Top shipping practices that need to be adopted by D2C businesses

• Be wise while selecting your logistic provider

For offering your customers a hassle-free shipping process choosing the right logistics provider will play a crucial role. While selecting, one should keep in mind the locations they deliver, their charges, and whether they offer special services such as packaging, same or next day delivery, customer service. An important aspect of selection should also be providing an insurance plan, in case of any losses or damages in the future. Next, based on the sector the business might require additional services to offer, for instance, an online cycle brand can offer to assemble the cycle parts upon delivery, which should be part of SLA ( service-level agreement).

• Convey the tentative date of the estimated date of delivery at the checkout

The internet-first or D2C businesses should display the estimated date of delivery to the customers while they checkout. This also helps build customer expectations and excitement around the shopping experience. Logistics software needs to be implemented that helps to generate a near-accurate date of delivery, with available data on carrier performance as soon the customer enters the delivery pin code. However, the shipment needs to be delivered on the near-accurate date displayed.

• Prioritising order tracking updates 

The online Ayurvedic brand made one huge blunder by not updating its customers with the tracking updates of their shipment. Digital businesses should send regular updates on every order will help to minimise customer dissatisfaction.

• Returns and exchanges should be quick 

Returns and exchanges especially in the apparel businesses are prevalent. Customers on social media, express their resentment on social media over returns and exchange processes. By making these processes quicker and seamless they can turn this into a favourable business opportunity.

• A plan-B for failed deliveries and shipping exceptions

Businesses do not wish to see a failed delivery, but such cases might arise. A logistics provider will attempt for at least three deliveries before declaring it as failed. However, the business needs to be aware of fake delivery attempts. Therefore, businesses here should intervene and implement logistics software to anticipate delays and exceptions and inform the customer of the same beforehand.

For internet-first or D2C businesses, post-purchase experience is an important aspect that can weaken or strengthen customer loyalty and impact repeat businesses. Sending shipment updates might seem an unimportant task but making small changes to shipping practices can lead to big improvements in sales and shipping and elevate the overall satisfaction levels.

How are different fintech platforms reacting to tokenisation?

Razorpay has launched ‘Razorpay TokenHQ’ a multi-network Card-on-File (CoF) Tokenisation solution accessible to all businesses. Merchants using different payment gateways can tokenise cards using Razorpay’s tokenisation solution and route payments using their existing payment partnerships. Using Razorpay TokenHQ businesses will be able to create, process, delete and modify tokens for online card payment with customer’s consent at zero cost and effort.

Much to the likes of Razorpay, Walmart-backed digital payment firm PhonePe has launched PhonePe SafeCard- a tokenisation solution where merchant partners can create, process, delete and modify tokens for online card payments with customers’ consent on their platforms via a simple Application programming interface (API) integration. This saves time and effort also eliminates the need to integrate with multiple card networks.

PayU also announced its unique tokenisation solution ‘PayU Token Hub which will enable businesses to comply with RBIs latest guidelines for online card data storage also allowing issuing banks to generate their tokens.

How will it impact the existing online e-commerce and online businesses?

This new move from RBI is a progressive step towards safeguarding the vital card information and will benefit businesses with a smooth customer payment experience as repeat customers can simply use their CoF or access one-click checkout directly without going through the hassle of entering payment details again. However, the deadline given for businesses for transitioning to tokenisation is abrupt that will subsequently impact small and medium payment operators to go out of business which is already reeling under RBI’s new rule of recurring payments where transactions will be carried out only after the customer gives a green signal, in turn, affecting the continuity of business.
This sudden move will immensely impact around 5 million customers who frequently shop online by storing their card details and might result in customers switching to UPI-based payments or cash-on-delivery payment mode.

For e-commerce and D2C companies, tokenisation can impact cashback and equated monthly installments (EMIs) that customers pay through stored cards for purchases and buy-now-pay-later options. This would mean pushing customers for a UPI payment for products of smaller ticket sizes.

D2C brands holding a soft corner among small-town shoppers

Surprisingly, job losses and pay cuts did not reflect in the purchases of D2C brands. Here are some of the reasons why it drove the demand.

• Rise of social commerce: Social commerce platforms are currently becoming the launchpad of D2C brands and have empowered several small retailers and women entrepreneurs. Generally, products sold in tier-II and tier-III cities are unstructured and unbranded. Being listed on social commerce platforms helps small D2C business to sell their products to nearby towns and cities without having to bother about middlemen and pay commission. Also, listing businesses on B2C platforms is a time-consuming process. According to a study by Bain & Company, three out of every five shoppers now come from smaller towns.

