Today, D2C enablers are playing a major role in pushing brick-and-mortar businesses towards the digital space
Shiprocket, a shipping and logistics solutions startup, is one of the early D2C enablers and serves more than 100K sellers across the country
The logistics launched its Rocketfuel accelerator programme in September 2020 to guide and invest in early-stage consumer product startups
Some founders are born with the entrepreneurial bug, and some are bitten by it along their career path. For Saahil Goel, who was working as a business consultant in the US between 2009-2011, it turned out to be the latter. The entrepreneurial bug compelled him to get up at 4 in the morning to get on a call with his friend Gautam Kapoor in India and spend the next four hours working on their startup idea, right from deciding on the brand name and logo to developing the business model. And then he would leave for his day job.
Four months, a 200-page document and a small rented-out office space later, the founders were ready to launch their startup called KartRocket. It was 2012, and the B2B company based in New Delhi had a slew of offerings in place, including web and mobile site design, payments and sales integration solutions as well as product shipping services. One year into the startup journey, the cofounders realised that the merchant partners of most businesses were more interested in shipping solutions. Sensing an opportunity in that space, KartRocket pivoted to emerge as Shiprocket, a shipping and logistic solutions startup for small, medium and large enterprises.
Businesses such as Shiprocket form the part of the ecosystem that enables other SMBs, especially those selling directly to consumers (D2C), to operate at scale and grow. While Shiprocket provides shipping and logistics solutions, the likes of Shopify, Wix Stores and Ecwid offer platform solutions, and companies like Deskera and Perpule focus on payments and inventory solutions. Understandably, these B2B enablers play a crucial role in bringing down the entry barriers for companies opting for the D2C model.
Ecosystem evolution has not happened in a day. In the 90s, the only way a retail brand could sell to customers was through supermarkets or other retail outlets (The first ecommerce platform in India was Fabmart in 1999). This also meant sharing margins with wholesalers, distributors and retailers. Also, the current level of brand engagement with customers was unheard of before social media platforms came into play. Consequently, businesses lacked a robust and timely feedback mechanism at the time to help them understand what their customers wanted.
But the rapid technology makeover since then has changed the face of businesses. With access to the internet and smartphones decimating all physical borders, digital marketplaces are thriving worldwide, and the entry barriers to sell to customers have come down significantly. However, a major boost came in 2020 when the Covid-19 pandemic hit the country. As nationwide lockdowns were implemented to contain the virus, customers depended heavily on online shopping for convenient and contactless buying, forcing businesses to go for digital adaptation.
Being a part of the D2C enabler segment since 2012 has helped Shiprocket understand the paradigm shift in consumer markets and the evolving needs of businesses. At present, Shiprocket is helping more than 100K companies reach directly to their customers. The startup clocked INR 367 Cr in revenue in FY2020-21 at a YoY growth rate of 239%.
“Shipping has always been one of the major pain points for SMBs in India. And it can be more so as timely shipping is a crucial instrument to accomplish online selling, especially when one is an established D2C business. So, we intend to help them ship their products across the country with as few hassles as possible,” said Goel.
Enabling SMBs To Tap Into The D2C Rush
Of all the services that make a difference for a D2C brand, supply chain solutions are the most crucial. New entrants to the D2C space may find it extremely difficult to manage due to the sheer magnitude and diversity of operations. Operations such as managing warehouses, building shipping channels, ensuring last-mile delivery and tracking fulfilment of multiple orders simultaneously while developing the infrastructure for the same may not be feasible for SMBs and early-stage startups. In fact, it was one of the primary bottlenecks that hindered businesses from going global for the longest time.
This is where Shiprocket comes in. To overcome the challenges surrounding post-order logistics and fulfilment, the company offers a bouquet of solutions, including shipping aggregation, shipment tracking in real-time, warehousing, order fulfilment, hyperlocal delivery and more. The startup mainly works with personal care, healthcare and electronics brands and delivers more than 4 Mn consignments a month.
