mandate is very clear that they want the manufacturing to be manu manufacturing to happen in India what Indian you know importers are primarily doing they're

either doing an SKD or a CKD SKD means semi- knockdown ckd means complete knockdown so if it's The product semi- knockdown would mean that you're

importing certain parts of the product which are pre-assembled but all of them are coming together here on an assembly line here in India and complete knockdown means that you're going to if

some of the parts are not available here in India from a manufacturing purpose you're going to import those parts and the entire product will be created here in India. Uh so that's how it happens.

in India. Uh so that's how it happens.

Yours is an SKD product for now as an SKD product but eventually we're like in the next couple of months or so we're moving to CKD.

Okay. So what all do you import from China when you're making in India? Can

you can you just walk me through it?

Because I do understand that now anyone who wants to import something will have to look at BIS. They will have to find someone who can do assembly in India.

What do you think is the playbook they should follow if they're building in consumer today? So if they're planning

consumer today? So if they're planning to import from China at least in CKD which is complete knockdown the bigger reliance on China

or Taiwan is with respect to PCB which is essentially the technology that circuit board that powers uh the mechanism and the features for your product that is the bigger reliance. Uh

motor is also to some extent a reliance which is not really readily available here in the Indian market. But apart

from that for our product everything else is by and large available. So

earlier the reliance was also on lithiumion battery which is the charging mechanism for a rechargeable product.

But now there are Indian manufacturers who are manufacturing lithiumion lithiumion batteries. Uh so that

lithiumion batteries. Uh so that reliance is now sort of eliminated.

Apart from that for our products you know the plastic component uh is injection molding anyway has been happening in India for a long time right and even the the

bristles right so Dupont is the uh largest manufacturer for uh bristles and they also have a manufacturing plant here in India so you can source bristles

from uh India as well like for most of the time period we've been sourcing the bristles from China because of a certain quality of a certain grade but now we've been speaking to the company directly if

they can sort of make sure either they import the bristles to the India plant and they can supply us or they manufacture the same quality of bristles here in India.

Okay. So if someone has to for example create a product like a coffee machine that we spoke about or say something in home appliances, it could be a fragrance machine, a dehumidifier for whatever purpose.

What you would recommend is first they go to something like a Shenzhen.

um they go to one of those markets just to see what products are available. If

they like a product, they request to be taken to the factory and see a broader library. They give a price point at

library. They give a price point at which they want it made in China X works or X factory which should ideally be 25

to 30% of the selling price that they think they can aim for in India. Once

that is established, you would say if BIS is applicable, they have to import in SKD or CKD manner.

Yeah.

Any playbook or reason as to saying that in these categories SKD is better or in these categories CKD is better. How

would one take a decision on that? Or is

it about costing? Is it about not finding the right guy in India? How do

you take that decision?

It's about uh you know the volume of the business, right? So coffee machine is a

business, right? So coffee machine is a smaller volume business. So SKD would make a lot more sense because Indian manufacturers wouldn't want to sort of go down the process of you know creating the entire product product from ground

up because the volumes won't justify it.

Correct.

Uh so yeah it is about the volume that the category is doing. If you were selling a smart watch CKD is very well possible and doable and is being done in our country but if you're selling a

coffee machine is going to be uh more predominant and feasible option.

Similarly, if you're selling, let's say, you know, beard trimmers or trimmers in general, uh, CKD is doable because the volumes have really really grown in the in the market. Uh, so yeah, I think

that's that's largely the lens to to be taken. U for any product to be

taken. U for any product to be introduced. My always the first sense

introduced. My always the first sense before even you know going to figure out uh what product to do, what enhancements to do, what manufacturer to do is just understand the consumer pain point.

understand what is a consumer willing to pay how much are they willing to pay that is one and second in the hindsight looking back now I very strongly recommend that the X factory price

should be not more than 20% of the selling price that you plan to sell you're saying have a 5x of a selling price on your Xactory price yeah and that's because the cost of

advertising is increasing uh the world is becoming a lot more comp competitive and you need certain margin profile to really scale in the business and really

invest uh in the advertising, right? If

you're building a brand, it becomes even more important because you will also need certain dollars to be invested in the on the brand marketing side of things. So having slightly more margin

things. So having slightly more margin helps unless you operate in a category which is very high volume, right? So

correct. So commodities would not get that kind of margin. So high margins would only come if you're differentiated in terms of being a unique product where there is lower competition.

Yeah. lower competition, more niche, trying to sort of sell a better story, better product, you need, you should have a higher margin.

Okay. So 5x is the price of the X factory that you get from China in India.

Yeah.

Wonderful. Now imagine you found that product, you've negotiated theQ and they can do the quality that you

wish and QC is taken care of. How do you find the right shipping company? Like

did you depend on your factory to ship it and you trusted whoever they were taking or did you find someone like a custom agent in India to organize shipping for you?

We did the latter. So uh we found a custom agent here in India who could sort of handle there are two parts of shipping right. One is freight

shipping right. One is freight forwarding which is the shipping part and second part is the custom clearance clearance which the CHA would do. which

a CHA would do. Right? So there are two parts. A lot of companies in our country

parts. A lot of companies in our country are able to take care of both. Uh CHA is usually a government appointed licensing thing.

