Understanding Direct-to-Consumer Market Opportunity

Consumer acquisition is a significant objective for any brand starting up early in its journey.
Understanding Direct-to-Consumer Market Opportunity

D2C is an exciting space, and in the last few years, we have seen many changes in the evolution of the e-commerce ecosystem. But the change in D2C has been far more than the overall changes in the e-commerce sector. 

Highlighting the benefits for a brand to go D2C, Aakash Anand, Founder, Bella Vita Organic says, “When you are in D2C, you understand the consumer exactly. Compared it with you selling something in a store, for D2C brand, how easy it is for you to call a customer and say to them that you bought a face wash or a scrub last month, come back and repurchase it. Once you have that data with you and with the help of technology and your own platform, you can reach out to millions of people with the click of one button. One push notification can give you an equivalent amount of sale that a two-day offline event would not be able to give. Having that data and access to customers at a minimal cost differentiates D2C companies like us from the bigger ones who are just relying on traditional mediums of selling and reaching out to customers.” 

Resonating the same thoughts, Agnim Gupta, Principal - Tech & Growth, Amrutam says, “Because of D2C, I'm able to deal with my consumers directly. I have that bandwidth and freedom to give them that kind of experience. Twenty years back, if I were an FMCG brand, I wouldn't know my consumers that well, and I won't be able to provide them with that experience. At Amrutam, everything is about customer experience. Apart from this, it helps in building a brand in such a way that there is more trust. If you come to my retail store, I wouldn't know all the things, but if you visit my website, there I know all the touchpoints and the channels to reach out to you. I have SMS, web push, email, WhatsApp, and I know when it is the right time to pitch you. I think D2C is an experience not just for the brand but also for the consumer to connect with the brand in a way that other channels wouldn't be able to do.”

Apart from this, data is the center point of the function of any D2C brand. The heart of the differentiation is data. Once you have access to that data and there is no lag between that access, you will be able to make better decisions for your customers, the category you are building, and the products you have launched.

“Once you have the information about your customer, you will make better products for them and be better than the traditional players in the market. By doing this, you will be able to predict consumer behavior, and that changes the game. Distribution is also an important differentiator because earlier, you were putting your stocks in a traditional setup or a modern/ general trade outlet. I'm not saying that either it should be D2C or offline wholesale; I'm a big believer in omnichannel play,” states Bharat Sethi, Founder & CEO, Rage Coffee.

Cost of Customer Acquisition

Consumer acquisition is a significant objective for any brand starting up early in its journey. It's expensive and not easy; it's a treadmill that you need to keep running on. 

“It is also important to have your acquisition channels right. Influencers play an important role and so does performance marketing, but it is specific to every brand,” says Anand.

“Earlier it was like you put your products and brand’s story out through your influencers, you will get swipe ups, and you'll make certain sales. Now, that is changing because consumers are also getting smarter and the influencer relationship is changing from short-term to long-term. Brands need influencers who stay with the brand for a longer period of time and consumers are happy to see a particular influencer talking about a brand for a longer period of time. That builds trust, which benefits the brand,” adds Deepak Gupta, COO, Bombay Shaving Company.

However, performance marketing depends on your brand or product or the market fit. If your product is good to be on Amazon, so be there. If you want to maintain exclusivity and have a certain set of clientele and want them to buy products only from your website, then focus on that. It is important to understand where your product will sell, which platform it will sell, and its geography. This will help you scale further.

“These choices also make or break your brand. First, you need to have the conviction of what you want to do and then stick to it because it is accessible in the initial 2-3 years of your business to spread yourself too thin or too wide across platforms. Coming to performance marketing, knowing your cost structure, where you operate in terms of your margins, and how you distribute those margins across these channels can make or break your brand. Therefore, acquiring the right customers at the right price point is necessary,” Sethi asserts.

Technology: The Game Changer

The backbone of D2C is the technology, and many innovations are happening on that front. D2C is not just the website you see on the front where you shop; it includes solving marketing automation, CRM, return, etc. a lot goes at the back end, and for a brand, those are the most critical things.

Explaining it further, Deepak Gupta says, “There is technology to manage my inventory because you don't want to be in a situation where you are out of stock, but your front end is showing the inventory. Then there are technologies to provide a good customer experience because customers are ephemeral they want a response right away. As a brand, I don't need to be worried about it because many startups are solving that problem and coming up with new tech, but I need to be aware of it to implement it. Four pillars that I believe are critical for the success of a brand apart from these technologies are how to create more content in-house, customizations, technology to a cohort longer relationship with consumer and long-term values through the consumer, and lastly, technology to synthesize the data that we have and make a smarter decision every time through learning.”

“Whatsapp bots have popped up in the last 18 months and have hugely succeeded in the previous 6 months. So, the speed at which we can move is being agile and young as companies, by having tech DNA, that is where we differentiate from the legacy giants. That makes all the difference, and that passes on to the end customer,” adds Sethi.

How Bright is the Future?

As a D2C brand, certain changes are happening in the marketplace. Certain brands are taking a bigger role now and more front stage in India. 

“The whole ecosystem is growing, and money is going to pump in. Earlier, these big venture funds used to say how much a D2C brand could grow, but today they know the answer. In 2018, when I started, it was difficult to convince what kind of brand it was, how we were going to do it, and getting my seed funding was the most complex challenge. But now, it has evolved, but the negative side is that now there is so much money pumped in that customer acquisition costs are increasing. Everyone has their arsenals, and it is a war that I see for another 5 to 6 years. It will become difficult to capture, stay in the arena, build a brand for ourselves, and survive,” avers Divij Bajaj, CEO, Power Gummies.

“The consumer is king, and this is a bright time for D2C. D2C will continue to grow because India has more than 700 million online buyers. If they don't buy your brand, they will buy some other, so you have an opportunity to create something unique. If you want to be there for a long game, you need to have a good team. Certain metrics are equally important like funding is fuel for the engine, repeat rate of customers, innovations, and consumer advocacy,” adds Deepak Gupta.
 

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