Ayurvedic Personal and Healthcare Industry: The world Ayurvedic health and personal care products market is sectioned based on product type, end user, distribution channel, and geography. On the basis of product type, it is divided into Ayurvedic personal care products and Ayurvedic healthcare products. Personal care products comprise hair care, skin care, oral care, and baby care products. Women, men, and babies are the prime users of Ayurvedic products. These products are distributed through supermarkets, department stores, drug stores, beauty salons, speciality stores, direct selling, and Internet retailing.
Hair oil is one of the leading categories in the natural personal care space which constitutes 34 percent of the market, followed by toilet soaps (30 percent), face care (13 percent), toothpaste (11 percent), shampoo (7 percent) and hand and body (6 percent). Among these categories, natural segment has been growing in category toothpaste at 20.1 percent, followed by hand and body (17.5 percent) and shampoo with 13.2 percent growth.
As it has been observed, Drug stores and Supermarkets are the retail channels that have been most responsible for boosting growth in the natural segment. Now Patanjali is going online selling products on various marketplaces like Amazon and Flipkart as there is a huge potential for growth.
Porter’s Forces affected –
Rivalry among Competitors:
The natural segment in India is the fastest growing segment in personal care. According to the Nielson, it is to be estimated that the total market share of the natural segment in India’s is 18500 crores which is 41% of the total care market. As the involvement of the natural segment in the Indian personal care industry has amplified by around one percentage point every year, naturals’ contribution by 2025 would be almost half of total personal care sales, according to Nielson.
Companies of FMCG domain are aggressive with each other to gain market share. Colgate-Palmolive (India) which holds 7% of the market share is leading in oral care but is facing stiff competition from Dabur. To claim a greater share of this market, HUL has relaunched its master brand lever Ayush in five south Indian states and is leveraging over its acquired brand Indulekha. Over the recent years, Patanjali has significantly increased its presence in the personal care market and seems to double its turnover of Rs 10,000 crore with its business growing at 100% per year and plans to expand in dozen categories. Sri Sri Tattva has also planned to leverage over the brand image of Sri Sri Ravi Shankar and has planned 1000 stores selling its products. VLCC has also evolved from a fitness and slimming ventures into conventional consumer goods and more into products with natural ingredients. Himalaya Drug Company which is present in Ayurveda and related fields for decades has plans to extend its presence in categories such as baby care and wellness as it seeks to become a billion-dollar business by 2020.
Bargaining Power of Suppliers:
1. Suppliers in the ayurvedic industry which are affected, as given in the article, can be the online marketplaces, as Patanjali is planning to reach the consumers through online marketplaces
As there are fewer predominant players in the Ayurvedic Personal and Healthcare Industry compared to the number of online marketplaces available, the industry is more concentrated than its suppliers. Hence, the suppliers have low bargaining power.
This is also supported by the fact that the industry is now expanding its sales channels and as the options of sales channels will grow, the bargaining power of those channels will decrease.
Threat of New Entrants:
1. The Ayurvedic Industry in India has a few concentrated players like Patanjali,HUL,Dabur etc
2. Demand side benefits of Scale are high in the Ayurvedic Industry.
3. Price wars to capture market share is frequent in this industry.
Few concentrated players will increase the barriers to entry as the current players are huge and enjoy supply side benefits of scale. Also in the past there have been several price wars between the big players in order to capture a substantial market share. Also as can be seen in the reference article current players are increasing their reach to the consumers through online marketplace. This all represents significant barriers to entry.
Bargaining Power of Buyers:
1. Industry players have tried to increase the buyer switching cost.
For e.g. In the article we can see that Patanjali is planning to come up with a loyalty program for their brand stores so that their traditional sales channels does not get negatively impacted after their foray in online marketplaces.
Consumer reach increased
Due to an increase in rivalry Price wars may start among competitiors on online platforms
Impact on traditional sales channel
Brand visibility and reach
Article Referred: Baba Ramdev’s Patanjali goes online, ties with Amazon, Flipkart and 6 others
The article reports Patanjali Ayurveda’s recent tie up with e-commerce companies Amazon India, Flipkart, BigBasket, Paytm, Shopclues, Grofers and online medicine sellers 1MG and Netmeds in an attempt to leverage online marketplaces and expand its reach.