From being just a niche segment, Direct-to-consumer (DTC or D2C) has metamorphosed into becoming a powerful driver of the retail revolution of the country. With an unfazed, booming popularity and systematic logistics committed to delivering customer delight, the D2C segment has emerged as a clear winner in disrupting the status quo of the retail landscape. With the consumer at the core of their strategies, D2C is a promising business model for companies wishing to reach out to the consumer directly. As our country continues to ride on the D2C revolution, our cover story unravels its background and impact.
D2C is no longer a trend—-it is now a pivotal factor for a booming business in a post-pandemic world, where quality and convenience reign supreme.
With reduced foot traffic in stores owing to the coronavirus scenario, online sales have been a saving grace for retailers in light of the pandemic. Young consumers today are now making the switch to D2C brands owing to the convenience, innovative options and level of customisation available, which traditional brands have been unable to cater to.
This segment has shaken up the retail sector, redefining how consumers browse, shop, and purchase.
D2C: Disrupting Status Quo
If anything, D2C has allowed brands to disrupt and challenge the status quo through nouveau strategies and a fresh outlook on retail and customer retention.
It has enabled companies to shatter the barriers that exist between the producer and the consumer, thereby granting businesses more power, liberty and advantage to connect directly with the customer and exercise more control over their reputation and marketing tactics.
D2C players have capitalised on greater levels of data retention and consumer insights which in turn leads to smarter decision-making. The segment is projected to grow by 19.2% in 2021 alone.
Tapping into customer behaviour through a personalised approach
Due to the convenience offered by the D2C brands, in addition to providing them with the ability to customise and control their purchases, the shift towards the segment for shoppers has been an inevitable one.
Personal care and cosmetics, for example, is one of the leading D2C categories, with brands such as Mamaearth and SUGAR cosmetics setting the bar for customer-first strategies that pivot on quality and convenience.
“At SUGAR, we constantly work towards engaging customers with a delightful experience.”
~ Aritra Barmanray, Vice President – Operations, SUGAR Cosmetics
On the other hand, Avinash Dhagat, VP- Supply Chain, Mamaearth talks about utilising data and technology to meet customer expectations.
“Mamaearth is a digital first brand, and we believe in leveraging data and technology in Supply Chain as well to build the right end to end visibility and capability in order to meet our consumer demands. Having the right technology also helps us enable scaleups which is critical for a fast growing brand.”
~ Avinash Dhagat, VP- Supply Chain, Mamaearth
Direct brands have ousted traditional, backward strategies by delivering on the core values that catch the attention most to a new generation of shoppers. This, in combination with a more structured and in-depth data set, has enabled a much more personalised brand experience.
Delivering Delight through robust logistics
“Delivering customer delight” can be said to be a catchphrase that sums up the fundamental goal that DTC companies have imbibed in their thought processes and operations. However, it is not easy, especially in such an overly competitive space.
Lavanya Pachisia- VP Finance and Operations, Zivame, shares two critical points in this regard.
“For a consumer, order delivery is the Moment of Truth.”
~ Lavanya Pachisia- VP Finance and Operations, Zivame
Efficient logistics needs to ensure the following:
- Leverage technology to ensure speed of delivery – Consumers expect to receive the products as soon as it is ordered, irrespective of external factors. And thus it is critical to reduce the O2D timelines.
- Real-time Visibility – Ensure consumers are aware of the order’s status and informed in advance in case of any delays ensuring ambiguity and uncertainty are reduced.”
Today’s customer expects faster deliveries. At a time when e-commerce giants like Amazon and Flipkart are offering 1-2 day deliveries, D2C brands cannot afford to continue with delayed delivery as it will only lead to customers leaving and the imminent fall of the reputation of the company.
“When it comes to customer satisfaction, brands should emphasize on two focus areas – fast delivery and post-purchase experience.”
~Kapil Makhija, CEO of Unicommerce, a leading cloud-based ecommerce solution.
Latest trends in the D2C supply chain
As the D2C boom continues to impact retail businesses across all categories, some interesting new trends have come to the fore. While the first key trend is the fundamental change in the approach of companies towards dealing and engaging with the customers, there are other interesting trends driving the consumption of the DTC space, such as:
Experimenting with different supply chain models:
- Novel ways of personalised browsing and shopping experiences to customers
- Micro-warehousing centres
- Application of AI to boost operations
“The speed and efficiency of logistics can make or break the entire customer experience.”
~Krishna Khandelwal, Chief Business Officer, Locus
Keeping up with the challenges of the D2C Segment:
Carving a niche for oneself in the DTC market means putting up with the challenges in the supply chain side of the D2C segment. That can be related to customer demands, reverse logistics, etc.
How are brands addressing these challenges specific to the DTC domain?
- Solving problems specific to the industry
One of the key challenges for any D2C brand is to find a solution that solves problems specific to their industry. Mr Makhija, while talking about Unicommerce, alludes to the solutions they have undertaken in order to address this.
“We have built a sector-agnostic platform that can easily be adjusted based on the specific requirements of an industry. For instance, we offer expiry management for FMCG brands as their products come with a limited shelf life. Similarly, companies operating in the fashion and apparel industries require shelf allocation and an easy quality check process, which can also be managed on Unicommerce’s platform”.
- Solving the problem of high returns
With free shipping becoming the norm, it would not be wrong to state that product returns have become the nemesis for the high losses incurred with high returns and exchanges in the direct-to-consumer strategy.The growing rate of costly product returns strikes like a ticking time bomb— all at a time when e-commerce continues to amass greater share.
With more companies entering the realm of D2C operations, companies are now looking for a robust reverse logistic solution. Keeping this in mind, companies have started changing their Returns management policies to accommodate this change. For example, Unicommerce revamped and relaunched its ‘Returns Management solution’ to address the problem of high return volume and reduce returns management costs.
- Dynamic customer demands
Common problems that prevail in the DTC segment are dynamic customer demands, on-ground supply chain bottlenecks, lack of on-ground rider visibility and, not to forget, the lack of experience in handling end-to-end logistics. With strategic supply chain planning, the right placement of warehouses and distribution centers, the flow of goods can be streamlined in the D2C supply chain.
“Though everyone expects fast & on time deliveries, pro-active communications like shipment in transit, out for delivery etc. can significantly improve customer delight. Also, pro-active resolution of non-delivery issues like rescheduling deliveries, incorrect address or false update by carrier boys are some other ways to up the game.”
~ Gaurav Gupta, Co-founder, Shipway
The Delivery Delight Index
As a resourceful toolkit that sheds light on the feedback, trends and growth of customer expectations and fulfilment, The Delivery Delight Index has surfaced as a potent handbook for gauging customer expectations towards ecommerce brands.
Rolled out by Shadowfax and Redseer, it is a toolkit for brands and platforms thathas been developed after closely engaging with more than 10,000 consumers, including around 38 players across four types of platforms i.e., E-tailing Marketplaces, Hyper-local Marketplaces, Digitally Native Brands and Traditional Brands/Retailers. Derived from surveying a large sample set of actual customers, it attempts to paint a true picture of Customer Delight.
“The Delivery Delight Index shows that the customer expectations are moving towards faster and swifter deliveries today.”
~Abhishek Bansal, Co-Founder and CEO, Shadowfax Technologies.
“There is also an increased demand for D2C fulfillment that has been observed over the past 1.5 years. With the growing number of D2C brands entering the market looking to offer a seamless experience and bolster customer relations, the need for a sophisticated end-to-end fulfillment strategy is greater than ever before.”
~Saahil Goel, CEO and Co-Founder, Shiprocket
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