• Faster and timely deliveries: The shortening of delivery timelines by introducing same-day delivery or delivery within five days has instilled confidence for shopping online more as in physical shopping they get the product as soon as they purchase it.

• Shopping in vernacular: Vernacular will drive shopping for the next generation of consumers. Most shoppers from small cities will prefer purchasing browsing web pages that have vernacular content. According to Bain & Company, webpage translation to vernacular languages increased to 1.5 times in 2020. 

• Digital Payments and BNPL (Buy Now Pay Later): Digital payments are increasingly gaining acceptance and especially with purchasing electronics online, newer payment models such as BNPL (Buy Now Pay Later) that do not require upfront full payment is quickly gaining ground in online shopping.

Another reason for D2C brands’ success can be attributed to its focus on ‘ individualisation’ especially in the personal care segment. Different hair types, skin types, body sizes, and purposes are driving the demand for the same.

What is in it for the D2C brands to foray into tier-II and tier-III cities?

According to a study by Bain & Company, India’s e-retail market is projected to grow at 25%–30% annually over the next five years to reach $120–140 billion by FY26, which is higher than Modern Trade. It is anticipated that India’s e-retail growth will be fuelled by small-town shoppers especially by women and older shoppers. Moreover, most shoppers from lower-tier cities are aspirational and thereby will choose products that will enhance their self-image and desirability. Gone are the days when brands underestimated the shoppers of low-tier cities based on their income and willingness to shop. With deeper internet penetration and increasing disposable incomes, tier-II and tier-III markets will have maximum growth potential than metro cities. 

Bargaining online? A win-win for both seller and buyer

The usual business model of e-commerce sites to drive maximum profitability and sales is to exploit the festive period to give heavy discounts, for which the shoppers eagerly wait. But what should e-commerce platforms do to ensure they get the best deals even when it is not a sale and can treasure their loyalty?

Indian shoppers are habituated with assisted shopping through up-selling and get the right price from a seller through bargaining.

To which Coutloot, a social commerce platform that emulates Taobao’s model to allow any offline seller to sell their products online has implemented an ‘automatic bargain’ feature that allows both buyers and sellers to bargain automatically. This auto-bargain feature provides a pre-decided bargain price to the buyer within a chatbox that allows them to close deals instantly. The buyer can select and quote a desirable price that he/ she feels is appropriate for the product. Coutloot aims to achieve a conversion rate of 15 percent with this live bargaining feature.

Kurland and Marrapodi’s e-commerce negotiation site

Hunting for the best deals online is not limited to Indians, but even to American founders Andrew Kurland and Joe Marrapodi that led them to build their e-commerce negotiation site Greentoe. It is an e-commerce site that allows customers to haggle down prices. What drove them to build their site was the frustration arising from spending too much time to find the best deals online.

It works in this manner, say a shopper wants to buy a camera online at the best price but does not want to spend a lot of time comparing and looking. Greentoe’s network of vetted online retailers simplifies the process by showing the average price and the lowest price possible for each product currently available online, it is then upto the willingness of the customer to pay for that product.

What lies ahead for the e-commerce sites on live bargaining?

The freedom to bargain on e-commerce sites is although in its infancy in India, but the platforms might not want to miss the loyalty of its customers since according to a study by Kearney, value shoppers will constitute 38 percent in online shopping by 2026 and will become 50 percent by 2030. Therefore, there is a need to humanise and Indianise online shopping by adding a live bargaining feature.

D2C Brands going the traditional way 

After foraying into traditional retail these D2C brands such as WOW Skin Science, Sugar Cosmetics and Bombay Shaving Company witnessed a high frequency of orders. Below are some of the D2C brands that are planning to sell their products through physical retail. 

• Peesafe: A female personal care and hygiene brand that was founded in 2013. Cut to February 2021, Peesafe launched its first exclusive stores in 2021 in the cities of Gurugram, Bengaluru, and Ahmedabad; and plans to launch 50 offline stores in the next 12 months. There will be exclusive brand outlets launched through the franchise-owned and franchise-operated model. 

• Plum: Plum a paraben-free skincare brand has recently opened its physical in one of the malls in Mumbai. The purchasing journey of a customer goes through touchpoints of inquisitiveness, awareness, consideration, trials, and purchase. It is not certain that the processes are followed sequentially, but in the online purchases, some of the steps are skipped. A traditional retail store gives a combined experience across all the touchpoints and the assistance of humans also elevates the experience of buying and consuming the product. Plum has its shelf presence in more than 750 assisted outlets and more than 10,000 unassisted outlets. 

