India is witnessing a surge of D2C brands and ecommerce across various categories, with an estimated $100 Bn addressable market opportunity by 2025
As ecommerce adoption grows around the world, what challenges can D2C brands expect and how are ecommerce platforms enabling the journey of D2C brands to the global market?
In the third episode of Inc42’s #GoingD2C webinar series in association with PayPal and Shopify, we hosted Udit Khanna, cofounder of Tilfi Banaras on how the brand overcame the initial challenges of selling internationally
The direct-to-consumer (D2C) model is drawing attention from traditional retail brands as well as new launches in India as ecommerce becomes the default go-to-market strategy in the wake of the pandemic. As reported by Avendus, India is witnessing the rise of D2C brands across various categories and is estimated to have a $100 Bn addressable market by 2025.
With D2C establishing its place in the Indian market, brands are scaling across geographies to widen their consumer base and grow. The new normal further accelerated these startups and businesses to recognise the potential of cross-border opportunities.
However, despite the benefits of catering to the entire world in a click, startups and brands may still feel overwhelmed due to the complicated process. Thus, to help brands create an impact at a global level, ecommerce solution providers and platforms have come to the rescue. For instance, Shopify, with its user-friendly ecommerce tools, has collaborated with payments giant PayPal to solve the challenges in setting up an online store, bringing visitors and accepting digital payments for secure checkouts.
One can easily make the shift to global without an IT team or tech background thanks to these services. From offering a number of themes to plugins, they are helping D2C brands reach international markets without any hassles. Moreover, payment gateways such as PayPal are helping brands take care of the complexity around transactions with safe and secure checkouts in multiple currencies.
While Shopify has worked with more than 10 lakh businesses across 175 countries, PayPal has 346 Mn-plus active users in more than 200 markets, enabling digital financial services and payments on its native ecommerce platforms in a more secure way.
That being said, setting up a D2C brand to tap international markets still needs some focussed changes in the businesses and there are plenty of challenges that need to be overcome by brands in this regard so far.
In the third episode of #GoingD2C webinar series, we talked about how brands can scale up across geographies, the challenges of selling D2C in a cross-border world and more. We were joined by Udit Khanna who shared his journey of scaling luxury textiles brand Tilfi Banaras to more than 30 countries.
Launched by Khanna, along with his wife Aditi and brother Ujjwal, the Varanasi-based five-decade-old family business has been leveraging D2C tools to serve the global market since 2016. With a customer return rate of more than 35% and an average order value of almost 27K to 28K, Tifli has been seeing 60% year on year growth.
Moderated by Apurva Chamaria, SVP and chief of staff to CEO and MD, Tech Mahindra, the webinar captured insights on what helped Tilfi achieve these numbers and also gave an insider’s view on when, why, and how Indian D2C brands should tap the cross-border opportunity.
When Is The Right Time To Go Global?
Taking your brand to a global audience is a crucial step for any D2C brand.
For Tilfi, the decision to take the D2C route was largely influenced by the need to reach — international audiences. Since all the cofounders had many international careers before launching Tilfi, the exposure to global audiences was huge. For instance, Khanna was running a language training company in the UK, where he had students from over 70 countries and he then set up a business in Kazakhstan and a venture in Mexico. This pushed them to expand outside India and not limit themselves to the domestic market.
He also noted that there’s no reason why a brand should wait to go international, but they should avoid a hope and pray approach. For instance, a brand should not just run a Facebook ad and believe they will get an order from outside India. They should build their website focussing on international audiences and also look at aspects such as unit economics, shipping charges, courier charges, the pricing of products, among others.
For those who are new to international selling, Khanna advises breaking down these elements into very simple small achievable tasks.
“Don’t try to capture the world in the first go. Break it down, do your basic unit economics and you will succeed. So just get rid of that mental barrier, selling international is almost as easy as selling locally. You just need to cross one more milestone, that’s it,” he said.
How D2C Brands Can Leverage The Ecosystem To Solve Payments, Logistics Hurdles
Although the D2C market provides a plethora of opportunities and a borderless commerce experience, launching a business globally comes with its own set of challenges around payments, shipments, logistics and more.
