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  • Writer's pictureDibyendu Ganguly

The history of Growth for D2C brands in India & What's next?

Updated: Dec 31, 2022

History of Growth of D2C brands and What's next?
History of Growth of D2C brands and What's next?

There has been a surge in D2C brands reaching out directly to customers. Private Label brands are no longer dependant on Marketplaces only to sell their products. There are several advantages to it as the customer experience becomes more customised while serving your customers directly instead of depending upon an 3rd party online marketplace.

I remember the year 2012-2013 when there were several web-store platforms like Shopify, Martjack, Kartrocket, Magento (acquired by Adobe now) and more were trying to expand and urging private label brand owners to set up an online store. This was the time in India especially when brand owners were looking at online business as a side liquidation hustle or platform. So, if there were some unsold inventory they will try to recover the COGS via selling online. As I was also associated in setting up India launch for one of such web-store platform, I could see the sales (it was SaaS based pricing mostly ie a monthly subscription cost) was great month on month.

While we were happy to see the sales traction of new subscribers increase, there was a concern with Churn. For people who do not understand how important this metric is for any SaaS based tech platform, this metric says how many customers were leaving or not renewing the subscription plans. This was a worry. In a SaaS based tech scenario a double digit churn was a killer.

We thought a lot and understood that the ultimate reason for the customers not renewing the platform was because there were no sales for merchants. While we were trying to create an awareness among merchants through our ecosystem partners by giving Facebook and Google Ad Credits, still there was no change in the churn numbers.

We realised that online business was just a side hustle where merchants wanted to just check if there could be some extra sales to their core business. Thus they never focused on Online Brand Building, neither they invested on their online outreach programs through social media platform. I must say that there were few brands which understood the power of online D2C sales and they were doing great. But overall the SME or Enterprises didn't take D2C selling seriously.

Around the same time there was the galore of multiple online Marketplaces (Both Horizontal and Vertical) like Flipkart, Snapdeal, Jabong, Myntra, Shopclues, Homeshop18, Fashionara, Fashion&U, Yebhi, Askme, Fabfurnish and more. This created an overnight online channel of sales for a merchant to sell on 20+ Indian online channels. Moreover, they did not think of marketing budgets as most of these marketplaces were burning large cash to grab the marketshare. Hence merchants and brand owners were happy. The online sales started to increase. Yes there were problems with huge returns. But I am trying to bring focus to the increase in overall GMV in almost all these Marketplaces.

Come 2014, there was a funding winter and a lot of these marketplaces got closed or got acquired and Amazon slowly entered the Indian market by then. During this period there were several new PURE ONLINE merchants that grew up by 100%, however the channels of sales squeezed with hardly 2-3 marketplaces that can actually deliver product sales or returns. During this phase the sales of standalone D2C stores were very less we saw few of them pivot to something else. For example, Kartrocket moved to Shiprocket and the focus shifted from creating web-stores to shipping aggregation. Martjack was acquired by Capillary. Others died slowly. It was only the large ones that survived like Shopify or Magento and they could only because they were running their business only through partnership and alliances.

Ominichannel retail
Omni-channel retail

This was the influx point, I would say by mid or end of 2015 we saw the emergence of D2C brands in India. However, the numbers were less but now there were several new age entrepreneurs especially First Generation Entrepreneurs. The D2C landscape was being powered by huge internet penetration, large scale usage of smart phones, buyers getting used to shopping online, more disposable income among youngsters, the logistics reach to inner parts of India. Also this was the time of new channels like Social Commerce like Meesho emerging slowly. Facebook launched their Store, google shopping and Instagram started to take off.

By 2018 the online merchandise ecosystem in India was good. As a D2C brand, I can scale up not only selling through my own online store, but couple of marketplaces and social media traction to create awareness and discovery of my brand. Further the disruption of JIO along we 4G speed and access to more than 26000 pin codes across India created a robust business model for any brand to create it's identity. The influencer business was yet to take off though.

The era of Pandemic / COVID 19 lockdowns, skyrocketed the online sales. The online sales marketshare of organised retail was just 2-3% in 2018 up from 1% in 2014. However, 2020 there were times when online sales reached over 9% of retail sales in India. This was also the time of spike in Content Marketing especially visual content and growth of influencer marketing through social media channels. Be it through podcasts via Spotify or Reels through Instagram, or Gyan sessions over Youtube.

Come 2023, it is an era of Omnichannel Retail. Browse offline and buy online, or browse online and buy offline we are seeing everything. Several D2C brands getting Unicorn status and several pure Online players going Offline now speaks that Onminchannel is the way forward. Moreover the ecosystem is very strong with several Multichannel retail softwares (OMS, WMS, AI Predictions, Inventory management) like Unicommerce, EasyEcom, Vinculum makes it easy for anyone to manage everything from one place. For shipping Shiprocket, Pikker along with robust ESCROW based payment gateway partners like Razorpay, PayU and more. Moreover there are strategic fulfilment centres with online ready warehouses across the country now.

Considering the fact that the Indian market is huge, this will grow further by many folds. The fact that Indian merchants have figured out the ways to sell and grow in India, we should not forget the role of ENABLERS like Browntape, 99Yrs, Iksula and more small companies especially digital marketing ones providing pillar support to merchants in India.

Now is the time for Indian brands to go Global. This is where NIRYATI is trying to solve the global supply chain for Indian brands to scale global markets from India. In our next blog we will illustrate why an Indian brand now try to sell in international markets too. If you are a brand that wants to sell global, reach out to Niryati team.

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.

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