25 May 2024
The parent business of popular brands like Mamaearth, Aqualogica, and Bblunt, Honasa Consumer, is drastically altering its distribution plan. The business is moving away from mega stockists and toward a direct distribution strategy in the top 50 cities. Although a temporary decline in revenue is anticipated, the ultimate goal of this action is to improve long-term profits and operational effectiveness.
The financial performance of Honasa Consumer has already started to be impacted by the switch to a direct distribution model, which was started during the previous quarter. The company’s primary sales decreased by 200 basis points in the short term, and over the following three quarters, a further 50–100 basis point decline is expected. Varun Alagh, the chief executive, has said that although this change may momentarily affect income, it is a calculated move meant to do away with the additional expenses related to super stockists.
This financial impact in the short run is a calculated risk. Honasa hopes to increase cost-effectiveness and streamline operations by eliminating super-stockists from the supply chain. The business is wagering that in the long run, the advantages will exceed the disadvantages, even though there may be some short-term income loss.
The parent business of popular brands like Mamaearth, Aqualogica, and Bblunt, Honasa Consumer, is drastically altering its distribution plan. The business is moving away from mega stockists and toward a direct distribution strategy in the top 50 cities. Although a temporary decline in revenue is anticipated, the ultimate goal of this action is to improve long-term profits and operational effectiveness.
The financial performance of Honasa Consumer has already started to be impacted by the switch to a direct distribution model, which was started during the previous quarter. The company’s primary sales decreased by 200 basis points in the short term, and over the following three quarters, a further 50–100 basis point decline is expected. Varun Alagh, the chief executive, has said that although this change may momentarily affect income, it is a calculated move meant to do away with the additional expenses related to super stockists.
This financial impact in the short run is a calculated risk. Honasa hopes to increase cost-effectiveness and streamline operations by eliminating super-stockists from the supply chain. The business is wagering that in the long run, the advantages will exceed the disadvantages, even though there may be some short-term income loss.
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