Pandemic has lead to the growth of D2C industry by leaps and bounds.
According to many reports, e-commerce industry in India has been pegged between $50-60 million and is expected to reach $100-200 billion. As compared to US, India is expected to become a bigger market for D2C category due to large number of SMEs.
“We have divided D2C sellers in 3 different categories:-
- Large Established Brands – These brands have an offline presence and have entered the e-commerce space via aggregators like Amazon and Flipkart. These brands have become big enough for these e-commerce for aggregators, so they are looking to have their direct presence. To have a direct presence, these brands build their own websites and start selling through them.
- Mid-level Brands – The retailers and wholesalers who have been doing decent business and have enough capital in their kitty, plan to create their online presence.
- Low-level Brands – The brands selling products through social commerce, influencer-led commerce and small homepreneurs fall under this category,” says Pankaj Makkar, Managing Director, Bertelsmann India Investments.
Difference Between D2C Strategy of Established and New Brands
The traditional brands like P&G, Nestle etc are not directly connected to consumers. They depend upon surveys to find out who their customer is. However, there is an opportunity for new age brands like Licious, who understand what their customers want and create a unique personalized experience for them. These decision made by these brands are data and scientific driven.
“The D2C brands have an edge over other brands as the initial investment is comparatively low, digital marketing helps these brands to reach huge audience base much faster, and lastly, the audience or the customers that they were owning are all millennials who did not want to buy old stuff,” states Makkar.
How To Grow Your D2C Business
Many brands are adopting various strategies to grow their D2C business. From marketing to acquiring consumers, these brands are investing a lot of funds, however, there are a few tricks which can help these brands gain an edge over the others.
“The brand should focus on the category which is large enough and should at least have a 50-60 percent gross margin. Along with this, they should also use the help of ecosystem enablers like Facebook, Instagram etc. These enablers help the brands with customer acquisition. Lastly, the brand should concentrate on building an extremely amazing product for consumers,” shares Makkar.
Way Forward for D2C Brands
D2C brands operating in categories like fashion, food & beverages, personal care, shoes and kids have a bright future going ahead.
“These brands should be cognizant of not raising too much funding. A lot of traditional consumer companies would be eventual buyers of these businesses. Apart from this, D2C category also lends itself to great private equity buyers. Last but not the least, there also lies an opportunity for IPO,” explaining the way forward for D2C brand Makkar concludes.