'Focus on product differentiation; consumer loyalty will follow'

Beauty and skincare brand Pilgrim, which started its life online, is putting its might behind offline expansion at the moment. In the last year and a half, the contribution of offline to its overall sales has grown from nil to nearly 25%, says co-founder Anurag Kedia. In this interview, he talks to Toshiro Agarwal about the challenges small players face when they start making their way through offline channels. Edited excerpts:

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Quick commerce has become a priority sales channel for D2C brands. How is Pilgrim adapting its supply chain and inventory to meet the demands of platforms like Blinkit and Zepto?

The challenge with quick commerce is that they work out of dark stores. Overall, the space they have in a dark store is very limited. Therefore, the space they have for the category is also limited. Marketplaces are used to holding inventory for 30 to 45 days. Q-commerce is not able to do that. They need a much faster turnaround time, which means that they need much faster service time, and they don't carry the long tail. What I mean by that is that if the brand has 250 stock keeping units (SKUs), q-commerce platforms will carry between 30 and 50 SKUs, and they will service a smaller quantity at the point of sale.

We have set up four regional warehouses, which are working very closely with the q-commerce partners, and we are setting up more. We will probably have 10 to 15 warehouses in another two months' time, which will work exclusively only for q-commerce. The application programming interfaces are getting integrated - so their ERP and our ERP will talk to each other. In other words, the manual intervention is being erased.