As we incorporated a global pandemic into our lives, dramatically shifting global shopping trends and consumer behaviors, a cluster of brands, even a few legacy ones have adopted innovation to gain rapid momentum, removing middlemen and catering directly to consumers. Yes, we are talking about direct-to-consumer or D2C brands.
Think Mamaearth, Wow Skin Science, SUGAR Cosmetics, BoAt, Licious, and Lenskart. The initiation of evangelical technology and the grand success of online selling have been empowering brands to go solo. Consumer pain points like seller malpractices, logistical challenges, and payment fraud are just some of the leading reasons why users are flocking to D2C stores.
Certainly, when we talk of the e-commerce space, there’s no marketplace that stands taller than Amazon, and every e-commerce company, irrespective of size, business vertical, or geography must factor the e-commerce behemoth into its expansion plans. These companies have figured out how to use Amazon for at least fractional distribution of their products or have carved out niches away from Amazon‘s marketplace.
Digitally naïve novices are ordering groceries, getting their appliances fixed, shopping for linen, and all at the click of a button-pushing the former misconception of ‘touching’ a product before purchasing into the archives of history.
These are stories that are shaping India’s burgeoning direct-to-consumer revolution.
According to recent industry experts, online retail sales will obtain $6.39 trillion, with e-commerce taking up 21.8 percent of overall retail earnings. In India alone, the e-commerce market is being projected to touch the $100 billion mark by 2025. The capability for D2C brands to begin their global journey has amplified because of the intensification of India’s digital infrastructure.
Consumers are gaining conviction on brands, they are willing to conduct trial and error and the D2C network is witnessing a mammoth intensification in shoppers from tier III and tier IV cities, earlier undetected in the Indian online shopping context.
Crucial Indicators To Bear In Mind While Entering International Countries
Moving swiftly to new markets is a move most brands wish to make in an attempt to capture market share, but when it comes to launching new products in new markets with disruptive innovation, speed-to-market does not essentially interpret the market readiness of the business value proposition.
While expansion into international territories looks seamless, brands need to consider two sets of crucial elements while planning their strategy. margin, localization of products, and logistics are one set. The second is that of language, integration, and compliance.
Here’s where localization of products, logistics, language, integration, and compliance play a very crucial role in determining the mind-share for new products.
Additionally, international business expansion jeopardizes your supply chain. Managing a supply chain that bridges borders is a big challenge. There are particulars around imports, exports, shipping, and operational logistics that are touched by international laws, trade deals, and other multifaceted legislation.
For example, when we ship goods from Europe to North America, we have to deal with logistical nuances, along with cost and time –add to this the added risk of environmental factors.
READ MORE: Why Women are Leading the D2C Revolution
Brands also need to keep country-wise taxes and compliances in mind. Operating across borders signifies we have to deal with more than one set of business regulations. There are taxes, fees, and trade tariffs that we need to be cognizant of.
For example, Ashwagandha, an ancient medicinal herb from India is not allowed to be sold in the Middle East. There are ethical compliances and a long list of licenses and documents that need to be furnished and even then, the process to start selling an OTC drug in the Middle East is a struggle.
Language and cultural barriers are also roadblocks to entry. Yes, for consumers, it is viable to course product descriptions through Google Translate –but how can a D2C brand depend on Google Translate to represent its brand value and proposition in a new business milieu? Irrational right?
Where Is The Global D2C Sector Headed?
So, what I am trying to say is that although tons of D2C brands have done phenomenally well on international terrains, and challenges galore. How you tackle these challenges is what will make or break your business offering.
Bearing in mind the pace at which the D2C sector is developing, there is a lot of innovation that the sector demands. Personalization of products and services will become more state-of-the-art and business elements such as green packaging, green products, and bio-degradable products will take precedence.
Legacy brands are facing stiff competition with D2C brands owning a market share in retail and not just online. Brands are looking at products and team expansion, strengthening R&D infrastructure, brand building, and scaling tech as the key developmental goals.
Also, traditional retailers are being expected to keep intensifying their D2C offerings which could significantly translate to more investments and M&Is in the sector. Thanks to India’s massive online spending capacity strengthening the nation’s expanding internet infrastructure, India is primed to watch its online spending nurture from $39 billion at present to $200 billion over the next 5 years.
D2C gives brands a long-standing upper hand by placing customer-centric innovation at the very heart of how their companies operate. Adopting a D2C strategy will ensure brands keep control of their customer data that can be, and in fact should be, tactfully used to map and augment customer experiences.
Amazon, Walmart, or Target’s supremacy in the traditional retail playground is not going to fade away anytime soon. But, there is plenty of evidence to suggest that new brands are making breakthroughs in innovation in catering to customers and are set to give these goliaths tough competition.