Mensa Brands Modifies The Thrasio Model To Become A ‘House of Brands’ - Savage & Palmer - Enabling Entrepreneurs

Mensa Brands Modifies The Thrasio Model To Become A ‘House of Brands’

by | May 2, 2022 | Business Strategy | 0 comments

Mensa brands has become the fastest Indian startup to become a Unicorn. Ex Myntra CEO and Midlife cofounder, Anantha Narayanan, founded the brand in 2021, and it soon became the talk of the town when he managed to raise funding amounting to USD 135 million, which set its valuation at over a billion USD within its first 6 months. 

Mena is bringing online brands and local companies from the fashion, beauty, and personal care industry together to create a ‘house of brands. The Bengaluru-based company has built global digital-first brands by hand-picking the right entrepreneurs and investing in their businesses. Mensa incorporates brands to scale by utilising its expertise in e-commerce, IT, inventory management, advertisement and marketing, and supply & demand chain flow. It drives D2C sales of businesses and makes them global brands. 

What’s so special about Mensa Brands?

Mensa Brands has followed a business model that is similar to Thrasio’s model, which is a US-based consumer goods company. In this model, the company uses ‘RxRxR’ ( reviews, rating, and rank) to help in the acquisition of established businesses, and then helps those businesses to scale up their operations. 

According to Mr. Anantha, the company currently owns 12 brands, and around 80% of its business is run by women. The venture operates in three segments, including fashion, beauty, and personal care. They are making brands global in all three segments, with 30% of the venture’s revenue coming from overseas markets. 

Mensa Brands purchases a majority stake in each brand with strategies to fully acquire them within five years. All of these brands are promising, and their founding team unites with Mensa Brands to run operations at a larger scale. The company assists these brands in managing and extending their offerings on their official e-platforms and all leading marketplaces. Mensa Brands helps businesses involved in tech-led product development, by determining a product that prospective customers are seeking and introducing a new product range accordingly.  

What is the Thrasio model?

Established by Joshua Silberstein and Carlos Cashman in 2018, Thrasio deals with brands that sell its products on Amazon. The company merges with the businesses or acquires them to scale. Generally, they deal with brands allied with day-to-day products. After the acquisition, Thrasio enhances the acquired company’s inventory management, marketing strategies, product development and supply chain management. 

With this business model, Thrasio has earned revenue of around $500 million and a profit of $100 million in 2020. In February 2021, Bloomberg reported the company to have a value of more than $ 3 billion. 

Differences and similarities between Thrasio’s model and Mensa’s model

Mensa Brands is largely inspired by the Thrasio business model and has adapted the model for its success, and to attract investors. Similar to Thrasio, Mensa identifies small businesses with a digital-first approach, having reputable founders, a base of loyal customers, and a revenue generation of $1-$10 million per annum. It acquired a few rapidly-growing brands and started working on their portfolios. Then, the company utilised its marketing strategies, IT structures, inventory management, and industry knowledge to optimise the growth and development of the brands it acquired. 

The company leveraged its robust digital marketing competencies for effective brand story creation, creative copywriting, and world-class photography to give brands a push to scale. While Thrasio offered a 100% exit to the founders of the businesses, Mensa Brands purchased stakes in the brand and aimed to fully acquire them in the next five years. Once the brand is all set to work with a larger and more technically equipped team, Mensa employs its expertise in digital marketing and supply chain expansion to boost the acquired business. 

Mensa Brands business model

Acquisition opportunities through the Mensa Brands Model 

There are numerous startups that are inspired by the Thrasio model, and these startups have managed to raise funds from equity and debt investors. The goal of this model is to identify brand development potential, acquire the brand at the proper pricing, and then drive growth through a mix of greater sales and lower expenses.

With throat-cutting competition, a house of brands needs to be quick to act in order to close the acquisition before the competition increases the brand’s valuation. India is quite different from the USA as a market, and its comprehensive e-commerce economy is still incomparable. Moreover, Indian offline retailing is still dominating the market even after the pandemic. 

Though the Indian e-commerce industry is behind the e-commerce markets of the USA, UK and China, it has excellent future opportunities to utilise economies of scale and employ the proper expertise to develop acquired brands. Mensa Brands’ model can open up the door to new opportunities for potential e-commerce growth

The evolution of the Indian eCommerce market

The competition in the Indian e-commerce industry is increasing every day, and its success will depend on the acquisition of quality founders, effective fundraising, and expertise to scale a brand efficiently. With respect to the business dynamics of the Indian market, e-commerce experts are expecting the evolution of the Thrasio model. Following this model, companies may acquire direct-to-customer businesses or offline businesses that seem promising in the market. These businesses will be those that have excellent customer affinity and an enhanced customer experience, with an optimistic development forecast. In the future, we can anticipate the rise of numerous mergers and houses of brands that acquire different brands and permit them to operate under the banner of a company. 

Are there more Mensa’s to come?

Taking inspiration from the Thrasio model, Mensa has assisted different brands in organising and optimising their products across all leading markets. The company has executed “tech-led marketing” and optimised product prices to drive demand. The company itself has performed tech-led product development, such as identifying the things people want and assisting brands to launch new product ranges accordingly. Though there are significant differences between the Indian e-commerce market and European e-commerce markets, this model is quite inspiring for companies that are ready to be a part of a house of brands. 

While a growing number of competitors are joining the e-commerce rollup industry, Indian brands have gotten a head start. Thrasio-style business models provide critical marketing, cost-cutting, and technology know-how to drive the growth of acquired businesses. This is an exciting period for the Indian ecommerce sector, as players are copying the business model while making their own changes to align it with India’s economy. Investors are looking for prospects with high growth potential, and they are now driving an increase in roll-up firms.

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