FMCG and Personal Care Brands Going D2C Way to Strengthen Consumer Relationship?
FMCG and Personal Care Brands Going D2C Way to Strengthen Consumer Relationship?

E-commerce has emerged as the Indian retail ecosystem’s backbone last year when the world was hit by one of the worst pandemics ever witnessed. As we scramble our way with the new reality, India’s retail ecosystem, on the other hand, has seen a radical change. With e-commerce becoming an integral part of the retail industry, companies are finding new ways to sell and connect with consumers digitally across demographics and psychographic. The massive push to the digital economy has given companies a platform and a huge opportunity to connect directly with consumers which has further led to the emergence of a plethora of D2C brands.

Although the fashion and electronics industries have been the forerunners in adopting the D2C model, the FMCG and personal care industries are now following the suit, with the introduction of a slew of digital-first brands. Multiple digital-first brands emerged in the last few years, catching the attention of young aspiring Indian consumers’ as traditional FMCG and personal care giants fought for customer attention and market share in the offline traditional retail space.

In a short period, these brands established a strong relationship with consumers and built a robust business. Beauty and personal care are one of the fastest-growing online segments. According to the ‘Q-4 E-commerce Trends Report’ by Unicommerce and Kearney, “the personal care segment recorded a 94 percent increase in order volume and the FMCG segment reported a 46 percent order volume growth in Q4 2020 over the same time-frame last year.”

Though offline retail still accounts for the majority of the overall personal care market, digital-first and direct-to-consumer brands are gaining traction amongst the young millennials. 

Mamaearth, m-caffeine, Oziva, Sugar Cosmetics, Habbit, Plumm, MyGlamm, and a slew of other digital-first personal care brands have successfully carved out a niche in the market and have developed a strong connection with consumers. Though D2C brands are primarily focused on selling through their websites, however, they are also using marketplaces to increase brand visibility and compete with conventional players on the same platform. 

Another emerging trend is the reverse journey, where established D2C players are entering the offline retail market. These brands have now realized that in India, volume is driven by offline sales. Mamaearth is a perfect example of a brand that has followed this reverse model. It’s an extremely successful digital-first brand with a strong online presence and the company is exploring digital avenues like social commerce. In 2020, the company established its offline presence in over 70 cities, and they further expanded its online presence. This has led to the increasing adoption of Omnichannel solutions by companies, where they can manage the offline and online channels together and offer a similar shopping experience across platforms.
Traditional personal care players have recognized the value of going direct-to-consumer (D2C) and have accelerated digital adoption in the aftermath of the pandemic. The traditional personal care brands are taking bold steps to get into the online market, For instance, Lotus Herbals has introduced a direct-to-consumer brand named Lotus Botanicals for skin and hair care products. Traditional players have also begun to acquire emerging D2C players, such as Marico's recent acquisition of Beardo, to join the men's care market.
The FMCG industry, which is known to follow a convoluted supply-chain model of wholesalers, distributors, and retailers, is now experimenting with new distribution networks to sell directly to customers. New-age distribution channels, such as omnichannel, direct-to-consumer, hyperlocal delivery, and aggregator models are becoming popular as they allow retailers to have much better control over customer experience. 

For example, Marico launched a D2C portal called Safola Stores and launched multiple products under the brand name ‘Safola’ to sell directly to consumers. Hindustan Unilever and Nestle have reported remarkable growth in their online sale. While it still constitutes a very small part of overall sales, there is a remarkable shift in the way FMCG companies are approaching digital sales channels. 

The FMCG and personal care brands have made a fast journey from ‘bricks-versus-clicks’ to ‘bricks-and-clicks'. Large conglomerates like Hindustan Unilever, have strengthened their project (a platform that does hyperlocal delivery through Kirana stores) and ITC has launched ITC eStore, with aggressive investment in dark stores across metros to ensure same-day delivery. 

Companies are evaluating multiple models to regulate their logistics costs, reachability and adopting them on the basis of the consumer demand in the region. Not just FMCG brands, even e-commerce companies are also investing in new distribution models. Recently, Flipkart has started ‘Flipkart Quick', a hyperlocal delivery model in Bengaluru for products like grocery and fresh items.  

The adoption of e-commerce is on a constant rise across the country.  The rising demand from Tier-II and Tier-III cities of India has led to companies focusing on these markets and exploring various distribution channels. In a country where rural India drives volume and is an integral part of India’s retail industry, companies need to evolve and explore distribution channels that help them serve consumers in these regions. 

The D2C mindset has empowered the FMCG companies to have a direct connection with consumers in these regions. These companies in the past would follow long distribution channels and the only feedback was the product movement. The increasing digitization has also led to companies adopt new distribution channels such as hyperlocal and delivery from stores. FMCG companies are collaborating with logistic providers like Dunzo, Shadowfax, and Delhivery to ensure last-mile deliveries. Multiple such partnerships took place during the lockdown and have yielded great results for the FMCG companies. 

Today’s consumers are spoiled for choices, with a plethora of brands and shopping platforms. The brands have woken up to the reality that while e-commerce adoption is at an all-time high, offline retail is going to stay and will continue to be a major part of the overall retail. However, the digital world plays a vital role in building a brand and they can no more consider online and offline as two different sale platforms with different consumers, they have to consider that both the platforms are interlinked with the same or similar set of audience. Omnichannel is no more just a ‘buzz-word’ or a ‘great-to-have’ solution, it’s a reality of today’s retail world. Businesses will have to adopt omnichannel sooner than later and the only thing that will make a brand stand out is consistent brand experience across sale channels.  

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