So you know more customs clearance focused.

Yeah. So you know certain shipping companies would either have connections with CHA or people who are you know classified to do the clearance process.

So they will have them on their payroll etc. or certain commissioning basis. We

we took the route of finding a custom agent here in India. We spoke to a bunch of them, understood what the process looks like, how will they do it, what are the timelines, what is the cost. Uh

whoever we could build certain comfort and camaraderie with, we felt okay, hey, let's go ahead and give this person a chance. So that's how it started for us.

chance. So that's how it started for us.

Uh if you don't want to go down this route, uh there is UPS, DHL, uh FedEx of the world, but they turn out to be really expensive. that turn out to be

expensive. that turn out to be expensive. If you're not too worried

expensive. If you're not too worried about the first shipment expense because uh eventually you'll sort of optimize it down the line. Uh to make it slightly more hassle-free, you can give it to

DHL, UPS uh and they'll take care of it end to end. Uh so that's a standard and easier process. We didn't go down that

easier process. We didn't go down that route because I have a fair bit of understanding of uh shipping and custom clearance.

So tell me that you shipped your initial samples through air because you wanted it faster. Not the

initial samples, initial shipment, the final production.

Okay. Final production because you wanted like faster feedback loop. You wanted to penetrate the market, send it out, get feedback and then work on the product.

Now at scale that you've been doing it for 4 years and I believe your revenues are close to 100 crores.

Yeah. uh do you now depend on C freight because it's cheaper or the nature of your product is such that it's better for you from a working capital

perspective to just continue to kind of get shipments through air.

So it's a combination of both. 70% of

our shipments come via sea and 30% come via air. It is a function of planning as

via air. It is a function of planning as well at the back end. How are how you're able to plan for your inventory? What is

moving? Yeah. The lead time, what is moving? how many inventory days are

moving? how many inventory days are left, right? If a product is moving

left, right? If a product is moving really fast and you need the replacement to replenishment to happen even at a faster level, you have no option but to go for a air route because the shipment

will reach your warehouse from the day it is picked in about 10 to 15 odd days and by sea it'll be about 45 days about 45 days.

So through C as a thumb rule it is it takes three times the amount of time to get to you and air freight is three times more costly compared to C. Would

you say that or you've now optimized it to twice?

Yeah, it's it's about you know two to 2.5 times more expensive air air shipment.

Okay.

Yeah. So that's that's largely what the maths looks like.

Okay. And when you found a freight forwarder or a CHA Yeah. Um would you prefer to get one at

Yeah. Um would you prefer to get one at the port in say Gujarat or Visag or wherever your product is landing or did you find someone in in say Delhi where

you're located and saying that okay you take care of all the clearance and or maybe the goods are uh coming to the port via sea but they're getting custom cleared in in Delhi. How is it working

out for you?

Uh for shipments via sea uh the shipment usually lands at Nawasha port which is in Bombay. M

in Bombay. M but we have a freight forward and CHA based in Delhi because of the comfort of relationship and we being able to

understand and navigate the process better. Uh every like any decent size

better. Uh every like any decent size shipping company or a freight forwarding company would have multiple regional offices. They'll have people on

offices. They'll have people on different ports so they're able to sort of navigate the process accordingly. Uh

when a shipment comes let's say because we are located in Delhi and our warehouse is also in Gura. The shipment

comes on the seapport in Bombay. Then it

is transferred via rail to you know Delhi. Delhi has two rail ports which is

Delhi. Delhi has two rail ports which is one in Purp and second in Tlagabad.

Then the shipment is custom cleared here like first it's custom cleared there.

Second it is sort of there's something called as OC out of charge it's done here in Delhi and then the shipment travels to our warehouse.

Okay. So um the fact that it comes to Navasha in Bombay was that a call that your custom agent took or was it a function

of costing? Because what I figured is a

of costing? Because what I figured is a lot of Cas have their own comfort depending on where their team is located and they feel that okay if the shipment comes to Bombay I have a team there I

have a relationship it will be easier for me to get it cleared there and if it comes to Chennai maybe I don't know people there and might just get stuck.

So, and it might be cheaper for it to land in Chennai from a freight perspective. So, how do you balance out

perspective. So, how do you balance out where the shipment is coming or you trust the shipping guy, you've given him a target of this is the cost that we can kind of put for this and you take a call

and as long as you get us the goods cleared in Delhi, we're happy. We we of course checked with the CHA what should be the landing port because let's say if the shipment is being picked from

Shenzhen how much time will it take so one is you know uh freight part of it second is also the connectivity part of it you know how soon it can reach Delhi from the landing port because event the

final destination for us is Delhi right and third is the the costing part of it uh which also comes into picture and fourth is what you mentioned the comfort of the shipping company in our case we

happen to choose a shipping company that's fairly large now when we started you know using C as a shipping mode and they have like people across all the

ports out there so and when we did the maths from at the back end of you know time freight uh cost Navasa made a lot more sense and that's how we said you know let's get the shipment on Navasa

it's easier and better would you want to name the shipping company if others could also use their services uh We use a bunch of them. One of the ones that uh one of the frequent ones that we use is cargo people.

