So far, we talked about why Commerce Advertising is growing and making Brands & Advertisers excited about its propositions. In one of our previous articles, we also covered how Kritter is ideal for creating winning Monetization Solutions for eCommerce and Retail Platforms and Payment Apps to enable their sellers and Brands to connect with customers without disrupting the user experience.
We all are aware of the exponential growth eCommerce has seen in the past decade, and thanks to rising internet penetration and inexpensive devices, it will be accelerated further in the coming years. Add to that the recent lock-downs across the globe, that pushed more people to make online purchases. For instance, Dunzo, the app-based grocery delivery platform, saw a 3X growth in demand since the lock-down started.
As per a Goldman Sachs report, currently, at ~6% penetration in India, eCommerce is set to reach 11% in the next four years.
In terms of value, Statista projects the eCommerce industry in India to reach $200 billion by 2027.
Market size of e-commerce industry across India from 2014 to 2017, with forecasts until 2027 (in billion US dollars) source - Statista
This unprecedented and yet expected growth in eCommerce and thus in Commerce Advertising has pushed forward two new breeds of brands coming to the foray. These are Direct to Consumer (D2C) Brands and Digital First brands.
This article will focus on D2C brands. We will take up the Digital First Brands in our next blog.
What is a D2C Brand?
A D2C brand, as the name suggests, is one that bypasses the conventional distribution networks and directly puts themselves in front of consumers. These brands are made keeping in mind the modern shoppers who are always connected and have trust on online platforms (84% of people trust online reviews as much as their friends) to try out new products. These D2C brands promise to deliver higher quality and value to consumers since they cut down on many intermediaries in the chain and when they deliver on their promise, their sales and brand equity skyrocket.
These modern brands know how to use Social Media Influencers, and Commerce Advertising and always stick to ingenuity and authenticity. The ever spanning eCommerce ecosystem is fundamental to the success of any D2C Brand. From getting the eyeballs, conversions, and delivery assistance with an added benefit of trust created by these eCommerce players, these brands rely heavily on this ecosystem before making it big.
We have numerous examples of such D2C brands in India. Brands such as Beardo and The Man Company created their own spaces in the upcoming men grooming space in India while MamaEarth created its loyal customer base in the baby-care space, which was so far dominated by national and multinational brands. We all know the success story of Nykaa becoming a $750 million brand in just seven years.
BOAT, Wow Skin Science, and Wakefit are other successful brands that traveled this route.
These D2C Brands start small, effectively use the power of social media, peer reviews (word of mouth), and eCommerce and eventually succeed in creating their own branded stores online.
How Commerce Advertising Plays An Important Role
By definition, Commerce Platforms between the D2C brands and their customers seem like an anomaly. In an ideal world, these brands wouldn't need these platforms for sales and branding. But they do (for now).
Here is why...
Even when customers' trust in individual brands increases, they prefer going to online retailers to benefit from choices. As per a study conducted by CoreDNA, 72% of the consumers would choose marketplaces.
In addition to trust, eCommerce Platforms have a set of benefits that outplay the margins that these D2C players have to share, at least in short to medium term.
- They have the Audience
The vertical eCommerce businesses have a clear superiority when it comes to niche audience segments. For example, if you are launching a health-supplement brand, you have to be present on Medlife (or Netmeds), who already have built a trustworthy brand in the space.
Horizontal eCommerce platforms have the benefit of scale. For brands selling apparel, consumer products, electronics, or auxiliaries, for example, being present on Amazon or Flipkart is necessary. These players sell products in almost all imaginable categories and are the first choice for window shopping for netizens.
- They have the Customers' Voice.
We mentioned earlier how much the peer reviews matter to new prospects interested in your products. This becomes even more important when you are a new brand and don't have the means and time to create your presence conventionally.
- They have the Data
Customer data is the real currency in today's times. eCommerce Platforms like Amazon, Flipkart, Swiggy, PayTM, and Dunzo have invested heavily over the years, incurring huge losses, to scale the country's length and breadth. What they have achieved is trillions of bytes of browsing and transaction data of logged-in customers. This data becomes crucial when creating personalized views for each user, and if your brand fits in that view, the match between you and the prospect is a real one.
- They decide on Seasonality
These eCommerce players know the pulse of the nation. What started as "The Big Billion Day" and "The Great Indian Festival" sales around the country's key festivities have become some of the world's most significant shopping events. At particular times of the year, consumers keep their shopping carts and wishlists ready to grab on the best deals as soon as these events start. In a way, these eCommerce giants decide when Indians shop online.
Brands launch their best products and offers during these times. Syncing up your business calendar with theirs would bring the needed push to your top and bottom lines.
Today D2C brands are coming from all over the country, creating products for all kinds of segments. What will be interesting to see in the coming times is the adoption and innovation in the eCommerce space to cater to the increasing vernacular demands of the next billion users to get on board. The big players will have the advantage of scale and recognition, but the grassroots players will have to show the way.
