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Powerhouse91: By the end of the year, we want to buy 20-25 e-commerce brands

Powerhouse91 was founded early this year with the goal of acquiring, consolidating, and expediting the growth of firms who sell products on Indian ecommerce marketplaces.

To take the acquired businesses to the next level, the company combines growth capital with a broad range of e-commerce skills.

Thrasio's concept, which was pioneered in the United States, has witnessed record-breaking growth and is gaining traction in Western regions.

Serial entrepreneurs Shashwat Diesh and Aqib Mohammed hope to replicate the idea in India with Powerhouse91.

The team talks about what they're trying to do, why it makes sense, and how they differ from Thrasio .

What is the purpose of Powerhouse91?

What problem does Powerhouse91 intend to solve , and what is the business strategy that will enable it to do so?

SD (Shashwat Diesh):Powerhouse91 acquires and builds up Indian e-commerce businesses while paying the owners a fair financial recompense in exchange for their assets.

The issue we're attempting to solve is that many e-commerce firms are unable to reach their full potential due to problems that can be efficiently overcome with the appropriate approach and resources.

Starting an e-commerce business isn't easy, but extending it beyond a certain point necessitates a new level of technological expertise and resources that most small business owners lack.

We intend to give these brands a platform to catapult their growth by providing considerable growth capital, extensive ecommerce expertise across all areas such as marketing and operations, and, of course, sharing this expertise throughout our entire family of brands.

Why would someone who has a lucrative e-commerce business consider selling it?


AM (Aqib Mohammed):

Running an e-commerce brand, even a healthy successful one, isn't always the bed of roses it's made out to be, as any e-commerce firm owner can attest.

Even with healthy profitable firms, the majority of profits must be re-invested to help the brand develop.

As a result, the actual profit that owners can earn is only a small portion of the total profit.

Add to that the reality that in e-commerce, even this profit is never guaranteed, and you're constantly up against new adversaries attempting to oust you, ever-changing marketplace T&Cs, supply chain concerns, expanding working capital needs, and so on.


What we're attempting to provide here is a mechanism for brand owners to generate multiple years of profit in one go, while avoiding all of the dangers associated with doing so through normal business operations.

Additionally, we provide clients with the option to continue to profit from their brand as it grows.

As a result, individuals may sit back, relax, and, if necessary, focus on other elements of their lives.

What's it like to work with Powerhouse91?

What data do you consider when evaluating a brand, and how do you determine its value and payment structure?


SD: Every brand and person we speak with is like having a one-on-one chat with us.

And with each meeting, we're trying to figure out whether there's a win-win situation for both the brand owner and us, and if so, how to get there as quickly as possible.

We normally look at month-over-month sales data, margins and profits, consumer love generated by your brand, and the category in general when evaluating any company.



There is no such thing as a one-size-fits-all approach to valuation and payment structure.

Apart from the scale, a variety of elements including as margins, category potential, product differentiation, and so on can influence valuation.

However, it's usually calculated as a multiple of the previous twelve months' EBITDA.

In terms of payment structure, we believe that each brand owner has their own set of preferences, and we do our best to provide options that satisfy them.

In general, the payout structure consists of a lump amount component delivered at the moment of transaction completion, as well as earnouts dependent on the brand's future growth.

What is the procedure for acquiring a company?

Do you intend to take full control of these businesses?


In most cases, we take full control of the brand.

Depending on how the company is set up, the logistical aspects may differ.

When a company is also involved in manufacturing, for example, we just take ownership of the ecommerce brand, and the brand owner can continue to run the manufacturing side of the business independently.

Which brands does Powerhouse91 prefer to purchase?

What is their typical scale and what categories do they operate in?

SD: We're happy to talk to brands that generate anywhere from a crore to a few tens of crores in revenue.We're rather category agnostic, although we don't get involved in trends or categories with a lot of design cycles, such as fashion.

What are your plans for the acquired brands?

What do you do differently to operate them compared to how they are currently operated?


AM:

Our main focus is on accelerating the growth of the acquired brands.

In accordance to this, we have a checklist of over 100 elements that we go over with any brand before beginning the acquisition process in order to properly grasp how we can achieve this growth.


These can range from simple things like improving listing quality to more complex things like deep supply chain optimizations, uncovering untapped client segments, and so on.

The ecommerce roll-up game appears to be on its way to becoming a crowded market.

Why should someone choose Powerhouse91 over anyone else to sell to?

What makes you unique?

SD:We understand the amount of sweat and tears it takes to establish a truly loved brand, having started and scaled e-commerce brands to multiple crores in sales ourselves.

We don't regard ourselves as purchasers or owners, but rather as partners in your brand's evolution, and we value the idea that you'll always share that emotional connection with your brand, no matter what. As a result, we're personally invested in the success of any brand with which we collaborate, big or small, and we leave no stone unturned to ensure that your brand is the roaring success you've always imagined.

What sets Powerhouse91 apart from worldwide competitors such as Thrasio?

AM:Running an e-commerce business in India is very different from running one in the United States or any other international market.

The nature and scope of the difficulties that brand owners encounter here necessitate a set of answers that are particularly "Indian."

And this is mirrored in everything we do at Powerhouse91, from how we evaluate brands to how we structure payouts to the post-acquisition connections we want to continue with brand owners.

What do you expect Powerhouse91 to be worth in three years, and with which sectoral e-commerce enterprises are you in discussions to buy?


SD:

By the end of the year, we hope to have acquired anywhere between 20 and 25 brands, with an annual topline of around Rs 100 crore.


We're aiming for a topline of roughly Rs 500 crore over the next three years, with several of our member brands contributing tens of crores apiece.

We're now speaking with over 50 businesses, and as previously stated, we're quite category agnostic, so these brands span a wide range of sectors, from automotive to home decor, fitness, and infant care, among others.

What does Powerhouse91's long-term strategy require?

What role does it play in India's e-commerce story?


AM: We believe that, like the previous decade, the next ten years will see another paradigm shift in the way Indians acquire and consume goods.

We also believe that tomorrow's brands will all be Internet-first, and that some of the smaller ones making a few crores in sales now will become nearly ubiquitous in 5, 10 years.

We wish to play a vital role in this and, more importantly, contribute to the expansion of Indian ecommerce.


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