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Product sampling, a marketing strategy that involves offering consumers a small amount of a product to try, is considered a vital strategy for market penetration and consumer engagement in India, where the consumer base is vast and preferences are diverse.
Doing this on behalf of more than 1300 brands is the e-commerce platform—Smytten— whose business model involves partnering with premium and luxury brands to provide them with a targeted sampling strategy in India.
The sampling and engagement platform, which raised around $12.9M in a Series A round in 2022 led by Fireside Ventures and Roots Ventures, is staring at a Series B round to expand its offline presence, its co-founder Swagat Sarangi (ex-head of business marketing at Google) tells Storyboard18.
Currently, operating stores in four cities—Indore, Surat, Noida, and Ahmedabad, the brand plans to open 50 to 100 new stores over the next 12 to 18 months and will focus on the central and eastern regions of India, in the initial phase.
Apart from helping companies to generate leads and enable consumers to make informed buying decisions, the brand also has in-house large language models (LLMs)— Smytten Pulse— that predicts purchasing patterns for specific categories and products, providing valuable insights for the business.
"We have successfully helped more than 100 brands with consumer insights, research, and advertising solutions via Smytten Pulse," Sarangi shares.
He further delves into growth plans, advertising spends, and how it has been highly profitable at the unit economics level for the past 18 months and is on the verge of achieving company-level profitability by the end of FY25.
Edited excerpts:
How significant is the offline expansion for an e-commerce company like Smytten? Is product sampling an omni-channel phenomenon?
Smytten currently operates stores in four cities—Indore, Surat, Noida, and Ahmedabad— and plans to open 50 to 100 new stores over the next 12 to 18 months. The company aims to establish company-owned and operated stores while also exploring ‘store-in-store’ collaborations with large retail chains.
The current stores have seen impressive year-on-year growth of 70 to 100%. The stores provide a physical space for consumers to experience product sampling first hand, which is especially valuable in building trust with new customers, particularly in tier-two cities.
Our offline presence is proving to be a key driver of consumer engagement and brand visibility.
As for where product sampling reaps better results, both online and offline have their strengths.
Online sampling allows for wide reach and data-driven targeting, making it scalable and efficient, particularly for tech-savvy consumers. On the other hand, offline stores offer a tactile experience, which helps skeptical or first-time buyers feel more confident about their purchase decisions. For brands, a blended approach, that involves leveraging the strengths of both channels yields the best results. Overall, we work with more than 1300 brands for sampling/e-commerce for Smytten.
We expect the retail business to contribute 20–25% to the total revenue of the company, sampling around 50%, e-commerce 10%, and Smytten Pulse around 25%, in the next few years.
Walk us through how both channels are contributing to Smytten’s overall sales or revenue.
The online platform continues to be a major contributor due to its wide reach, extensive data analytics, and ability to target consumers at scale. Offline stores, however, are rapidly growing in importance as they provide a crucial touch-and-feel experience.
To grow both channels, Smytten plans to expand its offline presence by opening 50 to 100 new stores over the next 12 to 18 months. This will help increase consumer touchpoints and build trust through physical product trials, especially in tier-two cities where in-person experiences matter more. Simultaneously, we will continue to enhance online capabilities by investing in AI-driven recommendations, personalised sampling, and targeted advertising. This dual strategy will allow the company to drive growth and create a seamless omnichannel experience for consumers.
Smytten's next phase of expansion will focus on tier 2 and tier 3 cities across Andhra Pradesh, Telangana, Madhya Pradesh, Odisha, West Bengal, and Kerala. The central and eastern regions of India will be the priority in this first phase of growth.
How receptive is Bharat to the product sampling trend?
Consumers across demographics indulge in product sampling. However, we have observed that the consumers in tier-two and three cities are particularly more enthusiastic about trying sample products and also exploring new brands and products. After the pandemic, contributions from non-tier one cities have increased by two times. That apart, personal care and beauty are the top-performing categories for our platform.
Heard Smytten is on the verge of achieving company-level profitability? How has the growth been for the company over the past few years?
Smytten has been highly profitable at the unit economics level for the past 18 months and is on the verge of achieving company-level profitability by the end of FY25. We believe in sustainable and profitable growth.
Having crossed the Rs 100 crore revenue milestone two years back, we have been growing healthily at a 30-40% year-on-year and will continue to do so for the next two to three years. We are already highly profitable at a unit economics level and will generate profits at a company level from the upcoming financial year onwards while maintaining the growth rate.
In terms of ad spends, we invest around Rs 40 crore in it and have an in-house team to look after the media plans.
With such extensive growth plans, are you planning to raise capital?
We plan to raise funds by the end of this fiscal or beginning of next fiscal year— FY2025. This will be Series B Funding for Smytten and Smytten Pulse. Our focus lies on growing offline (omnichannel) and the technology infrastructure.
Smytten Pulse—your in-house large language models (LLMs) predict purchasing patterns for specific categories and products, providing valuable insights for the business. How many brands have you helped so far with this?
We have successfully helped more than 100 brands with consumer insights, research, and advertising solutions via Smytten Pulse. It further expects a 200% year-on-year growth in the number of brands in the current portfolio. Going forward, we plan to tap into the automobile (EV), real estate, paints, and pharmaceutical industries.
Rapid consumer research will empower brands by making their strategies agile, providing real-time insights into consumer behaviors, preferences, and pain points, enabling them to quickly adapt and fine-tune their products, marketing strategies, and messaging. By leveraging these timely insights, brands can create hyper-targeted campaigns that resonate with specific consumer segments, offering personalised experiences that attract and engage customers more effectively.
The integration of the latest technology - LLMs, Vector Stores, Retrieval-Augmented Generation (RAG), Generative Adversarial Networks (GANs), Neural Search, AI-powered Sentiment Analysis, etc are the key drivers of our uniquely crafted research and insight solutions and will further lead our growth journey in the market for Smytten Pulse.