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How D2C Brands Can Lower CAC And Drive Sales Ahead Of The Big Indian Festive Period

21 Oct'22 | By Inc42 BrandLabs

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Inc42 and Simpl recently held a panel discussion titled How Can D2C Brands Lower CAC And Drive Sales Ahead Of The Big Indian Festive Period, exploring many critical areas such as:

Decoding consumer trends and expectations, including same-day delivery and try-and-buy options, among others, that will reshape the future of D2C brands
Looking at key opportunities and critical challenges like smart inventory management and time-bound logistics operations
Enhancing customer experience and engagement throughout the journey
Unlocking the potential of Tier 2 and 3 cities to drive the next phase of growth

Moderated by Nitya Sharma, cofounder and CEO of Simpl, the session included Priyanka Salot, cofounder of The Sleep Company; Vedang Patel, cofounder of The Souled Store, and Anurag Saboo, cofounder of Damensch.

How D2C Brands Can Lower CAC And Drive Sales Ahead Of The Big Indian Festive Period

The explosive growth of D2C (direct-to-consumer) brands in India has disrupted traditional retail and shaken up the mainstream ecommerce model. Several factors contributed to it – from rapid digital adoption at business and consumer levels during the pandemic mayhem to product personalisation and enhanced customer engagement.

The lean business model adopted by D2C startups (made possible due to the absence of intermediaries) has further shored up their business. These brands are now quite well-positioned and pegged to reach a market size of $100 Bn by 2025, according to an Inc42 report.

But what matters most is the tectonic shift in people’s mindset and buying behaviour. Consumers today not only buy products but an entire experience. People are more likely to shop with brands that provide relevant information, recommendations and personalisation. In simple terms, customers now want hassle-free, engaging and meaningful purchasing experiences, boxes rarely ticked by big retail.

“Consumers today are well informed and willing to pay for what they want. They are well aware of a brand’s value proposition and its authenticity. If you give them a good product, they will also be your brand’s ambassador on social media.” said Patel of The Souled Store.

Now that the festive season is here and sales are soaring, homegrown D2C brands are expected to notch huge gains. According to the citizen and community engagement platform LocalCircles, spending in the 2022 festival season can rise to $32 Bn as Indian households prepare for a restriction-free Diwali.

Anurag Saboo of Damensch also thought it would be a great business opportunity after a long time. “This is the first post-Covid festive season, and the demand is definitely out there as there are no restrictions,” he said.

While D2C brands have geared up to provide an exceptional experience to consumers and make their mark, festive shoppers are also ready to bet big on these newfound brands. What may follow will trigger more news stories and analyses, underlining how a retail shift will eventually impact Indian customers.

But along with the cheer and enthusiasm, the festive season also poses some critical challenges for D2C brands. From managing multiple logistics and technology partners and ensuring fast deliveries to handling returns/replacements and keeping tabs on digital ad spending, the to-do list looks long and tough.

What tops this list is the high customer acquisition cost (CAC). As shoppers are now spoilt for choice and customer loyalty is taking a hit, the ballooning cost of customer acquisition (and retention) is a constant worry for new-age D2C brands.

“Fundamentally, people are tackling CAC in the wrong way. What is important is to find the perfect product fit [for the right customer]. You should acquire customers only if you see high repeat rates. And marketing should be used as a megaphone for your business; it should not be THE business,” said Patel.

Tune in to this panel discussion to get deep insights into the D2C ecosystem and how D2C brands are upping their game this festive season.