Our guest author dives into the intricacies of D2C as a powerful force in the ever-changing landscape of consumer-centric innovation.
D2C has been a buzzword for some time now and India is the posterchild of D2C for the world, today there are brands sprouting in tier 2-3 towns with D2C ambitions and entrepreneurs in Indonesia /Vietnam want to replicate the Indian D2C success model.
D2C, for the unversed, is a channel through which brands sell directly to consumers, however in reality most D2C brands get discovered on marketplaces like Amazon and hence have a multi-channel revenue stream right from the beginning. Instagram is the preferred mode of brand building and if D2C brands were to have a playbook it would read
Colloquial content tapping into Gen-Z and millennial lingo
Innovation in product
Occupying an entertainment space within the category ecosystem. For example, KNYA a D2C brand which sells scrubs for doctors has a thriving YouTube channel showing the daily life of residents.
Most brands which started out as D2C are today venturing into offline (brand-retailer-consumer) and hence breaking the core of D2C channel philosophy of cutting the middleman and reaching customers directly.
Often one assumes when someone says D2C it is the channel that is being referred to – Direct to Customer – however the term has evolved today to be channel agnostic. D2C today is a mindset, its customer centricity on steroids.
The offline foray
The high disposable income families that buy into these Masstige (mass to premium) brands are a small population of about 6 Crore at best who can be tapped into using all the multitude of mediums including OTT, Smart TVs and converted into loyal customers.
Most D2C brands start with a journey of reaching the first 10k customers using WOM, 3rd-degree friends, family, relatives, acquaintances, peers, and 1:1 marketing. the journey from 10k to 1L is traversed through initial investments in Meta and the journey of 1L to 10L through higher involvement mediums through YT, OTT, Celebrity endorsement etc.
Beyond the 10L mark, there is a huge chasm that online as a channel finds difficult to bridge effectively, increasing Digital spends at decreasing ROAS forces one to retreat and wonder how to continue to grow and that’s when most brands figure out that the channel is a barrier.
Brands enter the offline market at this juncture and realise that the discounting that they have been operating in the digital world needs to stop.
The ways of working changes
Weekly discounting events give way to Monthly discount
Price parity is to be maintained on all channels
Product and Brand philosophy needs to be thought of for BHARAT and not just INDIA
The true merit of creating a brand comes to the forefront beyond getting conversion through performance marketing campaigns
THE BRAND MATURES
What happens to D2C?
Brands which are D2C first still hold a huge edge over legacy brands in being able to innovate constantly, they are closest to consumers and have a pulse of the market. D2C becomes a mindset and not a channel, the mindset of innovating to solve consumer needs—stated or latent.
D2C as a mindset also says that it's okay if the consumer does not know they deserve better, it's okay if they are not asking for it, and we will create better solutions at great prices. We will provide best-in-class global solutions, make it India, and give it to the Great Indian consumer.
Scaled Brands/products will sell offline, whereas new innovations will continue to be online till they see consumer acceptance. The online channel thus is a brand-building channel, ensuring consumer experience, being close to consumers and building trust for the brand by staying real whereas revenue is now generated through multiple channels.
Brands which have a 1000-1500 AOV know they cannot breach the 100 crore revenue mark online, other brands adjust for it accordingly, however, the biggest play is understanding how to go offline basis category nuance- if you are a mattress manufacturer having own outlet or featuring in multi-brand outlets might make sense given the high ticket size however if you are a snack brand then a pop-up store in a mall might not be a sustainable solution and hence the age-old family grocery/kirana store will be the GTM.
The D2C wave
The D2C wave might be the best thing that happened for the Indian consumer, it shook the legacy brands out of their complacency, offered world-class products to consumers in India and was a huge wake-up call to marketing gurus sitting in the upper echelons to reimagine communication.
From 30-second TVC to DVC, the common parlance at agencies have gone through a sea change, from social media manager to content creator the roles in organizations have metamorphosed. The D2C wave has impacted the Indian economy in ways that cannot be denied and the wave is still in passing.
(Our guest author is Deepti Karthik, founder of Decision Pinnacle, a growth and marketing consultancy)