Okay.

Uh uh they're very well connected. They

do both freight forwarding and clearance.

Okay.

Uh in the past we have worked with GINA.

We've worked with uh how do you spell that?

Uh J NA. Okay.

Uh we have worked with Movers International. We've worked with

International. We've worked with Speedlog. So multiple companies of

Speedlog. So multiple companies of different.

So if people look up cargo people, GINA, Movers International and Speed Log.

Yeah.

LOG log.

Yeah. LG.

Okay. Wonderful. How much of the percentage of cost really goes in your category towards freight and clearance.

So for example, your product is 300 there. Uh how much is the shipping? You

there. Uh how much is the shipping? You

said it the landing is now 350 for you at your warehouse.

Yeah. at a sales volume of 100 cr annualized.

Yeah.

And I'm assuming you're you're essentially procuring 20 crores worth of imports.

No. So for us, our business uh has a segregation between India and China, right? Because uh a lot of our products

right? Because uh a lot of our products like toothpaste, mouthwashes is all locally produced.

Is all locally produced. So our

I would say import volume would be close to about a million dollars.

Okay. So 8 crores.

8 odd crores. So, and one shipment is typically would last you you would have 10 to 12 shipments coming a year.

No, more. Uh, so frequency is a lot more. Okay.

more. Okay.

Uh, we have about three shipments, three to four shipments coming every month.

Oh, so every 10 days.

Yeah.

Okay. So,

because it's also a function of working capital, right? China usually works on

capital, right? China usually works on correct advanced payments, right? Like

in India, we are able to leverage uh credit period from all the manufacturers that you're working with. But in China, it's usually 100% advance. Uh we we're able to navigate that. But mostly people

who are starting up in the early days, you'll have to pay 100% advance. So you

don't want to block a lot of money by procuring in bulk. Uh you'd want faster shipment so that anything and everything that you're getting is also converting to cash so that you have more capital to be deployed in the business.

So I'm assuming a shipment is roughly about 15 to 20 lakhs for you.

Yeah.

Yeah. So on a 15 to 20 lakhs shipment what is the X works price and what is the split of say the freight and the clearing charges just so that people can

also build their economics accordingly for us the percent so freight is about 10 to 15% of the invoice value okay uh and clearance charges are about you

know 50,000 to a lakh yeah 50,000 to a lakh which on a 20 lakh shipment would be about you know 5% %

right sub 5% 2 and a half to 5%. like my

uh what I remember it's about 3 to 4% actually by and large 3 to 4% is what we'll pay on clearance rest is customs duty for which in our case in our

category is about 22% 20% basic customs duty and 10% welfare search charge yeah search charge on top on top of the c the basic custom duty so that comes

down to be 22% and on top of that you have to pay 18% GST to the government so so yeah that's what okay so you would say that roughly If if

something is say uh 15 lakh rupees worth of x works u the remaining five lakhs or 25% more

or less of the total landed cost is what you would attribute to 22% being custom duty another 3 4% of clearance no there's also going to be 10 15% of extra

of freight so you would say if your x works is close to about uh 13 lakh it would land at about 20 lakhs to your

warehouse. Is that correct?

warehouse. Is that correct?

Uh no. If if the let's say if the X was 10 lakhs, right? Another 10% would be freight. That's 11. Another 3% would be

freight. That's 11. Another 3% would be uh you know clearance the clearance but that's not you you'll have to account that in your cost. So

that's another 30,000. Yeah.

Uh so that's 11 lakh 30,000. On top of that you have to now pay you have to pay you know on 11 lakhs you have to pay 22%.

Correct?

Right. Which essentially means that 2 and a half lakhs right. So

that becomes so say give or take it comes to 14 lakhs.

14 lakhs but on that 14 lakhs now you have to pay 18%. Correct. Right. Another

20%. Right. So that comes down to another three odd lakhs. So 17 odd.

Yeah. Approximately 18 19 lakhs is what you'll have to end up paying for a 10 lakh rupee shipment. If it's a 13 lakh X factory, you'll end up paying 212.

Correct. So it's essentially it comes to 100 rupees of X works will come to 170 landed.

Yeah.

So the initial thumb rule that I had in my mind kind of works.

Yeah.

That 100 it lands at 170 at your warehouse.

Yeah.

Perfect. Okay. So we've spoken about what kind of freight forwarders you have. Do you also have an agency who

have. Do you also have an agency who does quality control in China and how do you ensure they don't collude with the factory in China?

Uh so yeah, we do have a third party quality inspection agency that goes and inspects our shipments uh when they're ready to be dispatched. Uh how do we

ensure they are not colluding with the manufacturer? I don't think so. I have

manufacturer? I don't think so. I have

an answer for this.

because you have an established relationship. So now there is trust.

relationship. So now there is trust.

