D2C, a flourishing business model on the rise in India, involves brands selling their products directly to consumers, eliminating the need for traditional retail intermediaries. With more than 800 emerging brands adopting this strategy, D2C has experienced remarkable growth, allowing brands to establish direct connections with consumers and meet their demands effectively.
The Covid-19 pandemic acted as a catalyst, accelerating the expansion of prominent D2C brands, especially those with a robust online presence, leading to a substantial surge in consumer demand. The Indian D2C market is expected to reach $100 billion by 2025.
Image Source: Statista | Numbers are in Billion USD
Traditional vs D2C business Model:
- Relies on intermediaries (middlemen) for reaching consumers.
- Limited control over customer experience.
- Indirect customer feedback.
- Higher cost.
- Bypasses intermediaries.
- Direct control over customer experience.
- Access to customer feedback.
- Lower costs.
Direct-to-consumer market size by Channel:
Image Source: Statista
Top D2C contributors by 2025
Major growth factors:
D2C space has immense potential due to various factors including:
- The growing young population and middle class in India, which has more disposable income to spend on D2C products.
- The changing preferences of Indian consumers, who are increasingly looking for high-quality, affordable products that are delivered directly to their doorsteps.
- Rapid Digitization: The rise of the internet, mobile phones and advancements in payment systems like UPI has made it easier for consumers to shop online.
- Technological advancements: Brands can leverage technology and collaborate with enablers such as crowdfunding platforms, social media, ecommerce platforms, payment gateways, and logistics providers to overcome funding and resource challenges.
- Low penetration of organized retail in India, access to innovative products at affordable prices, and delivery of great quality products to the remotest corner of India.
- Government support: Government support in terms of funding, liberalization, fueling digital e-commerce and related policies have served as a push for the augmentation of the market.
Data Source: Inc42
Importance of Logistics in the D2C space:
Logistics play a crucial role for D2C brands in India, ensuring efficient delivery of products directly to consumers.
Streamlined logistics operations are essential for maintaining customer satisfaction and loyalty in the competitive market.
- In-House Fulfilment: Companies manage the entire process in-house without any help from 3rd party logistics providers. Best suited for new D2C businesses or small ecommerce stores
- Fulfilment By Marketplaces: Ecommerce marketplaces through which companies sell their products undertake all fulfilment activities. Best suited for smaller or emerging brands.
- Third-party logistics service providers: Companies outsource the entire fulfilment process to these third-party logistics service providers. Best suited for large and growing ecommerce stores.
India’s abundant asset lies in its population, encompassing skilled IT professionals, entrepreneurs, and diverse job classes, all embracing the D2C model. Being one of the youngest nations globally, with an average age of 29 and 66% of its population below 35, India presents immense market potential. With 1.15 billion mobile phone users, the Indian D2C segment offers a promising avenue for growth in the upcoming years.
Read more about Economy and Market: The Rising Middle Class: Fueling India’s Luxury Market Revolution