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The D2C market has grown exponentially in the past year. There are more than 800 successful D2C brands in India, and the market segment could easily reach $100 billion by 2025.
Indian direct-to-consumer brands have had a growth spurt in the last couple of years. We see companies like Mamaearth reaching 100 crore revenue in just two years, compared to globally popular brands taking at least a good 20 years to reach that mark.
But before we discuss more D2C, we need to know what direct to consumer stands for and how it can generate so much growth?
D2C, or direct-to-consumer, is a strategy where the company sells or promotes a product directly to its consumers by cutting out intermediaries. There are various advantages of the D2C business model that have a hand in its growth spurt:
In many ways, D2C is an empowering strategy that helps you build a brand and not just sell a product. That is one of the main reasons why it is so successful in India. 70% of millennials take brand value into account before they decide to buy a product. And out of the 100+ million people who shop online in India, millennials are a majority chunk.
But building brand value is not the only thing that is empowering growth. D2C makes sales breezy for its consumers. It’s convenient, authentic, low cost, and seamless. It’s breeziness coupled with India’s rising per capita income, evolving buyer persona, and first-time internet users – you get a booming industry.
Now that we know what D2C is all about and how it’s generating growth in India – Let’s look at 8 D2C market predictions for 2022.
1. Cause-Driven Brands
The new generation is informed and empowered.
More than 70 percent of Gen-Z and 80 percent of millennials expect brands to become more sustainable. Hence sustainability is being pushed to the core of D2C brands, where consumers are likely to choose products that are good for the environment and community.
Not only does the new generation want sustainability, but it also wants transparency. How was the product made, who made it, how does it affect the environment, etc.? All these factors are important when it comes to consumer behavior in 2022.
2. Personalized Experiences
Customer relationship building will be a huge trend in 2022. Gone are the days of mass marketing; building personalized relationships and products for D2C brands is a must.
Because of this, AI-based chatbots are going to become essential in 2022. Chatbots have now reached 54% of users globally. In fact, 33% of consumers agree that chatbots and virtual assistants make it easier to get their issues resolved. The idea is to become personally connected to the consumer, give them a seamless customer experience, and build long-lasting relationships.
Marketing will also play a massive role in building personalized experiences. Customized emails and offers, retargeted ads based on previous web interactions, and reminders or incentives for abandoned shopping carts all culminate into a better user experience.
Now that we have discussed customer relationships and marketing, how can we forget the product itself?
Since customization will be the new big thing in 2022, it is slowly seeping into the product itself. With Indian companies like Bare Anatomy customizing their products based on the consumer’s preferences, the relationship between the company and the customer has become even deeper.
3. Omnichannel Culture
With COVID hitting India, the offline experience of retail therapy decreased, but with everything slowly opening up again, consumer behavior has changed, and they want more than just an online experience.
“An omnichannel strategy puts the customer and not corporate silos at the center of its strategy. A D2C brand that adopts this acknowledges the fact that their customers can engage with them in multiple ways across multiple channels simultaneously.”
According to a PwC survey, convenience matters more to 65% of consumers, making omnichannel into a new wave in 2022. This approach ties in a digital consumer experience with a real-life experience, making the D2C industry even more wholesome.
4. Voice-Based Search
Voice-based searches have translated into a new line of convenience for consumers. As 2022 approaches, it will become a significant part of buying and selling experience in the D2C industry.
According to a Salesforce report – “at least 4 millennials out of 10 browse online before purchasing a product using voice search assistants such as Alexa, Siri, Hello Google or others.” Today, at least 20% of basic home necessities are bought online through voice-based searches. As we move towards 2022, shopper spending will increase up to 18% through voice searches.
D2C is becoming a game of convenience. As voice-based searches become more enhanced, they will gain popularity. And, as they gain popularity, they will become the 1st choice for online shopping. Hence in 2022, D2C brands must up their content and SEO game to make it more conversation-friendly.
Basically, sell your product in an everyday user-friendly language.
5. Subscription Sales Models
Have you heard of the successful Indian startup called RainCan?
RainCan, now called BBDaily after being acquired by Bigbasket, uses a subscription-based business model to generate its revenue. It works on an Indian way of buying milk, where you have a monthly subscription, and the milk gets delivered to your doorstep on a daily/ weekly basis.
The biggest trend for 2022 in the Indian D2C industry is simplicity. Consumers want things to be easy and efficient; hence, the subscription sales model will be huge this coming year.
Companies having a subscription sales model are highly successful. Why? Because customers don’t have to keep coming back for essentials they will need frequently. It’s on your doorstep, every day/month, without any hassle. Not only that but having a subscription-based model significantly boosts brand loyalty.
6. Back to Traditional Marketing
The rise of D2C brands has also shifted the marketing atmosphere in India. It’s not just digital anymore. There has been a massive shift back towards traditional marketing.
In 2022, D2C brands should be ready to capture the market by using old-school marketing tactics such as billboard ads, street ads, transit ads, TV, and even radio.
Traditional marketing means; Water cooler moments are going to be the new trend in 2022.
There has been a push towards creating brands that have a unique identity of their own. Creating ads that are memorable and become moments in history has become important now.
7. Selling Globally
The Indian direct-to-consumer market in 2022 will be about scaling up, not just in our own country but globally.
According to Alex O’Byrne, co-founder of Shopify Plus, “International markets are growing at a crazy pace, with projections that cross-border purchases will account for a fifth of all worldwide e-commerce by 2022,”
It is a fact that international markets have huge potential when it comes to sales. With new financial technology like tax calculators for different countries, multi-currency payment options, international shipping, distribution, etc., buying and selling across borders has never been easier.
8. Emphasis on Storytelling
Creative and engaging content is going to be the trend in 2022. Just mindlessly giving information will not work; consumers want to feel connected to a brand, and storytelling will be the solution.
D2C business owners will now have to describe more than just the product they are selling. More emphasis will be given to company inspirations, business values, what the company supports, and its impact on the larger community.
Take Levis, for example. The brand’s #ProudToBeMore and the newly launched ‘When you take a step, we all move’ campaign are excellent guides on how storytelling works in India. Levis is also slowly moving toward a more D2C model where they have seen a huge boost in their direct-to-consumer sales since the reopening of retail stores after lockdowns.
Future of D2C in India
- D2C growth will be highly charged by our Gen-Z and X generation as well as new-age tech.
- There will be a significant emphasis on leveraging brand value for sales. Companies are now investing in creating stories for their consumer base that is well informed and empowered.
- Data will be leveraged to a considerable extent – Targeted ads, personalized packaging, user-focused emails, heavily personalized products, etc.
- Many large brands will start moving towards a more D2C friendly model of sales or will entirely be hybrid. E.g., Heinz and PepsiCo have opened new channels of communication with their customers, where they are interacting with them directly.
- Technology will be the key to success in 2022, clubbed with creativity – AI enablement, advanced consumer forecasting, personalized targeting, localized content, and native regional language interfaces.