The pandemic has fundamentally changed the way we shop, purchase, and engage with brands. Even my mother, who isn’t a digital native, is now ordering groceries from Big Basket, buying her Fabindia bedcovers online, getting the microwave fixed by Urban Company partners, and shopping on Instagram. Her growing confidence to experiment with new brands, products, and services online – minus the ‘touch and feel’ or ‘familiarity’ she once considered a must before any purchase – is one among the millions of stories shaping India’s direct-to-consumer (D2C) movement.
D2C isn’t a new phenomenon. Even before COVID-19, data-driven companies realised that the value from consumer transactions comes not just from the sale, but from the one-to-one customer relationship that develops out of it. The pandemic has only intensified the need for direct customer engagements.
Today, D2C brands are thriving, as online channels (including social media) became the go-to destinations for discovery, inspiration, purchase, and easy delivery. In fact, India is expected to add 200 million online shoppers in the next four years. That, coupled with VC funding, consolidations, IPOs, and market reactions all point to the Indian D2C ecosystem being at an inflection point of rapid growth.
D2C is a business model where brands engage, market, and sell to consumers directly; where brands have a majority of their revenue or customer acquisition coming in from direct-to-consumer online channels or have started with online-first distribution before going omni-channel. Since 2016, India has launched 600+ D2C brands and growth momentum suggests that the total addressable market size will touch $100 billion by 2025.
What’s driving this trend? For starters, consumer types are evolving. More women are shopping online, enabling D2C brands to tap into their needs, understand their decision criteria, and come up with suitable offerings. Meanwhile, many product and price gaps remain untapped or underserved by industry incumbents, enabling the emergence of new industry players.
Finally, India’s new age consumers seek instant gratification, convenience, and niche or customised products across categories – be it fashion and lifestyle, beauty and personal care, F&B, or home decor. That sets the stage for D2C brands to establish direct, intimate relationships with consumers.
Other big trends shaping India’s D2C boom include:
D2C players are differentiating themselves in five key ways:
D2C isn’t restricted to new age consumer businesses. Even companies that weren’t born on the web are dipping their feet into the D2C space to get closer to consumers. Economic Times reports that several mainstream businesses have acquired online-first brands in the past three years. Colgate Palmolive bought a stake in Bombay Shaving Company, while Emami and Marico purchased majority stakes in The Man Company and Just Herbs, respectively.
Why the increased interest in D2C? Because D2C isn’t just an effective sales channel. It also helps companies understand consumers better. These insights can be used to inform company marketing strategies, fine-tune the ‘innovation flywheel’, and test and launch products/services in mere weeks.
D2C channels provide unprecedented access to customer data. But this information is often scattered across silos, limiting visibility. Technologies like Salesforce CDP can help by capturing, consolidating, and harmonising customer data from multiple online and offline touchpoints into a single source of truth. So, you have all the insights you need at your fingertips to engage with relevance, and build customer relationships that last.
We believe D2C is here to stay. It unlocks new first-party relationships that wouldn’t have otherwise existed. It also enriches consumer profiling and micro-segmentation which help personalise customer experiences.
There will be a D2C maturity curve. Success factors will vary by category. And distribution will either be online-only or multi-channel. Moreover, as D2C brands scale and mature, many of them make that reverse journey - entering offline retail to further strengthen brand visibility, experience and reach. This omni-channel foray requires investments across talent and channel, including in digitising in-store experiences.
Whichever way it plays out, the times demand that you reassess how best to connect with customers, and own the battleground of consumer relationships. D2C can be your strongest weapon.
To learn how to get a D2C channel up and running quickly, discover the Quick Start for Direct-to-Consumer Commerce.
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