Consumer preferences change over time. However, the direct-to-consumer (D2C) model is now particularly thriving, due to the onset of the COVID-19 pandemic.
Before the pandemic, consumer spending was majorly on products from legacy brands such as HUL, P&G, Dabur, ITC etc. These conglomerates would usually have third-party retailers selling their products. But now, consumers are very quick to look for their favourite FMCG or everyday use products online, before making a trip to a nearby departmental store.
Around 66 percent of India’s population is less than 35 years of age and spends close to five hours every day browsing on their smartphones, for shopping or on social media. Consumers are shifting towards new-age D2C brands.
D2C brands now have opportunities to reach end-customers directly for a negligible CAC (Cost of Acquisition), through digital ads and content marketing, since digital marketing is cheaper, more personalized and effective compared to conventional print, TV and radio advertising. This has given rise to D2C behemoths brands in India.
The D2C industry is pegged to reach a market size of $100 billion by 2025 from $30 billion in 2020.
Categories that stand out
Lifestyle brands have been doing some pathbreaking work in the D2C space, closely followed by consumer edible goods in the snacks and beverages section. They have witnessed that New-Age ge brands in the snacks and beverages category outperform lifestyle categories by 350 percent,A D2C chips brand went from 2 percent to 12 percent in category ownership in just eight months of launch. It has also been observed that customers in the age range of 13-35 are four times more likely to buy a new age D2C brand.
D2C change is being driven by women shoppers
With more women entering the workforce, they are also taking over the shopping sector. At many companies in the industry, women are 37 percent more likely to buy a new age D2C product over a legacy brand product. Women are 70 percent more likely to buy D2C personal care products, especially from new categories such as Femtech and Fem Hygiene. With regards to snacking, however, men are 45 percent more likely to consume D2C brands. The male-to-female shopping ratio at such stores is 65:35.
Rise of enablers in the industry
New brands have also given way to the growth of D2C brands. They give end-to-end solutions for warehousing, logistics and last-mile delivery which helps D2C brands reach customers everywhere swiftly.
D2C is now an integral part of the industry. It is an omnichannel which caters to customers at multiple touchpoints. D2C brands bring in a significant chunk of our revenues. We root for homegrown D2C brands that give customers exactly what they want.
(Mani Dev Gyawali, Co-Founder at The NEW Shop)