D2C refers to Direct-to-Consumer. It’s a business model where a producer or manufacturer can avoid the middlemen to build, market, sell, and ship its products directly to the customer. By forgoing the traditional retail distribution models and middlemen like third-party retailers, go-betweens, intermediaries, and brokers, D2C companies can offer their products at lower prices compared to brands that use traditional retail business models.
Studies have found over 50% of online shoppers want to cut the middleman out and prefer to shop with manufacturers instead of retailers. These are among the key reasons why several B2B businesses are incorporating D2C into their sales strategy. When a company sells directly to its target consumers, it’ll enjoy a massive competitive advantage in the market.
Reasons that gave D2C momentum in the recent years
1. The COVID-19 pandemic
The coronavirus pandemic has acted as a catalyst for some of the biggest global brands, making them open online stores to deliver products directly to their consumers’ homes. The Indian market was no different as leading brands like ITC, Duroflex, Puma launched their D2C offerings during the 2020 lockdown to help their customers access their preferred consumer-packaged goods.
Lockdowns and subsequent outdoor movement restrictions also encouraged people to experiment with and increasingly buy D2C offerings, especially in the fields of healthy food alternatives and personal care items.
2. Significant growth in Ayurveda-based brands
COVID-19 has triggered a spurt in the growth of Ayurveda wellness brands, especially in the categories of health and nutrition, and skin care, among others. For instance, Khadi Essentials – a D2C beauty and wellness brand, which was launched in 2019, closed at over 15 crores in gross merchandise value within a year of its inception. It’s interesting to note here that India’s Ayurveda market is anticipated to touch the INR 710.87 billion mark by 2024. This will surely fuel the growth of Ayurveda-based D2C brands further.
3. Need for personalized and newer brands
Boredom spawned due to being cooped at home because of the pandemic and trying to find relevant products online also gave a fillip to several new-age brands like Licious, Country Delight, Lenskart, Dr. Vaidya’s, and BoAt, and among others. Thanks to being brand-starved, the new-age consumers in India are also looking for variety, which has given these brands an additional boost. For instance, leading D2C brands in food spaces like Licious and Country Delight have witnessed more than 100% growth in scale with respect to pre-COVID levels.
COVID-19 also encouraged many people like home bakers, DIY enthusiasts, etc. to start their home-based D2C businesses. By using technological advancements and channels like Facebook, Instagram, Shopify, etc. to reach their customers and sell their offerings, these people have added some much-needed variety to the market mix.
4. Dropshipping has helped D2C models growth
Thanks to their ability to reach the end customers quickly, drop shippers have helped D2C brands leverage their services to fulfil products on their behalf. Such services can even come in handy when a D2C brand wants the drop shipper to stock and fulfil its orders.
5. Better customized offerings and quicker customer service
For businesses, customer service is of vital importance. Having a D2C model helps them offer their products more conveniently and to evaluate feedback from consumers faster. D2C models allow businesses to check several items off of their list in order to grow and reach new levels.
For instance, the Bengaluru-based Wakefit.co, which is a D2C sleep and home solutions brand, noticed how most customers hated the elaborate and confusing process of buying mattresses and decided to simplify the process by meeting the expectations of most buyers. To ensure a seamless pre-purchase, purchase, and post-purchase journey for its customers, the brand partnered with MoEngage in 2020. MoEngage is a fully integrated, AI-powered customer engagement solution to drive deeper consumer insights, greater efficiencies, personalization at scale, and cross-channel automation.
If you’re an entrepreneur at heart and haven’t used the D2C model until now or if you have been using marketplaces like Amazon/Flipkart for promoting your brand so far, it’s time to set up your business and leverage the D2C model. D2C allows you to connect with your target consumers directly and provide them with customized experiences. You will have a chance to tell your brand story to your customers.
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