There's trust and uh you know every time they send their guy you know we've done certain video calls to just understand what's happening on the ground. The

report that they send for QC has is fairly visual because they're going to click pictures. They're going to share

click pictures. They're going to share videos on what's right, what's not right. So

right. So so if someone has to say today find a QC agency, which one would you recommend? Like

what's a good starting point? Do you

have a couple that you worked with that you would say maybe look up these agencies and they would have I can remember one the one that we work with very frequently now it's called proqc proqc

proqc China I guess or if you search proqc quality check a you'll get the uh details of the website they also have an India office and how much uh does the QC cost does it

come to like 1% or something of the total shipment value or what is it like it is uh actually a fixed charge if I remember So it's about $300 per mandate for 8 hours.

Okay.

Inspection and they will check I think u the quality inspection will be done for about 5% of the total units uh that are being dispatched. Uh something along

being dispatched. Uh something along those lines.

So about 25,000 rupees for an 8 hour mandate where 5% of the goods are going to be checked. They're going to make a report

checked. They're going to make a report and they will send it to you so that you can sign it off and say it's all good to go. Perfect.

Wonderful. That's that's amazing knowledge and thank you for giving that.

Next um how much is the lead time? So

when you place an order with your factory typically what do you expect? 45

days is going to take on C after they produce it.

Does it take them 15 days or 20 days or 30 days? And I understand it depends on

30 days? And I understand it depends on the category you're in. But what's the thumb rule for you?

For us it's about uh it's actually on the higher side. It takes about 50 to 75 odd days.

Wow. depending on the volume of the order, the customization required, when are we placing the order, right? So for

example like globally everyone everyone's aware that there's something called as Chinese New Year that happens in end of January correct to mid of February then and then the labor is not available for

like good 20 days or so.

Correct. So the entire China like the manufacturing system is a shutdown during that 3 week process right 3 week timeline. So, if you're placing an

timeline. So, if you're placing an order, let's say uh in December, uh ideally, they should be able to produce it from a 60-day timeline, but they'll say this will be dispatched post the

Chinese New Year because there is an influx of order. There's a lot of shipments that they've already planned to be dispatched, right? So, so again depends on the time of the year, the

volume of the order as well, but ballpark it takes us about 50 to 60 days easily for an order to be get. So that

means you you essentially have to take a 100 day lead time for it to reach you because yeah via se. So 55 days of just production and shipping from the factory another 45 days for it to come

and if you don't have that kind of time you need it within say 75 days you would probably say do it by air.

Yeah.

Oh wow. Okay. So that's really a lot of forecasting and being able to predict and amazing. Next thing let's look at

and amazing. Next thing let's look at how do you pay your vendors? How much of it is advance? Yeah.

I'm going to pay.

And what banks have you seen have the best facility or or are the most proactive when it comes to payments and you've not faced any trouble and what kind of you

have LC facilities, other facilities that you use in terms of financing all of this?

Yeah, just educate me on this.

Sure. So uh a standard payment mechanism if you're working with a factory in China is 3070 30% advance 70% before

dispatch that is when your goods are cleared for pickup from the factory from the finance department of the factory.

Uh today we work on 20% and 80% uh and sometimes 15% and 85% as well.

Uh that is one because now the trust is established.

trust is established, volumes are good, uh they know that we are not going anywhere etc. Uh that's one. How do we pay them? We pay them via our banking

pay them? We pay them via our banking partners. Most banks in India are able

partners. Most banks in India are able to facilitate this. We have worked with you know SDFC, KOTA, RBL. So everyone's

fairly good at it. No hiccups as such.

Uh third what we are using is something called as import financing. Right? So

the uh the advanced payment is done from our bank account but the balance payment which is the larger portion of the payment let's say 80 odd percent uh is

financed by the bank and we pay them 90 days later uh from the payment they've made to the vendor. So let's say if you're getting a shipment via air we'll

get the shipment in 15 odd days and we'll have about uh 75 odd days to sell that stock. uh and once we get the money

that stock. uh and once we get the money from that stock we'll pay the bank and there's a small certain interest percentage that we have to pay uh for the financing that is being done typically that cost would be between 9 to 12% depending on if you're giving

collateral or not or what is it like these days yeah it's about 9 to 12%. Okay. Not more

than 12% is what you would give.

Not not more than 12%. Uh see you there are banks that will charge correct. I mean financing or when you

correct. I mean financing or when you don't have adequate collateral and they're taking that bet on you.

So there are banks that will also charge 15 to 18%. Uh but a good rule of thumb is 9 to 12% lower the better. Uh 9% is

very very good. 9 9 and a half%.

Yeah. tough to get but you possibly have to give your removable property as collateral to yeah get that or you know you have to figure out something with your fixed deposits correct

uh etc. So, so yeah, I think 9 and a half% is a good rate of interest if you're able to crack that. Uh,

did you have any problem like getting a bank to finance your imports initially or did you feel there was a threshold only after which you crossed it in terms of number of shipments that you've

already gotten over a period of time that banks actually had the comfort to say okay now this business has a balance sheet or a P&L which is large enough for us to fund. Did you see any such

threshold in your business?

