Indian D2C Guide To Tapping The Cross-Border Opportunity

Globalisation broadened our horizons, compelling us to form new socioeconomic bonds that are not bound by geographical or political boundaries. This, combined with rapid urbanisation, has paved the way for borderless ecommerce, opening the floodgates for online retailers.

Since 2020, the uptick in ecommerce and mcommerce businesses has been further accelerated as more consumers were forced into the new normal of shopping online. This trend is expected to continue, with the global ecommerce market expected to reach $55.6 Tn by 2027 and the Indian D2C market expected to reach $100 Bn by 2025.

Brands are increasingly adopting a direct-to-consumer (D2C) model, which eliminates stockists, distributors, and retailers because the brand is the retailer. As the brand gets full autonomy over end-to-end operations, it becomes easier to understand buying patterns, build targeted market strategies, and ensure greater personalisation. This can result in higher profits while maintaining consistency and quality.

Research suggests a growing preference among consumers to buy directly from the manufacturer. D2C brings brands closer to digitally savvy consumers by eliminating the middleman and enabling an enriching virtual market experience.

India already has over 800 D2C brands, including well-known names like Lenskart, SUGAR Cosmetics, boAT, Nua, Mamaearth, Nykaa, Wakefit, and Pee Safe, with more on the way. On a global scale, personal care, homemade products, mental health,  yoga, and disease management products are the top attractions among consumers. While in the domestic D2C market, fashion and lifestyle, beauty and personal care, F&B, home décor are the leading segments.

Looking Beyond Conventional Regions

For Indian brands to continue their blistering pace of growth, they need to capitalise on every possible opportunity to grow their businesses multi-fold.

Having tasted success at home, Indian D2C brands are realising that globalisation is their next frontier. Beyond the top export destinations of the United States and the United Kingdom, opportunities are emerging in Asia-Pacific, Africa, and the Middle East, among other places. Pharmaceuticals, agricultural products, fashion, electronics, metals, fitness, hygiene, personal care, and other products have all found a new market.

Laying The Foundation For Global Success

As brands expand their presence and tap new markets, they are laying the foundation for global expansion. They are maintaining brand product quality as per global standards, regulating costs to provide differential pricing, developing a deep understanding of regional markets, enabling pickup, warehousing and delivery in remote areas, and forecasting trends and patterns through data-driven and predictive analysis.

A brand going global must ensure that cross-border deliveries meet international standards, as regulations vary by country. Those embarking on this journey must consider a plethora of factors in order to build a successful cross-border business.

• Managing supply chain and logistics disruptions because price fluctuations, unforeseen shipping delays, and other factors can be costly. As the last leg of the supply chain, shipping determines the consumer’s overall satisfaction levels. Rather than doing everything themselves, brands are better off partnering with an experienced logistics supply chain partner. 

They must strategically deploy human, social and economic resources across the supply chain as they now face competition from local, established players. For instance, Groupon entered the Chinese market as a group-buying deals site. It went ahead without a proper understanding of the buying attitude of the locals and therefore failed to capitalise on the opportunity.

• Portfolio management is critical because brands cannot assume that a product line that performs well in one market will perform well in another. New product lines need to be planned and executed well to avoid chaos or complications while doing business in unfamiliar geographies. Bisleri, a popular mineral water brand, was unable to replicate this success in other beverages such as Pina Colada, Fonzo, and so on.

• Protecting brand identity and integrity across geographies must be handled strategically by top management while also bringing in local flavors and cultural elements of different markets.

• Managing tax, duty, and payment as they differ depending on country-specific policies. Brands must prepare and plan ahead of time to address local taxation and currency requirements. 

American retail giant, Walmart was forced to pull out of Germany and incurred huge losses after launching 85 stores in the country. This was a result of excessively complex labor laws, red tape and business hours restrictions.

• Management of risk and fraud is crucial and involves putting in adequate research and tools to mitigate and chargeback risk. 

After the Chinese ecommerce platform, Nice Tuan expanded into small towns, costs rose disproportionately. The strategy of lowering prices to entice customers and using fake buyers to prop up sales targets set alarm bells ringing among regulators.

• Brands must strategise regional visibility and market listings in order to effectively build visibility and attract new customers using digital marketing tools.  

Coors, a successful American beer manufacturer, made the mistake of launching their “Turn it Loose” campaign in Spain without realising that in Spanish, their tagline translated into “suffer from diarrhoea.”

• Managing the last mile without hiccups is critical because it is the point where the brand meets the customer and should be the most satisfying part of the journey.  It can make or break the relationship. While the first-mile dispatch is from a centralised fulfilment location, the last mile is distributed across the geographical landscape and need not be near a distribution centre. 

Having an effective channel for end-to-end logistics is therefore, of the essence. PepperTap, a Gurgaon-based hyperlocal grocery delivery start-up, raised over $50 Mn but folded within a year due to a negative margin per delivery.

Every entrepreneur envisions their brand crossing international borders. Taking a strategic yet expansive approach by finding the right partner that enables essential features such as strategic tie-ups with carriers, price-sensitive solutions, last-mile deliveries, documentation assistance, and easy integration with global marketplaces can make the journey much smoother.

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