Emerging Opportunities In India For D2C Brands
It is beyond any doubt that this once-in-a-century event has resulted in catastrophic repercussions and consequences across the globe and almost each industry. At the beginning of last year, India’s consumption led growth story occupied a central and pivotal position when it came to talks around growth trajectory, making financial bets, corporate dialogues etc. but the onset of this pandemic and resultant lockdowns brought that narrative to a screeching halt. Owing to reduction in salaries, job losses, collapse of the global economy and more, consumption, especially discretionary spending, took a massive hit, adding to the existing supply chain woes.
Today, things are much better and as with any event/crisis, humans have effectively adapted to the post-covid era. There are certain long-term changes that are now seen in consumption patterns, consumer behavior, purchasing habits etc. and as with every crisis, these changes, and the evolution of digital commerce across India, presents an interesting and lucrative bright side.
Let us look at some elements that in my opinion, will drive the sustainable growth of Direct-to-consumer (D2C) brands in the country-
Heightened consumer awareness - It is now an established opinion that this pandemic accelerated the digital adoption of consumers in the country across all markets. An interesting takeaway/consequence that digital adoption has given birth to is the intake and outflow of information. The consumer of today, irrespective of gender, age, city etc, wants to understand and comprehend the products that he/she is consuming and the effects that the product might have on their health and wellness. Yes, if the consumer is the King then information is its queen, and this is something that brands need to acknowledge. The influence of social media and other information channels has grown during the COVID era and resultant digital commerce. As such, it presents a good opportunity for robust brands to build strong and tenable customer loyalty by leveraging these information channels and supplying pertinent and critical knowledge to the end customer.
Surging contract manufacturing setups and healthier supply chains - The world order is now seeing an interesting shift when it comes to setting up a consumer brand wherein, the focus is now much deeper on creating innovative and highly useful products and bolstering distribution including integration of data analytics to deliver high quality experience to the consumer. Across the country, the ecosystem that predominantly used to only contract manufacture for large consumer brands, are now ready to work with newer and emerging consumer brands at lower MOQs and competitive prices. As a result of this shift, founders of consumer brands are being able to launch and scale brands that are focused on strong R&D that can ultimately give birth to amazing and disruptive products. In my humble opinion, brands and entrepreneurs should leverage this ecosystem not just to deepen the focus but also build an asset light and favorable PnL led business.
Vocal for Local - This maybe a third on my list but in all sincerity, this is a strongly emerging theme and behavioral change that we are witnessing throughout the country. The clarion call issued by our honorable Prime Minister in order to promote India made products coupled with muted activity on the global front definitely provides a solid launch pad to Indian D2C brands. The
sentiment to buy Indian brands and promote brands which are indigenously created provides for a strong tailwind for the entire consumer sector and it is imperative that Indian brands take advantage of this sentiment and overall positive recovery in the economy. In the recent budget presented by the honorable Finance Minister, there has been a strong push on infrastructure and this augurs well for the consumer sector in form of better supply chain and logistics, which are extremely critical for enhancing consumption and experience on a sustainable basis.
To reiterate, the data is clearly reflecting that the recovery is better than expected and India as a country has delivered a stellar performance in its fight against the pandemic and its effect. A tenable combination of digital adoption push to local brands, stronger supply chain etc presents a lucrative opportunity for D2C brands.
The author is Mihir Mehta, Senior Vice President at Ashika Capital