I think what we saw as a threshold was a function of equity money in the bank account.

Uh it's not about the uh number of shipments or the P&L, the size of the P&L. Even if you're running a 10 cr P&L,

P&L. Even if you're running a 10 cr P&L, but if you have 50 crores of equity money in your bank account, I think that gives them a lot of comfort. you might

sort of give them you know a fixed deposit of five odd kores and that sort of will make them more assured in their heads that this is a good business or a good client to take on.

So that's what we've seen a very direct correlation with the equity capital.

So they essentially after you've raised an equity round they take that money as an FD they say this is our collateral and against this FD we're issuing like a line of credit and you can keep rotating it.

Yeah. But but then those terms I've also seen they say that when you have less than 12 months of runway left we are going to like we have the right or the power to kind of seize this facility

onto you. So do you feel there came like

onto you. So do you feel there came like a threshold or or something in terms of CM2 positivity unit economics did they even evaluate that to to say okay now we're taking a bet on the longevity of

this business in this category because my perception and experience with banks is no matter how much they say that we're very startup pro and startup uh you know focused on on getting those

startups as customers essentially they're just banking on you getting equity and using your FD as a collateral which is not really taking a true bet and in that case only say a venture debt

fund would essentially come in and there the cost would be closer to 16 to 18%.

Yeah.

So have you used venture debt in the past and then gradually moved on to banks?

Yes. So that's been the journey for us.

We started with venture debt and then moved on to banks. But

even the way uh business happens in India, I'm sure you're well aware of this. It's actually a people'sdriven

this. It's actually a people'sdriven business, right? So let's say you know

business, right? So let's say you know an XYZ fund putting in the money in your company if the bank is really well connected with the fund right then there is a level of trust that's already

established uh even when they're sort of financing the company uh they're not taking FD as the 100% collateral right it's typically you know 30 70 and 30 is what they'll take a bet on you

yeah no I think it's the at least what we are saying it's the other way around so 30 40% of the amount is considered as a collateral and we getting exposure of you know the remaining

I think it's maybe at your scale because it at about 100 crores you would get it but I'm assuming someone who's starting off and is at just 10 15 crores also banks may not feel comfortable taking that exposure

yeah but it is a function of equity money and the uh how well connected is the fund that's put in the money with the bank that you're talking to right there is a bit of you know uh I would

say dynamic nature here which cannot be put into a playbook and this is what will happen at this scale this is going to happen at that scale you're absolutely right and when you found like factories in India who could

assem assemble the SKD products or the CKD products for you so how do you go about finding these factories do you look at labels of

someone who's manufacturing for say an earphones brand or a smart watches brand and manufactured by you look at it you contact them and then you ask them can you do toothbrushes for us is that the way to

do this or is there something else.

Uh that's a very common and the first principal way of doing it.

Uh fortunately for us there was some inbound interest people reaching out to us uh when the entire BIS update and the

circular was issued uh that you know if you're looking at this kind of a uh mechanism or operations we'll be more than happy to sort of uh figure things out together. Uh so that's how we went.

out together. Uh so that's how we went.

we didn't have to really go down the route of you know looking at the back label of a another electronic device and reach out to manufacturers. So uh

wonderful. So it was an inbound interest and it just clicked and that was great.

Yeah.

Okay. Wonderful. And these people also educated you on BIS and saying that we can take care of um all the quality controls and ensure that you know your quality doesn't dip because you're now

kind of switching over manufacturers and they can they can put it together. Okay.

Okay. So now your products come with a make in India label or a made in India label.

Yes. Uh the one that we've recently introduced in the month of August uh that is like now the country of origin on that product is India. Earlier it

used to be PRC, People's Republic of China.

Uh is that something which is available for purchase now? Like if I'd want to go on

purchase now? Like if I'd want to go on your website and I will will I also see like a made in India?

Uh somewhere on the product page it's mentioned uh made in India assembled in India. uh that's mentioned. Okay. Uh and

India. uh that's mentioned. Okay. Uh and

even the manufacturers's name is mentioned because by under law you're required under law we required to mention that uh if it's being manufactured here in India. So

India. So has that changed the economics for you?

Yeah. How much like can you give me some context that it's about 30% cheaper for us to do it in India?

Yes. The similar product with more enhancements and uh modifications that we've done on the product. The product

is about uh about 30% cheaper.

Wonderful. So what I'm hearing is if your um if your toothbrush is costed per unit about 350 has landed to your warehouse earlier today it could be closer to 250 270. Is

that fair to assume?

Yeah. 270ish is what we're looking at.

Wow. Now that we've learned everything about how to source from China.

Yeah.

And all aspects of the value chain. I

also want to come to it's not as simple as just picking up a product, white labeling it and selling it here which would be just trading or drop shipping.

Yeah.

Um it's essentially about picking up something and making it your own and building a branding mode around it. So I

want to figure out like what has been your playbook towards building a brand.

So we did work with a design studio at the very beginning to get the brand identity packaging uh you know packaging architecture in place. Uh it's a studio

based out of Bombay called Strat Edgy.

Stratgy.

