As the country recovers from the pandemic, the retail sector has resumed its growth trajectory. According to a report by BCG-RAI titled “Running Towards the Next Wave of Retail in India”, the industry is expected to grow 10% annually to reach around $2 million by 2032. The huge market is creating a vast opportunity for brands based on how well they respond to pent-up demand and consumer needs.
The pandemic has changed consumer behavior around the world. As a result, convenience, health, safety, security and hygiene become the main purchase drivers. With consumers going the digital route, Direct-to-Consumer (D2C) brands have a huge opportunity to serve their needs effectively. These brands took a few months to adopt the technological tools, which would otherwise have taken them years.
What is driving D2C adoption?
The drag effects of the pandemic have accentuated the shift to digital platforms. These D2C brands provide consumers with a simpler and more convenient personalized experience. However, the transition is not incipient. Some FMCG actors have been using the channel for years.
The D2C model has several advantages, such as brand values, convenience, ease of use, and a sense of community. According to the Google India report, there has been up to 80% growth in the number of customers searching for a brand’s official store. Changing consumer behavior is one of the main reasons brands are embracing the D2C model.
Over the next five years, the Indian retail market is expected to grow to around 300-350 million shoppers. To meet growing demand and changing consumer habits, businesses need to assess their resources, analyze their business model, and see which equipment is right for their needs. There is a need to modify and adapt the D2C model for long-term sustainability in this ever-changing dynamic environment.
D2C brands improve the customer experience
Keeping the customer happy is key to the success of any business. After all, the customer is god. In the digital space, there are often challenges since the mode of communication is solely internet-based. Therefore, brands need to pay attention to the customer journey and make it as convenient and smooth as possible.
The D2C business model looks attractive. However, this comes with a set of hurdles – with customer experience being the most difficult. It is crucial to not only focus on scalability and revenue, but also to integrate new features to provide a smooth customer journey.
Deeper impact on product innovation
D2C actors interact directly with customers, which facilitates personalization. Using customer feedback, brands need to market good products, analyze good prices, and manage demand. In the absence of intermediaries and third-party vendors, these players use an innovative marketing strategy to enter the market directly. There are no barriers between producer and consumer, allowing companies to control their reputation, marketing and sales tactics.
Convert visitors to loyalists
The need to focus on customer acquisition has repeated itself countless times now. Brands know the importance of marketing, ads and campaigns, but how can they stand out? While acquiring new customers is vital, it is also necessary to focus on old ones.
Maintain a personal relationship with customers. Send them good wishes on special days or offer discounts and surprise gifts. The D2C model focuses on establishing a personal connection with customers using digital channels and tools.
Financial support and personalized options
Digital payment models are becoming extremely popular. Brands should make efforts to simplify transactions and offer several payment methods at checkout. Allow customers to use different cards, UPIs and wallets.
One of the recent rising trends in the industry includes deferred payments, also known as “buy now, pay later”. Smooth transactions can be decisive for customers.
Social media should be your best friend
Social media is an essential tool. Brands can be confused with the many choices available to them – Facebook, Twitter, Instagram, Pinterest and many more. Instead of trying to strategize for all platforms, marketers should focus on what their capacity allows them to do.
Use these channels to identify your target audience and engage with them. Plus, stay informed about new launches and products. Prepare a strategy with the right channel and the right content strategy. Influencer marketing has gained immense popularity and social media is a great marketing tool.
Data is your greatest asset
One of the main advantages of digital channels is the availability of data. The need for guesswork is over. Engagement rate, reach, impressions, and other stats are readily available, so you can plan your strategy accordingly. A brand should use this data to its advantage.
Due to the abundance of data, some challenges may persist. Brands need to filter this data to get a clear idea of their personalized journey across different platforms.
There are countless D2C success stories in India, and this, coupled with the impact of the pandemic, has prompted investors to show widespread support for useful, nimble and innovative D2C brands. With fewer barriers to entry, D2C start-ups can offer higher margins while maintaining greater control. D2C brands have the advantage of dominating the entire value chain, from product creation to sale and delivery. A majority of these brands emerged digitally and naturally knew how to communicate with the digital consumer, from their marketing to how transactions flow.
A direct-to-consumer brand is responsible for its customer service, and this is the segment where both the risk and the potential reside. Purpose-driven brands capable of creating relevant, personalized and connected experiences to meet the needs and desires of the new India will come out on top and surge to the top.