Prolonged lockdowns in the pandemic gave severe hiccups to the supply chain and logistics front that caused delays in deliveries and disrupted the distribution and supply system. Major e-commerce players Flipkart and Amazon were badly hit by the same. With supply and distribution becoming the grey area, consumers shifted to buy from the D2C brands. The shift to purchase from D2C startups can be attributed to streamlined distribution since it skips the middlemen and retailers giving quicker deliveries.
In the coming years, investors are eyeing to invest double in D2C startups since a report from Avendus Capital says that D2C brands in India will be a $100 Billion market by 2025. Reasons for D2C becoming attractive for investors is due to startups leveraging technology to bring in more customers.
D2C brands through innovative digital marketing such as the inclusion of voice search in SEO strategy and effective storytelling can establish an emotional connection to target the right audience and ensure repeat business. Their direct access to consumer data through advanced technologies like the use of collaborative filtering in websites, virtual reality, and image recognition is helping to unlock consumer preferences, trends, needs, and patterns of buying leading to better customer segmentation and marketing strategies resulting in better sales. For streamlining operations, they are using state of the art technologies to control demand forecasting, cost optimization, quality, and traceability.
India will be having 300-350 million online shoppers by 2025 from 100 million as per a study from Bain and Company in collaboration with Flipkart. The increase in purchase from D2C brands can be owed to the rising incomes of millennials and the increased exposure of screen to consume content.
Top investors like Sequoia Capital, Verlinvest, and Elevation Capital are looking forward to investing more in D2C brands. The categories in D2C brands that are expected to see a rise are fashion, beauty and personal care, food and beverages, and electronics.
The dietary preferences towards organic and plant-based products among millennials are giving a push to D2C food and beverage brands. In the fashion segment, the ‘the more the better’ idea is bringing in more customers for their varied choices. The narrative of ‘self-care’, ‘ personal wellness’ from the rising amount of work stress is driving more purchases from the beauty and personal care D2C brand.
Hence, the private label startups are proving to be a golden opportunity for investors since people are now adapting to a digital lifestyle.