Yeah. strategy in terms of content which is the real playbook and the real brand building effort that happens day in and day out. We've done everything inhouse.

day out. We've done everything inhouse.

We've learned on the go. Uh, of course there are certain insights that we uh played upon and some of them worked for us and has given us the kind of reach and the kind of brand recognition that

we today end up enjoying. But uh but yeah and there's been a lot of iteration in that process.

Give me some examples on what kind of content would work for a toothpaste or a toothbrush brand. I'm just thinking I've

toothbrush brand. I'm just thinking I've not audited your Instagram page, so I'm I'm quite intrigued to see um what's your follow count like? What has worked for you so far?

So, our follow count on Instagram is about 150,000 plus. That's uh broadly what it looks like. Uh in terms of content, I think we've been fairly

experimental. Uh one key insight early

experimental. Uh one key insight early on was we would want to talk to our talk to the audience directly. We'd want to put ourselves out there as founders

because uh in our category nobody knows the founder of Colgate or the founder of OralB and they're not going to be on the camera. Not even the CEO is also going

camera. Not even the CEO is also going to be on the camera. So we are going to talk about behind the scenes. We are

going to talk about what it takes to build a brand. What are the kind of challenges we are facing? Uh that's one.

Second, when we appeared on Shark Tank that was a big jump in terms of our follower growth. uh we were a I think we

follower growth. uh we were a I think we we had a follower base of about 15,000 or so but in a postairing 30 days we had a follower base of about 30 35,000 uh

and the credit 100% jam it's a 100% jam the credit goes to the team on creating a lot of pre-birth uh pre-Shark tank airing then capitalizing

during the airing time period and then also following it up with post Shark Tank madness what's happening what has changed what has not changed etc. X spike in orders. You would ideally show

that and say in fact over you did you even have inventory at that time to No, we didn't. Uh we didn't. So we were sold out for about 40 odd days uh on

especially on the products that we were importing from China. The India supply chain was a lot more agile and we were sort of able to replenish in 15 days 20 days time period because

we spoke China timeline is at least you know 75 80 days for us. Then a big uh jump in our follower base happened when we we we did something very unique and

interesting. We had organized a spoken

interesting. We had organized a spoken word evening event here in Guro and one reel from that event went viral. This

reel was by this creator named Nyab Midha. Uh she spoken about Muskura. So

Midha. Uh she spoken about Muskura. So

there was some event like some brand integration around you know Muskurana because smile is an important part of our teeth and that blew up. I think we were about at 40 45,000 follower base.

We suddenly rammed up to about 80,000 followers and that real today I think has about 30 million odd views organically. Um so

yeah I think that was a big jump post that um I think every few months something or the other keeps on happening in terms of growing the uh growing the follower base.

But is it all inhouse?

Yes, it's all in house. So how many people are part of your content team to drive this brand?

Three people right now.

Okay. And what is the cost that you would kind of allocate to this department? And I would say salaries

department? And I would say salaries plus other costs like how much would you invest in doing this?

About about three odd lakhs a month.

Three odd lakhs which would be about lakh and a half towards salaries.

Another lak and a half towards would you say that's a fair breakup? about two

lakhs on the salaries and I think actually the number should be about four odd lakhs. So two 2.5 lakhs on the

odd lakhs. So two 2.5 lakhs on the salary and uh another half and a another one and a half lakhs on uh all things content.

Okay. And is even performance marketing something that you would uh do in-house or kind of outsource to an agency and I know your answer could differ now at this scale at about 100 crores but was

it different at some other time?

Yeah. So initially and earlier on it was a lot more outsourced. Uh today 80% of the content for performance marketing is inhouse. Uh like a lot of

inhouse. Uh like a lot of is it a cost thing or do you think it there is an impact on the rass also depending on are there any learnings?

Are you doing better after after bringing it in house?

Two three things. One uh it's faster to test and iterate because performance marketing is very very dynamic. What

works what does not work. you have to really really iterate a lot.

Uh second uh people who end up shooting creating content inhouse, they just understand the brand a lot better. They

know what to talk, how to talk. They're

also looking at metrics real time. I

would say this is working, why this is working, what is the CTR, what is the hook rate, what is the whole rate, what is the conversion, etc. Uh third, definitely it's cheaper uh

compared to you know compared to outsourcing it. So I think these are the three reasons why we are doing a lot of content production in house.

Okay. And what is the contribution of different channels to your sales just so that we understand how people buying it?

Uh so for us we are pretty much like a 100% uh digital only company today. Uh

very small percentage comes from offline. So I'll just sort of skip that.

offline. So I'll just sort of skip that.

For us it's actually well equally split.

One/ird is our own brand website brand.com. uh another one/ird is one/ird

brand.com. uh another one/ird is one/ird is about e-commerce which is in which includes Amazon, Flipkart, Nikas of the world and another 30 odd% is

quickcommerce which is blinket instamart etc. Okay. And are the economics

etc. Okay. And are the economics different on each of them? What

according to you is the most profitable right now? Because while your own brand

right now? Because while your own brand gives you access to a lot of data, but performance marketing can really skew the economics in such a way that you know there are seasons where everyone's throwing ads and the bid rates become

really high and it doesn't really leave you with a lot of money on the table.

