All startup pitches include a conversation about competitive advantage or “moats,” and these moats are what ultimately allow companies to stand differentiated over the long run.
A question that a lot of early-stage consumers startups face is when should one start thinking about moat in the first place?
At the start, the problem statement is to not protect from the competition because there is no competition for you on day zero. One should think about moat as the value you're providing to consumers. As you progress, it keeps evolving. You should start thinking about moats as you scale up in order to establish the value.
So what does the elusive 'moat' mean for brand building? According to Vineeta Singh, CEO and Co-founder, Sugar Cosmetics:
Their brand has been one of their biggest moats. As entrepreneurs, a lot of them are engineers, and conditioned to be metrics driven. One gets onto the treadmill of performance marketing and CAC optimisation. 95% of Sugar Cosmetics spend was initially going into performance marketing.Their dependence on Facebook and Google is increasing day by day but it was necessary to build a sense of brand identity
“Brand Building, Community and Content are your biggest Moats and one should build them as early as possible.”- Vineeta Singh, CEO and Co-founder, Sugar Cosmetics
“Initially, Product was our moat followed by technology and scaling but Brand is the final sustainable, long term moat, which you realise overtime today. Investing in it or thinking about how to sustain it early is impossible for most startups. What is relevant is how do you solve a customer's problem.”- Chakradhar Gade, Co-founder, Country Delight
“The kind of R&D culture you build, the kind of organisation you build, the kind of insight that you get from the market, the kind of processes set around that. The ability to launch a product at the earliest is what the ultimate moat of a product company is.”- Shibam, Co-founder, Atomberg Technologies
Amazon, Flipkart, Nykaa are some of the most profitable channels. So it's a no brainer to go ahead with them initially because you need that bottom line to invest in things which are relatively more expensive.
But if you want end consumers to start buying from your own channels directly, you need to provide a superior end user experience around how to use this product along with being able to buy it, or getting people to get the app and use it on a regular basis. Once you get into people's phones, it's a very powerful position, because you get the customer exclusively and directly.
Over and above this: consistency should be maintained in product quality and design.
Brands have to keep their messaging, packaging, and design consistent. If that can be something which is consistent and stands out, you know, you get free access to the consumer mindspace.
It also matters how you define the percentage split of your investment across sales, and long-term brand building.
In summary, there are a lot of factors which can be considered for creating a sustainable & competitive moat for consumer brands. But the takeaway is that: Founders should stay focused on solving a problem that they are passionate about and building the brand and a community as they scale.
Watch this insightful session from Brands Decoded 2020 to get more insights on building a moat for a consumer brand on You Tube
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