Influencers use reach on social media to launch their labels

In October, Anam C., a beauty influencer with a decade of domain expertise, launched her own cosmetics label, Verified. She claims that pre-orders for her collection of lipsticks have increased her estimated sales by up to 150%.

Popular food vlogger Madhura Bachal launched her own brand of spices for Marathi cuisine, Madhura’s Recipes, on e-commerce sites in August 2018. Since last year, these spices—which contribute more to their annual income than revenue from branded ingredients—have been sold. Selected retail stores in Maharashtra.

Fashion influencer Suman Khera Sethi, who has over 33,000 followers on Instagram, makes more money from her clothing line, Label S, than she does with brand collaborations right now. Initiated a few months before the first nationwide lockdown in 2020, she says her venture has picked up recently, after being hit twice during the pandemic.

Top entertainment producer Faisal Shaikh’s line of deodorants, 2407, was launched in October 2019, with annual sales set to reach double digits into crores, according to his agency.

The combination of low marketing costs and high engagement with customers makes these brands click. Their clients are a ready-made cohort of followers and customers, who have been liked and won by creators over the years. This community is highly engaged and trusts the manufacturer, making it easy to sell. While some creators have launched products to strengthen their brand, others use the influential route to gain a following and eventually enter the market.

Abhimanyu Radhakrishnan, Managing Director, Qiqi Digital Media, describes these lines launched by influencers as ‘Creator Brands’, “have lower customer acquisition costs than regular e-commerce products. Radhakrishnan of Qikie says , “It is easier to turn a fan into a customer, than a customer to a fan.”

Anam called the brand launch event a “natural next step” by the creators. From Kylie Jenner and Tati Westbrook in the US to Deepa Khosla in the Netherlands and Huda Kattan in the United Arab Emirates, many major international influencers now run their own beauty and skincare brands. worth millions.

“With attention dwindling, audience loyalty is waning, and the content game has become too number-driven for my liking,” says Anonymous. Through Verified, she seeks to build a more sustainable parallel career free from the uncertainties of algorithms. She hopes that her new brand and career will hinge on the connections she has established over the past decade with her follower community that has given her the insights she needs for product development.

A former marketing professional, Sethi says she “took the path of influencer to get into the fashion designing business”, which was her dream.

A representative for Faisu says the makers decided to launch a range of deodorants based on his experience selling clothes to passersby on Mumbai’s busy Linking Road before he became famous for his captivating TikTok videos. He wanted to create a product for people like himself, who needed to look and smell good for consumer-facing jobs even when public transportation didn’t have uninterrupted water or commuting facilities.

While his life as a manufacturer has given him unparalleled insight into the minds and needs of consumers, launching and managing a product is an entirely different matter. Running a product business requires skills that overall creators don’t have. And most of them are aware of this. Too often, the agency hired to represent them manages the day-to-day operations of the business, from customer service to ensuring adherence to manufacturing guidelines, while they continue to focus on content creation.

“We take a minority stake in the enterprise to provide necessary manpower, technical, legal and operational support. Our aim is to take the unit from zero to one,” says Radhakrishnan.

Agencies also see a huge business opportunity to enhance their creators’ brands, especially when there are Thresio-style companies that build brands across sectors and want to invest in or acquire D2C startups.

Unsurprisingly, advertisers, especially D2C brands that rely on influencer marketing for sales growth, are not thrilled. Shivani Chakraborty, founder of Exalt, an artisanal wellness tea brand, says, “It is confusing for the audience. Chakraborty was considering an influencer to collaborate when he learned that the manufacturer had launched its range of teas. “How does one justify and convey the brand’s offering then reassures the community?” he asked.

In most traditional industries, this would be considered a conflict of interest. However, manufacturers collaborate with several competing brands at once, but on a project basis and for a fixed fee or commission. When they launch a brand, they automatically become its brand ambassador, so the stakes are high. “In my opinion, both brands and content creators would avoid collaborating on product categories where they see a major conflict of interest,” says Shivani Behl, chief marketing officer of beauty and personal care brand Plum.

Manufacturers like Faisu and Bachal do not endorse competing brands with their products. On the other hand, Anam and Sethi say that they have not faced any issue of conflict of interest. “The benefit of being a beauty maker is that you’re wearing 20 brands at once,” explains Anam. “Brands have no problem collaborating as I am not promoting my label in my time,” says label SK Sethi.

Of course, beauty and fashion are categories where consumers often buy products from multiple brands, which probably works out favorably for both the manufacturer IP owner and the advertisers. Fashion consultant Shruti Jaipuria believes the absence of conflict is also because most D2C fashion brands are “young and inexperienced”. “Their goal, primarily, is to get mentions and improve sales. If an influencer offers it, it’s usually a win for them,” she says.

Diksha Sachdev, founder of Fashion Solutions, a fashion and lifestyle marketing agency for young brands, says that globally, fashion influencers like Chiara Ferragni have capitalized on their global following to launch brands. Sachdev, who works extensively with foreign and local fashion brands, says, “This has not diminished their authenticity in any way nor has it clashed with other brands.”

However, the “it has worked in the US and China” thesis falls flat in the face of the reality that people in those countries have a greater tendency to spend on hobbies and leisure in addition to a more developed e-commerce scene.

an estimated Currently 900 crores, India’s impressive economy figures are not comparable to a $3 billion industry in the US, much less than China’s impressive $210 billion economy driven by a vibrant live-commerce ecosystem. Recently, China’s top live-streamer, Austin Li Jiaqi (also known as The Lipstick King), sold $1.7 billion worth of products from various brands on Alibaba’s Taobao app during a 12-hour live-stream session. Another top live-streamer, Via, enabled sales of $1.25 billion worth of goods in its 14-hour marathon, a Business Insider report said.

At least four influencer marketing executives told Mint that brand collaborations still bring in the lion’s share of income for most creators, while sales of their products remain low. Lakshmi Balasubramaniam, co-founder of Greenroom, an influencer marketing firm, says, “The model works better when a celebrity launches their own brand. They don’t do much; usually, an established player in this field accompanies them. ties and runs the business side of things while the celeb gets a share of the profits.” Balasubramaniam cites the example of actor Katrina Kaif, who entered into a joint venture with Nykaa in 2018 to launch her line of products, K Beauty. When the beauty market went public earlier this year, the value of Kaif’s investment in the venture jumped 10 times. 22 crore according to market analysts.

A similar co-creation model with relevant influencers is an option many brands are exploring. Plum is one of those brands. Stylenook, a clothing recommendation service, is another. “The trend (of maker brands) is inevitable,” says Kuntal Malia, co-founder, Stylenook. She would rather be a part of it than oppose it.

It’s an essential trend, says Lavin Mirchandani, founder of GetEvangelized, the agency that represents the label SK Sethi. likely to be less relevant in the long run.”

This is similar to production houses that create commissioned content for TV networks as a service versus studios that produce IP that can be distributed over the network and expanded into experiences, merchandise, books. Is. Mirchandani argues that creators should ultimately be like studios.

Radhakrishnan of Qiki believes that niche influencers will see their IP grow faster than lifestyle influencers. However, even for them, he predicts that earnings from product sales will last at least two years before brand collaboration.

But the manufacturer brand model isn’t for everyone. As Mirchandani says, “People who don’t know the difference between audience and community should be wary of monetizing too quickly.”