In the last decade, Direct-to-Consumer (D2C) startups have witnessed remarkable growth, disrupting traditional business models across various industries. With roughly over 600 million internet users and 185 million online shoppers, India has the third-largest digital shopping base after the United States and China. This means that D2C, or digital-first brands, which use the online platform to sell directly to consumers without the traditional distribution network of wholesalers, stockists, and retailers, are experiencing an upsurge.
It is also worth noting that, currently, India is home to 800 or more D2C brands with a market size of over 66 billion U.S. dollars in 2023. Some of the emerging D2C brands, including Mamaearth, CaratLane, and Nua, merely took a couple of years to reach the INR 100 Cr revenue mark. This is a testament to the potential of D2C market in India..
One of the key drivers behind the exponential growth of D2C eCommerce is the low entry barrier and the ease of starting up. In the digital age, launching an online store has become remarkably accessible. Platforms like Shopify and WordPress offer plug & play solutions that enable entrepreneurs to set up their online stores quickly. Payment solutions and distribution services, such as Shiprocket, further simplify the process. This quick time-to-market and opportunity to scale fast is what technology unlocks for aspiring entrepreneurs.
As the D2C landscape expands, tech-led solutions are revolutionising customer shopping experiences like never before. From mapping potential customer intent on digital storefront and offering personalized content to engaging customers basis their shopping behaviour, AI-enabled solutions have taken the game far deeper. Advanced Customer Relationship Management (CRM) tools and AI tools enable brands to understand their customers on a deeper level, offering tailored recommendations, personalized offers, and targeted marketing campaigns. This level of hyper-personalization not only drives customer loyalty but also boosts sales, showcasing the transformative impact of technology on D2C businesses.
Moreover, technology has eradicated geographical boundaries for D2C brands, enabling them to reach customers across India with unparalleled ease. With the click of a button, businesses can now sell and distribute their products to customers in over 20,000 pin codes, a feat previously unimaginable for traditional businesses. Logistics solutions like Shiprocket have played a pivotal role in this unprecedented scalability.
In addition, the foundation of eCommerce relies heavily on secure and convenient payment options. Technology has revolutionized this space with the emergence of players like Paytm, Razorpay, and UPI-based payment systems. These platforms have not only made transactions smoother but also instilled trust in online shopping, further boosting the growth of D2C eCommerce. The security and ease of transactions are critical factors in the success of D2C businesses.
Also, efficient inventory management and supply chain optimization are pivotal to the success of any eCommerce venture. Technology-driven solutions, such as inventory management software and predictive analytics, have enabled D2C brands to update their operations. Real-time insights into inventory levels, demand forecasting, and supply chain efficiency enhancements have reduced costs and improved customer satisfaction.
Perhaps one of the most significant advantages of technology for D2C businesses is the ability to gain valuable consumer insights. With data analytics tools, brands can gather and analyse customer data ethically. This data-driven approach enables businesses to get actionable insights into customers’ behaviour, preferences, and pain points. It is significant to emphasize that this should not come across as data misuse; instead, it is about building better customer experiences and products based on genuine customer needs.
While the positive impact of technology on D2C eCommerce growth is undeniable, there are still some challenges that a digital first brand would need to keep navigating like RTOs (returns), increase in shipping costs etc.
India’s direct-to-consumer (D2C) market is projected to reach a size of $100 Bn by 2025 as per Inc42 Plus’— The Rise of India’s D2C: Market Landscape and Trends Report, 2021. We can look forward a greater momentum in innovation and growth not only in the D2C space but also in tech-enablers who would further transforming the way consumers shop and interact with brands.
Article Contributed by Nischal Kandula, Co-Founder, CURRYIT