New Trends in Technology in the D2C Space

EMI payments are not a foreign concept in India. People have been making big purchases like automobiles, and large appliances such as refrigerators, TVs, etc. However, it had its limitations. It required a lot of physical documentation and bank approvals. EMIs were also not made available to a huge majority of the population. Big firms limited their EMI option to affluent customers and high price point categories. The estimate is that out of 550 Million PAN card holders in India, only 45 Mn have access to credit. This eventually left only the affluent with the power to purchase an EMI. Fintechs have come in to change who has access to credit and where they can use it.  

The shift came during the post covid era when contactless payments became the norm. RBI pushed UPI, recurring payments, and online verifications (KYC) for easy payments. Most of the D2C brands shifted their focus online. Their ideal audience group online was the Tier I city audiences as they are recognized as internet savvy. However, brands quickly discovered that Tier II-V cities had significant demand too. Another segment that also came to focus was the Gen Zs- people who are just entering the workforce. 

Today, most D2C brands recognize Gen Zs and Tier II-V city audiences as their target group. Due to various EMI payment options available in the market, this generation holds greater purchasing power. Opposed to the traditional way of getting EMI financing, online verification today is convenient, hassle-free, and requires minimal to no physical documentation. Most of the payment platforms use underwriting to predict credit history, all in under 2 minutes.

Split payments solved issues for both brands and consumers. While consumers were more likely to purchase an item when they had to split the payments, brands were able to up their sales and revenue. One important trend to note here is the narrative of EMI payments for D2C categories. Before, EMI payments were associated with big price points. Now, one can split payments for hair dyes, protein shakes, earphones, etc. For brands, the win was when their COD (cash on delivery) purchases and return rates were reduced when they partnered with splinter payment platforms. This boosted their Average Order Value and gave them the onus to partner with platforms that gives their customers a smooth and fast approval rate. 

EMIs have also been accepted by the women segment rapidly. Research shows that 22 percent of Indian women are likely planning to adopt installment payments for their personal finances in the next 12 months. Thus, split payments have helped to make waves in the traditional narrative of the purchasing power majorly lying with men. Even in the women segment, Gen Z women have been more actively taking EMIs to purchase in the fashion and beauty categories. 

The D2C trends have shifted towards catering to people who can purchase on credit. EMI payment platforms have been successful in addressing the gap for the segments that need credit. Currently, there are 700 million consumers on the internet to leverage split payment offerings by sitting in any remote corner of the country.