After witnessing massive growth in the last few years, optimism is running high for D2C brands as 2023 nears. It is estimated that D2C brands in India are growing at a CAGR of 40%
While growing acceptance of ecommerce, online payments and affordable internet access have fueled the explosion of D2C business, the real story is still unfolding through different trends
The new D2C space has transitioned beyond traditional approaches by reaching the market with consumer-friendly pricing and finding buyers through social media
After witnessing massive growth in the last few years, optimism is running high for Indian D2C brands as 2023 nears. It is estimated that D2C brands in India are growing at a Compound Annual Growth Rate (CAGR) of 40%. The combined revenue of D2C brands is expected to hit $60 Bn by FY27 from $12 Bn in FY22.
While growing acceptance of ecommerce, online payments and affordable internet access have fueled the explosion of D2C business, the real story is still unfolding through different trends. Many of them are expected to play out in 2023. It will also be the first full year since 2020 in which D2C players will operate without fear of a new Covid wave.
Here’s a list of significant trends to expect in the D2C segment in 2023:
Organic & Plant-Based Shift
Several D2C brands are occupying niche segments at scale. While traditional market leaders are fighting hard to maintain their positions, D2C brands have made significant inroads in personal care, including beauty and hygiene segments. There has been increased interest and adoption of brands and products that are clean, organic, plant-based, eco-friendly and sustainable.
The plant-based food industry in India is booming. This has especially been the case for the plant-based protein segment. The plant protein market is expected to reach $565 Mn in the coming year from $347.1 Mn in 2018.
Another report estimates that organic or natural products will command 5%-10% of the $30 Bn market size of the beauty and personal care segment by 2025.
Indian D2C brands that offer such products are expected to grow further in the coming year. Consumers are more aware and committed to using brands and products that are good for the body and the environment. Terms like organic, eco-friendly, and plant-based are no more passing fads but are getting more mainstream with even traditional brands exploring new ranges of products that cater to these evolving needs of consumers.
Holistic Approach To Health & Wellness
Consumers are increasingly choosing a holistic lifestyle, a trend that has been on the rise since the onset of the pandemic. Since the pandemic, most consumers have tilted towards holistic wellness.
The modern consumer is now conscious about complete well-being that focuses on physical, mental and emotional well-being and is less frenzied about outward appearance. D2C brands are hopping on this trend and the newer products on offer will be around the holistic and total well-being of the buyers. The new-age buyer weighs more on a healthy body and mind than being isolated with one solution. New-age D2C brands in health, personal care and wellness segments stand to gain further from this shift in consumer sentiment in 2023.
Adoption Of The Omnichannel Approach
D2C brands are now expanding beyond digital channels and spreading their footprint across offline channels as well. While digital channels have helped these brands penetrate into different markets, the offline presence will further take these brands closer to an even larger base of consumers.
It also gives consumers multiple touch points to interact with the brand. For instance, a consumer might read up on a product and its competition online and go try it out offline. Through this fusion approach, buyers can quickly continue their shopping from any channel, irrespective of where they might have left off.
We can expect more focus on multiple touchpoints, personalised communication and customer feedback-centric solutions as Indian D2C brands strive to build a solid and large consumer base.
Growth In Social Commerce
Social commerce is another exciting area in which we can expect many activities by D2C players in the coming year. As almost everyone with a smartphone in the country is now on social media platforms like Facebook, Twitter and Instagram, there is a vast space for the growth of social commerce.
In 2022, the estimated market size of social commerce in the country was $7 Bn, which is expected to grow to $84 Bn by 2030. New-age D2C brands have an edge in the social media game as most of them have risen through the ranks by directly communicating with potential consumers on social media platforms. In the process, they have created huge communities of followers for themselves.
Focus On Customer-Centric Solutions
D2C brands have shown excellence in leveraging technology. On the back of product innovation and intelligent brand positioning, many of these brands have become household names even in tier-2 and tier-3 cities.
As expectations of customers from their favourite brands are rising across the country, D2C players are expected to dig deeper into their resources to provide more customer-centric solutions in 2023.
Subscription-Sales Model
In the past eight years, the subscription economy in India has grown by 400% according to Zuora. Such models provide consumers with ease and financial benefits, while the brands enjoy repeat purchases and brand loyalty.
This will be more evident in D2C brands that offer products and services that are a part of daily routines like groceries, nutrition supplements, and beauty products, amongst others.
The Way Forward
D2C brands are now making an organic growth shift in the market. Instead of using chemicals, the focus is more on producing products with natural ingredients.
The focus has gradually shifted to customer needs by placing them at the helm of the business and creating a range that meets the target audience’s needs. The new D2C space has transitioned beyond traditional approaches by reaching the market with consumer-friendly pricing and finding buyers through social media. The growth in the D2C segment with such approaches is new and promising and aims to continue in the future.
