D2C Model, An Ideal Approach for MSMEs

Digitisation is the key to unlocking long-term growth for SMEs.


D2C (Direct-to-Consumer) has created a level playing field for SMEs (small and medium enterprises) to directly take on legacy brands. The business model is simple. Post or run ads on social media, engage your customers and encourage them to make a purchase on your e-commerce or Shopify store. The Indian D2C market is expected to reach $100 Bn by 2025. The D2C model is thus an ideal approach for MSMEs who have suffered disruptions in their offline presence and are looking to revive. 

How the D2C model is helping SMEs go global

The D2C model is helping SMEs go global since it enables them to start from scratch and eventually grow bigger from there. Since stay-at-home shopping has gelled very well with consumers, the D2C model has emerged as a strong contender and as a correct approach where consumers get the upper hand. Thus, it is enabling SMEs to venture outside Indian markets. 

Why the D2C model is ideal for SMEs

The cost factor

Virtual retail is the new avatar of the shopping experience and SMEs can easily set up online storefronts via D2C. They can even undertake branding and marketing activities with low budgets through D2C. It also allows for customer personalisation and innovation. 

Consumer demand dictates stock piling 

Through D2C, SMEs can deal with the stock piling problem since they do not need to spend exorbitant amounts on warehousing. Consumer behaviour, market trends and demand dictate stocks and manufacturing. Through the D2C model, you can accurately forecast manufacturing and stocks needed for specific sale events.

Highly adaptable

With D2C, you can easily expand your reach to new markets since a virtual storefront is agile and adaptable to new geographics, additional pin codes and even new lines of product categories. There’s no investment needed to tweak these changes on your online store as compared to a physical retail store. 

User metrics and predictive analytics

E-commerce stores, especially D2C platforms give you the freedom and flexibility to analyse consumer data, conversion metrics, web traffic and demographics using predictive analytics tools. As per the trends and insights, you can change your strategy accordingly and mould the UX (user experience) as per real-time engagement statistics. 

Exploring international markets

With D2C, your online shop can easily export products to international markets as you have a direct approach with the consumers. Since you can directly communicate with the end consumer, SMEs can skip the traditional supply chain and costs of traditional exports. 

Deep Internet penetration in Tier II and III cities

Owing to the deep internet penetration in Tier II and III cities, SMEs no longer need to rely on e-commerce aggregators to reach consumers in these locations. They can set up D2C channels and adopt cutting-edge technology tools to limit their physical presence. The omnichannel D2C strategy can target consumers in these cities which can help SMEs tap into these niche markets. Local economies in small cities and towns with strong internet penetration prefer buying online ever since the pandemic began. 

Growth opportunities in D2C

D2C and all its sub-segments have huge growth potential. SMEs venturing into any retail market can expect huge spikes in demand and revenue. Without middlemen tinkering with your supply chain, you can easily bypass the hassles of traditional e-commerce and create efficient consumer engagement strategies. When compared to traditional retail, D2C brands with dedicated websites can experience a much greater demand.

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Through the D2C model, you can accurately forecast manufacturing and stocks needed for specific sale events.

What’s in it for me?

D2C brands, under various segments, are clocking in crores of revenue in short periods of time. SMEs can provide affordable products to consumers by taking the D2C approach and still make staggering profits. Make in India SMEs who are less keen on investing heavily into marketing will find that D2C is the best way to provide affordable products to consumers. The real-time feedback coming from D2C is what makes brands stick to this model. You can acquire 100% revenue and sales from your e-commerce website if your retail segment has suffered from pandemic induced disruptions recently. 

Small D2C brands are raising investor money which is helping them in their global expansion plans. The Indian D2C market is currently operating at its very best. This is the best time for SMEs to consider building a new-age D2C brand with Make in India products.

Anju Nambiar
Anju Nambiar
Anju has 5 years of experience covering business. She writes on startups, business life cycle and startup ecosystem. Her stints include Amazon and Adjetter Media Network.

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