Is Omni-channel retail the best Brand Strategy today?
Updated: Dec 31, 2022
We are aware of the buzz around growth and success of D2C brands in India. We have seen how the likes of some homegrown private label brands and reached Unicorn status wit
hin 5 years of starting up. The internet if full of hullabaloo about how a brand started with husband and wife in the streets and scaling heights now with strong resilience and determination. There are podcasts flooded over the internet giving how you can start a D2C brand and start making money easily with low investment as you keep maximum margins with yourself and not giving anyone else in the supply chain. All is good and welcome sign for Indian merchants scaling new heights. Any why not after all there is a robust ecosystem being created around online selling or eCommerce.
Unlike before, you will not have any problem of shipping or logistics. Also the rate of logistics are also optimised so you know how much chunk of your product pricing goes where. You can also optimise your faster delivery by keeping your inventory in strategic fulfilment centres based on demand. The demand channels are robust these days be it your own store built on Shopify or custom built or online Marketplaces like Amazon, Flipkart, Myntra or Social commerce channels like Meesho or Social handles like Instagram, Facebook , Pinterest or Whatsapp. That followed by easy credit and soft loans from OfBusiness and other NBFCs. There is a definite leverage post pandemic and there is tremendous penetration of smart phones in Tier 2&3 cities in India. Thus there are abundance of products to select from within the palm of a buyer. The best part of digital ecosystem is that based on the behaviour you can now target a potential buyer. That too if the customer has used your product and liked it, there are chances of word of mouth spread. Thus selling or to start a private label brand business is not that challenging as of today.
The market size for any products in India is huge and thus there are several international brands too that wants to enter India. There are several Korean cosmetics brands and several Chinese brands that have already entered Indian market and selling throug
h both online channels and offline distribution. Thus the competition is going to rise along with the market size.
Also not all Indian brands which considers themselves as D2C brand are successful and are struggling. Because you would need to understand that scaling a D2C brand is not that easy. The CAC (customer acquisition cost) is very higher and along with that comes a brand building activity too. Moreover you need repeat traffic, constant brand awareness through content of multiple forms. And then COMPETITION from existing and new similar products. We all know for any D2C brand it's the Pareto Rule ie 20% of the SKUs determine 80% of GMV in your inventory. However for most brands to identify the top 20% (Hero products) gets a huge cash burn. Thus only <1% of most Private Label brands are only successful as pure D2C.
I remember speaking with one manufacturer of Beauty and Personal care in Gurugram. He said that he manufacturers products for some top Private label beauty products in India. They created a private label brand for themselves thinking that as they are manufacturers for few top Beauty brands their own brand will also take of the shelf. Had they knew that Brand Building, Marketing, Advertising and Sales are each functions in making a brand successful. They didn't had any success on online marketplaces too as the FOCUS was not there. Thus all cash burn and no results. I was consulting them for international brand building as they wanted more sales channels to liquidate the unsold inventory. But it's not that simple.
Most so called D2C brands today are struggling. Everyone is not funded to scale up from 0-1 and 1-5. Most struggle at this stage and most of the way to sell the inventory is Deep discounting in Online Marketplaces, Flea Market Sales, Liquidation through exhibitions etc. But they are not profitable because: Online marketplaces will have commissions and shipping charges, Flea Markets and Exhibitions will have participation charges and logistics cost again. Remember we live in a world of uncertainty and understanding demand is and experiment as the Choice of buyers is short lived these days and buyers don't hesitate to explore new products. There is hardly any stickiness to the product from consumer.
Well the top D2C brands that you see today also went through the same journey you are in today. It's the resilience and to pivot fast and take decisions quick that will help you stay in the market. If you see most top D2C brands, they are not only selling through their own D2C store, instead they are everywhere. They are ready to explore all channels. They apply to themselves the OMNI-CHANNEL strategy. Although it takes time to set up a robust omni-channel strategy, however you need to start somewhere.
If you are an Online first brand and doing well through Online Marketplaces, you need to expand to other online channels. In this case your own online store or social channels or try social commerce. Then you try one offline store at a strategic location based on your demand analysis of your online sales. Say you get most orders from Delhi and North India, and mostly these are from students try to open a shop at a place where you find your buyers that showed interest on your products and slowly expand. You may also speak to Large Format Stores like Reliance Smart, Shopperstop etc and find a shelf place for your brands. Similarly if you are an offline brand, explore multiple online channels. Trust me it is easy to go offline to online than vice versa.
One more thing you may do is to explore international markets. At Niryati, we can enable any D2C private label brand with robust Global Supply Chain to multiple international locations from India. Maybe you speak with someone from Niryati's team and discuss a strategy. It's simple and a force multiplier in increasing your sales. Also, selling international will give you more margins as the disposable income outside India is more than in India. Moreover you have multiple countries and each country has multiple online channels. And who knows, your brand may become more successful than in India.
Now to manage such omni-channel retail strategy, you must have a robust technology in place. There are plenty of such softwares already available in today over the web. Leverage technology along with a precision level brand strategy and scale your business in India and the world.
Let team of Niryati know if you want to know more about Omni-channel Brand Strategy...
PS: I am Dibyendu Ganguly, founder of Niryati. These are my own views after spending over a decade in Crossborder eCommerce, Product Sourcing/Procurement, Contract Manufacturing, building SaaS based tech products and Solving Global Supply Chain problems along with speaking to several customers, brand owners, logistics and 3 PL partners, sales agencies, and online marketplaces both in India and international markets. You can reach out to me over Linkedin or drop a contact message here for a consultation with me. I will be happy to assist you.