New Delhi: According to a recent KPMG report, there are more than 800 D2C brands in India with the sector valued at $44.6 billion in 2022, projected to reach $100 billion by 2025. As the pandemic severely disrupted business operations, retailers found innovative ways to reach customers through the power of digitisation. As supply and logistics were disrupted the D2C business model grew.
The D2C model of retail heavily relies on the internet. With over 650 million web users in India currently, there is bound to be a boost in the e-commerce industry. The D2C (direct to customer) model has been a huge success in Metropolitan cities. It is now time for retailers to target Tier II and Tier III cities with this model.
The D2C model is nothing short of a revolution in the retail industry owing to the pandemic. As the model has been tested in the last two years and more, it is now time to focus on the business continuity plans of retailers who seek to expand their businesses with this model.
The advantages of the D2C model:
The D2C model relies heavily on data. Data being the biggest asset for retailers, businesses focus more on social recall with more inventive retail experiences for the new-age discerning consumer. There is more focus on product innovation as the D2C model has become a popular choice giving a new outlook to traditional marketing tools.
The focus is on product customisation, digital solutions, loyalty programmes, and quality enhancement, which all lead to a holistic customer experience. The whole D2C retail experience feels more personal for the customer and is a natural progression from the brick-and-mortar model. There is an emotional connection with the brand, leading to a more cohesive brand experience. With the D2C model, it is important for brands to innovate the customer experience as their emotions towards the brand are very important, requiring new-age digital marketing strategies.
This leads to a better relationship between the brand and the customer, notwithstanding the use of faster payment methods. As more businesses adopt the D2C business model, there is healthy competition, leading to better prices and enhanced customer service. This also leads to more profit because of the elimination of middlemen.
Room for Innovation:
As the pandemic led to a disruption in the way brands curate the retail experience, the D2C model saw a boom. This has led to the growth of virtual client-business relationships with live purchases and video commerce.
The demand has led to the innovation of analytical tools to rope in repeat customers and implement automation across verticals that includes product development, marketing, sales, and logistics to improve customer service.
The D2C retail experience is challenging for brands as businesses are compelled to deliver on feedback almost immediately. There is also a huge focus on retention as the aim is to convert visitors to loyalists. The model has led to brands offering more customised financial support as opposed to social commerce.
As customers find this kind of retail experience more convenient, brands are compelled to innovate on marketing strategies and make their interface easy to use. The D2C model is definitely sustainable given the fast pace of digitisation.
The Future:
The future is very bright for the D2C model because of the evolution of e-commerce and new-age digital-first consumers. There is a huge scope for product innovation because of increased global competition. The use of social media and influencer marketing is bound to expand brand reach as data is the new currency.
The D2C model is a trend that will separate the best from the rest.
Ms Kalinga