Honestly, my answer to this is uh very different. I don't want to look at uh

different. I don't want to look at uh the channel level profitability because that's an incorrect picture. Today when

you advertise on meta or for example on Instagram or Facebook we end up allocating the entire ad spend to the brand.com P&L but in reality when I'm

showing you an ad right I'm creating some brand awareness I'm creating some product which is going to lead to sales on quickcommerce and Amazon and everywhere depending on if you're buying you want to add things to your cart you might just pick up the cart value

correct so what we can't control today or what any brand can't control today is where will the consumer shop, right? Because that's a discretion at

right? Because that's a discretion at his or her end. Uh unless you have a product offering which is very different on different channels, right? You're

talking about a product that's not even available on on a quick commerce platform or an e-commerce platform, right? But that's not the case with us.

right? But that's not the case with us.

But you think certain products are more channel specific or more channel friendly. For example, a toothpaste

friendly. For example, a toothpaste someone may not want to buy from your website, but they would be they possibly want to buy the brush from your website because there the personalization option is available. But

a toothpaste is more quick commerce friendly.

That's true. That's true for us. And uh

we've seen that uh over the over the course of our journey certain products are more you know there's a more channel product fit a term that we you use uh

very often internally. So a toothpaste has a more channel product market fit on a quickcommerce platform. A flosser uh has more channel product fit on a Amazon

whereas electric toothbrush has a more channel product fit on our own brand.com because of the personalization etc. Okay. Wonderful. And um just like

Okay. Wonderful. And um just like learnings on getting listed on quickcommerce is something that a lot of brands today are

struggling with. Um any hacks around it

struggling with. Um any hacks around it or something that worked out for you?

Uh yes uh there were hacks that worked out for us but at the same time it also took us fair bit of time to get listed and this is when when you say that is then 12 months or

more give or take 12 months. Uh I think realistically it took us about 10 months to get listed. And uh in terms of hacks

is one channel easier that for example if you've cracked like instamart or maybe you've cracked a blinket or a zeppto then you can create fomo among the others saying that we're kind of

listed here and why don't you also place it.

I don't think so that works honestly. I

feel people and category managers across uh all the platforms are looking at data very very closely. They're looking at uh Neielson reports. They're looking at

Amazon. They're looking at and they all

Amazon. They're looking at and they all like the information is available across platforms, right? Because uh there's

platforms, right? Because uh there's constant uh shuffling of people from one platform to another platform. So you

know how much is that brand selling on a particular platform or so. Uh I don't think so that for more works. Uh but in terms of hacks uh like I think we were

very persistent one one was that hack like we would just email them you know and reach out to different PC's every now and then at regular intervals and how would you find these people is it through LinkedIn search or just

through your founder network of the same how did you get listed can you put me in touch with your category manager who's probably not for your category but you use them as a warm channel to kind of be introduced

so we've done everything we've used LinkedIn we've used founder network.

I've also used my investor network to get introductions.

Uh so different channels to get an introduction. I've also written cold

introduction. I've also written cold emails and I've been fortunate to get replies from the founders of these uh quickcommerce platforms when the needle was not moving at all. Uh and I was

talking about we were in the phase two of getting listed. So one was phase one where when these quickcommerce platforms just started out and they onboarded a

bunch of brands. Uh that was not when the other brands were lining up to get listed. Phase two was there was some

listed. Phase two was there was some awareness, there was some consumption, a few brands wanted to get listed and they were being listed. So we were in the phase two but still what it was a

10-month kind of a gestation period for us. And now I think it's a phase three

us. And now I think it's a phase three or a phase four when it's become really really tough to even get time of the day of a category manager no matter which investor is introducing or which founder

has referred you uh because it is a power dynamic right uh quickcommerce platforms have become very powerful and they can choose to ignore and they can make you wait so I'm assuming that today if any person

decides to import a product from China something in electronics they do it as SKD they assemble part of it in India they comply with BIS and everything and now it's about customer

acquisition so from a long-term perspective content will help to build brand awareness loyalty brand love and then early on when you want sales

you're essentially I'm assuming going by some arbitrage opportunity that you don't see too many players listed on an Amazon or a marketplace and you're betting on the fact that people who are searching for it today have just one or

two brand options and I could be the third option and look cooler or perform better or be better priced and people would buy it. Do you think this is the right way to go about it or would you

say to start off from a distribution perspective do it from your own brand website as performance marketing and then look at

uh a marketplace today having gone through this for the past four years what's the playbook you would recommend?

