Nestroots is a unique Indian brand that offers elegant and unique designs for home decor, dining, and furnishing products. The founder, Chhavi Singh, has had a successful career in sales and operations, and she has now taken her experience to create a brand that offers superior quality products at affordable prices. With an aim to compete with international markets, Nestroots has become a go-to brand for many consumers in India, with more than one lakh loyal customers.
During an episode of Shark Tank India, Chhavi Singh came to pitch her business idea to the sharks. Her ask was for 50 lakhs rupees for 1% equity in the company. The sharks were intrigued by the unique concept of Nestroots, and they were eager to know more about the brand and its potential for growth.
One of the sharks, Namita, was particularly interested in Nestroots, and she offered 50 lakhs rupees for 2% equity in the company. As all the other sharks were not interested, there were no counteroffers. Chhavi was pleased with the offer and decided to accept the deal with Namita. The deal with Namita was a great opportunity for Nestroots to expand its business and reach a wider audience. With the additional investment, Chhavi planned to increase the marketing spend and improve the online presence of the brand. She also aimed to introduce new product lines and expand the existing ones to offer more variety to customers.
Nestroots had a strong presence on more than 25 online platforms, including their own website and marketplaces like Amazon, Flipkart, and Myntra. With the additional investment, Chhavi planned to increase the customer base and expand the brand's reach to new online marketplaces.
The major sales contribution for Nestroots came from the furniture category, which accounted for 55% of the company's total sales. The average monthly sales were 1.1 crore rupees after returns, with 25% of the sales coming from their website and 75% from the marketplaces. The gross margin was about 70-75%, and the contribution margin was 10% on average. The company was profitable, with a net profitability of 16-19%.
In FY 21-22, Nestroots had a net sales of 7.2 crore rupees and a net profit of 14%. The projected sales for FY 22-23 were 16 crore rupees, which showed a significant potential for growth. Chhavi had also raised a debt of 35 lakhs rupees, which had been paid off. She had raised a fund of 35 lakhs rupees at a valuation of 4.5 crore rupees, which had helped the company to expand its operations and improve its product offerings.
Overall, the deal with Namita was a win-win situation for both parties. Nestroots received the necessary investment to expand its operations and reach a wider audience, while Namita had the opportunity to invest in a unique and promising Indian brand. With its elegant aesthetics and unique designs, Nestroots is set to become a leading brand in the Indian decor and furnishing industry.
From the above blog, there are several learnings that businesses can take to grow and succeed in the market. Here are some of the key takeaways:
- Unique Selling Proposition: Having a unique selling proposition (USP) is critical for any business to stand out in the market. Nestroots' USP is elegant aesthetics and unique designs that are affordable. It's important to have a clear and distinct USP that can differentiate a brand from its competitors.
- Customer Base: Building a strong customer base is important for any business. Nestroots has reached more than one lakh customers and has products available on more than 25 online platforms. It's essential to understand the target audience and create products that meet their needs and preferences.
- Category Focus: Focusing on specific categories of products can help businesses create a strong brand image in the market. Nestroots has five categories of products - Furniture, Kitchen and Dining products, Serveware & Tableware, Barware, and Furnishing. The furniture category is the major sales contributor for the company. It's important to identify and focus on the most profitable categories to maximize revenue.
- Financial Management: Effective financial management is crucial for the success of any business. Nestroots has a gross margin of about 70-75% and a net profitability of 16-19%. The company is making a profit and has projected sales of 16 crore rupees for FY 22-23. It's important to manage expenses and allocate funds effectively to ensure profitability.
- Fundraising: Raising funds is an important aspect of business growth. Nestroots founder Chhavi Singh raised a debt of 35 lakhs rupees, and later raised 35 lakhs rupees at a valuation of 4.5 crore rupees. It's important to have a clear fundraising strategy and identify potential investors who can add value to the business.