“It’s an exciting time to be a D2C entrepreneur; it’s probably THE time and THE place in the world to be a D2C entrepreneur (in India).” — Priyanka Gill, cofounder, Good Glam Group
The meteoric rise of the direct-to-consumer (D2C) brands is a recent phenomenon in India, although the business model has existed for decades. The fast-track, web-only retail model, broadly differentiated by its lean supply chain, niche market appeal and social media marketing, has gunned for the mainstream since the Covid-19 outbreak.
The model’s instant success at scale was no fluke. People were ready to try and buy online for the sake of safety and convenience after frequent lockdowns in most parts of the country. The digital infrastructure needed for transaction and deployment was also up to date, thanks to significant internet penetration and large-scale smartphone foray. And finally, the rapid rise of the enabler ecosystem helped D2C brands overcome many teething business problems, from social media marketing to insights into customer acquisition.
Since 2020, the retail model has made significant strides in the Indian ecommerce space as businesses find it easier to scale up and grow. With more and more brands adopting this model, the D2C market is likely to cross $100 Bn by 2025. Understandably, this sector’s outlook made Gill come up with the statement during her fireside chat with Saahil Goel, CEO and cofounder of Shiprocket, at the second edition of The D2C Summit.
“In the last two years, we have witnessed a surge in homegrown brands, and the brands which are always there in the ecosystem have also seen a tremendous rise in traction. This is because the entire nation moved to ecommerce during lockdowns, not only to shop but also to browse (products) as there was nothing much to do,” said Sahil Nayar, VP (online sales, digital marketing and international expansion) at Gurugram-based The Moms Co, that specialises in mother and babycare products.
Although the market is rife with opportunities, there are several challenges. For one, competitors flood every nook and cranny, and it has become increasingly difficult to retain customers, engage with them and build long-term customer loyalty.
Will Marketing Automation Solve The Retention Puzzle?
With the spread and adoption of digitalisation, legacy brands like NIVEA, Lotus, Biotique and many others have made their way into online retail, making it difficult for new-age and early-stage startups to grab consumers’ attention.
“When you have large FMCG companies with deep pockets coming into the digital space, it makes selling very expensive. That is what gets challenging. It is not that (D2C) brands are losing customers to these legacy mega-brands. But yes, it is becoming difficult to promote products among new customers,” said Nayar of The Moms Co.
Dhruv Madhok, director at the New Delhi-based Arata, offering plant-based personal care products, believes one’s strategy should not change regardless of the competition. “You need to focus on your niche, where you have found the product-market fit. Just keep addressing the needs of that particular niche and community.”
But that is not the only issue requiring attention. Today, consumers are very particular about what they consume, be it a product or the content created around it. So, the focus is not only on the kind of product a brand is selling — how organic, clean and affordable it is — but also on the content it puts out, the narrative it builds. Once a customer buys into the brand story, the chances of retaining the person and building loyalty are greater.
Brands have also started using catchy messaging and creatives to grab the attention of their target audience. Noida-based lingerie brand Clovia is a case in point.
“We have been catching up with the right set of creative elements that will help us acquire customers within a set budget. This is done every month as keeping up with customers’ preferences is extremely important to catch their attention,” said Rajeshwar Rao, VP, Digital Marketing, Clovia.
Another solution is to seek the services of marketing automation platforms like WebEngage that help brands engage with customers through relevant context and messaging and thus improve retention.
“We can reach out and engage with customers on different levels, right from when they enter content or product page to cart page or even during drop-offs,” explained Rao.
With more than 50 D2C brands in its portfolio and over five years of experience working with ecommerce companies, WebEngage has developed a bouquet of solutions based on its understanding of the market and the challenges these brands face. It provides a full-stack retention OS, including a customer data platform (CDP), analytics and insights, campaign management and communication personalisation.
The aim is to create a substantial consumer base/prospect pool for each brand and convert them into loyal, transacting customers. Leading brands such as Clovia, The Good Glam Group, Arata, Epigamia, The Man Company, SUGAR are using WebEngage to build effective retention and engagement strategies.
Commenting on the common challenges faced by the brands and the mistakes they make in implementing retention and engagement strategies, Apoorv Sood, VP, Global Business Development & Partnerships, WebEngage said, “When they start communicating via campaigns or other tools, some brands go a little overboard. They send too many messages and communicate too much, which is one of the mistakes. The second mistake is generic communication. In both cases, we suggest that brands create micro-audience segments and opt for a little more specific communication. Otherwise, users will end up losing interest in you as a brand.”
Then there are other challenges like meeting one’s monthly targets of customer acquisitions and outreach, where brands end up with a short-term perspective instead of thinking long term. So, they end up spending the moola on Amazon, Facebook, Instagram and the likes, which help them increase sales. “But the challenge is different. Exposure on those platforms won’t create a loyal or sticky user base,” added Sood.
In WebEngage’s service bouquet, there are solutions like ‘funnel analytics’ to reduce cart drop-offs and ‘journey designers’ and ‘paths’ to engage with, understand and thus retain users.
“WebEngage looks at all your consumers and helps you segment them and put them in different funnels. And each funnel has a unique journey. Therefore, I am able to give customers their unique experiences and the right products,” said Nayar of The Moms Co.
What The Future Holds
“One of the biggest trends is that many startups are coming up all over the country, especially in the beauty and personal care space, and technology has played a crucial role here. Plus, a lot of consolidation is happening in the industry. Think how the Good Glam Group, Mamaearth and Nykaa are doing a series of acquisitions. These trends will continue to grow and favour the industry.” — Arata’s Dhruv Madhok.
The D2C model in India has enabled new-age brands to challenge FMCG giants by removing intermediaries and making it easier for brands to reach the consumers directly. While D2C companies like SUGAR clocked INR 100 Cr in revenue in four years, industry behemoths such as Revlon and Lotus took around 20 years to reach that milestone.
Simply put, the market potential of this segment is huge, and brands in this space are gearing up to increase their efforts and tap into it.
Speaking about The Moms Co’s strategic approach to leverage these newfound opportunities — especially now as a part of The Good Glam Group, Nayar said, “We are moving to our own stack to become more self-sufficient. There will be a loyalty programme, including tier-wise membership, cashback, wallet, loyalty points and more. Additionally, we are focussing on building the brand and its story. We are looking to grow 2-3x in the next five months.
“D2C brands that want to win more loyal customers must seek out ways to stay agile and build more efficient engines for growth, especially in the post-pandemic world. This means tapping into new digital tools and platforms combined with powerful data analytics to directly engage with customers and provide delightful and memorable shopping experiences to drive conversions and customer retention for D2C businesses,” said Sood.
