Market Trends of India Direct-to-Consumer (D2C) Logistics Industry
Festive Season and Mega Sales Driving the Market
E-commerce marketplaces began distributing mega sales events throughout the year rather than focusing solely on Diwali or Dusshera festivals. D2C brands include events and promotions on their websites every fortnight or week, with higher discounts.
However, their share of sales events on online marketplaces increased. Industry experts say direct-to-consumer (D2C) brands grew nearly 200% in beauty, nutrition, and small electronics categories.
Many companies recorded profits during times of mega sales. For instance, D2C latex mattress brand Morning Owl said that on day one of the mega sales by the eCommerce platforms saw a 200% spike in business. With nearly 6 million shoppers, the D2C stores on the Shoptimize platform saw a whopping 182% increase in revenue during the Diwali festive sales in 2021. The massive growth in festive sales will further push the overall online retail GMV, which stood at USD 52 billion in 2021 and will grow 30% to USD 68 billion in 2022. While COVID-19 accelerated the shift to online shopping, the holiday season brought it ahead. In recent years, shoppers purchased on marketplaces, taking advantage of reasonable offers and sales.
The D2C brands aren't too shying away from giving out attractive discounts. The discounts, coupled with the customer's expectations for next-day or two-day delivery, keep the e-commerce industry players on their toes. While some D2C firms chose self-shipping their items, the vast majority relied on advanced logistics partners to deliver their orders to clients. As a result, they began seeking an ideal shipping partner who could provide them with a flawless logistical experience while saving them money. This year, the fashion category is expected to see robust growth driven by an increasing shopper base from Tier 2+ cities and first-time shoppers who generally tend to begin their online shopping journey with fashion.
Investment on D2C Startups Growing in India
India's direct-to-consumer (D2C) category experienced significant investment activity for the past few years as eCommerce market conditions matured and evolved. The relatively solid eCommerce infrastructure ecosystem in India, which includes eCommerce enablers, logistics, marketing, customer support, and other services, makes it easier for vertical or specialized eCommerce businesses to create new brands and build up. Indian D2C firms raised USD 783.7 million in the first seven months of 2021.
D2C fashion startups raised USD 336.5 million of the total funding in 2021 alone until July. Lenskart was a significant donor, raising USD 315 million in two offerings in 2021.
Beyond fashion, the direct-to-consumer (D2C) revolution is also reshaping the FMCG business. The amount of D2C FMCG businesses raised USD 33.5 million in 139 deals in 6 years. In 2021, such startups raised USD 321.3 million in total investment across 39 transactions. In 2021, Mamaearth and WOWSkin Science were prominent D2C FMCG firms that raised USD 50 million each.
Through a service fee model, Flipkart launched a program to identify and build digital-first brands on its platform. Under the Flipkart Boost program, the e-commerce giant will offer its expertise to early-stage brands in planning, advertising, cataloging, logistics, quality control, and mentoring. It will also assist them in approaching venture funds to raise capital.
