In the first week of January 2021, New York based private equity firm Warburg Pincus invested $100 million in home grown headphones and speaker brand, boAt. The funding was touted to be one of the largest capital raise for the D2C industry so far. Founded in 2016, the D2C brand has successfully solidified its position as the fifth largest wearable brand in the country. Aman Gupta, Co-Founder, boAt said, “The investment is great news for not only the company but for the entire D2C sector”.

Things have been good for D2C brands over the last few years and the last two years have certainly been their moment in the sun. The Indian consumer product landscape has witnessed a gradual rise of the D2C business model with over 600 such companies popping up from across different industries since 2016.

Entering the market with niche products and innovative marketing campaigns, D2C brands render democratised choices, price points and convenience of buying to consumers which adds to their popularity. D2C brands are often agile in their go to market strategies. Owing to their closer connect with their consumers it is easier for such brands to receive relevant feedback. Their efficient operational processes also allows them to innovate and act upon the feedback given swiftly. As a consequence such brands can launch newer products faster and thus capture consumers’ attention.

Companies such as Lenskart, Licious, Furlenco, Zivame, BoAt, Healthkart, Mamaearth, MyGlamm, Sugar, IncNut, Country Delight have not only captured consumer attention but have also been at the receiving end of increased funding activity. According to reports these D2C brands have collectively raked in over $1.6 billion in funding so far.

Beauty & personal care and food & beverage have been two of the most lucrative segments within the D2C industry and major brands in this category have witnessed over 100 percent growth in scale with respect to pre-covid levels.

The amalgamation of horizontal & vertical e-commerce players, social media marketing, plug-and-play supply chain and logistics options has been fuelling the growth of D2C brands across the country.

The upward trend in the D2C market is slated to continue. A report by Avendus Capital, the investment banking arm of financial Avendus Group concluded that India’s growing D2C segment will have $100 billion addressable market by 2025.

Factors Pushing the Growth
It is pertinent to note that this growth comes at the heels of evolving consumer preference. As more and more Indians connect to the internet, online spending is slated to grow exponentially. According to reports the number which was $39 billion in 2019 will increase to $200 billion within the next five years.

India, a nation of 1.3 billion people is one of the largest retail markets in the world. However, a majority of India’s retail segment is still unorganized and e-commerce counts as a measly four percent currently. However, the trends are evolving and more and more people are turning to e-tail for their shopping needs. The Covid 19 crisis has also played a crucial role in pushing a vast majority of Indians to rely on digital platforms for their shopping requirements.

With the emergence of social commerce and influencer marketing, an era of trust is also being ushered in which will help bring more Indians to shop online which will in turn help D2C brands capture a larger market share.