How The D2C Model Is Transforming Indian SMBs

The way traditional business models have changed and re-aligned to the more persistent and visible demands of the ‘new normal,’ if such a thing exists, is a notable shift in the post-pandemic era.  Customers now have a direct line to hear and converse with marketers and brand owners through nimbler, more responsive, and highly personalised channels. 

Disintermediation has resulted in lower operating costs for sellers, as well as increased efficiencies. The SME sector has benefited from this customer-centric landscape, which is predictable due to its nature and composition, with a significant proportion of returns coming from the D2C sub-segment. 

Ecommerce, digital marketing, mobile banking, and the essential ingredient of personalisation have increased D2C opportunities and provided a lifeline to SMEs during their most difficult times.

India’s Evolving D2C Landscape

The D2C market is omnipresent. From food delivery to ecommerce, edtech and fintech, telemedicine and government services, the consumer is the hero. The D2C market in India is expected to exceed $100 Bn by 2025, fueled in part by a legion of online buyers currently numbering in the hundreds of millions. Despite the pandemic’s weakening onslaught, SME resilience is also evident in the fact that, with 42.5 Mn units, this sector is contributing significantly to the country’s 17% consumption growth.

SMEs have contributed to the emergence and rapid growth of the D2C sector. The reasons for this are driven by both the demand and supply sides.  Personalisation, innovation, collaboration, and investment, combined with a vast and amorphous consumer psyche, quality-conscious buyers, and rapidly changing brand loyalty, are just a few of the factors that are strengthening the D2C muscle. 

The nature of modern post-pandemic retail, where traditional formats have given way to more agile and adaptive constructs, has also played a role in SMEs’ survival. Small businesses will not only thrive through astute use of modern interconnected and mobile-driven technology, but they will also play a key role in driving the adoption of emerging technologies such as artificial intelligence and virtual reality, among others.

Personalisation

Personalisation is a key factor in the success of the D2C model. Marketers can effectively collect and use data, as well as apply learnings iteratively to provide an exceptional customer experience. Due to their proximity to customers and flexibility in changing and adapting the product mix, SMEs can meet changing customer expectations. 

Managing the supply chain so that it rarely fails and is robust enough to scale in response to demand is another distinguishing feature of the better D2C SME players. When indeterminate factors are not allowed for, logistics becomes a nightmare. SMEs can master all facets of complex logistics and be close to customers due to their flat organisational structures and open communication links.

Quality Assurance

Quality assurance is second nature to customer-service-obsessed SMEs. For D2C models to have any degree of competitive validity, product and process quality have to be one of the top considerations. SMEs are best positioned to invest in the appropriate technology, train resources and fine-tune this innovatively, and due to their small size and structure, customise it based on feedback on the fly. 

Mutual Strengths & Skills

Financial acumen and niche focus are two key advantages that put SMEs ahead of the competition in the D2C playoffs. With direct ownership and speed built into the leadership philosophy, as well as the ability to quickly identify nuanced market changes, these marketers can change their business models ahead of the curve and avoid costly delays. 

With the government stepping up to lend a helping hand in a variety of ways, SMEs are in for a lot of help. Be it easy availability of finance for research or operations, the feasibility of business diversification and expansion, or even an amenable tax and compliance structure, SMEs can take advantage of all this and sharpen their D2C game.

It is said that a startup’s success is determined by how many times and how quickly it can pivot during its formative years. 

When combined with perseverance, today’s D2C brands with a keen focus on personalised data and behaviour are poised for success. The D2C model is a test bed for India’s retail future. SMEs can be close and profitable partners in shaping this industry because of their mutual strengths and skills. With the pie constantly expanding, the sky and everything beneath it is now within the reach and ambit of savvy and astute SME marketers and innovators. 

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