I would recommend u if you're truly building a product that's innovative that's highly differentiated u and there is not much search on the respective

marketplace platforms right you have no option but to do the latter of going down the brand.com route and you know advertising and creating that product awareness brand awareness uh and over a

period of time you will start seeing searches happening for the products that you're advertising uh but if you're launching or introducing something that's I would say marginally differentiated to what's already out

there. there's a lot of captive demand

there. there's a lot of captive demand that exist right um then I feel being available across different platforms where there's a lot of consumption

happening you have to be there and you need to have a brand.com as well but your focus should be making sure that you're ranking up higher on those platforms you have the right

relationship you have the right insights so that uh your business starts moving so how do you rank up higher like for example if Amazon you want to rank up higher do you think day the stage your

brand is at and how big an Amazon is the only way to rank higher is um write images reviews uh write ratings and then putting in advertising money or is there something else do you think

relationships still work in today's day and age if if you want to rank higher on an Amazon you have a personal relationship with the category manager that you build do you think that will help or not really

it'll help it's a good to have not a must have uh and at a certain stage in scale it can have I would say exponential

benefits for your business. Uh so for example internal people at all these marketplaces have access to backend data right. So

right. So for instance, let's pick Amazon as a example. U I'm selling something and I'm

example. U I'm selling something and I'm selling everything via via something called as FBA fulfilled by Amazon, right? So I'm stocking my products in

right? So I'm stocking my products in Amazon warehouses.

Now the internal Amazon guy would know what does my stock level look like for a certain product, right? And if there is any incoming

right? And if there is any incoming shipment that's been scheduled or not.

Let's say I'm selling 100 units a day and I have about 500 units in stock of that product and there are no shipments scheduled. If I want to push another

scheduled. If I want to push another brand, I can give an insight that the inventory of this brand is almost going to get over. They will go out of stock.

So there is a significant chance for you to scale up and start ranking higher, advertise, bring build more visibility because Amazon's algo

seriously penalizes when your product goes out of stock.

Is it? Yeah.

So, so that's an opportunity for a competitor to rank up higher, right?

Do you think this information is classified?

Classified or ethical to have. Um,

it's it's part of the relationship.

Nobody's putting on a piece of paper, right? It's a relationship thing that if

right? It's a relationship thing that if you're saying that, okay, hey, I want to grow and the guy on the other side of the table likes you and is feeling that you're the right guy to push this through and you can sort of grow the

business in a way that will eventually benefit Amazon as well because your Amazon sales are going to be larger for the platform. They make higher commissions.

platform. They make higher commissions.

Yeah. So, so I think it's part of the business. There's nothing unethical as

business. There's nothing unethical as such. Do you also use any tools like a

such. Do you also use any tools like a uh SEM Rush or a Jungle Scout to to look at search trends or is it is it helium?

Helium 10.

Helium. Okay. You use Helium 10.

Yeah.

Wonderful. And you have a dedicated team which is constantly looking at Helium 10 and looking at like search volumes and I I do it myself as well.

Oh wow. And do you also place ads on competitors names and other competitors place it on your name? Have you seen that happen?

Yeah.

Yeah.

That's a common practice across the industry. Very very common.

industry. Very very common.

Yeah. So if someone searches for perfora, what are the competitors which will show up on quick commas?

You'll see a Colgate uh highly likely or a Sensorine uh bidding against us.

Okay. And when that happens like you're in a category where all your competitors are like easily more than 10x your size.

Yeah.

What kind of risks does it really bring?

Because the reason I would think it's very difficult for any other person to enter this category is because you would think I'm competing against the largest.

Now, it's also an opportunity, but it also means either you need a great deal of capital and I know you've raised about four rounds of about 80 crores in total.

Yeah.

So, if someone today does not have access to that kind of capital, would you say don't get into this absolute unbiased view? not to say creating competition for you but

I think it's difficult see my my view and my sense is not about capital right I feel less capital and you can still make a good business a good brand uh

that is doable but you have to choose the category and the problem that you're going to solve very very carefully spend enough time thinking about the problem thinking about the uh how the category

is evolving how the consumption in that category is evolving right uh If like to give you a sense I feel and what I'm observing and what I'm learning uh

skincare and hair care as categories are they have massive tailwinds right so the opportunity to launch an opportunity to grow a business is there even though the competition is a lot more it's a lot

more cluttered there's no one clear leader like with 50% or more market share uh but there's an opportunity to do because the category has a lot of tailwinds right a lot of people are

willing to upgrade willing to try, willing to experiment, uh willing to add more products to their personal consumption, etc. In oral care, there are no such strong tailwinds and hence

with very little capital, if you can't invest up front on the brand front, it is going to be a tough task to get to serious scale. And I I think I can't

serious scale. And I I think I can't call ourselves that we are at a serious scale, but we are at a decent scale, right? We're getting there, right? It's

right? We're getting there, right? It's

a we've been able to move the needle.

we've been able to get to a double-digit market share in the online world of things uh within our category right so even to get here is a accomplishment to

some extent but at the same time I feel oral care is a tough category with no such tailwinds and hence you have to be really really cautious of what you're signing up for

thanks Jatan this has been amazing I know you've been very kind to sit under the spotlight in this dark room which is why we call it in the den but the Focus of the episode was to extract maximum

insights possible for anyone who wants to start a consumer business in India where they would require to import products from China that and I think you've been very kind to the founder community and for anyone who wants to

start up by giving all your insights and learnings. So thank you for making the

learnings. So thank you for making the time.

Thank you so much Satak for having me over.