• Mellora: Where jewellery purchase in India consists of touch, feel, and trials, Mellora a D2C fine jewellery brand first launched as a digital-first brand. Before, purchasing a customer would like to try out designs, check for genuine gems or stones, etc. which makes having an offline storefront necessary. After, tasting success online, it has ambitious plans to open more physical stores. Currently, having six physical experience centres in cities Bengaluru, Delhi/NCR, and Bhopal, it aims to establish 350 experience centres across India. Moreover, it is adopting a hybrid approach where customers can choose products online and place the order offline in any of its experience stores.
  

  The shift to traditional channels from online – A good move 

Pivoting to offline retail is necessary for the online-only brands where the touch and feel of the product influence the purchase decision of customers. For better growth and penetration, the brands need to have better visibility physically for a larger set of consumer touchpoints. Face-to-face interaction with the brand in terms of fragrance, textures, look and feel increases customer’s persuasion eventually giving a smooth post-purchase experience.

Acquiring the digital media and lifestyle companies

The intent of acquiring digital media and lifestyle content platforms is to allow users to consume content and urge them to make a transaction on the platform. Human beings tend to buy what they see. Thereby, by creating branded content on these entertainment and lifestyle platforms it aims to push its products for sales utilising its already made massive fanbase. Pushing products through branded content gives high conversion rates. In August 2020, Good Glamm then MyGlamm acquired content and influencer marketing platforms POPxo and Plixxo that increased its reach exponentially amongst its female fan base consisting of 88 million and 1,50000 female influencers. Recently, in October 2021, Good Glamm has acquired ScoopWhoop which will continue to work independently but with an increased focus on its male fanbase which is 60 percent. This acquisition will pave its entry into content-to-commerce for the fast-growing male personal care segment.
Users consuming the kind of content on such platforms will help Good Glamm to decode the kind of content the users’ consumer using its improved data science and analytics capabilities and give clarity about the kind of products they will be interested to spend.

Good Glamm’s Funding and IPO Plans in 2023

Good Glamm aspires to be the next HUL owning an umbrella of brands offering everything in personal care under the same ecosystem. The funds raised from the investors will be utilised to invest in product development, support data science and technology research, increase offline expansion and working capital requirements.

Consecutively in September and October, Good Glamm raised funding of Rs 255 crore in series-C and Rs 1,110 crore in series-D respectively to join the unicorn family and become the 35th unicorn in 2021. By 2023, it is eyeing to release its IPO as soon as the company’s valuation reaches $10 billion.

Mensa Brands globalising the acquired D2C brands 

Mensa brands are focused to acquire D2C brands from verticals of fashion and apparel, beauty and cosmetics, and soft-home furnishings that are capable to generate annual revenues between Rs 7 crore to Rs 70 crore. Through its team of experts wants to globalise the acquired D2C brands by leveraging their expertise in driving growth, product, merchandising, technology, supply chain, and access to global markets. 

D2C brands in recent times have gained enormous popularity and profits amongst the neo-consumerist Indians who are willing to spend more on products and services that make their lives easier, more individual, and more controllable. Especially, in beauty products, customers are purchasing that has less sulphur and are vegan. D2C apparel sellers are becoming more size-inclusive for all shapes and sizes. 

How Mensa plans to make the brands global

Mensa follows a three-step process to understand a brand’s potential. 

• First Step: Decoding the brand‘s journey both financially and qualitatively. 

• Second step: After thoroughly knowing the business, the second step includes coming up with a fair and transparent commercial construct.

• Third step: It consists of carrying out due diligence and verification of financial statements, sales, costs, marketing, and supply chain. If Mensa is satisfied with the brand’s growth prospects, it attaches a valuation and undertakes the preparation of contracts and other paperwork to integrate the seller. 

Soon after the brand undergoes integration process Mensa brings its expertise across various functions such as marketing, technology, supply chain, inventory management, logistics, and product development to scale the acquired brand rapidly. A part of the profits earned in the process is distributed to the startup founders.

Lastly, these Thrasio-style startups will thrive on acquiring profitable D2C brands, which can be a bright future since according to a study by Avendus Capital the D2C market is estimated to be $100 billion by 2025. But, this thing should be taken into consideration that although India has a huge retail market, people shopping from the online market is completely is yet in its infancy to bring huge economies of scale.