Today, consumers have a multitude of brands to pick and choose from for every category. We have the ability to closely observe, and assess which brands have products or philosophies that align with our needs. The credit for this goes to new age D2C companies who now promote a greater level of transparency, by eliminating the middle-man, and well, connecting directly to the consumer. India’s eCommerce potential has given rise to a new breed of these D2C brands in the country. Before the prevalence of the e-com surge, it was nearly impossible to successfully introduce your product into the market without high entry costs. Now online portals facilitate transactions from small and large brands worth 100 billion dollars in India, and this number is estimated to grow up to four times by 2025 as per Deloitte.
As new categories, products and industries prosper, it is safe to say that the opportunities around eCommerce are abundant. Brands would do well to capitalise on this by understanding the factors that contribute to the success of D2C commerce in India.
- Internet Penetration: Cell phone providers, like Jio, have revolutionised the use of the internet throughout India by making it more affordable and accessible. A joint report by MMA India (Mobile Marketing Association) and media agency GroupM says India would reach 900 million internet users from the current 622 million by 2025. Although eCommerce adoption does not start immediately, the current penetration is around 76.7 percent, as per Statista. That means 76.7% of the 622 million people shop online. Internet accessibility has allowed companies to reach a broader potential customer base and decrease many other costs associated with retailing a product. What is interesting is that there are still around 300 million people yet to access the internet, which underscores a future of unexplored possibilities.
- ECommerce Enablers: The advent of payment gateways, website builders, and services that allow companies to host shops online has allowed eCommerce to grow exponentially. This is simply because D2C companies now have a greater ability to offer more services online with the support of these B2C enablers. We are proud to partner with companies like Razorpay to help companies with payment options. Platforms like Shopify and Wix, have revamped their offerings to give the end-consumer a better experience. As competition in this sector continues to rise, the winners are the brands, who now have a bunch of attractive propositions and options to digitise their business, and supercharge their growth.
- COVID Constraints: Limitations due to global lockdowns forced startups and MNCs to re-invent themselves online. Over the course of the pandemic, Indian eCommerce grew 2.1 times faster than pundits predicted. Incumbents and existing players rushed to create a new digital presence, to address evolving consumer buying behaviours and companies that were able to adapt quickly benefitted the most. Brands we support like Licious, Nua, and Rage Coffee are great examples of new-age brands that are breaking barriers and addressing new consumption patterns with innovative products and D2C models.
- Alternative Finance for Digital SMEs: Alternative finance, like Revenue-Based Financing (RBF), has quickly become the most favourable way to access credit for SMEs. Companies like GetVantage, in India, are paving the way for the new-age entrepreneurs focused on creating value through eCommerce. GetVantage has funded many prominent companies like Bummer, Urban Monkey, and Arata with its proprietary credit engine and is leading the way for other RBFs in India. Similarly, companies like Clearco in the US, Uncapped and Wayflyer in Europe have also emerged as significant capital resources for founders across the globe. RBF has truly made its mark worldwide and is here to stay, as it solves a real funding gap that traditional approaches couldn’t adequately address. Today over 1,000 D2C companies have been funded via revenue-based financing in India alone, and this number is set to grow dramatically.
India’s D2C and eCommerce space is booming, and the data has evidenced that the best is yet to come. We have witnessed unprecedented growth in this space, creating opportunities like never before.