Pandemic has significantly altered consumer behavior and the business world. Lockdown restrictions, WFH, and keeping indoors have changed the way consumers shop.
E-commerce sales in India are estimated to have risen by 7-8 percent in 2020. E-commerce orders volume increased by 36 percent in the last quarter of 2020, with beauty and personal care leading.
Many offline shoppers are now opting for online shopping as they prefer convenience and value-add. For many established brands, for whom e-commerce was never a priority, this surged demand urged them to join the D2C route and already established D2C platforms to flourish even faster.
“D2C in beauty brands has emerged because of the non-complex supply chain and agile real-time brand interaction. Through their webstore, the brads are offering a bespoke and bilateral experience to consumers. Moreover, D2C eases brand communication related to exclusive offers and promotions that attract a loyal consumer base taking a detour from the conventional business models. As an extension, we have instant access to data-enabled consumer buying patterns, purchase behavior which helps us improve our online services and product innovations,” says Nitin Passi, Jt Managing Director, Lotus Herbals.
“D2C has always been an integral part of our business strategy. At Lakmé Salon, we want to be able to cater to our consumers’ needs across various touchpoints, be it in a salon or online, by providing them with the products they need for their skin, hair, and beauty. Of course, D2C has ramped up across the board since the onset of the pandemic, as more people are spending time at home and are getting a chance to take care of themselves. Self-care is important during these times, and looking and feeling good is a big part of that. Delighting our customers through various channels, including D2C to ensure their convenience and comfort, will remain at the core of our business,” adds Pushkaraj Shenai, CEO, Lakmé Lever.
Homegrown D2C beauty brands have a strong vision combined with an innovatively curated high-performance product range to make personal care accessible and affordable.
"Over time, there has been increased consumer inclination towards well-being leaning towards the consumption of home remedies and natural ingredients. This trend has paved the way for D2C beauty and personal care brands holding tremendous growth potential. Consumer feedback is key to the growth of a D2C brand and the distinct advantage of being a D2C brand is owning first-hand consumer data which is much harder to come by if you sell through a retailer. The platform empowers and enables a brand to directly connect and engage with customers providing the brand with the tool to understand and evolve from understanding their audience’s preferences.
The pandemic has led to a remarkable surge in online sales of beauty products as people were not only locked at home but were also well informed to make conscious buying decisions. The D2C space is being looked at as an instantly gratifying opportunity for brands to create their niche operating through a platform where shoppers feel that they are able to purchase higher quality products at lower prices than via retailers,” says Vivek Bali, CEO at Enrich.
D2C Strategy: A Boon for the Brands
During these testing times, the D2C strategy has proved to be a boon for the brands as it helped them stay closer to their consumers, understand their needs, and introduce new products accordingly.
“SUGAR’s journey started as a D2C brand in 2015, which has now led us to be a cult-fave brand specifically created for young Indian women, clocking in Rs 105 crore+ revenue in 5 years, along with an offline presence across 10,000+ outlets in 130+ cities. Our D2C start helped us control the brand narrative and be closer to the consumer for feedback during the initial phases - both being priceless. We were also able to swiftly prove our product-market fit and demand in the first two years and then step into the massive retail space. At the same time D2C still remains a strong part of SUGAR, as we have been seeing increased traction on our brand owned app which crossed 1 million+ downloads with a 4.6+ rating on iOS and Android – making us one of the largest D2C beauty brands in India,” states Vineeta Singh, Co-founder & CEO, SUGAR Cosmetics.
Similarly, customer has been a priority for Lotus Herbals, and D2C has proven to be a long-term viable and profitable strategy. It helped the brand understand the consumer pulse, their choices, buying patterns, and trends.
“These consumer insights accelerate our response and turn-around time for pricing, promotion, and product launch strategy. Result; a content consumer who has access to a delightful consumer journey and a robust brand-consumer connection when they get their desired product curated in environmentally sustainable packaging at their doorstep,” asserts Passi.
“The brands available at Lakmé Salons and on our webshop are all reputed, innovative, and result-oriented ones that provide customized care and style to our customers. Our clients know they can trust us for the best products and services, suited not just to their skin or hair type, but also to their lifestyle. As many salons are currently shut, we want to ensure that we stay connected to our customers and be available for whatever they need, be it online consultations, delivering products to their doorstep, or helping them build sustainable at-home regimes. Moreover, we are offering our franchise partners and staff the opportunity to earn incentives through sales on the webshop, which is beneficial to them during current times,” adds Shenai.
Leveraging Social Media
Social media is an effective medium, not just to drive sales, but also to connect with customers. At a time when many stores are shut and everyone is stuck at home, brands want to stay in touch with their consumers and meet their beauty and wellness needs as far as possible.
