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In the previous article, we looked at the key factors that have contributed to the exponential growth in the D2C space, the key performance metrics, and how India, being a consumption-demand driven economy is a promising market opportunity for D2C brands to scale a steep growth trajectory. In this article, we shall look at the prominent categories that have benefitted from the D2C migration, the future outlook, and how D2C companies can seize emerging opportunities to grow further.
Growing online presence and brand awareness
With the growth in active social media users from 200 Mn in 2021 to 370 Mn in 2022, D2C companies are leveraging digital platforms to build a community of brand-loyal customers. A report by Redseer Consulting reveals that digital-first brands comprised 30% of e-commerce in 2020, which would jump to 45% share by 2025. Certain segments such as fashion, foods and beverages, consumer healthcare, beauty, and personal care, and women-centric brands have seen a massive hike in acceptance levels with a notable trend of consumer preference from premium global brands to home-grown, glocal brands, with higher price sensitivity and quality focus.
Correlation between online shopping and rise of D2C brands
With a jump in online shopping, early mover brands have seized the business opportunity by launching their standalone websites with updated inventory catalogues, better control of operations, and access to consumer buying patterns. D2C brands that are able to successfully leverage upon an omnichannel sales approach and streamline supply chain operations while delivering a delightful shopping experience to customers would witness higher growth.
How D2C brands can leverage upon Simpl’s pay later option?
One of the proven ways of providing customers an enhanced shopping experience is a seamless payment experience. D2C brands can utilize Simpl‘s two-click payment process to provide their select customers with a smooth, almost invisible payments experience at the time of checkout. This results in transaction completion with just 2 clicks, assured payment and builds consumer brand loyalty towards the D2C brand.
The closely interlinked fortunes of e-commerce and D2C
A report by Unicommerce indicates that brands that have invested in an easily navigable e-commerce website have clocked higher growth as against those with a sole presence in a marketplace.
Brand websites saw an 88% surge in order volume in comparison to a 32% jump on the marketplace. This reinforces the benefits of directly engaging with the end consumer, a factor that can be capitalized on by D2C brands.
Categories that are witnessing growing D2C adoption
While D2C brands globally have witnessed overwhelming response across categories, in India certain key categories are dominating the D2C space. An Avendus report throws light on these key segments:
Beauty and Personal Care (BPC): The global beauty and personal care market are expected to touch $725Bn by 2025. Key highlights include:
- In India, the beauty and personal care market is estimated to cross $28Bn by 2025, clocking a 9% CAGR between 2020-25.
- The online beauty and personal care market is expected to register a CAGR of 29% (2020-25) and would be worth $ 4.4 Bn by 2025
- There would be an estimated 80+ D2C brands spanning across beauty, personal care, cosmetics, and mens’ grooming in India by 2025
- Key D2C drivers would be product innovation, variety, and growth capital infusion with an estimated 70%+ gross margin level
Foods and Beverages (F&B): The global foods and beverage sector is valued at $12Tn. Key highlights include:
- In India, the F&B market is estimated to cross $1Tn by 2025, clocking a 9% CAGR between 2020-25 to become #3 globally by market size
- The online F&B market is expected to grow to $ 15 Bn by 2025 with an estimated 50% gross margin level
- There would be an estimated 100+ D2C brands spanning across dairy, health, snacks, beverages, and nutrient-rich foods in India by 2025
- F&B commands a 35% lion’s share of the wallet of the Indian consumer spending
- F&B is amongst the largest retail segment by value
- Key D2C drivers would be a preference for organic, nutrition-rich, and plant-origin healthy products.
Fashion: The global fashion sector is valued at $1Tn. Key highlights include:
- In India, the fashion market is estimated to be worth over $100Bn and would cross $185Bn by 2025, clocking a 12.5% CAGR between 2020-25
- The online fashion shopper base is expected to expand to 370Mn by 2025( CAGR 20% between 2020-25) with 45% lion’s share consisting of organized, branded players.
- Womens’ fashion is expected to spearhead growth
- D2C is expected to penetrate across segments – eyecare, clothing, footwear, and accessories
It is expected that demand for D2C brands, coupled with omnichannel would continue to grow in the coming days. For example, a study by Unicommerce mentions how H&M has a tie-up with Myntra as an online partner, along with a dedicated website and app to sell its products.
For successful D2C models, it is imperative that brands invest heavily in technology, have a robust inventory management system with real-time integration of online and offline platforms and provide a consistent end-to-end shopping experience including a hassle-free payment experience and on-time product delivery. Removal of supply chain bottlenecks and achieving scale through technology can also significantly reduce overall costs while building consumer loyalty.
The new business mantra: Brand affinity and omnichannel
Consumer expectations have considerably evolved since the outbreak of the pandemic. Today, consumers are thinking beyond purely brick and mortar stores or entirely digital, resulting in a combination of offline and online or a phygital approach.
While the product needs to meet consumer needs, the consumer is also keen to derive a convenient buying experience, rather than being limited to freebies, offers, or discounts. Future-ready brands have recognized the shift and are rapidly adopting digital as a key competitive advantage.
An omnichannel approach with a growing community of loyal consumers backed by detailed data analytics of buying patterns at every consumer touchpoint and a dedicated, intuitive website would differentiate the winning D2C brands going forward.
Simpl partners with leading D2C brands to provide customers with a prompt payment experience, as part of an overall delightful shopping experience.