For Shiv Kumar, the founder of Ashwini Herbal Hair Oil, a small manufacturing firm in the Hebbal region of Karnataka, running his business meant relying on word-of-mouth promotion and the customers who would find his brick-and-mortar outlet and purchase the product. But now, with the help of social media platforms like Facebook, he has been able to build a brand page and spread awareness about his product. However, that did not result in conversions as orders came from far-flung corners and he had no shipping mechanism in place to deliver them. Conventional solutions like the post office and independent courier service also didn’t work out for him due to a large amount of paperwork, slow deliveries, and no cash on delivery options. As a result, he lost out on many orders.
“With the help of Shiprocket, we have been able to sell our product all over India. Earlier, we could sell 50-100 bottles a month, but we are now selling that many in a day,” said Kumar.
Kumar is not the only beneficiary. According to the E-commerce Trends Report 2020, published by Unicommerce, the year saw 88% increase in order volumes from D2C brands. The rise of D2C also ensured the rise of SMBs, which could not build a large-scale customer base earlier due to inadequate infrastructure and resources.
SMBs face another roadblock in terms of adopting tech-heavy services provided by D2C enablers. Many business owners do not have an online presence, and the lack of digital literacy acts as a crippling barrier when it comes to scaling their operations. In essence, digital markets are booming and the growth hacks are ready, but not all businesses are fully equipped to embrace those new-age solutions.
Kumar faced similar challenges throughout his journey. And when he first approached Shiprocket at his cousin’s insistence, he was apprehensive of solutions and the entire process. However, his experience was much better than he anticipated. The startup’s representatives connected him with a senior account manager, who did the necessary hand-holding and helped the manufacturer set up his company’s account on Shiprocket’s platform.
“We just have to hand over the consignments to Shiprocket every month, and it takes care of the rest. The account manager helps us understand the process and is available around the clock to answer all queries,” said Kumar.
Of late, the D2C enablers are also focussing on the unique challenges faced by Indian SMBs and coming up with solutions to deal with those pain points. From simplifying tech-driven processes to developing easy-to-surf company platforms with more images, fewer words and, at times, vernacular content to attract businesses, D2C enablers are doing it all and more to penetrate the SMB circle.
Their efforts have borne fruit as businesses are increasingly adopting the D2C model. According to Statista, the FMCG segment in India was valued at $52.75 Bn in FY2018. The market is expected to increase to $220 Bn by FY2025.
Shiprocket’s Rocketfuel Programme To Accelerate Growth
Although the current D2C format is helping early-stage startups and traditional SMBs get a lift-off, it is not enough to make a strong impact in the fiercely competitive digital market.
Shiprocket believes that the next step is to prepare a structured system to guide and mentor businesses inexperienced in running a D2C model. Besides, they should have adequate funds to transform their vision into action, presumably on a larger scale. To contribute meaningfully as a D2C enabler, the logistics solutions company launched the Rocketfuel accelerator programme in September 2020.
The two-month-long programme was first held between November 2020 and January 2021 and included five D2C startups that deal in a variety of consumer products. Those in the first cohort were Bebe Burp (organic baby food startup), WatchOut Wearables (smartwatch startup), Loop Audio (wireless earphones startup), Durmeric (herbal products startup), and Supply6 (nutrition drinks startup).
The startups were provided with access to learning sessions and one-to-one mentoring sessions held by subject matter experts, with the focus on all aspects of building a D2C business in India. The topics ranged from building brand narrative and marketing campaigns to streamlining operations and more. Shiprocket also announced to invest up to INR 3.5 Cr in these startups.
“As a new startup in the market, one faces the dual challenge of inexperience and a lack of funds. With our years of experience in the D2C space, we want to address these issues and help startups with capital-efficient growth opportunities,” said Goel.
In spite of the pandemic, Shiprocket saw robust growth in 2020 as the company made a foray into more fulfilment areas in terms of hyperlocal delivery, warehousing and packaging. It is now planning to enter the global market along with a short-term focus on regional expansion. According to Goel, the expansion plans are in sync with the platform’s vision of providing a comprehensive solution for ecommerce fulfilment.
“D2C and ecommerce are the next big things in the commercial ecosystem, and our vision is to propel these by providing an intuitive tech-stack. With our various initiatives and services, we hope to positively impact the small and medium manufacturers of the country and help them foster an environment of economic growth,” said Goel.