“Over the years, we've invested in a content-first strategy. This means developing solid content along with earned media strategies that can organically expand ‘top of the funnel’ metrics via high-quality traffic and assets that keep on giving. In the past year, we've doubled down on content and expanded to high-quality and longer-format video/ text content, keeping it very educational. This paid off as we were able to reach 6 million+ followers across all our digital platforms. Our strongest suit in the above has been Instagram where we are one of the very few beauty brands in India to cross 1.5 million+ followers on the platform in record time. Additionally, we are working with 1,000+ women influencers and garnering 250+ million monthly impressions,” Singh shares.
Lotus Herbals also has a thriving social media presence that is not confined as a medium for sales closures. With 8 independent brands under its portfolio, each social media handle serves as an independent broadcast channel showcasing their products, creating buzz, and communicating the purpose of our existence to our consumers while socializing with them. Additionally, the brand also focuses on interactions beyond beauty with conversations around environmental impact, sustainability, and organic and ethical beauty practices.
“Our campaigns are designed with a 360-degree approach as we cater to a discerning audience. These initiatives help us build credibility and interest amongst existing brand lovers and new customers. This automatically leads to sales by facilitating traffic to our websites/ webstores. In the future, we also plan to explore social commerce through our social media handles,” Passi says.
Similarly, Lakmé engages with its customers and community in different ways via social media, including informative live sessions, influencer collaborations, contests and offers, etc.
“Social media is also the first point of entry to our Lakmé Salon webshop for many, so it also helps in driving sales and increases awareness,” asserts Shenai.
Each and every retail strategy comes with its own set of challenges. Like, It wasn't a monumental task for Lotus Herbals to pivot the D2C strategy, given its colossal experience in the beauty industry. Lotus Herbals has been a pioneer beauty brand when it comes to agility and adaptation. Starting from the ground up and within a short period, it developed multiple D2C platforms to cater to the vast consumer segments.
“During this exciting journey, product innovation, distribution model, warehousing, communication strategy had to be aligned and integrated to create a seamless and inspiring connection with our consumer. Our nimble approach was to keep everything consumer-centric and hence plan accordingly with minor challenges taking a step back eventually,” asserts Passi.
“A challenge that I think all new businesses face and so did we - was working capital. Managing the credit cycle is key to keeping the working capital cycle to a bare minimum which in turn ensures efficient capital use and rotation. With little funding when we had started this was really tough - I recall times when we were out-of-stock and yet couldn't order a new batch of products because we just didn't have the money. Today we have a dedicated team that monitors this daily and proactively intervenes to help our trade partners ease and improve our cash flows,” Singh adds.
Pandemic also added to the woes. At the onset of the pandemic, supply and delivery were challenges, as everything had to be shut down.
“However, over time, we have optimized these processes to ensure that we procure products and deliver them to our customers in time. And when and if there is a delay, we ensure we keep our clients informed. Given current circumstances, people are very understanding and know that we are doing our best to serve their needs,” Shenai says.
How Bright is the Future?
E-commerce has been growing in popularity, both in metros and smaller towns over the past few years, and the pandemic has further boosted online shopping. With an increase in smartphone usability, easy exposure to the latest trends and constant engagement on digital platforms – D2C platforms have been growing. The surge in popularity of the D2C model has led smaller brands to survive and thrive even during the pandemic.
The pandemic has had a lasting impact on consumer behavior as well as businesses. The strong growth momentum in e-commerce is likely to continue as consumers have started experiencing its benefits both in terms of convenience and discounts.
“The post-pandemic world will be very different for brands. While consumer sentiments will continue to be fragile based on intense emotions, dependability on the Omnichannel approach is a must for every brand. Consumers today appreciate brand transparency, honest efforts to attract customers, and a 'plain sailing' shopping experience. With the growing aversion to unrealistic advertising, consumers are keener to see product value based on authentic communication. So, D2C helps brands fulfill such expectations and makes relationships stronger, wiser, and full of empathy. Furthermore, with brick-and-mortar retail taking a hit, brand discovery is made easier through D2C as brands constantly gain in-depth data rather than relying on disparate information from vendors or associates,” says Passi.
According to experts, D2C will no longer be limited to niche brand offerings but will emerge as a powerful sales medium owing to its stability against disruptions because of digital infrastructure and internal supply chain value.
“We’ve seen the growth of online shopping in the last few years. The convenience of it coupled with the variety available is a huge sell. As people continue to stay home and stay safe, D2C will see further growth across categories. Having said that, we are also optimistic that once the situation improves, people will also return to salons and make purchases in-store, after consultation and recommendations from our experts. While convenience is definitely a factor, the basic human need for tactile connections will never die,” concludes Shenai.