Dawn Of The Subscription Economy Among India’s D2C Startups

“There’s a hack for it”

“There’s a website for it”

“There’s an app for it”

Over the years, almost all technology has more or less evolved on these lines as it has matured. But in 2021, D2C startups in India are hoping “there’s a subscription for it” joins this troika.

D2C startups are keenly eyeing the many forms of subscriptions to build loyal customer bases and global brands. Is India ready for subscriptions? We look to answer, but a short detour before that:

• ?After entering the refurbished furniture market, furniture company House of Kieraya (formerly Furlenco) has ventured into luxury furniture with PRAVA
• ?️RPSG Capital Ventures launches Basecamp D2C accelerator with brands such as CurryIt, Born Good, Plow, House This and Vivinkaa among the first cohort

?The D2C Subscriptions Game Is Afoot

The term maturity is often overused in the context of Indian tech. Each year startups talk about businesses and consumers maturing. And it’s true most of the time given just how large and under-penetrated the Indian market is.

But even in the pockets where new-age brands and startups have become household names, there are levels to maturity — some cohorts mature faster than others. That’s an opportunity many are eyeing.

In the D2C sphere, that means experimenting and testing the waters for models that seek to leverage the creamy layer of consumers through subscriptions.

?The Many Faces Of Subscription: Despite the number of startups and brands attempting to break through in the D2C subscription economy, it’s still early days. One thing that makes subscriptions compelling is the variety of models possible.

Ajith Karimpana, founder of House Of Kieraya, believes that while 2010-2020 was the decade of ecommerce, the next ten years will be about the subscription economy. We are seeing experiments with models even within this niche — from monthly mystery boxes such as the ones by FabBag to daily meal kits by a number of cloud kitchens.

Then there are marketplaces such as Scriberr dedicated to subscriptions or EV startups offering bikes and cars on long-term subscriptions, besides furniture and durables — the coming of age of the subscription model within the D2C segment belies its relative youth within the Indian digital economy.

?Are Consumers Ready? Subscriptions are not new for the Indian consumer, says Ravi Ramachandran, cofounder and CEO of femtech startup Nua, citing examples of cable TV or DTH, dairy, and newspapers. For certain categories such as sanitary pads or cosmetics or coffee, the affinity to brands is very strong, Ramachandran added. The only difference is that new-age brands need to do this digitally whereas earlier it was all physical or retail.

While ecommerce introduced Indian consumers to convenience and ease of availability, the complexity involved in choosing the right products is still high. D2C subscription platforms are looking to solve this complexity and make it easier to buy.

On the other hand, Arunprasad Durairaj, founder of learning solutions platform Flinto, says what we are seeing in the Indian market is a wave of early adopters on both the brand side and the consumer side. India is not yet fully subscription-ready, but rather it has pockets of users and customers that are willing to embrace this model.

?Will ‘Bharat’ Ride The Subscription Wave? Tapping these pockets, D2C startups are looking at marketplaces, retail and hyperlocal platforms as channels to convert their customer base into repeat customers.

For coffee brand Sleepy Owl, the idea is to funnel the audience from digital marketing initiatives to its native platform. Cofounder Ajai Thandi added that using QR codes prominently on the physical packaging is another attempt to convert retail shoppers into long-term customers on its native platform.

Founders in the D2C economy believe such conversion and retention techniques are the key to attracting the next generation of customers from Tier 2/3/4 cities to the subscription fold. As these customers interact with the brand on social media or on marketplaces or in retail, brands need to look for ways to leverage this exposure.

D2C Discovery: Bili hu ☕

With more than a dozen competitors in the D2C coffee space in India, creating a brand presence at multiple touchpoints is a critical success factor. At least that’s what Delhi NCR-based Bili hu is attempting to do before taking a deeper dive into D2C.

The startup began in 2019 with the proposition of making high-quality and sustainably sourced Indian coffee accessible and more visible to everyone stepping out of their homes.

The Idea: The founder says the company’s coffee story is inspired by the massive agricultural wealth in India, which is renowned the world over but not accessible to many in the country. “We’re all about agriculture first and showcasing the characters of terroir, where coffees are grown.”

This is also why Bili hu is not pushing for espresso-based beverages, but is focussed more on manual brewing

So the startup began by bringing these single-estate coffees to retail locations such as hotels, conferences, restaurants, cafes and other public spaces to build an aspiration for the brand among consumers.

The Tech In Coffee: Bili hu works with coffee plantations across Chikmagalur, in Karnataka, which is known as the coffee belt of India. The biggest challenge in procurement, Singhal claims, is that some coffee plantations are not yet chemical free, which does not align with the sustainability goals for the company.

“We have explored double fermentation, aerobic and anaerobic fermentation, fermentation with or without yeast in air tight containers, carbon maceration, among other techniques like fermenting in fruit juices. While some processes are great for the coffee, they are not all sustainable or scalable,” the founder adds.

The D2C Journey: While it has expanded retail presence from metros to Tier 3 cities, the next step for Bili hu is bolstering its D2C platform with newer blends, coffee-adjacent lifestyle products and brewing equipment.

Currently, it offers 80 SKUs across these three categories on its website. Next out of the pipeline will be a range of instant brew dip bags, which are becoming more commonplace among Indian coffee brands.

Singhal tells us, “We will be reaching customers via departmental stores by giving them added sensory experiences. While that is still for the gourmet segment, we will be able to reach masses with coffee dip bags.”

Funding & Acquisitions

• ?Early-Stage D2C Funding: Beauty and personal care marketplace Kindlife.in, ready-to-cook food brand MasterChow and skincare brand Foxtale raised funding this week, along with pet care startups Zoivame Pets and PawPurrfect, and babycare brand Haus & Kinder
• ?Growth-Stage Rounds: Nutraceuticals brand Fullife raised $22 Mn from Morgan Stanley Private Equity, while home care startup Clensta and plant-based nutrition brand Plix announced their Series A rounds this week
• ?Roll-Up Acquisitions Roll On: This week, Mensa Brands acquired kidswear brand LilPicks, while Tarun Katial’s EVE WORLD acquired menstrual wellness brand ‘Femcy’. Besides this, Goat Brand Labs picked up stake In Pepe Jeans Innerfashion

D2C Buzz This Week

• ?Mattress Wars! SleepyCat has opened its first brand-owned store in Bengaluru to gain an edge in the tightly-contested sleep solutions market
• ?D2C Express: Logistics tech startup Wherehouse has launched 12-hour fulfilment services in Delhi-NCR with 25 partner brands, with plans to enter Bengaluru and Mumbai next
• ?Bewakoof’s Marketplace Play: Chumbak, Brown Mocha, Clovia, boAt, Campus Sutra, Ustraa among other brands have come onboard Bewakoof’s new marketplace

See you again next Wednesday with more insights and developments from the buzzing D2C arena.

Images: Aprajita Ashk

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