However, today the ecosystem is in place to make the transition easy and seamless and that is why brands can choose to go international as soon as they are ready. Shopify, PayPal, DHL, all these together, allow brands to go international, and help make the most of the ecosystem, Khanna noted.
Together, Shopify and PayPal support a global consumer base of over 500 Mn users and have over two decades of experience in dealing with the challenges faced by Indian direct-to-consumer brands as they expand their reach to international markets, allowing them to reach audiences in UK, Australia, New Zealand and the US, without overhiring and in a sustainable manner.
For someone like Khanna, who was not from a tech background, Shopify made setting up the website a cakewalk. “Shopify had the best possible themes available, you know, we wanted to build a solid brand. And for that, you know, how you present your products, and your craft is very important. So, we did want a platform that was robust enough, and that was smart enough to display what we were going to, you know, sort of put forward to our consumers,” said Khanna.
Another hurdle for early-stage entrepreneurs, especially when they are selling internationally is to go through abandoned checkouts due to payment failures. “Not only have you already lost a potential customer, but your client also did not have a good experience,’’ Khanna said.
Having the right payments partner can also go a long way in ensuring customer satisfaction and also it allows brands to focus on other aspects of their business such as product development.
“You have done the job, you added a great new collection on the website, you put in a lot of effort to describe the product in a nice way to describe them to explain what the product is and next morning you wake up to abandoned checkouts for payment failures, and I just mean that that really hurts. And it not only hurts because you lost the sale, but it also hurts because your consumer didn’t have a good experience,” the Khanna added.
For Tilfi and other startups of its kind, PayPal is a boon as it allows brands to accept payments seamlessly and it stopped being a pain point at all. Khanna added that both Shopify and PayPal have been their partners in growth, helping them in suggestions of apps to developers to people they can work with among others. In that sense, they have got a very good ecosystem especially for selling internationally and they are just that what you need, Khanna noted.
Additionally, more than often, how a brand handles shipping and transit can indicate its dedication towards the customers. Seamless payments and the ability to track products, and solving customer support challenges have become the standard expectation of a user. On the flip side, returns and replacements can also be a major point of concern, especially for international shipping. Some brands partner with professional services to overcome these challenges.
Tilfi, for instance, uses DHL for shipping, which has a dedicated network for ecommerce shipping to international consumers. “It can be quite worrying to order for somebody in the US from a website run out of a city in India. For us, DHL takes only one week when normally shipping within India takes three to four days. So, in that sense, we are pretty quick,” he said.
Another challenge that seems to overwork brands while going global is regulatory compliance, government laws, taxes and duties. However, it has been simplified over years.
Mihir Ajit Shah, consultant, advisor and trainer in the field of international business said during the second webinar of #GoingD2C series, “Fortunately, India would continue with its current policy throughout this financial year. So, brands don’t have to worry much about learning new things until March 31 next year. And whenever there is a requirement, training sessions will come up so that people can brush up on it and understand the nuances.”
How To Overcome Cross-Border Hurdles In A Nutshell
Summing up all the important insights shared in the webinar, here are some important points brands should keep in mind while going global.
- Do not go for a spray and pray approach — a sharp focus is crucial for international selling
- Build the top of the funnel, which means build awareness before you go deep into selling
- Identify your target market and the local requirements
- Resolve payments issues by finding the right partners
- Be careful about returns, which can be cost-intensive for cross-border selling — Don’t send incorrect shipments and don’t send wrong products
- Be clear on legalities, never break the rules and regulations in other geographies
- Do not compromise on the quality of the product and packaging
- Create brand loyalty and narrative through storytelling
- Focus on customer feedback
- Customise influencer marketing and advertising campaigns
With the whole world to cater to, D2C surely is a rising and prominent sector for Indian brands today. Many well-known brands such as Apple have also entered the D2C space this year with their own online stores. Consumers too have benefited with this shift to D2C, especially since retail visits have plummeted in the past year.
The mandate for any D2C brand serving globally today is thus retention of customers, repeat sales, boosting engagement and providing their users with end-to-end safe and convenient experience. Additionally, finding the right partner for marketing and secure payments can go a long way in reaching the global audience.
Catch more insights about the global market for Indian D2C brands and the inherent challenges in cross-border ecommerce in our webinar here.