Direct-to-consumer is no longer an option, it's the present and future.
In 2020 alone close to 1000 D2C companies across 10+ categories were founded and the overall D2C sector is expected to be $100 bn economy by 2025!
So, what do these numbers project?
D2C is here to stay.
Shoppers are loving it and D2C as an industry will continue to thrive and democratize the e-commerce space.
Now you must be having several questions when it comes to D2C. In this article, we will answer them all, one by one.
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1. What is Direct-to-Consumer (D2C or DTC)?
In a D2C business model, a manufacturer/producer/brand owner sells the product directly to a consumer, without involving any middlemen. The consumer can place an order directly on the brand's website, mobile app, or any other medium.
E.g., Noise is a well-known name in its category and sells products on marketplaces and its website www.goNoise.com. When you purchase Noise products from Noise website, it is an example of D2C.
By reducing the number of parties involved, which is middlemen in this case, brands exercise greater control over shopper experience and benefit from improved margins.
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2. Why is D2C Economy Booming in India?
The key reason behind this is a thriving e-commerce industry!
Compared to $20 bn in 2015, the overall e-comm industry in 2020 grew to $64 bn and by 2025 it is expected to be $188 bn. That's 800% growth in just 10 years!
So, it's no surprise that with rising industry size, people's preference to shop online coupled with affordable internet connectivity, the D2C industry will only grow bigger.
Also, there are other factors driving D2C adoption:
- Low Entry Barrier
Starting a D2C business is akin to starting any other retail business, the only difference being that focus to sell products is mainly via online channels.
- Rise of E-Commerce Enablers
Setting up websites and entire backend processes have become simpler now. E-commerce enablers like AdYogi, Shiprocket, Unicommerce, and Zencommerce are helping D2C entrepreneurs to manage several of their operations seamlessly.
Also, Sezzle's buy now pay later solution is enabling D2C websites to get more sales and a higher conversion rate.
- Ease of Reaching Target Audience/Customers
Thanks to growth of social platforms and overall digital media, today a D2C entrepreneur from Bengaluru can very easily market and sell their products to a consumer from Bikaner or any other city.
As social media continues to rise in popularity, D2C brands have the opportunity to build strong following around their products. Platforms like Instagram and Pinterest lets retailers engage consumers on the go, thus increasing brand loyalty and sales.
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3. Key Benefits of D2C Model
- Better Margins
With no middle parties involved, D2C companies benefit from improved margins.
- Control over Customer Experience
Another key advantage is that you get to define and shape the complete customer journey.
Through innovation you can delight shoppers at each stage of the journey and increase chances of them becoming your repeat shoppers and brand advocate.
- Know Your Shopper Better & Build Relationship
Wouldn't you like if someone wished you on birthday or anniversary? Even better if you received some gifts on special occasions!
Through D2C model, you can get several input directly from your customer and delight them with coupons, special discounts on their special days.
These small gesture will help you build a better relationship as well as increase the brand recall value.
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The Future of D2C
“The honest reality is, if not now, when? If you look at the state of how businesses are functioning today, it’s a level playing field because the internet is accessible across regions, forget countries,” — Naarayan TV, Head of Marketing, Paypal
As told on a webinar hosted by Inc42.
Every facet of the global retail ecosystem is undergoing radical change. Many Indian brands have come up with their direct sales model, inextricably relying on word-of-mouth marketing and innovation within the consumer marketplace.
These online brands sell products ranging from apparel and accessories to computers, mobile phones and electronics. The number of such brands are only going to go upwards.
References:1 - https://inc42.com/reports/decoding-indias-100-bn-d2c-opportunity-market-landscape-and-trends-report-2021/2 - https://yourstory.com/2021/09/d2c-brands-online-discovery-startup-smytten-sampling-adoption/amp3 - https://www.statista.com/statistics/792047/india-e-commerce-market-size/