A consumer is nestled in the comfort of their home, scrolling through their laptop or phone, exploring products of a certain brand. Here, traditional intermediaries like retailers and wholesalers have been bypassed, with the brand being responsible for the entire customer experience, be it manufacturing, product development, marketing, sales, customer service and more. This is the direct-to-consumer (D2C) model. And it's been gaining traction in India over the last decade, especially since the Covid-19 pandemic.
With consumers seeming to crave authenticity, is the D2C revolution a way for Indian startups to bring their products directly to market, disrupt established supply chains and redefine industry norms?
With consumers seeming to crave authenticity, is the D2C revolution a way for Indian startups to bring their products directly to market, disrupt established supply chains and redefine industry norms? But at a time when competition is fierce in the D2C arena, could a sleek website or catchy marketing campaign suffice? How could D2C brands continuously innovate to stay ahead of the curve?
The first puzzle for Indian startup founders in the D2C space is figuring out their product-market fit.
Mohit Jain, co-founder and CEO, Kimirica, a luxury personal brand which manufactures hotel toiletries and airline amenity kits, said, “I was pursuing my Master's degree in Marketing Research from the University of Birmingham to get a holistic view of the D2C space. Over six months, all I was studying was consumer surveys, questionnaires and sampling, leading me to wonder whether I was in the right class. When I started my career, I began actively researching. I behaved like a supplier calling hotels to find out what they want to buy and then behaved like a hotel calling suppliers to find out what they're selling. I was surprised to find out that 90% of the hospitality industry in India was importing products from places such as China, the US and the UK. We found that these international brands were looking for a global story, international quality and more. They want something matching their brand DNA. We did B2B in a very D2C manner. When we went for presentations, we displayed our products on a table, telling a beautiful storyline about each collection we created".
"So, if you're starting something, even if it takes time, go ahead, don’t be afraid and talk to people. Curate a consumer persona, which would give you a real consumer view. It may not be entirely prudent to go to relatives or friends, for they may embellish the truth; meet those people who can be brutally honest", added Jain.
According to Vaibhav Jain, co-founder at ABNW - AayushBharat, a tech-based ecosystem aimed at empowering Ayush doctors and providers, said, "New founders should immediately go out in the market, do primary research first, then talk to as many consumers as possible. And based on that, record data and analyse it. If you know your product positioning, take your product and interact with customers. If there is a wider range of products, identify the low-hanging fruit, while defining your brand and core ethos".
How D2C founders use marketing strategies to optimise their reach
Within the D2C space, marketing strategies have kept evolving. Startup founders need to keep evolving their strategies to keep pace with consumers. Sharing his approach towards marketing, ABNW - AayushBharat's Jain said, "Post-Covid, a lot of Ayurvedic players entered the space. When people are searching for something, they find it and realize they should buy it. That should happen organically. Performance marketing is like a tap: you open it and the supply comes in. Yet, this is where new founders fall prey. They think putting money, creating websites and doing a burn budget would lead to sales coming in, but these are not the right figures and right consumers; you end up burning a lot of money.”
Still, many startup founders have to contend with growing their customer base through marketing via inorganic and organic means. Underlining the importance of curating a large data set, Jain said, "In the last year, we interacted with more than 100,000 people, who have ordered from us or who have landed on our websites. So, we have not spent money on performance marketing. For scaling up, sure, there will be a need for performance marketing but before one does that, they have to establish themselves and their brand persona. When you start the tap of performance marketing and people come on to your page or website, if they don't relate to what you've mentioned, the orders are not going to come in. You're going to burn a lot of money, so there's a lot of brainstorming that needs to take place.”
The lingering question of funding for D2C startup founders
Similar to several startups, the D2C founders had to reckon with a decline in funding during the funding winter last year, after booming investments during the pandemic years. The issue of funding still remains a pressing concern for startup founders.
"If you have a fixed set of repeat consumers, you may not even require funding. There's a sense of FOMO, where everyone is getting high levels of funding, so a startup founder may wonder why they're not getting funding, which may lead to defocus. So, one should have a gut feeling and a strong understanding of one's product,” Kimirica's Jain said.
Due to struggles with funding, getting acquired seems to be the endgame for founders. Sharing his view on acquisitions, Kimirica's Jain said, "In business, passion is important, but it's important to not be swayed by your passion to the point that it hinders growth. Sometimes, getting acquired may be the right move, for at times, there may be leaders who may be better than you and who can drive your vision better than you".
The D2C landscape in India could be more than just a business model, it could be revolutionising how brands innovate, adapt and evolve to meet the evolving needs of consumers.
"On any given day, we can have the highest high and lowest low, be it launching products or engaging new practitioners on the platform. It's a journey where we have to keep our own mental state balanced so that we can continuously work", said ABNW-Aayush Bharat's Jain.
Shrija Agrawal is a business journalist who has covered startups and private capital markets before it was considered cool in India.
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