D2C Caffeine - Issue No. 2

Now that our 2021 highlights are done with..

Let's jump into the next issue of our Newsletter.

A Small quote on "The Beginning of Thrasio" to catch you up -

Now let us explain the Thrasio Acquisition & Model in 4 (not so) simple steps: 

In the first step, the company gets to know the seller/entrepreneur & their business after a couple of meetings. 

The flexibility of Thrasio deals - the vast majority of their deals are where the entrepreneurs just want to sell the business and move on. They buy the business, they migrate it, and the seller can walk away - there’s no waiting period. As Thrasio takes just a few weeks to remodel their new buys. These are 90% of the cases.

The others are the ones who get revenue shares and stakes.

Second, they carry out thorough due diligence. And if the to-be-acquired company is satisfied with the brands’ growth prospects, they attach a valuation and undertake preparations for contract & other paperwork to integrate the seller.

Thrasio’s focus on brands/organizations (for acquisition) - They are Category agnostic, they have acquired a random mix of products/services.

(Exceptions - products that just spike up and vanish like the fidget spinner, fast fashion - things that become obsolete)

Third, the seller signs off; and they receive the funds. In some cases, the founders continue to receive a share of the profit while running the business even after selling it.

People are so happy with the model that they would sell their first business to Thrasio, and with that money, they build another - and go back to Thrasio to sell the second., and so on!

It’s a Win-Win! For all.

(From start to finish, the process is completed well within 6 weeks)

The work of the acquirer does not stop here. 

Now that they have acquired, they begin the work, executing what their model is famous for….

….The fourth and final step!

The brand goes through a post-acquisition process, the integration of expertise across marketing, tech, supply chain, logistics, inventory management, and product development - to scale the business rapidly.

Entrepreneurs are typically really good at a couple of things. The person who’s really good at marketing is good at creative and branding - but maybe they’re not as good when it comes to supply chain or logistics. Thrasio comes into these businesses and applies best practices & excellence to all the parts of the business.Meaning, even if the seller has been doing one piece of it “Perfectly”, there is always going to be other pieces of their business that they were not focused on, or weren’t their strength. So, Thrasio comes in and drives value immediately.

Simply put - Thrasio identifies the gaps and fills them the ideal way.

What's the key to their success - Data-driven decision making. Through the lens of omnichannel retailers.Their data-driven model in eCommerce - For example - in marketing, everything is split tested by the creative team. Every launch - conversion rate is watched closely and optimised. It is a constantly iterative process, every step takes you closer to perfection (mainly by taking all the emotion out of it and focusing & prioritising work/goals based on data). 

Estimating revenue potential of individual channels, prioritising across portfolios, and targeting the biggest opportunities first - this is enabled by Data.

The reason Thrasio can be quick, thorough, and efficient is because of large-scale acquisition → which in turn leads to “information”. The more companies/brands they buy, the more products they launch etcetera - with each of those; they get a ton of data! So, they’re seeing what works. And the HUGE PLUS is that they have the biggest portfolio of various brands, be it B2B or D2C, or anything you can think of. Making them truly versatile and that they have the data on “everything”. Yes, “everything”.

They might see significant failure when they implement new ideas, but with each failure, they remove its possibility in the rest of their portfolio.

They take each of those learnings and systematically apply them across their portfolio. 

For example, 

• They notice something that clicks for a D2C, they repeat the tactic on other products. 

• They notice something working on Amazon Germany, they slowly target similar potential where that could work.

Note: They also go 100% on one new idea instead of 50% each on two new ideas - that’s when you know if it works, it really…really works!

In 2020, as many as 4,152 sellers on its Indian marketplace; crossed ₹1 crore in sales. Which is 29% more than 2019. Revealing the untapped potential for Thrasio-modelled start-ups in India.

In less than a year since the entry of the Thrasio Model into India, the start-ups modelled after it have already skyrocketed. 

Mensa Brands has acquired a majority stake in 10 consumer brands with revenues between $1Mn & $10Mn. And planning to acquire 50 digital brands over the next 3yrs.

10 Club has announced 2 acquisitions, and so has GlobalBees, the 9-month company & unicorn. 

Amid all this, Thrasio is in talks to acquire Lifestyle Online - a consumer durables brand. To make a strong entry into India.

Thrasio’s effectiveness in such a short span - Learn quick, Roll it out quicker

Learn - Where are the consumers? (which keeps changing, through/because of trends, or situations like Covid)Example - Covid has created more and more eyeballs, more consumers, on these new marketplaces who were never before on them.

Apply - How do I best reach them? (adapt to changing buying behaviour) 

Example - move toward what brings/creates more ease for consumers. Dominate through customer obsession - that’s one reason D2C has grown so much in the past years because customer-centricity is their foundation.

Thrasio has not taken a new approach with their Marketplace lens, they have incorporated swift efficiency through expertise in 100% of the fields required for maximum potential & growth. It’s more like a FAR better approach.

That’s the end of our talk on '[Intel inside] Of the past Year with You'...

See you on the next coffee date!

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